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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

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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

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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.

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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,

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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.

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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

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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

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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

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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.