JUDGMENT
Balakrishna Ayyar, J.
1. One Ramalingam Pillai was running a coffee hotel in Cholapuram in Tirunelveli District. For the year 1950-51 the Assistant Commercial Tax Officer, Kadambur, assessed him to a tax of Rs. 205-12-6 under the Madras General Sales Tax Act. Payment of the tax was demanded by a notice served on him on 28th February, 1952. The assessee preferred an appeal to the Commercial Tax Officer, but that appeal was dismissed. A revision petition which he preferred to the Deputy Commissioner also failed. Thereafter the assessee filed a suit in the court of the Subordinate Judge, Tuticorin, questioning the validity of the assessment. That suit was dismissed by the Subordinate Judge, Tirunelveli, to whose file the case had been transferred. As the tax was still not paid the Deputy Commercial Tax Officer, Koilpatti, laid a complaint against the assessee on 2nd April, 1956, before the Sub-Divisional Magistrate, Koilpatti, under Section 15(b) of the Madras . General Sales Tax Act. The learned Magistrate came to the conclusion that the accused was not assessable in respect of the year 1950-51 and acquitted him under Section 245 (1) of the Criminal Procedure Code. Against the order of acquittal the State preferred an appeal.
2. Section 16-A of the Madras General Sales Tax Act runs as follows :
The validity of the assessment of any tax, or of the levy of any fee or other amount, made under this Act, or the liability of any person to pay any tax, fee or other amount so assessed or levied shall not be questioned in any Criminal Court in any prosecution or other proceeding, whether under this Act or otherwise.
3. In Syed Mohamed and Co. v. State of Madras (1952) 2 M.L.J. 598 a Bench of this Court took the view that Section 16-A of the Act is intra vires the Legislature. A contrary view was however taken by another Bench in Guruviah Naidu, In re, I.L.R. 1955 Mad. 184. In view of the conflict between these decisions and certain others, Ramaswami, J., before whom the appeal against the order of acquittal came up for hearing, referred the following question to a Full Bench :
Whether it is open to a Criminal Court to question the validity of the assessment of any tax, or of the levy of any fee or other amount, made under the Madras General Sales Tax Act, or the liability of any person to pay any tax, fee or other amount so assessed or levied in view of the provisions of Section 16-A of the said Act.
4. We shall begin our discussion of this question by referring to the main features of the Madras General Sales Tax Act so far as they are here relevant. Section 2 (b) defines a “dealer” as meaning any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise. Section 3 enacts that every dealer shall pay for each year on his total turnover a tax to be computed in the manner prescribed in detail in the Act and the rules made thereunder. Section 5 provides for exemptions and reductions of tax in certain cases. Section 9 prescribes the procedure that has to be followed by the officers charged with the duty of making assessments on dealers. Section 11 confers a right of appeal on any assessee objecting to the assessment made on him. Section 12 empowers the Commercial Tax Officer, the Deputy Commissioner and the Board of Revenue to exercise certain powers of revision. Section 12-A confers in certain circumstances a right on an assessee who objects to an assessment imposed upon him to appeal to the Appellate Tribunal set up under Section 2-A of the Act. Under Section 12-B an assessee is entitled in certain circumstances to move this Court in revision. Section 12-C gives an assessee a right of appeal to this Court in certain cases. It will thus be seen that the Sales Tax Act contains a comprehensive set of provisions which enables an assessee to question the assessment imposed on him. He can go to the appropriate authority and establish either that he is not liable at all or that he is liable only in a smaller amount.
5. We may point out here that the provisions made in this Act in respect of appeals and revisions are more comprehensive than those to be found for example in the Sales of Motor Spirit Taxation Act. Section 24 of that Act gives to a person aggrieved by any order made by that Act only the right to one appeal; beyond that there is only a power of revision vested in the Board of Revenue. The Madras Entertainment Tax Act of 1939 does not give even this limited right of appeal.
6. It may be mentioned here that Section 18-A of the General Sales Tax Act 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.
7. But, we are not called upon to express any opinion on the validity or otherwise of this provision, and we want to make it plain that we refrain from doing so.
8. The learned Advocate-General placed before us practically all the decisions that have a bearing on the question we have to decide. We propose, however, to examine only the more important of them. Of these the earliest is reported in Kamayya v. Leman (1879) I.L.R. 2 Mad. 37. The facts there were as follows : Under Madras Act III of 1871 the Commissioners of the Municipality of Guntur levied and collected profession tax for the year 1876-77 from the plaintiff. He then brought a suit in the Court of the District Munsif of Guntur to recover the money that had been collected from him. He alleged that the tax had been imposed on him upon the supposition that he carried on business as an agent while in fact he carried on no such business. The defendant contended that the matter in dispute was not cognizable by the Civil Courts. The District Munsif held that he had jurisdiction and referred to the High Court the question whether he was competent to decide whether the tax was lawfully imposed by the Municipal Commissioners. A Bench of this Court decided,
We are of opinion that the Civil Courts have no jurisdiction to adjudicate on the matter in contest in this suit.
9. We may mention here that the learned Judges found as a fact that the procedure prescribed by the statute for the imposition of the tax had been conformed to by the Commissioners and that therefore the tax had a legal existence.
10. The next case in order of time is reported in Veeraraghavalu v. The President, Corporation of Madras (1911) 34 Mad. 130. In that case one Veeraraghavalu was assessed to profession tax under the Madras City Municipal Act of 1904 and he was served with a notice to pay the tax under Section 125 of the Act. He did not pay the tax; nor did he apply for revision within fifteen days after service of the notice. He was then prosecuted before the Third Presidency Magistrate. It appears from the judgment that Veeraraghavalu took the plea that he did not exercise any profession in the City for sixty days during the current half year and that therefore he was not liable to be taxed. The contention raised on behalf of the Corporation was that the fact of notice to pay tax for the half year having been served on the petitioner was conclusive of his liability to pay in view of his failure to apply for revision within 15 days of the notice. The Magistrate apparently took the view that he could not entertain the plea taken by Veeraraghavalu and convicted him. He appealed to this Court. It was heard by a Bench consisting of Wallis and Krishnaswami Aiyar, JJ., and they confirmed the conviction. Krishnaswami Aiyar, J., observed,
Was the Magistrate right in declining to enquire into the plea of non-exercise of the profession ? The question thus raised is one of some difficulty but I have come to the conclusion that he was right. Section 172 of the Madras Act III of 1904 provides ‘that all complaints against and all applications for revision of classification in respect of any tax or toll leviable under Part IV shall be heard and decided by the President and two Commissioners.’ Section 175 provides an appeal against the order of the President and two Commissioners to Magistrates. Section 176 authorises a reference by the Magistrate to the High Court. Section 177 declares the finality of the decision of the respective authorities in the following terms : ‘The assessment, revision or demand of any tax or toll, when no complaint, application or objection is made as hereinbefore provided, and the adjudication of an appeal by the Magistrate shall be final’. It will be noticed that the declaration of finality is not merely with reference to the decision of Magistrates or of the President and Commissioners, but, in case no complaint or objection is made, with reference also to the original assessment.
11. The Commissioner, Municipal Council, Vizagapatam v. Siddessara Devi (1948) 2 M.L.J. 111 is the next case we would refer to. The facts are set in the first paragraph of the headnote :
Upto 1940 a house and site of about 4 acres had been assessed as if the whole of the 4 acres was adjacent and appurtenant to the house. In 1940, however, on the report of a special officer some 3 acres out of the 4 were excluded from the site held to be appurtenant to the house and were separately taxed. A suit to recover the tax in respect of this land was brought by the Municipality and the defendants maintained that they were not liable to pay the tax as the site was appurtenant to the house.
Happell, J.
held:
Where there has been or there is alleged to have been a mistake of fact, the remedy is by way of an appeal to the Municipal Council, and the Civil Court has no jurisdiction, provided that the provisions of the Act have been in substance and effect complied with. It is not suggested in the present case that the provisions of the Act have not been in substance and effect complied with, and even if the site in question or some of it should have been held to have been appurtenant to the house, that is merely an error of fact in making the assessment. The assessment was one which the Municipality had the power to make and it seems to me clear that there has been no contravention of any express provisions of the Act, and no mistaken view of the provisions of the Act. In this view it was not open to the lower Courts to go into the question whether the assessment was correct or not. The only remedy of the defendants was to appeal to the Municipal Council within one month, and as that was not done, they have become liable to pay the tax according to the assessment that has been made.
12. We now come to Syed Mohamed and Co. v. State of Madras (1952) 2 M.L.J. 598. That was a case in which certain tanners in Eluru were assessed under the Madras General Sales Tax Act. No appeal was taken against the order of assessment and it became final. The tax not having been paid, the Commercial Tax Officer prosecuted them under section I5(b)of the Act. While proceedings were pending before the Magistrate the petitioners took out writ petitions to quash the proceedings on the ground that the Act and the rules and assessment made thereunder were void and the prosecution was illegal. It is sufficient to quote the first paragraph of the headnote:
The Madras General Sales Tax Act which creates the liability to pay tax on sales also constitutes Tribunals for determining the amount payable under the Act and such determination has to be made after notice to the assessee and it is open to appeal and further revision. Where the assessees were duly served with notice under the Act and had ample opportunity of putting forward before the Tribunals all contentions based on the provisions of the Act or the Rules thereunder but did not avail themselves of it, they cannot be permitted to put forward in a writ petition questioning the validity of the Act or Rules the contentions which were available to them before the Tribunals. The only plea that will be open to them in the writ proceedings are those which could not have been urged before the Tribunals. Such for example will be the plea that the Act is ultra vires, such a plea could not obviously be entertained by the Tribunal which owes its very existence to the Act. Where tax is determined after notice to the assessees it is not repugnant to rules of natural justice to provide that the validity of assessment shall not be questioned at the stage of realisation of the tax. The provision in Section 16-A of the Sales Tax Act is analogous to the rule which precludes the judgment-debtors from putting forward at the stage of execution of a decree defences that were open to them in the suit itself. The contention that Section 16-A is opposed to natural justice must be rejected.
Entry 48 in the Provincial List, Government of India Act, 1935, is of sufficient amplitude to authorise the levy of a tax on purchases and Madras Act IX of 1939 is intra vires the powers of the Madras Legislature.
13. We shall now refer to two cases under the Income-tax Act. It is hardly necessary to mention that the Income-tax Act sets up a hierarchy of officers, tribunals and courts before which any person who is assessed to income-tax can question the validity of the assessment, either in whole or in part. The provisions in the Madras General Sales Tax Act which we have summarised above are analogous to those provisions in the Indian Income-tax Act. The first of the two cases is Raleigh Investment Co., Ltd. v. Governor-General in Council [1947] F.C.R. 59 : 15 I.T.R. 332.. In that case, Raleigh Investment Co., Ltd., instituted a suit on the Original Side of the High Court at Calcutta, claiming a declaration that in so far as Explanation 3 and the other provisions of Section 4 of the Indian Income-tax Act, 1922 as amended in 1939, purported to authorise the assessment and charging to tax of a non-resident in respect of dividends declared or paid outside British India, but not brought into British India, those provisions were ultra vires the legislative powers of the Federal Legislature, and that the assessment was illegal and wrongful; an injunction restraining the making of future assessments in respect of such dividends, and repayment of the tax already collected were also prayed for. The High Court of Calcutta allowed the suit. The Federal Court reversed the decision. The plaintiff then took up the matter to the Privy Council. Their Lordships affirmed the decision of the Federal Court. In doing so they observed :
In construing the section it is pertinent, in their Lordships’ opinion, to ascertain whether the Act contains machinery which enables an assessee effectively to raise in the 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, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to enquire into the same subject-matter. The absence of such machinery would greatly assist the appellant on the question of construction and, indeed, it may be added that, if there were no such machinery, and if the section affected to preclude the High Court in its ordinary civil jurisdiction from considering a point of ultra vires, there would be a serious question whether the opening part of the section, so far as it debarred the question of ultra vires being debated, fell within the competence of the Legislature. In their Lordships’ view it is clear that the Income-tax Act, 1922, as it stood at the relevant date, did give the assessee the right effectively to raise in relation to an assessment made on him the question whether or not a provision in the Act was ultra vires. Under Section 30, an assessee whose only ground of complaint was that effect had been given in the assessment to a provision which he contended was ultra vires might appeal against the assessment. If he were dissatisfied with the decision on appeal–the details relating to the procedure immaterial–the assessee could ask for a case to be stated on any question of law for the opinion of the High Court and, if his request were refused, he might apply to the High Court for an order requiring a case to be stated and to be referred to the High Court (see Section 30 and Secretary of State for India v. Meyyappa Chettiar [1936] 4 I.T.R. 341 : I.L.R. 1937 Mad. 211). It cannot be doubted that included in the questions of law which might be raised by a case stated is any question as to the validity of any taxing provision in the Income-tax Act to which effect has been given in the assessment under review. Any decision of the High Court on that question of law can be reviewed on appeal. Effective and appropriate machinery is therefore provided by the Act itself for the review on grounds of law of any assessment. It is in that setting that Section 67 has to be construed…. In conclusion, their Lordships would observe that the scheme of the Act is to set up a particular machinery by the use of which alone total income assessable for income-tax is to be ascertained. The income-tax exigible is determined by reference to the total income so ascertained, and only by reference to such total income. Under the Act (Section 45) there arises a duty to pay the amount of tax demanded on the basis of that assessment of total income. Jurisdiction to question the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay arising by virtue of the assessment. The only doubt, indeed, in their Lordships’ mind, is whether an express provision was necessary in order to exclude jurisdiction in a Civil Court to set aside or modify an assessment.”
14. The second case is reported in Commissioner of Income-tax, West Punjab v. Tribune Trust, Lahore (1948) 2 M.L.J. 14. The relevant facts are summarised in the headnote :
In respect of the assessment for the year 1932-33, the assessee claimed an exemption under Section 4 (3)(i) of the Income-tax Act. The matter was finally decided by the Privy Council in favour of the assessee. Meanwhile, during the pendency of the appeal to the Privy Council assessments continued to be made in respect of the same property till 1938-39 disallowing the claim for an exemption and they not having been appealed against, became final before the decision of the Privy Council. After the Privy Council allowed the claim of the assessee in respect of 1932-33 the assessee applied to the Commissioner under Section 33 of the Income-tax Act to reopen the assessments for those years and to quash the assessments as they had become a nullity in view of the Privy Council decision holding that the assessee’s property was exempt from taxation by virtue of Section 4 (3)(i) of the Act. It was rejected by the Commissioner.
On a case being stated by the Commissioner of Income-tax under the directions of the High Court, Lahore, that Court held that the assessments in question were a nullity and that the assessee could not be denied the relief he claimed under Section 33 on any valid ground.
The Commissioner appealed to the Privy Council. Their Lordships allowed the appeal and observed :
Upon this footing, then the argument must be that the assessee has a right enforceable against the Commissioner to require refund of tax paid by him upon grounds of equity and good conscience, though the assessment has been made and the tax received in good faith. Their Lordships cannot accept this argument. They have reviewed the Code of Income-tax law for the purpose of showing that it exhaustively defines the obligations and remedies of the taxpayer. It would be wholly incompatible with this that he should have a collateral right, necessarily vague and ill-defined, founded on the principles of equity and good conscience. Their Lordships are of opinion that the only remedies open to the taxpayer, whether in regard to appeal against assessment or to claim for refund, are to be found within the four corners of the Act. This view of his rights harmonises with the provision of Section 67 to which reference has already been made, that no suit shall be brought in any Civil Court to set aside or modify any assessment made under the Act. It is the Act which prescribes both the remedy and the manner in which it may be enforced.
15. Both these decisions of the Privy Council would appear therefore to be clear authority for the position that where a statute sets up a hierarchy of authorities, tribunals and courts before which a person, who considers that he has been improperly assessed, can make a complaint either on the ground that he is not liable at all or that he is liable only in a smaller amount, then he must seek his redress before the authorities set up by the statute.
16. The Madras District Municipalities Act, the Local Boards Act and the City Municipal Act contain various provisions which require that a licence shall be taken out before certain things are done. They also provide that a person who fails to pay the licence fee may be prosecuted before a Magistrate and the amount of the licence fee recovered from him as if it were a fine. The question has arisen whether a defaulting party can plead by way of defence to the prosecution that no amount was due from him. There are numerous cases on this question, but we shall examine only two or three of them. One is reported in Gopayya, In re, (1928) 51 Mad. 866. The facts there were as follows : One Gopayya had erected a pandal without applying for or obtaining a licence from the Union Board. The Board could have taken action under Section 219 of the Act which provided a penalty not exceeding Rs. 50 for omission to take a licence. Under Section 212(9) the Magistrate could also recover the amount of the fee. The Board took a lenient view of Gopayya’s act and agreed to license the pandal on payment of the fee. Even this amount Gopayya did not pay. He was thereupon prosecuted. Gopayya then pleaded that no fee was payable as he had not erected a pandal in contravention of Section 163 of the Act. The Sub-Magistrate convicted Gopayya. The District Magistrate referred the case to the High Court. The High Court accepted the reference. Phillips, J., observed:
Gopayya made no application for a licence and no licence has been issued. If then there has been no grant of licence, the licence fee payable under the Act cannot be said to be due within the meaning of Section 221 and that section is inapplicable. The order of the Sub-Magistrate is therefore wrong and must be set aside….
Madhavan Nair, J., added,
There is no provision in the Act empowering the Local Board to fix a penalty for erecting a pandal without a licence as there is, for example, provision for levying a fine for unauthorised encroachment under Section 164 of the Act which may be recovered under Section 221. Nor can the Local Board levy fees without granting a licence.
17. It would be appreciated that this is a case in which the court found in effect that the claim made by the Union Board did not arise under the Act at all.
18. The second case is reported in Chairman, Municipal Council, Chidambaram v. Tirunarayana Iyengar (1928) 52 Mad. 714 : 30 L.W. 181. That was a case under the District Municipalities Act. A person had been granted a licence by the Municipal Council, Chidambaram, for keeping a coffee hotel. The Chairman of the Municipal Council cancelled the licence before the period for which it had been granted had expired. The licensee continued to keep the hotel open even after the licence was cancelled. The Chairman thereupon prosecuted him under Section 338 (b) read with sections 249 and 321 of the District Municipalities Act on the ground that he was keeping a coffee hotel without a licence. The accused pleaded that the cancellation of the licence was illegal and the Court held that he was entitled to raise the plea. The Court also observed,
In this case the reason for cancelling the licence is the non-payment by the respondent of the water tax. However reprehensible the conduct of the respondent may be in not paying the water tax due to the Municipality, that would not be a ground for cancelling his licence to carry on business of a coffee hotel keeper. Therefore the cancellation of the licence was ultra vires the Chairman of the Municipal Council. …But the respondent having had a licence, the improper or illegal cancellation of it by the Chairman does not deprive him of the licence which he obtained properly and the terms of which he has (1) (1928) 51 Mad. 876. not in any way violated….In the case of a licence which has been granted and which is good for a period it would be ultra vires the Chairman of the Council to cancel it or suspend it for not something which the licensee did in contravention of the terms of the licence but for something which was unconnected with the licence…. In this case the order of the Chairman was ultra vires and, that being so, the licence cannot be said to have been cancelled and the respondent cannot be said to have been trading or carrying on business without a licence.”
19. It will be at once perceived that the facts of this case do not resemble the facts of the instant case in any manner. Nonethe less that decision is of interest as showing that in certain cases where liability is sought to be imposed on a person it is open to that person to raise the plea that the action of the authority is ultra vires.
20. The third case in the series is reported in Raheem Sahib, In re, (1928) 52 Mad. 714 : 30 L.W. 181. The facts there were as follows : One Raheem Sahib owned two motor buses. The Union Board of Tindivanam had provided a stand for buses and prescribed fees for the use thereof. The fees leviable from the petitioner amounted to Rs. 10 for each of his buses. He refused to pay, whereupon the Board prosecuted him under Section 221 of the Local Boards Act. Before the Magistrate the petitioner contended that the fee was not legally leviable. The Board replied that such a contention was not open to him. The Magistrate held that he had no jurisdiction to consider the legality of the fee. A Bench of this Court consisting of Waller and Pandalai, JJ., held that he had jurisdiction.
21. An examination of the judgment shows that the amount claimed by the Tindivanam Board could not have been claimed under the Act at all. Section 184 of the Local Boards Act empowered a Board to construct or provide public landing places, halting places and cart stands. This Court held that the stand which the Tindivanam Union Board had set up was neither a public landing place, nor a halting place, nor a cart stand. When we examine the facts of this case it is found that the Board was making a claim which did not arise under the Act at all.
22. We shall refer to only one more decision in this series. That is reported in Thiruvengadasami v. Municipal Health Officer, Karaikudi (1950) I.L.R. 1950 Mad. 118. It is sufficient to quote the headnote :
In a case where a person is prosecuted for carrying on an industry or trade for which a licence to do so has been refused, it is open to the court to find out whether the order of the Statutory Board was made without jurisdiction, whether on the face of it the order is illegal, or whether it is unreasonable, revolting or repugnant to conscience. But where the order is in the legitimate exercise of jurisdiction vested in the Statutory Body and passed bona fide after considering the evidence before it, even if the order is wrong on the merits, the court cannot hold that it is wrong. It is not the function of the court to substitute its judgment as an appellate authority for that of the Statutory Body. In cases where the party pleads that no licence is necessary the question is one of jurisdiction. But where the plea is that even though a licence is necessary it has been refused on the merits, the plea cannot be considered as one involving jurisdiction at all.
23. Certain decisions of this Court have taken a view clearly different from the catena of cases, beginning with Kamayya v. Leman (1879) 2 Mad. 37 and to some of these reference must be made.
24. The facts in Ramaswami Aiyangar v. Sivakasi Municipality (1937) 1 M.L.J. 274 were as follows : The Municipal Council, Sivakasi, called upon the guardian and manager of the estate of a lunatic to submit a return showing the income of the lunatic in order that profession tax might be levied thereon. He submitted a return stating that he was not liable to pay profession tax. The Municipal Council overruled the objection and prosecuted him for non-payment of profession tax which it levied. The accused pleaded that he was not liable to pay the tax. The Sub-Magistrate of Virudhunagar convicted the accused. The Joint Magistrate of Sivakasi confirmed the conviction. The matter was then brought up to this Court and it was here decided,
We are therefore clearly of the opinion that it is incumbent upon the prosecution to establish affirmatively that the profession tax was legally leviable from the accused and it is also open to the accused to plead and prove that he is not liable to pay the tax and therefore he is not liable to be prosecuted under Rule 30, Clause 2 of Schedule 4 of the District Municipalities Act.
25. Dealing with the argument that Rule 28 of Schedule 4 provided that the assessment or demand of any tax, when no appeal was made, as thereinbefore provided, and when such an appeal was made, the adjudication of the Council thereon shall be final, (we are leaving out the proviso) it was observed,
the said finality is only for the purpose of the Act and it has been held that the said finality would not prevent a person from impeaching the legality or validity of the assessment in a Civil Court.
26. In respect of this decision we would point out that the earlier decisions of this Court in Kamayya v. Leman (1879) 2 Mad. 37 and Veeraraghavalu v. The President, Corporation of Madras (1911) 34 Mad. 130 do not appear to have been brought to the notice of the learned Judges.
27. The decision in Public Prosecutor v. Khader Khan (1946) 2 M.L.J. 461 does not carry the matter any further forward because it merely follows the decision in Ramaswami Aiyangar v. Sivakasi Municipality (1936) M.W.N. Crl. 221 without any discussion.
28. The decision in Public Prosecutor v. Chakka Kondappa (1947) 1 M.L.J. 317 is also that of a single Judge and it was clearly influenced by the decision in Ramaswami Aiyangar v. Sivakasi Municipality (1936) M.W.N. Crl. 221
29. The last case in this series that we would refer to is reported in Guruviah Naidu, In re, I.L.R. 1955 Mad. 184. The facts there were as below: Several dealers in hides and skins in Salem were assessed to sales tax under the Madras General Sales Tax Act. They failed to pay the amount demanded and were prosecuted. They raised the plea that the assessment, levied on them was invalid and that therefore they were not liable to pay the tax. The prosecution contended that it was not open to the accused to raise any such plea, and relied on Section 16-A of the Madras General Sales Tax Act. The learned Magistrate, relying upon the decision of Panchapakesa Ayyar, J., in Gigina Basha Sahib, In re’, (1950) 1 M.L.J. 231 and of Ramaswami, J., in Hajee Meeran v. Public Prosecutor Crl. R.P. No. 11 of 1952 held that Section 16-A is not ultra vires the State Legislature. The convicted persons came to this Court. A Bench of this Court then ruled that Section 16-A of the Madras General Sales Tax Act (IX of 1939) is ultra vires the Constitution of India and repugnant to the provisions of the Criminal Procedure Code (Act V of 1898).
30. We find that this decision was reversed by the Supreme Court in State of Madras v. Guruviah Naidu and Co. Ltd. 1956 M.W.N. Crl. 55 but the Supreme Court had no occasion to examine the validity of Section 16-A.
31. With respect we are unable to agree with the line of thought on which the judgment rests. It does not pay sufficient regard to the reasoning of the Privy Council in the two cases we have referred to above and certain basic principles enunciated by their Lordships. Where a statute sets up a tier of authorities before which a person sought to be made liable can enter his objections and protestations, then normally he will be bound by the decisions given by the authorities so set up. When he is proceeded against in the ordinary courts he can set up only those pleas which he could not have urged before the authorities created by the Statute or which those authorities by reason of the fact that they have been set up under the Statute are precluded from entertaining. The view taken in Guruviah Naidu, In re, I.L.R. 1955 Mad. 184 is likely to produce very startling results. The assessee may have gone up with his objections to the Board of Revenue or the Appellate Tribunal and finally come to this Court. In fact, he might have gone to the Supreme Court. After the amount payable has been ascertained at so high a level and when thereafter the amount is sought to be recovered from him by prosecuting him before a Magistrate to say that he can be allowed to plead that he is not liable or that he is liable only in a different amount, is tantamount to calling upon the Magistrate to adjudicate on questions which have been settled by the higher Courts in the land. That would be a very anomalous state of things indeed. And that will not be the end of the matter. For should the Magistrate overrule him and convict him, he can go up in appeal and again in revision. In other words, the matter which one would have supposed to have been finally adjudicated upon and settled is reopened and set at large.
32. It must also be realised that in the actual administration of the Act it will not be practicable to place before the Magistrate all the material that the authorities empowered to take action under the Act can collect. The Magistrate is bound by the Evidence Act and the strict rules of procedure and this may often be wholly unsuited and inapplicable to ascertaining what the turnover of a dealer is. The authorities set up by the Act are persons who, one may presume would have by sheer experience at least acquired proficiency and skill in making estimates and computations requisite to arriving at a reasonable figure. Magistrates do not usually have the training or facilities required for the purpose.
33. The reasoning in this case would produce this further result : If the amount is sought to be recovered from the assessee as if it were an arrear of land revenue, that is to say, by distraint of his movables or by the sale of his immovable properties, then he could not complain that the amount he is required to pay is excessive or that the demand is illegal. But, if the amount is sought to be recovered from him by prosecuting him before a Magistrate then he can raise all these pleas. The assessment would be final if it is sought to be recovered in one way; but it would not be final if it is sought to be recovered in another way.
34. The line of thought which produces such results cannot be easily accepted.
35. In support of the view taken in Guruviah Naidu, In re, , I.L.R. 1955 Mad. 184 it was said that the Assistant Commercial Tax Officer may assess a dealer and prosecute him for default, that the assessee might appeal, that the Magistrate is not bound to stay his hands pending the disposal of the appeal which the assessee may have filed, and the result may well be that the Magistrate convicts the assessee and sends him to prison and that subsequently his appeal under the General Sales Tax Act is allowed in which case he would have been deprived of his liberty without just cause and that this would involve a contravention of Article 21 of the Constitution. As a matter of pure law, such a result however unfortunate, would not result in any transgression of Article 21 of the Constitution. But the position will not be so bad as all that. The assessment does not become final till the time fixed for filing an appeal has expired. If the assessee has appealed then it is very unlikely that he would be prosecuted pending the disposal of the appeal. And, if the department should be so ill-advised as to do that the assessee can always bring the facts to the attention of the Magistrate and ask that the case be adjourned till the disposal of the appeal. We must proceed on the basis that the individuals upon whom powers had been conferred by various enactments would act in a reasonable manner. If they fail to do so and an abuse of the process of Court is likely to occur the party concerned can always come to this Court and ask for relief. The validity of an enactment cannot be determined on the assumption that all the authorities concerned would act in an unreasonable or improper manner. We consider that the decision in Guruviah Naidu, In re, I.L.R. 1955 Mad. 184 and in the earlier cases in that series to be erroneous and overrule the same.
36. On this case, Guruviah Naidu, In re, I.L.R. 1955 Mad. 184 one further observation remains to be made. In Sesham v. Narasimha Rao I.L.R. 1940 Mad. 454 a Full Bench of this Court observed :
The Division Bench is the final Court of Appeal in an Indian High Court, unless the case is referred to a Full Bench, and one Division Bench should regard itself bound by the decision of another Division Bench on a question of law. In England, where there is the Court of Appeal, Divisional Courts follow the decisions of other Divisional Courts on the grounds of judicial comity….
37. If a Division Bench does not accept as correct the decision on a question of law of another Division Bench, the only right and proper course. to adopt is to refer the matter to a Full Bench, for which the rules of this Court provide. If this course is not adopted, the Courts subordinate to the High Court are left without guidance. Apart from the impropriety of an Appellate Bench refusing to regard itself bound by a previous decision on a question of law of an Appellate Bench of equal ,,. -strength, and the difficulty placed in the way of subordinate Courts administering justice, there are the additional factors of the loss of money and the waste of judicial time.”
38. This statement of law was re-affirmed by another Full Bench of this Court in Madhava Rao v. Surya Rao (1953) 2 M.L.J. 340.. The learned Judges who decided Guruviah Naidu, In re, , I.L.R. 1955 Mad. 184 were of the view that the decision in Syed Mohamed and Co. v. State of Madras (1952) 2 M.L.J. 598 was not correct. In that case, if we may say so with respect, the only appropriate course for them was to refer the matter to a Full Bench.
39. The Madras General Sales Tax Act falls squarely within item 54 of List II of the Seventh Schedule to the Constitution. Item 64 empowers the State Legislature to enact laws with respect to offences arising in all matters in this List. It follows that the State Legislature could prescribe what acts or conduct would be regarded as offences in relation to taxes on the sale or purchase of goods. The impugned section in the Madras General Sales Tax Act is therefore clearly within the competence of the Legislature. It does not involve any contravention of Article 14 or 21, because apart from everything else the Act itself sets up a hierarchy of officials, tribunals and courts before which the person sought to be assessed can place his objections. Nor does it involve any contravention of the Criminal Procedure Code, because Sub-section (2) of Section 5 of the Code clearly provides that in respect of all offences outside the Penal Code the Criminal Procedure Code would take effect only subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. There is therefore no conflict between the Criminal Procedure Code and Section 16-A of the General Sales Tax Act.
40. The observations we have so far made would have indicated what our view of the matter is. We, however, re-state them. When a person is prosecuted, under Section 16-A of the General Sales Tax Act it will not be open to him to raise any objection, plea or contention which he could have raised before the authorities set up under the General Sales Tax Act; it will be open to him to raise only those pleas, objections and contentions which those authorities are precluded from entertaining.
41. One example of such a contention would be that the Act or any particular provision of it is ultra vires. In addition to such pleas the accused person can also show for example that he is not the person assessed or that he has paid the amount in respect of which he has been assessed. It is only pleas in such categories that will be open to him. We answer the question referred to us accordingly. 42. This appeal came on for final hearing and the Court (Ramaswami, J.) passed the following order on 23rd April, 1958. ORDER 1. On the answer returned by the Full Bench the acquittal by the lower Court cannot stand. The acquittal is set aside, and the accused is convicted for an offence punishable under Section 15(b) of the Madras General Sales Tax Act, 1939. He is fined Rs. 25 (Rupees twenty-five only) and the recovery of arrears of tax of Rs. 205-12-6 is directed to be made. It will be recoverable as if it were a fine.