PETITIONER: FIRM AND ILLURI SUBBAYYA CHETTY AND SONS Vs. RESPONDENT: THE STATE OF ANDHRA PRADESH DATE OF JUDGMENT: 25/01/1963 BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SINHA, BHUVNESHWAR P.(CJ) WANCHOO, K.N. HIDAYATULLAH, M. SHAH, J.C. CITATION: 1964 AIR 322 1964 SCR (1) 752 CITATOR INFO : F 1964 SC 807 (28) R 1964 SC1873 (8,9) R 1965 SC1942 (15,18,36) R 1966 SC 249 (28,29,59,66,68) D 1966 SC1089 (13,18) R 1966 SC1738 (6) R 1968 SC 169 (12) R 1968 SC 271 (10) E 1969 SC 78 (7,17,19,24,26,29,31,32) R 1971 SC1558 (19) E 1975 SC2238 (21) RF 1977 SC 955 (15) ACT: Civil Court--jurisdiction-Exclusion of-"Any assessment made under this Act" meaning of-Scope of-Madras General Sales Tax Act, 1939 (Mad. 9 of 1939), s. 18-A. HEADNOTE: The appellant filed a suit against the respondent for a decree for Rs. 8339/- on the ground that the said amount had been illegally recovered from it under the Madras General Sales Tax Act, 1939, for the years 1952-54. The respondent 753 resisted the claim on the ground that the suit was incompetent under s. I 8-A of the Act. On the merits, it was contended that the transactions in regard to groundnuts on which sales tax was levied and recovered from the appellant were transactions of purchase and not of sale, and it was urged that the appellant having voluntarily made the return and paid the taxes, it was not open to it to contend that the transactions were not taxable under the Act. Besides it was argued that the appellant had not preferred an appeal either to the Deputy Commissioner of Commercial Taxes or to the Sales Tax Appellate Tribunal against the assessments and bence the suit was not maintainable. The suit was decreed by the trial court but the High Court reversed that decision and dismissed the suit on the ground that in view of the provisions of s. 18-A of the Act, the suit was incompetent. Alternatively. it was found on merits that the claim made by the appellant was not justified. The appellant came to this Court by special leave. Held, that s. 18-A excludes the jurisdiction of Civil Courts to set aside or modify any assessment made under the Act. There is no express provision in the Act under which the suit can be said to have been filed and it falls under the prohibition contained in this section. The prohibition is express and unambiguous and no suit can be entertained by a Civil Court, if by instituting the suit. the plaintiff wants to set aside or modify any assessment made under the Act. Where an order of assessment has been made by an appropriate authority under the provisions of the Act, any challenge to its correctness and any attempt either to have it set aside or modified must be made before the appellate or revisional forum prescribed by the relevant provisions of the Act. A suit instituted for that purpose is barred under s. 18-A. When the appellant made its voluntary returns and paid the tax in advance to be adjusted at the end of the year from time to time, it treated the groundnut transactions as taxable. The appellant having conceded the taxable character of the transactions in question, no occasion arose for the taxing authorities to consider whether the said transactions could be taxed or not. Even after the impugned orders of assessment were made, the appellant did not choose to file an appeal and urge before the appellate authority that. the transactions were sale transactions and as such were outside the purview of s. 5A (2). If an order made by a taxing authority under the relevant provisions of the Act in a case where the taxable character of a transaction is disputed, is final and cannot be challenged in a civil court by a separate suit, the position is just 754 the same where the taxable character of the transactions is not even disputed by the dealer who accepts the order for the purposes of the Act and then institutes a suit to set aside or modify it. The expression "any assessment made under this Act" is wide enough to cover all assessments made by the appropriate authorities under this Act whether the said assessments arc correct or not. It is the activity of the assessing officer acting as such officer which is intended to be projected and as soon as it is shown that exercising his jurisdiction and authority under this Act, an assessing officer has made an order of assessment, that clearly falls within the scope of s. 18-A. The fact that the order passed by the assessing authority may in fact be incorrect or wrong does not affect the position that in law the said order has been passed by an appropriate authority and the assessment made by it must be treated as made under this Act. Whether or not an assessment has been made under this Act will not depend on the correctness or accuracy of the order passed by the assessing authority. There is a general presumption that there must be a remedy in the ordinary civil courts to a citizen claiming that an amount has been recovered from him illegally and such a remedy could be held to be barred only on very clear and unmistakable indications to the contrary. The exclusion of jurisdiction of civil courts to entertain civil causes will not be assumed unless the relevant statute contains an express provision to the effect or leads to a necessary and inevitable implication of that nature. The mere fact that a special statute provides for certain remedies may not by itself necessarily exclude the jurisdiction of the civil courts to deal with a case brought before it in respect of some of the matters covered by the said statute. There is no justification for the assumption that if a decision has been made by a taxing authority under the provisions of a taxing statute, its validity can be challenged by a suit on the ground that it is incorrect on merits and as such it can be claimed that the provisions of the said statute have not been complied with. Non- compliance with the provisions of the statute must be non- compliance with such fundamental provisions of the statute as would make the entire proceedings before the appropriate authority illegal and without jurisdiction. If an appropriate authority has acted in violation of the fundamental principles of judicial procedure, that may also tend to make the proceedings illegal and void and that infirmily may affect the validity of the order passed by the authority in question. It is cases of this character where the 755 defect or infirmity in the order goes to the root of the order and makes it in law invalid and void that these observations may perhaps be invoked in support of the plea that the civil court can exercise its jurisdiction notwithstanding a provision to the contrary contained in the relevant statute. Secretary of State v. Mask & Co., (1940) 67 I.A. 222 and Reliegh Investment Co. Ltd. v. Governor General in 'Council, (1947) 74 I.A. 50, relied on. State of Andhra Pradesh v. Sri Krishna Coconut Co. (1960) 1 Andhra W.R. 279, overruled. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 315 of 1962.
Appeal by special leave from the judgment and order dated
November 16,1960 of the Andhra Pradesh High Court in A.S.
No. 397 of 1957.
A. Ranganadham Chetty, A. Vedavalli and A. V. Rangam, for
the appellant.
D.Narasaraju, Advocate-General for the State of Andhra
Pradesh, T.V.R. Tatachari and P.D, Xenon, for the
respondent.
1963. January 25. The judgment of the Court was delivered
by
GAJENDRAGADKAR, J.-The short question which arises in this
appeal is whether the suit instituted by the appellant, Firm
of Illury Subbayya Chetty & Sons, in the court of the
Subordinate judge at Kurnool, seeking to recover Rs. 8,349/-
from the respondent, the State of Andhra Pradesh, on the
ground that the said amount had been illegally recovered
from it under the Madras General Sales Tax Act, 1939 (Mad.
IX of 1939) (hereinafter called the Act) for the years 1952-
54 is competent or not ; and this question has to be
determined in the light of the scope and effect of section
18-A of the Act.
756
The appellant is a firm of merchants carrying on commission
agency and other business at Kurnool and as such, it
purchases and sells ground-nuts and other goods on behalf of
principles for commission. For the year 1952-53 the Sales-
tax authorities included in the appellant’s taxable turnover
an amount of Rs. 3,45,488/12/10 representing groundnut sales
and collected the tax on the total turnover from it in
September, 1953 when the amount of the said tax was
determined and duly adjusted. The said turnover of Rs.
3,45,488/12/10 in fact represented sales of groundnuts and
not purchases and tax was recovered from the appellant on
the said amount illegally inasmuch as it is only on purchase
of groundnuts that the tax is leviable. As a result of this
illegal levy, the’ appellant had to pay Rs. 5.398/4/3 for
the said year. Similarly, for the subsequent year 1953-1954
the appellant had to pay an illegal tax of Rs. 1,159/11/,9.
In its plaint, the appellant claimed to recover this amount
together with interest @ 12% per annum and that is how the
claim was valued at Rs. 8,349/-.
This claim was resisted by the respondent on two grounds.
It was urged that the suit was incomepetent having regard to
the provisions of s. 18-A of the Act; and on the merits it
was alleged that the transactions in regard to groundnuts on
which s lestax was levied and recovered from the appellant
were transactions of purchase and not of sale. In this
connection, the respondent referred to the fact that the
appellant itself had included the transaction in question in
the return submitted by it in form A and that it was making
payments tentatively every month to be adjusted after the
final assessment was made at the end of the year.
Accordingly, the final adjustment was made in September and
the total amount due from the appellant duly recovered.
Thus, the appellant having voluntarily made the return and
paid the taxes, it was not open to him to
757
contend that the transactions in regard to groundnuts were
not taxable under the Act. Besides, the appellant had not
preferred an appeal either to the Deputy Commissioner of
Commercial taxes or to the Sales Tax Appellate Tribunal ;
and so, it had not availed itself of -remedies provided by
the Act.
On these pleadings, the trial Court framed three principal
issues. The first issue was whether the suit was barred by
s. 18-A of the Act; the second was whether there had been
excess collection of sales tax for the two years in question
and if so, how much ? And the third issue was whether the
appellant was estopped from questioning the validity of the
assessment ? According to the trial court, the respondent
had failed to prove its pleas against the apppellant’s claim
and so, it recorded findings in favour of the appellant in
all the three issues. In the result, a decree followed in
favour of the appellant for the recovery of Rs. 6,558/- with
interest 6% per annum from November 12, 1955 till the date
of payment.
This decree was challenged by the respondent by preferring
an appeal before the High Court of Andhra Pradesh. It
appeared that the decision of the said High Court in the
case of State of Andhra Pradesh v. Shri Krishna Cocoanut Co.
(1), was in favour of the view taken by the trial Court ;
but the respondent urged before the High Court that the said
decision was erroneous in law and require reconsideration.
That is why the respondent’s appeal was placed before a Full
Bench of the High Court. The Pull Bench has upheld the
contentions raised by the respondent. It has held that in
view of the provisions of s. 18-A of the Act, the suit is
incompetent. Alternatively, it has found that on the
merits, the claim made by the appellant was not justified.
The result of these findings was that the respondent’s
appeal was allowed and the appellant’s suit was dismissed
(1) (1960) 1 Andhra W.R.279.
758
with costs. The appellant had filed cross-objections
claiming additional interest on the decretal amount, but
since its suit was held to be incompetent by the High Court,
its cross-objections failed and were dismissed with costs.
it is against this decree that the appellant has come to
this Court by special leave.
Mr. Ranganathan Chetty for the appellant contends that the
High Court was in error in coming to the conclusion that the
appellant’s suit was incompetent because he argues that the
High Court has misjudged.the effect of the provisions of s.
18-A In dealing With the question wether civil courts
jurisdiction to entertain suit is barred or not it is
necessary to bear in mind the fact that there is a general
presumption that there must be a remedy in the ordinary
civil courts to a citizen claiming that an amount has been
recovered from him illegally and that such a remedy can be
held to be barred only on very clear and unmistakable
indications to the contrary. The exclusion of the
jurisdiction of Civil Courts to entertain civil causes will
not be assumed unless the relevant statute contains an
express provision to that effect, or leads to a necessary
and inevitable implication of that nature .The mere fact
that a special statute provides for certain remedies may not
by itself necessarily exclude the jurisdiction of the ,
civil courts to deal with a case brought before it in
respect of some of the matters covered by the said statute.
It is, therefore,necessary to enquire whether s.18-
Aexpressly or by necessary implication excludes the
jurisdiction of the civil court to entertain a suit like the
present. Section 18-A provides that no suit or other
Proceeding shall, except as expressly provided in this Act.
be instituted in any Court to set aside or modify any
assessment made under this Act. It is common ground that
there is no express provision made in the Act under which
the present
759
suit can be said to have been filed, and so, it falls under
the prohibition contained in this section. The prohibition
is express and unambiguous and there can be no doubt on a
fair construction of the section that a suit cannot be
entertained by a civil court if, by instituting the suit,
the plaintiff wants to set a side or modify any assessment
made under this Act. There is therefore, no difficulty in
holding that this section excludes the jurisdiction of the
civil courts in respect of the suits covered by it.
It is, however, urged by Mr. Chetty that if an order’,of
assessment has been made illegally by the appropriate
authority purporting to exercise its powers under the Act,
such an assessment cannot be said to be an assessment made
under this Act. He contends that the words used are “any
assessment made under this Act” and the section does not
cover cases of assessment which are purported to have been
made under this Act. In support of this argument he has
referred us to the provisions of s. 17 (1) and s. 18 where
any act done or purporting to be done under this Act is
referred to. It would, however, be noticed that having
regard to the subject-matter of the provisions contained in
ss. 17 (1) and 18 it was obviously necessary to refer not
only to acts done, but also to acts purporting to be done
under this Act. Section 17 (1) is intended to bar certain
proceedings and s. 18 is intended to afford an indemnity and
that is the reason why the legislature had to adopt the
usual formula by referring to acts done or porting to be
done. It was wholly unnecessary purl to refer to cases of
assessment purporting to have been made under this Act while
enacting s. 18-A, because all assessments made under this
Act would attract the provisions of s. 18-A and that is all
that the legislature intends s. 18-A to cover.
The expression “‘any assessment made under this Act” is, in
our opinion, wide enough to coverall
760
assessments made by the appropriate authorities under this
Act whether the said assessments are correct or not. It is
the activity of the assessing officer acting as such officer
which is intended to be protected and as soon as it is shown
that exercising his jurisdiction and authority under this
Act, an assessing officer has made an order of assessment
that clearly falls within the scope of s.18-A. The fact that
the order passed by the assessing authority may in fact be
incorrect or wrong does not affect the position that in law,
the said order has been passed by an appropriate authority
and the assessment made by it must be treated as made under
this Act. Whether or not an assessment has been made under
this Act will not depend on the correctness or the accuracy
of the order passed by the assessing authority. In
determining the applicability of s.18-A. the only question
to consider is: “Is the assessment sought to be set aside or
modified by the suit instituted an assessment made under
this Act or not?” It would be extremely anomalous, to hold
that it is only an accurate and correct order of assessment
which falls under s.18-A. Therefore, it seems to us that the
orders of assessment challenged by the appellant in its suit
fall under s.18-A.
In this connection, it is necessary to emphasise that while
providing for a bar to suits in ordinary civil courts in
respect of matters covered by s.18-A, the legislature has
taken the precaution of safeguarding the ‘citizens’ rights
by providing for adequate alternative remedies. Section 11
of the Act provides for appeals to such authority as may be
prescribed; s. 12 confers revisional jurisdiction on the
authorities specified by it; s.12-A allows an appeal to the
appellate Tribunal; s.12-B provides for a provision by the
High Court under the cases specified in it; s.12-C provides
for an appeal to the. High Court; and s. I 2-D lays down
that petitions, applications and appeals to High Court
should be heard by a Bench of not
761
less than two judges. The matter can even be brought to
this Court by way of a petition under Art. 130 of the
Constitution. It would thus be seen that and dealer who is
aggrieved by an order of assessment passed in respect of his
transactions, can avail him self of the remedies provided in
that behalf by these sections of the Act. It is in the
light of these elaborated alternative remedies provided by
the Act that the scope and effect of s.18-A must be judged.
Thus considered, there can be no doubt that where and order
of assessment has been made by an appropriate authority the
provisions of this Act, any challenge to its correctness and
any attempt either to have it set aside or modified must be
made before the appellate or the revisional forum prescribed
by the relevant provisions of the Act. A suit instituted
for that purpose would be barred under s. 18-A.
The facts alleged by the appellant in this case are somewhat
unusual. The appellant itself made voluntarly returns under
the relevant provisions of the Act and included the
groundnut transactions as taxable transactions. It was
never alleged by the appellant that the said transactions
were transactions of sale and as such, not liable to be
taxed under the Act. It is true that under s.5A(2)
groundnut is made liable to tax under s.3(1) only at the
point of the first purchase effected in the State by a
dealer who is not exempt from taxation under s. 3(3), but at
the rate of 2% on his turnover. When the appellant made its
voluntary returns and paid the tax in advance to be adjusted
at the end of the year from time to time, it treated the
groundnut transactions as taxable under s.5A(2). In other
words, the appellant itself having conceded the taxable
character of the transactions in question, no occasion arose
for the taxing authority to consider whether the said
transactions could be taxed or not; and even after the
impugned orders of assessment were made, the appellant did
not choose to file an appeal and urge
762
before the appellate authority that the transactions were
sale transactions and as such, were outside the purview of
s.5A(2). If the appellant had urged that the said
transactions were outside the purview of the Act and the
taxing authority in the first instance had rejected that
contention, there would be no doubt that the decision of the
taxing authority would be final, subject, of course, to the
appeals and revisions provided for by the Act. The position
of the appellant cannot be any better because it did not
raise any such contention in the assessment proceedings
under the Act. If the order made by the taxing authority
under the relevant provisions of the Act in a case where the
taxable character of the transaction is disputed is final
and cannot be challenged in a civil court by a separate
suit, the position would be just the same where the taxable
character of the transaction is not even disputed by the
dealer who accepts the order for the purpose of the Act and
then institutes a suit to set it aside or to modify it.
The question about the exclusion of the jurisdiction of the
civil courts to entertain civil actions by virtue of
specific provisions contained in special statutes has been
judicially considered on several occasions. We may in this
connection refer to two decisions of the Privy Council. In
Secretary of State v. Mask. & Coy., (1) the Privy Council
was dealing with the effect of the provisions contained in
s. 188 of the Sea Customs Act (VIII of 1878). The relevant
portion of the said section provides that every order passed
in appeal under this section shall, subject to the power ‘of
revision conferred by s. 191, be final. Dealing with the
question about the effect of this provisions the Privy
Council observed that it is settled law that the exclusion
of the jurisdiction of the civil courts is not to be readily
inferred, but that such exclusion must either be explicitly
expressed or clearly implied. Lord Thankerton who delivered
the opinion of the Board, however, proceeded to add that
(1) (1940) 67 I.A. 222,236,
763
“it is also well-settled that that even if jurisdiction is
so excluded, the civil courts have jurisdiction to examine
into cases where the provisions of the Act have not been
complied with, or the statutory tribunal has not acted in
conformity with the fundamental principles of judicial
procedure.” It is necessary to add that these observations,
though made in somewhat wide terms, do not justify the
assumption that if a decision has been made by a taxing
authority under the provisions of the relevant taxing
statute, its validity can be challenged by a suit on the
ground that it is incorrect on the merits and as such, it
can be claimed that the provisions of the said statute have
not been complied with. Non-compliance with the provisions
of the statute to which reference is made by the Privy
Council must, we think, be non-compliance with such
fundamental provisions of the statute as would make the
entire proceedings before the appropriate authority illegal
and without jurisdiction. Similarly, if an appropriate
authority has acted in violation of the fundamental
principles of judicial procedure, that may also tend to make
the proceedings illegal and void and this infirmity may
affect the validity of the order passed by the authority in
question. It is cases of this character where the defect or
the infirmity in the order goes to the root of the order and
makes it in law invalid and void that these observations may
perhaps be invoked in support of the plea that the civil
court can exercise its jurisdiction notwithstanding a
provision to the contrary contained in the relevant statute.
In what cases such a plea would succeed it is unnecessary
for us to decide in the present appeal because we have no
doubt that the contention of the appellant that on the
merits, the decision of the assessing authority was wrong,
cannot be the subject-matter of a suit because s. 18-A
clearly bars such a claim in the civil courts.
The next decision to which reference may be made was
pronounced by the Privy Council in the
764
case of Releigh Investment Coy. Ltd. v. GovernorGeneral in
Council (1). In that case the effect of s. 67 of the Indian
Income-tax Act fell to be considered. The said section,
inter alia, provides that no suit shall be brought in any
civil court to set aside or modify any assessment made under
this Act. It would be noticed that the words used in this
section are exactly similar to the words used in s. 18-A
with which we are concerned. In determining the effect of
s. 67, the Privy Council considered the scheme of the Act by
particular reference to the machinery provided by the Act
which enables an assessee effectively to raise in courts the
question whether a particular provision of the Income-tax
Act bearing on the assessment made is or is not ultra-vires.
The presence of such machinery observed the judgment, though
by no means conclusive, marches with a construction ‘of the
section which denies an alternative jurisdiction to enquire
into the same subject-matter. It is true that the judgment
shows that the Privy Council took the view that even the
constitutional validity of the taxing provision can be
challenged by adopting the procedure prescribed by the
Income-tax Act; and this assumption presumably proceeded on
the basis that if an assessee wants to challenge the vires
of the taxing provision on which an assessment is purported
to be made against him, it would be open to him to raise
that point before the taxing authority and take it for a
decision before the High Court under s. 66 (1) of the Act.’
It is not necessary for us to consider whether this assum-
ption is well founded or not. But the presence of the
alternative machinery by way of appeals which a particular
statute provides to a party aggrieved by the assessment
order on the merits, is a relevant consideration and that
consideration is satisfied by the Act with which we are
concerned in the present appeal.
The clause “assessment made under this Ace’ which occurs in
s. 18-A. also occurs in s. 67 with
(1)(1947) 74 I.A. 50, 68.
765
which the privy Council was concerned, and in construing the
said clause, the Privy Council observed that “the phrase
“made under this Act” describes the provenance of the
assessment : it does not relate to its accuracy in point of
law. The use of the machinery provided by the Act, not the
result of that use, is the test ” These two Privy Council’s
decisions support the conclusion that having regard to the
scheme of the Act, s. 18-A must be deemed to exclude the
jurisdiction of civil courts to entertain claims like the
present.
In the result, we must hold that the view taken by the High
Court is right and so, the appeal fails and is dismissed.
There would be no order as to
Appeal dismissed.