http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: SETH PREMCHAND SATRAMDAS

       Vs.

RESPONDENT: THE STATE OF BIHAR.

DATE OF JUDGMENT: 30/11/1950

BENCH: FAZAL ALI, SAIYID BENCH: FAZAL ALI, SAIYID MUKHERJEA, B.K. AIYAR, N. CHANDRASEKHARA

CITATION:  1951 AIR   14            1950 SCR  799  CITATOR INFO :  R          1952 SC 324  (13,23)  R          1963 SC1484  (6)  R          1964 SC1897  (8)  E          1968 SC 733  (7)  RF         1986 SC 421  (37)

ACT:     Bihar  Sates  Tax Act (VI of 1944) s. 21  (3)--Order  of High  Court  refusing to require Board of Revenue  to  state case--Appeal   to  Federal   Court--Maintainability--Letters Patent  Patna  High Court:, cl. 31--"Final Order"--Order  in exercise  of  advisory jurisdiction of High Court.

HEADNOTE:    No  appeal lay to the Federal Court from an order of  the Patna High Court dismissing an application under s.  21(3)of the Bihar Sales Tax Act, 1944, to direct the Board of  Reve- nue, Bihar, to state a case and refer it to the High  Court. Such an order is not a‘ "final order" within the meaning  of cl. 31 of the Letters Patent of the Patna High Court,  inas- much  as  an  order of the High Court under s.  ’21  (3)  is advisory and standing by itself does not bind or affect  the rights  of the parties though the ultimate order  passed  by the  Board of Revenue may be based on the opinion  expressed by the High Court.  Nor is such an order passed by the  High Court  in the exercise either of its appellate  or  original jurisdiction within the meaning of the said clause.    Sri  Mahant Harihar Gir v. Commissioner  of  Income-tax, Bihar  and Orissa (A.I.R. 1941  Pat. 225) and Tata Iron  and Steel  Company v. Chief Revenue Authority, Bombay  (50  I.A. 212 applied.     Feroze  Shah  Kaka  Khel  v.  Income-tax   Commissioner, Punjab  (A.I.R. 1931 Lab. 138)disapproved.

JUDGMENT: APPELLATE JURISDICTION: Civil Appeal No. 61 of 1950.     Appeal  from an order of the High Court of  Patna  dated 9th  September,  1948, (Agarwala C.J. and  Meredith  J.)  in M.J.C.  No. 5 of 1948.  The appeal was originally  filed  as

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

Federal Court Appeal No. 71 of 1948 on a certificate granted by  the Patna High Court under cl. 31 of the Letters  Patent of that High Court that the case was a fit one for appeal to the Federal Court.     H.P. Sinha (S.C. Sinha,  with  him) for the appellant.     S.K. Mitra (S. L. Chibber, with him) for the respondent.     1950. November 30.  The judgment of the Court was deliv- ered by FAzL ALl J. 800     FAZL  ALI  J. --This is an appeal from an order  of  the High  Court of Judicature at Patna dated the 9th  September, 1948, declining to call upon the board of Revenue to state a case  under section 21 (3) of the Bihar Sales Tax Act,  1944 (Act VI of 1944), with reference to an assessment made under that Act.     The Bihar Sales Tax Act was passed in 1944, and  section 4  of the Act provides that "every dealer whose gross  turn- over during the year immediately preceding the  commencement of  the  Act exceeded Rs. 5,000 shall be liable to  pay  tax under the Act on sales effected after the date so notified." It is not disputed that, having regard to the definitions of dealer, goods and sale under the Act, the appellant, who has been doing contract work on a fairly extensive scale for the Central Public Works Department and the East Indian Railway, comes  within the category of a dealer mentioned in  section 4.   Section  7 of the Act provides that "no  dealer  shall, while being liable under section 4 to pay tax under the Act, carry on business as a dealer unless he has been  registered under the Act and possesses a registration certificate".  In pursuance of this provision, the appellant filed an applica- tion  for  registration on the 19th December,  1944,  and  a certificate  of registration was issued to him on  the  21st December,  1944.   On the 8th October, 1945, the  Sales  Tax Officer  issued  a  notice to the appellant  asking  him  to produce  his  accounts on 10th November, 1945, and  to  show cause  why in addition to the tax to be finally assessed  on him a penalty not exceeding one and a half times the  amount should  not  be imposed on him under section 10 (5)  of  the Act.   Section 10 (5), under which the notice  purported  to have been issued, runs thus:--      "If  upon information which has come into  his  posses- sion, the Commissioner is satisfied that any dealer has been liable  to pay tax under this Act in respect of  any  period and has nevertheless wilfully failed to apply for  registra- tion,  the  Commissioner shall, alter giving  the  dealer  a reasonable  opportunity of being heard, assess, to the  best of  his  judgment, the amount of tax, if any, due  from  the dealer in respect of such      801 period  and all subsequent periods and the Commissioner  may direct  that the dealer shall pay, ’by way of,  penalty,  in addition to the amount so assessed, a sum not exceeding  one and a half times that amount." The  appellant  appeared  before the Sales  Tax  Officer  in response  to this notice, but obtained several  adjournments till  16th  March, 1046, and ultimately  failed  to  appear. Thereupon, he was assessed by the Sales Tax Officer, accord- ing to the best of his judgment, and was ordered to pay  Rs. 4,526-13-0 as tax and a penalty amounting to one and a  half times the amount assessed, under section 10 (5) of the  Act. The  appellant  appealed  to the  Commissioner  against  the assessment  and the penalty levied upon him, but his  appeal was dismissed on the 6th June, 1946.  He then filed a  peti- tion for revision to the Board of Revenue, against the order of  the Commissioner, but it was dismissed on the 28th  May,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

1947.   He thereupon moved the Board of Revenue to refer  to the  High Court certain questions of law arising out  of  is order  of  the 28th May, but Mr. N. Baksi, a Member  of  the Board, by his order of the 4th December, 1947, rejected  the petition with the following observations :-     "No case for review of my predecessor’s order made  out. No reference necessary."     Section  21  of the Act provides that if  the  Board  of Revenue  refuses to make a reference to the High Court,  the applicant may apply to the High Court against such  refusal, and   the  High  Court, if it is not satisfied   that   such refusal   was   justified,   may  require   the   Board   of Revenue   to  state a case and refer it to the  High  Court. The  section  also provides that "the High  Court  upon  the hearing  of any such case shall decide the question  of  law raised  thereby,  and  shall deliver  its  judgment  thereon containing  the grounds on which such decision  is  founded, and shall send to the Board of Revenue a copy of such  judg- ment  under the seal of the Court  .........  and the  Board shall dispose of the case accordingly."  In accordance  with this section, the appellant made an application to the  High Court  praying that the Board of Revenue may be called  upon to state a case and refer 802 it  to the High Court.  Dealing with this  application,  the High Court  pointed out that the Member of the Board had not been  asked  to review his predecessor’s order but  only  to state a case, and gave the following directions :--      "The  ease  must, therefore, go back to  the  Board  of Revenue  for  a  case to be stated or for  a  proper  ,order rejecting the application to be passed."      The  Board  then reheard the matter  and  rejected  the application of the appellant and refused to state a case and refer  it to the High Court.  The appellant thereafter  made an application to the High Court for requiring the Board  of Revenue to state a case, but this application was  summarily rejected.   He then applied to the High Court for  leave  to appeal  to the Federal Court, which the High Court  granted, following  the decision of a Full Bench of the  Lahore  High Court  in Feroze Shah Kaka Khd v.  Income-tax  Commissioner, punjab  and N.W.F.P., Lahore The High Court pointed  out  in the  order granting leave that in the appeal that was  taken to  the Privy Council in the Lahore case, an  objection  had been  raised  as to the competency of the  appeal,  but  the Privy  Council, while dismissing the appeal on  the  merits, had made the following observation:-" The objection is a serious one.  Admittedly  such an  appeal as  the  present  is not authorized by  the  Income-tax  Act itself.  If open at all, it must  be justified under  clause "9,  Letters  Patent of the Lahore High Court, as  being  an appeal  from a final judgment, decree or order made  in  the exercise of original jurisdiction by a Division Bench of the High  Court.  And this present appeal was held by  the  Full Court to be so justified.  Before the Board the question was not  fully argued, and their Lordships  accordingly  refrain from  expressing any opinion whatever upon it"  (2).      The High Court in granting leave to the appellant  seems to have been influenced mainly by the fact that the view  of the Lahore High Court had not been held by the Privy Council to be wrong. (1) A.I.R. 1981 Lah. 138.   (2) A.I.R. 1933 P. C. 198. 803     At the commencement of the hearing of the appeal in this Court,  a  preliminary objection was raised by  the  learned counsel for the respondent that this appeals was not  compe-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

tent, and, on hearing both the parties, we are of the  opin- ion that the objection is  wellfounded.     In  Sri Mahanth Harihar Gir v. Commissioner  of  Income- tax, Bihar and Orissa (1) it was held by a special Bench  of the  Patna High Court that no appeal lay to His  Majesty  in Council  under clause 31 of the Letters Patent of the  Patna High Court, from an order of the High Court  dismissing   an application  under section 66 (3) of the Income-tax Act,  (a provision  similar  to section 21 of the Act before  us)  to direct  the Commissioner of Income-tax to state a case.   In that case, the whole law on the subject has been clearly and exhaustively  dealt with, and it has been pointed  out  that the view taken by the Full Bench of the Lahore High Court in the case cited by the appellant was  not supported by sever- al  other High Courts and that the Privy Council also,  when the  matter  came before it, refrained from  expressing  any opinion  as  to its correctness.  In our opinion,  the  view expressed in the Patna case is correct.     Clause 31 of the Letters Patent of the Patna High Court, on the strength of which the appellant resists the  prelimi- nary objection raised by the respondent, runs thus :--     "And We do further ordain that any person or persons may appeal-to  Us,  Our heirs and successors, in  Our  or  Their Privy  Council,  in any matter not being of criminal  juris- diction, from any final judgment,  decree,  or  order of the said  High   Court of  Judicature   at  Patna,    made    on appeal and from any final judgment, decree on order made  in the exercise of original jurisdiction by Judges of the  said High  Court or of any Division Court, from which  an  appeal does  not  lie to the said High Court under  the  provisions contained in the  10th  clause of  these (1) A.I.R. 1941 Prat. 225. 804 presents:  provided, in either case, that the sum or  matter at   issue  is of the amount or value of not less  than  ten thousand  rupees,  or  that such  judgment,decree  or  order involves,  directly  or indirectly, some  claim,  demand  or question  to or respecting property amounting to or  of  the value  of  not less than ten thousand rupees;  or  from  any other final judgment, aecree or order made either on  appeal or otherwise as aforesaid, when the said High Court declares that the case is a fit one for appeal to Us  ......  "     In order to attract the provisions of this clause, it is necessary to show, firstly, that the order under appeal is a final  order; and secondly, that it was passed in the  exer- cise  of the original or appellate jurisdiction of the  High Court.   The second  requirement  clearly follows  from  the concluding part of the clause. It seems to us that the order appealed against in this case, cannot be regarded as a final order,  because it does not of its own force bind or  affect the  rights  of  the parties.  All that the  High  Court  is required  to do under section 21 of the Bihar Sales Tax  Act is  to decide the question of law raised and send a copy  of its judgment to the Board of Revenue.  The Board of  Revenue then has to dispose of the case in the light of the judgment of  the  High Court.  It is true that the Board’s  order  is based on what is stated by the High Court to be the  correct legal  position, but the fact remains that the order of  the High Court standing by itself does not affect the rights  of the parties, and the final order in the matter is the  order which  is  passed ultimately by the Board of  Revenue.  This question  has been fully dealt with in Tata Iron  and  Steel Company  v. Chief Revenue Authority, Bombay(1),  where  Lord Atkinson  pointed out that the order made by the High  Court was merely advisory and quoted the following observations of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

Lord  Esher  in In re Knight and  the  Tabernacle  Permanent Building Society(2):    "In the case of Ex parte County Council of Kent, where a statute provided that a case might be stated (1) [1892] Q.B. 613 at 617. 805 for  the decision of the Court it was held that  though  the language  might prima facie import that there has to be  the equivalent of a judgment or order, yet when the context  was looked  at  it appeared that the jurisdiction of  the  Court appealed to was only consultative, and that there was  noth- ing which amounted to a judgment or order."     It cannot also be held that the order was passed by  the High  Court in this case in the exercise of either  original or  appellate  jurisdiction.  It is not contended  that  the matter  arose in the exercise of the appellate  jurisdiction of  the High Court, because there was no appeal  before  it. Nor  can  the  matter, properly speaking, be  said  to  have arisen  in the exercise of the original jurisdiction of  the High  Court,  as was held by the Judges of the  Lahore  High Court  in the case to which reference was made, because  the proceeding did not commence in the High Court as all  origi- nal  suits  and proceedings should commence.  But  the  High Court acquired jurisdiction to deal with the case by  virtue of  an  express provision of the Bihar Sales Tax  Act.   The crux of the matter therefore is that the jurisdiction of the High  Court was only consultative and was  neither  original nor appellate.     In  this view, the appeal must be dismissed,  though  on hearing  the  parties, it appeared to us that  the  salestax authorities  including  the Commissioner and  the  Board  of Revenue were in error in imposing a penalty upon the  appel- lant  under section 10 15) of the Act which had no  applica- tion  to  his case, inasmuch as he had  been  registered  as required by section 7 of the Act.     In  the circumstances, while dismissing the  appeal,  we make no order as to costs.                 Appeal  dismissed. Agent  for  the appellant:  R.C. Prasad. Agent for the respondent: p.K. Chatterjee. 806