THANSINGH NATHMAL AND ORS. versus A.MAZID, SUPERINTENDENT OF TAXES

M. N. Cl11bwala v. Fida Hussain Salieb

Mudholkar I.

could not be effectively carried out by the landlord by part-ing with possession in favour of the stail-holders by reason of which the performance by the landlords of their duties and obligations could easily be rendered impossible if the stall-hoiders adopted an unreasonable attitude. If the landlords failed to perform their obligations they would be exposed to penalties under the Act and also >too<l in danger of having their licences revoked. Could, in such circum-stances, the landlords have ever intended to part with pos-session in· favour of the stall-holders and thus place them-selves at the mercy of these people? We are, therefore, of the opinion that the intention of the parties was to bring into existence merely licence and not lease and the word 'rent' was used loosely for 'fee'.

UjJon this view we must allow the appeal, set aside the decree of the High Court and dismiss the suit of the respon-dents in so far as it relates to reliefs (ii) (e), (f) and (g) granted by the High Court against the appellants are con-cerned. So far as the remaining reliefs granted by the High Court are concerned, its decree will stand. In the result we allow the a?peal to the extent indicated above but in the particular circumstances of the case we order costs throughout will be borne by the parties as incurred.

Appeal partly allowed.

THANSINGH NA THMAL AND ORS.

Ft!bruary, 4 v.

A. MAZID, SUPERINTENDENT OF TAXES

(P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. C. DAS GUPTA, J.C. SHAH AND N. RAJAGOPALA AYYANGAR JJ.)

Sale& Tax-Assessments made by Superintendent of Taxes-Appeab reiected by As,fistant Commissioner of Taxes and Revisions re;ected by Commissioner of Taxes, Assam-No reference to High Court

demanded although provided for in the Assam Sales Tax Act, 1947-1964 Writ Pelitions filed in High Court under Art. 226-EUect of-Than Sinth Scheme of the Act-Tax on sales whether ultra vires-When can v. new points other than those on which certificate was granted by Supdt. of Taus the High Court, be allowed to be raised in Supreme Court-Extent of jurisdiction of High Court under Art. 226-Constitution of India, Art. 226--Assam Sales Tax Act, 1947 (Act 17 of 1947). Explanation to s. 2(12).

The <ti)pellants who are merchants carrying on business as dealers in jute in Calcutta, submitted returns of turnover for purposes of sales-tax due under the Assam Sales Tax Act, 1947, but as they did not comply with the requisition of the Superintendent of Taxes to produce their books, the latter made ''best judgment assessment" under s. 17 ( 4) of the Act. · Their appeals to the Assistant Commissioner of Taxes and revision petitions to the Commissioner of Taxes, Assam were dismissed. The appellants then moved the High Court of Assam by petitions under Art. 226 and contended that Explanation to s. 2 ( 12) of the Act was ultra vires the Assam Legislature and that the tax could not be levied on sales irrespective of the place where the contracts were made. They also contended that the finding of the Commissioner that the goods were actually in the State of Assam at the time when the contract was made was based on mere speculation. The writ petitions were dismissed by the High Court and the appellants appealed to the Supreme Court with certificate under Art. 13 2 ( 1 ) of the Constitution. Before the Supreme Court the appellants applied for leave under Art. 132(3) of the Constitution to challenge the correctness of the decision of the High Court that the goods were actually within the State of Assam when the contracts were made.

Held: (i) Leave under Art. 132(3) be refused and the appeal must be restricted to the question of Jaw as to the interpretation of the Constitution, certified by the High Court.

If these questions were desired to be raised the appellants ought to have moved the Commissioner to refer the case to the High Court under s. 32 of the Act. They could have moved the High Court if the Commissioner refused to refer the case to the High Court. The Act provided machinery for obtaining relief and the same had to be re.sorted to and could not be allowed to be by-passed.

Ordinarily, the High Court does not entertain petition for writ under Art. 226, where the petitioner has an alternative remedy, which without being unduly onerous, provides an equally efficacious remedy~ The High Court does not generally enter upon questions which demand an elaborate examination of evidence to establish the rights to enforce which the writ is claimed. The High Court does not in exercise of its jurisdiction under Art. 226 act as court of appeal against tbe decision of court or Tribunal correct errors of fact.

1964 The scheme of the Assam Sales Tax Act iS that all questions of rAiat Silllll fact are to be decided by the taxing authorities. The opinion of the Y. High Court can be obtained on questions of law arisiog out of the s.,41. of Tazt1 decisions of the taxing authorities. The High Court has under the Act no power to decide questions of fact which are exclusively within the campetence of the taxing authorities.

(ii) Explanation to s. 2(12) of the Act is not ultra virt1 tho Assam Legislature.

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 86 to 97 of 1962.

Appeals from the judgment and order dated July 25, 1955, of the Assam High Court in Civil Rule Nos. 94-97, 105, 106, 114 and 175 to 179 of 1953.

M. C. Setalvad, Sohan Shroff, P. K. Kapi/a and Sukumar Ghosh, for the appellants.

Naunit Lal, for the respondents.

February 4, 1964. The Judgment of the Court was delivered by

SHAH J .-These appeals have been filed with certificates granted by the High Court of Assam undt:r Art. 132 of the Constitution against orders passed in certain petitions filed by the appellants praying for writs of certiorari or other appropriate writs quashing orders relating to assessment of sales-tax, and prohibiting the Superintendent of Taxes, Dhubri and other officers from taking action in enforcement of the said orders. The appeals raise common question> and may be disposed of by common judgment.

Sliah /.

The appellants are merchants carrying on business as dealers in jute, and have their principal place of business at Calcutta. The appellants have branch office at Dhubri in the State of Assam and are registered dealers under the Assam Sales Tax Act, 1947 (17 of 1947). The appellants purchased jute at Dhubri and other r,:>laces in the State of Assam and despatched bales of jute to diverse factories outside the Province of Assam. The appellants submitted returns of turnover for purposes of sales-tax before the Superintendent of Taxes, Dhubri, under the Assam Sales Tax Act in respect of transactions of sale during the period

6 S.C.R. SUPREME COURT REPORTS . '

between.March 1948 to March l9SO. The Superintendent 1964 of Taxes called upon:the a:;>pellants under s.17(2)"'of"the ·-r,;a-;;5,n~h Act to pro:lt,ce ·thdr !:>ooks of account and other evidence · ' -Supdt. v. of in support°<Ji thcit rrp_::-as and granted them time to enable them to cor!'ply ,.,.;,;, the.· requisition, . but ·the appellants ::1iah [[1]]• failed to do so. The Superintendent of Taxes . then made "best judgment assessments" exercising his powe~. under · s. 17 ( 4) of the Act and issued demand notices for the tax . determined. Against the orders passed by the Superinten-dent of Taxes appeals were preferred to the Assistant Com-missioner of Taxes. Before · the. appellate authority the appellants produced some but not all their books of account and documents in support · of their returns. Before the appellant authority it was contended, inter alia, that the definition of "sale" in s. 2 ( 12) of the Act was beyond the legislative competence of the Provincial Legislature, that tax was sought to be levied on sales effected outside· the State, and that imposition of sales tax on the transactions of the appellant amounted to levying an "export tax" which was not open to· the Provincial Legislature. It was however · not contended before the Assistant· Commissioner of Taxes that the jute bales, sale price of which was included in the turnover were not at the time of the contracts in the form of jute bales actually within the State of Assam and there-fore the Explanation to s. 2(12) did not make that sale price liable to be included in the turnover of the appellants. The Assistant Commissioner of Taxes', Assam, dismissed the appeals.

Supdt. of Tqxes ::1iah [[1]]•

In the revision applications preferred to the Commissioner of Taxes, Assam, against the order of the Assistant Com-missioner of Taxes it was contended for the first time that the price of jute included in the turnover under the orders passed by the Superintendent of Taxes was not liable to be taxed because within the meaning of the Explanation to s. 2 ( 12) the goods were not at the time of the contracts actually .. in the Province of Assam. The Commissioner rejected the contention after examinmg what he called the "time-table of cultivation". He observed that the usual time for marketing jute of the new crop was between July and June of the following year, jute being planted in or 134-159 S.C.'-42.

SUPREME COURT REPQRTS

about February and being ready for marketing some time about the month of June. The Commissioner further observed that the contracts were made on diverse dates between March and September and deliveries under the . . contracts were made after the month of July when the new crop was brought into the market. The contracts between the months of March and July were therefore in respect of the last year's crop and tJ\e goods sold must actually have been in the Province of Assam at the date of the contracts. The Commissioner made certain modifications in the assess-ment order, but with those modifications we are not con-cerned in these appeals.

Than Singh S up t. •·1 T o axes -Shah J.

Against the order passed by the Commissioner, !Petitions under Art. 226 of the Constitution were filed by the appel-lants for writs of certiorari and prohibition. Amongst the grounds urged before the High Court were the following two grounds, which alone survive for determination in these appeals:

(1) that the Explanation to s. 2 ( 12) of the Act was ultra vires the Assam Legislature under the provisions of the Government of India Act, 1935, and therefore tax could not be levied on sales irrespective of the place where the con-tracts were made merely relying upon the circumstance that at the time of the contracts of sale the goods contracted to be sold were actually in the Province of Assam; and

( 2) that the finding recorded by the Commissioner that the goods were actually in the Province of Assam at the time when the contracts were made was "speculative".

The High Court held 1that the Explanation to s. 2 ( 12) was, in respect of the 11eriod prior to the Constitution, not ultra vires the authority of the Provincial Legislature, and that no attempt was made to establish before the appellate authority that the books of account supported the contention that the goods were not actually in existence in the State of Assam at the time of the contracts of sale. Holding that the reasons which the Commissioner had given in support of his finding were not "altogether unjustified" and that tho taxing

6 S.C.R.

authorities being "fully conscious'" that one of the essential ingredients of tax liability was that the goods must be actually in existence in the Stiite of Assam at the time of the contracts of sale, the High Court declined to consider whether the conclusions of ,foe taxing authorities on questions of fact wer:: correct. But the High Court held that the plea about the vires of s. 2 (12) and the Exiplanation thereto raised substantial question as to the interpretation of the Constitution, and accordingly granted certificates of fitness under Art. 132 of the Constitution.

At the hearing of these appeals counsel for the appellants sought leave to challenge the correctness of the decision that the goods were when the contracts were made actually within the Province of Assam. We have heard counsel for the appellants at great length upon this application for leave to appeal on grounds other than constitutional on which the certificates were granted by the High Court. After carefully considering the arguments, we are of the view that no case has been made out for acceding to that request. person arppealing to this Court under Art. 132 of the Constitution may not challenge the correctness or propriety of the decision appealed against on grounds other than those on which the certificate is granted, unless this Court grants him leave to raise other questions. Such leave is generally granted where the trial before the High Court has resulted in grave miscarriage of justice or where the appeal raises such substantial questions that on an application made to this Court under Art. 136 of the Constitution leave would be granted to the applicant to appeal against the decision on those questions.

The Assam Sales Tax Act, 1947, was enacted in 1947. By s. 2 ( 3) the expression "dealer" is defined as meaning any person who carries on the business of selling or supply-ing goods in the Province, and by the Explanation the manager or agent of dealer who resides outside the . Province and carries on the business of selling or supplying goods in the Province is in respect of such business to be deemed dealer for the pUI1pOSC of the Act. Clause (12) of s. 2 defines 'sale'. Section 3 is the charging section and s. 4 prescribes the rates of tax. The sales-tax authority may,

Than Singh v. Supdt. of Taus Shah /.

1964 nan Singh v. ~upa1. of 1 axes __ Shah .r.

if he is not satisfied that the return furnished by the dealer is correct and complete, serve on the dealer notice requiring him either to attend . in person and to produce or • cause to be produced any evidence on which he may rely in support of his return [sub-s. (2) of s. 17], and may make an assessment to the best of his judgment if the dealer fails to make return or fails to comply with the terms of the notice issued under sub-s. ( 2) of s. 17. Section 30 con-fers right of appeal to an aggrieved dealer to the authority prescribed by the rules, and by s. 31 revisional jurisdiction may be exercised by the Commissioner of Sales Tax against the order of the sales-tax authorities. By s. 32, within sixty days from the date of service of any order in appeal or revision, the dealer may, by application in writing, require the Board of Revenue or the Commissioner, as the case may be, to refer to the High Court any question of law arising out of such order, and if the Board or the Com-missioner decline to state the case, the dealer may apply to the High Court calling upon the Board or the Commissioner to state the case, and the High Court may if it be not satisfied with the correctaess of the decision of the Com-missioner, require the authority concerned to state the case and refer it and on receipt of any such requisition, such. authority shall state and refer the case. The High Court upon hearing any such case decides the question of law raised on the reference and delivers its judgment thereon containing the grounds on which such decision is founded [sub-s. (8)]. The Act therefore provides hierarchy of taxing tribunals competent to decide question as to the liability of the tax-qiayer under the Assam Sales Tax Act, with right to have questions of law arising out of the order decided by the High Court of the Province. Primarily it is the Superintendent of Taxes who assesses the liability to pay tax. An appeal against the order of the Superintendent lies to the Assistant Commissioner of Taxes and against the order of the Assi~tant Commissioner revision application lies to the Commissioner. Against the order of the Commissioner reference may be demanded on questions of law to the High Court and if reference is refused the High Court may be moved to call for reference. The scheme evolved by the Legislature for determination

1964 Than Singh ~upu ,1 . •·, .J T a,.eL •• -SW J.

of tax liability is that all questions of fact are to be decided by the taxing authorities and on questions of law arising out of the decision of the taxing authorities the opinion of , High Court may be obtained. The High Court has however no power to decide questions of fact, which are exclusively within the competence of the taxing authorities. The High Court is again not an appellate authority over the decision of the Commissioner; it has merely to give its opinion on questions of law arising out of the order of the Commis-sioner. Whether the decision of the Commissioner is not su,pported by any evidence, or is based upon view of facts which could never be reasonably entertained, is question of law which arises out Qf the order.Against the order of the Commissioner an order for reference could have been claimed if the appellants satisfied the Commissioner or the High Court that question of law arose out of the order. But the procedure provided by the Act to invoke the jurisdiction of the High Court was by-passed. The appellants moved the High Court challenging the competence of the Provincial Legislature to extend the concept of sale, and invoked the extraordinary jurisdiction of the High Court under Art. 226 and sought to reopen the decision of the taxing authorities on questions of fact. The jurisdiction of the High Court under Art. 226 of the Consti-tution is couched i.n wide terms and the exercise thereof is not subject to any restrictions except the territorial restric-tions which are exipressly provided in the Article. But the exercise of the jurisdiction is discretionary; it is not exer-cised merely because it is lawful to do so. The very ampli-tude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations. Resort to that jurisdiction is not intended as' an alternative remedy for relief which may be obtained in suit or other mode prescribed by statute. Ordinarily the Court will not enter-tain petition for writ under Art. 226, where the petitioner has an alternative remedy which, without being unduly onerous, provides a.n equally efficacious remedy. Again the High Court does not generally enter upon determination of questions which demand an elaborate examination of evidence to establish the right to enforce which the writ is

1961 claimed. The High Court does not therefore act as court Than Singh of appeal against the decision of court or tribunal, to .\upat. ~I Taz., correct errors of fact, and does not by assuming jurisdiction -· under An. 226 trench upon an alternative remedy provided ·S/utlt J. by statute for obtaining relief. Where it is o;ien to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by statute, the High Court normally will not permit, by entertaining petition under Art. 226 of the Constitution, the machinery created under the statute to be by-passed, and will leave the party applying to it to seek resort to the machinery so set up.

In the present case the appellants had the right to move the .Commissioner to refer case to the High Court under s. 32 of the Act, and to move the High Court if the Com· missioner refused to refer the case. But they did not do so and moved the High Court in its jurisdiction under Art. 22,6 of tl!e Constitution, and invited the High Court to re-open the decision of the taxing authorities on questions of fact, which jurisdiction by the statute constituting them is exclusively vested in the taxing authorities. This they did, without even raising the questions before the Superin-tendent of Taxes and the Assistant Commissioner.

The appellants who are dealers registered under the Assam Sales Tax Act submiNed their returns to the Superintendent of Taxes, but failed when called upon to produce their books of account and other evidence in support of their returns. Even before the Assistant Com-missioner, they produced some but not all their books of account and evidence demanded by the Superintendent. By the Explanation to s. 2(12) of the Act the expression 'sale', notwithstanding anything contained in the Indian Sale of Goods Act, 1930, includes sale of any goods which are actually in the Province at the time when the contract of sale in respect thereof iiL made, irrespective of the place where the said contract is made and such sales are deemed for the purposes of. the Act to have taken place in the Province. Under the Indian Sale of Goods Act, sale takes place when property in the goods passes. But, for the purposei of the Assam Sales Tax Act situation of the goods

SUPI{EME COURT REPORTS

6 S.C.R.

is seized by the Legislature for the purpose of fictionally regarding the sale as having taken place within the Province of Assam if at the time of the contract of sale the goods are within the Province. Liability to sales tax in respect of the goods where the transfer in the property of the goods has taken place outside the Province of Assam undoubtedly arose if the conditions prescribed by the Explanation, exist : viz. the goods are actually in the Province when the contract of sale is made, and not otherwise. But the question whether the goods at the date of the contract of sale were actually in the Province is question of fact which had to be deter-mined by the sales tax authorities. Before the Superintendent of Taxes liability to pay tax was challenged but it does not <1;ipear to have been contended that at the time of the contract of sale, the goods were not actually within the Province, and no such contention appears to have been even raised before the Assistant Commissioner of Taxes. Before the Commissioner in the revision application filed by the appellants it was urged that part of the goods the price of which was sought to be included in the turnover were not within the Province at the time of the contract of sale and therefore the price of those goods could not be taken into account in computing the taxable turnover. The Commissioner held having regard to the "time-table of cultivation of jute" and the time when the jute is brought into the market for sale, that the goods sold were within the Province on the dates of the contracts and therefore the price thereof was liable to be included in the taxable turn-over. The High Court, as we have already observed, took the view that the finding of the Commissioner was not "altogether unjustified", nor could it be said that the Com-missioner and the other taxing authorities "were not quite conscious of" the requirements which attracted the UQplica-tion of the Explanation to s. 2(12) and declined to enter upon reappraisal of the evidence which in the view of the High Court the taxing authorities alone were competent to enter upon.

In these appeals Mr. Setalvad oil behalf of the appellants contends that there is clear evidence on the record to show tbat even ap;ilying the test laid down by the Commissioner

Than Singh v. Supdt. of Taxes

Shah J.

Than Singh v. Supdt. of Taxes S/!ah J.

some ot the contracts of sale were made before the goods were marketable and therefore the view taken by the taxing authorities that the goods were at the date of the contract in existence within the Province of Assam was "without any foundation". Counsel also submitted that some of the contracts related to jute grown in Pakistan and with respect to those contracts also the assumption made by the Com-missioner that the goods were within the State of Assam at the date of the contraot of sale could not be warranted. Counsel then said that the description of the goods in the contracts of sale indicated that they related to bales whereas the contracts for purchase by the appellants were in respect of loose jute and as the goods purchased were not identical or ascertainable with reference to the contracts of sale made by the appellants, liability to 1;iay tax was not attracted under s. 2 ( 12) of the Act. We are unable to entertain these pleas because they were never raised before the Superin-tendent of Taxes and the Assistant Commissioner and no evidence was produced by the appellants to support those pleas. Before the Commissioner it was broadly urged that the goods in respect of the contracts could not have been in existence within the Province at the date of the reSQective contracts of sale but that argument was for reasons already mentioned rejected by the Commissioner and the High Court declined to allow the question whether the findings of the Commissioner were "speculative" to be agitated. The appellants now seek to plead that the taxing authorities were in error in holding that the goods conformed to the conditions as to the situs of the goods at the dates of the contracts of sale, prescribed by s. 2 (12) so as to make the price liable to be included in the taxable turnover. The Legislature has entrusted power to asce~tain facts on which the price received on sales becomes taxable, to the authori-ties appointed in that behalf with right of recourse to the High Court on questions of law arising out of the order of the Commissioner of Taxes. It is therefore contemplated by the Legislature that all material evidence on which tax-payer relies to justify his claim that his transactions are not taxable, should be placed before the taxing authorities so that they may have an opportunity to adjudicate upon the claim. If after proper trial, the claim is negatived,

6 S.C.R.

because the facts on which it is founded are not proved, 196' the proceeding must end. If, however, the adjudication of Than Singh the Commis_sioner. is_ vitiated because. there is no .e~idence Supdt. :iu., 1 to support Jt or 1t 1s based on con1ectures, susp1c1ons or -irrelevant materials, or the proceedings of the taxing autho-Shah J. rities are otherwise vitiated so that there has been no fair trial, the High Court may undoubtedly advise the Com-missioner on questions properly referred to it in the manner provided by the Act. But the High Court can.not be asked to assume the role of an appellate authority over the decision of the Commissioner on questions of fact or even of law.

Assuming that there is some substance in the contention that the adjudication by the Commissioner proceeded on grounds which the appellants characterised as "speculative", it was open to them to resort to the machinery provided by the Act, and having failed to do so, they could not ask the High Court to act as an agpellate authority in clear violation of the statutory provisions and to bypass the machinery provided by the Act.

We accordingly decline to entertain the applicittion to raise questions other than those raised by the certificate granted by the High Court, because the questions sought to be raised are questions of fact which were not canvassed at the appropriate stage before the taxing authorities and the machinery provided under the Act for determination of questions relating to liability to tax is arttempted to be bypassed.

The constitutional question on which certificate was granted does not need consideration in any detail. By the Explanation to s. 2 ( 12) of the Act notwithstanding anything to the contrary contained in the provisions of the Indian Sale of Goods Act, 1930, sale is deemed to be complete when the goods which are actually within the State of Assam at the time when the contract of sale is made, irrespective of the place where the contract is made. Under the Sale of Goods Act, 1930, in the absence of contract to the contrary sale is complete when property in the goods passes, but by the Assam Sales Tax Act the Legislature has attempted to locate the situs of sale for the purpose of levy

Than Singh ... .. qJt:o. .. v.f o T axes -Shah J.

of sales-tax by fixing upon the actual situation of the goods within the Province at 1the date of the contract, for the purposes of levying tax on sales. The Legislature has thereby not overstepped the limits of its authority : The Tata Iron & Steel Company Ltd. v. The State of Bihar('). No argu-ment has therefore been advanced before us to support the plea of unconstitutionality.

All the appeals fail and are dismissed with costs. One hearing fee.

Appeals dismissed.

February, 4

H. R. S. MURTHY

COLLECTOR OF CHITTOOR AND ANOTHER

(P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. c. DAS GUPTA, J. C. SHAH AND N. RA.TAGOPALA AYYANGAR JJ.)

Mining Lease-Notice of demand for payment of land cess-Validity-Land cess, if recoverable as an arrear of land revenue-If tax on mineral rights-Expression ''Royalty'', 1ne1111ing of-If include.s royalty payable under mining lease-Madras District Boards Act (Mad. Act No. XIV of 1920), ss. 78 and 79-Mines and Minerals (Regulation and Development) Act, (Lill of 1948), and Act LXV/l of [957, Entry 49 of the State List.

Under the terms of mining lease the lessee worked the mines and won iron ore in tract of land in village in Chittor district and bound himself to pay dead rent if he used the leased land for the extraction of iron ore, to pay royalty on iron ore if it Were used for extraction of iron and in addition to pay surface rent in respect of the surface area occupied or used. The lessee working the mines extracted ore and marketed it. After separation from Madras in 1953, the District of Chittoor became part of the Andhra State. In 1955 demand was made for the payment of land cess under ss. 78 and 79 of the Madras District Boards Act and including in the computation of the ''annual rent value", the amounts payable to Government in each year under the mining lease both as surface rent and royalty. On challenge to the validity of this notice by the lessee, the High Court quashed the notices.

(I) [19S8] S.C.R. !3S5.