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PETITIONER: THANSINGH NATHMAL AND ORS.

       Vs.

RESPONDENT: A.   MAZID, SUPERINTENDENT OF TAXES

DATE OF JUDGMENT: 03/02/1964

BENCH: SHAH, J.C. BENCH: SHAH, J.C. GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA

CITATION:  1964 AIR 1419            1964 SCR  (6) 654  CITATOR INFO :  D          1967 SC1401  (6)  C          1991 SC2251  (8)

ACT: Sales  Tax-Assessments  made  by  Superintendent  of  Taxes- Appeals  rejected  by Assistant Commissioner  of  Taxes  and Revisions  rejected  by  Commissioner  of  Taxes,   Assam-No reference to High Court 655 demanded  although provided for in the Assam Sales Tax  Act, 1947--Writ  Petitions  filed in High Court under  Art.  226- Effect  of  Scheme  of the Act-Tax on  sales  whether  ultra vires-When  can  new  points  other  than  those  on   which certificate was granted by  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).

HEADNOTE: The  appellants  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 a "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. 132(1) of the Constitution.   Before the  Supreme  Court the appellants applied for  leave  under

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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 law 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  resorted  to  and could not be allowed to be by-passed. Ordinarily, the High Court does not entertain a petition for a  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 a  court of  appeal  against  the decision of  a  court  or  Tribunal correct errors of fact. 656 The scheme of the Assam Sales Tax Act is that all  questions of  fact are to be decided by the taxing  authorities.   The opinion  of the High Court can be obtained on  questions  of law arising out of the decisions of the taxing  authorities. The  High  Court  has  under the  Act  no  power  to  decide questions   of  fact  which  are  exclusively   within   the competence of the taxing authorities. (ii)Explanation  to s. 2(12) of the Act is not  ultra  vires the Legislature.

JUDGMENT: 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. Kapila 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 under 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 questions and may be disposed of by a common judgment. The appellants are merchants carrying on business as dealers in  jute,  and  have their principal place  of  business  at Calcutta.  The appellants have a 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 places in the  State  of Assam  and  despatched bales ’of jute to  diverse  factories

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,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                             657 between  March  1948 to March 1950.  The  Superintendent  of Taxes  called upon the appellants under s. 17(2) of the  Act to  produce  their books of account and  other  evidence  in support  of  their returns and granted them time  to  enable them  to  comply with the requisition,  but  the  appellants failed  to  do so.  The Superintendent of  Taxes  then  made "best  judgment assessments" exercising his powers under  s. 17(4)  of  the  Act and issued demand notices  for  the  tax determined.  Against the orders passed by the Superintendent 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. 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 examining 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. 658 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  the goods sold must actually have been in the Province of  Assam at the date of the contracts.  The Commissioner made certain modifications  in  the  assessment  order,  but  with  those modifications we are not concerned in these appeals. Against the  order passed by the Commissioner, petitions under  Art. 226  of  the Constitution were filed by the  appellants  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

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             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 contracts 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 that the Explanation to s. 2(12) was. in respect  of the period 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  the taxing 659 authorities   being  "fully  conscious"  that  one  of   the essential  ingredients of tax liability was that  the  goods must  be actually in existence in the State of Assam at  the time  of the contracts of sale, the High Court  declined  to consider  whether the conclusions of the taxing  authorities on questions of fact were correct.  But the High Court  held that  the  plea  about  the  vires  of  s.  2(12)  and   the Explanation thereto raised a 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.   A person  appealing  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  supplying goods in the Province, and by the Explanation the manager or agent  of  a  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  a dealer  for  the purpose 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, 660 if  he  is not satisfied that the return  furnished  by  the

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dealer is correct and complete, serve on the dealer a 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 a return or fails to comply with the terms  of  the notice issued under sub-s. (2) of s. 17.  Section 30 confers a  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 Commissioner 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 correctness 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 a  hierarchy  of taxing  tribunals  competent to decide question  as  to  the liability  of the tax-payer under the Assam Sales  Tax  Act, with  a  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  Assistant  Commissioner  a revision  application lies to the Commissioner  Against  the order  of  the Commissioner a 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 a reference. The scheme evolved by the Legislature for determination 661 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 Commissioner.   Whether the decision of the Commissioner  is not  supported by any evidence, or is based upon a  view  of facts  which  could never be reasonably  entertained,  is  a question of law which arises out of 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 a question of law  arose out of the order.  But the procedure provided by the Act  to invoke the jurisdiction of the High Court was bypassed.  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  Constitution  is

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couched  in  wide  terms and the  exercise  thereof  is  not subject to any restrictions except the territorial  restric- tions which are expressly provided in the Article.  But  the exercise  of  the jurisdiction is discretionary; it  is  not exercised  merely because it is lawful to do so.   The  very amplitude   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  a suit  or other mode prescribed by statute.   Ordinarily  the Court  will not entertain a petition for a writ  under  Art. 226,  where the petitioner has an alternative remedy  which, without   being   unduly  onerous,   provides   an   equally efficacious remedy.  Again the High Court does not generally enter  upon  a determination of questions  which  demand  an elaborate examination of evidence to establish the right  to enforce which the writ is 662 claimed.   The High Court does not therefore act as a  court of  appeal against the decision of a court or  tribunal,  to correct   errors   of  fact,  and  does  not   by   assuming jurisdiction  under  Art.  226 trench  upon  an  alternative remedy  provided by statute for obtaining relief.  Where  it is  open  to  the  aggrieved  petitioner  to  move   another tribunal,  or  even  itself  in  another  jurisdiction   for obtaining  redress in the manner provided by a statute,  the High  Court  normally  will not permit,  by  entertaining  a 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 a case to the High Court under s.  32 of  the Act, and to move the High Court if the  Commissioner refused to refer the case.  But they did not do so and moved the  High  Court in its jurisdiction under Art. 226  of  the Constitution,  and  invited  the High Court  to  reopen  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 submitted 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 Commissioner, 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 is  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,  a sale takes place when property in  the  goods passes.   But, for the purposes of the Assam Sales  Tax  Act situation of the goods                             663 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

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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 a question  of  fact which  had  to be determined by the sales  tax  authorities. Before the Superintendent of Taxes liability to pay tax  was challenged  but it does not, appear 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 turnover.  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 Commissioner and the other taxing authorities "were  not quite  conscious  of" the requirements which  attracted  the application  of the Explanation to s. 2(12) and declined  to enter  upon a 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 on behalf of  the  appellants contends that there is clear evidence on the record to  show that even applying the test laid down by the Commissioner 664 some  of  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 contract 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 pay 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  Superintendent 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 con-tracts could not  have been  in  existence within the Province at the date  of  the respective  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 sites of the goods  at

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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  ascertain facts on which the price received on sales becomes  taxable, to  the authorities 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 a 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 a proper  trial,  the claim is negatived, 665 because the facts on which it is founded are not proved, the proceeding  must end.  If, however, the adjudication of  the Commissioner  is  vitiated because there is no  evidence  to support  it  or it is based on  conjectures,  suspicions  or irrelevant  materials,  or  the proceedings  of  the  taxing authorities 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 cannot 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 appellate authority in clear violation of the  statutory  provisions  and  to  bypass  the   machinery provided by the Act. We accordingly decline to entertain the application 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 attempted  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, a 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  a  contract  to  the contrary  a  sale  is complete when property  in  the  goods passes,  but by the Assam Sales Tax Act the Legislature  has attempted  to  locate the sites of sale for the  purpose  of levy 666 of  sales-tax  by fixing upon the actual  situation  of  the goods  within the Province at the 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(1).  No argument  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.

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