THIS ARTICLE WAS WRITTEN BY RACHIT SHARMA, A STUDENT OF DELHI METROPOLITAN EDUCATION, GREATER NOIDA.
DATE OF JUDGEMENT: 05/04/1968
BENCH: HIDAYATULLAH, M. (CJ)
ACT: Madhya Bharat Sales Tax Act (30 of 1950), S. 17 – Jurisdiction of civil court barred- scope of the bar.
The appellants were dealers in tobacco and have their place of business in Ujjain.
They purchase and sales tobacco use for eating, smoking and for preparing bidis.
They also get their tobacco locally or import it from other states
At that time in Madhya Pradesh an act called madhya bharat sales tax act (act 30 of 1950) came into force on May 01 1950.
Under section 3 of the act, every dealer who’s business in the previous year in respect of sales or supplies of goods exceeded by 12000 had to pay taxes in respect of sales only.
Under section 5 , the tax was a single point tax and it was provided that the government should specify the point of sales at which the tax was payable i.e how much a person should sell to pay taxes .
The section also fixed the minimum and maximum rates of tax, leaving it to government to notify the actual rate i.e. the tax rate was not fixed, however minimum and maximum rate was fixed.
Government later issued a number of notifications on April 30 1950, may 22 1950, Oct 24 1950 and Jan 21 1954. All these notifications imposed taxes at different rates on tobacco as stated above i.e. the tax was not collected at the rate which was stated above .
The tax was not levied on sale or purchase on tobacco in Madhya Pradesh. The tax was collected by the authorities in varying amounts from the appellant for different quarters.
The appellant served notices under sec 80of the civil procedure court which states that no suit shall be instituted against government / public officer in his official capacity until the expiration of two Month notice.
RELIEF CLAIMED BY APPELANT
The appellant filed the suit for refund of the tax on the ground that it was illegally collected from them and it was against constitution. Similarly in the case of Bhailal vs state of M.P the High Court of Madhya Pradesh declared the notifications to be offensive to Art. 301 of the Constitution on the ground that it was illegal to levy a tax on the importer when an equal tax was not levied on similar goods produced in the State. The decision was later confirmed on this point in State of M.P. v. Bhailal Bhai. The appellants did not take, recourse to the provisions of Art. 226 of the Constitution but filed their suits on December 21, 1957.
The judgement of the court was delivered by C.J, Hidayatullah, who was the eleventh chief justice of India and sixth Vice-president of India. He is regarded as an eminent jurist, scholar, educationist, author and linguist. Justice Hidayatullah became the only person to have served in all three offices of Chief Justice of India, President of India, and the Vice President of India. During his long tenure in the Supreme Court he was a party to a number of landmark judgments including the judgment in Golaknath v. State of Punjab which took the view that the Parliament had no power to cut down the Fundamental Rights by constitutional amendment. His judgment in the case of Ranjit D. Udeshi dealing with the law of obscenity, displayed a flair for literature which is not so common among our judges. He was the president of Indian Law Institute, International Law Association (Indian Branch), Indian Society of International Law from 1968 to 1970. He also presided the Indian Red Cross Society in 1982. He was closely associated with Hunger Project of USA, World Association of Orphans and Abandoned Children (Geneva), and Independent Commission on International Humanitarian Issues (1982–84).
The Hidayatullah National Law University at Naya Raipur is named after him.
DECISION OF COURT
This was a case relating to jurisdiction of civil courts i.e geographical area or subject matter to which such authority applies and the civil court has inherited power to decide its own jurisdiction .
In the case of Dhulabhai vs State of Madhya pradesh , justice Hidayatullah summarised the following principles relating to exclusion of jurisdiction of civil courts :
(1) Where the statute gives a finality to the orders of the special tribunals the Civil Courts’ jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.
(2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court.
Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in Civil Courts are prescribed by the said statute or not.
(3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals.
(4) When a provision is already declared unconstitutional. Or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act. But, it is not a compulsory remedy to replace a suit.
(5) Where the particular Act contains no machinery for refund’ of tax collected in excess of constitutional limits or illegally collected a suit lies.
(6) Questions of the correctness of the assessment apart from its constitutionality are for. The decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry.
(7) An exclusion of the jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply.
In the light of these conclusions we have to see how the present case stands. Section 3 was the charging section. It spoke of the incidence of the tax. In consisted of several sub-sections. These sub-sections laid the tax on dealers according to their tax able turnover and in the case of a dealer who imported goods into Madhya Bharat the taxable turnover was Rs. 5000/-. Section 4 made certain exclusions and exemptions, and section 5 prescribed the rate of tax. That section read “5(1) the tax payable by a dealer under this Act shall be at a single point and shall not be less than Rs. 1-9-0 per cent. Or more than 6 1/4 per cent of the tax able turnover, as notified from time to time by the Government by publication in the official gazette.
Provided that Government may in respect of special class of goods charge tax up to twelce and a half percent on the taxable turnover.
Some cases which have used the case of dhulabhai vs state of M.P as a guiding principle are :
1. Lal Babu Nath Tiwari vs The Secretary Rani Lakshmi Bai
2. Rajaganapathy ganesan vs union of India
3. Ramesh Gobindram vs Sugra Humayun Mirza
4. Chandrakant Tukaram Nikam & others vs municipal corporation
5. Rajasthan SRTC vs Bal Mukund Bairwa
6. Narinder Mohan Arya vs. United India Insurance Co. Ltd. & ors
The precedents laid down by the judicial authorities clearly establish a general rule that despite the existence of special authorities for the adjudication of disputes arising under a particular statute, the jurisdiction of civil courts to adjudicate the same cannot be barred. Section 9 of CPC substantiated by various precedents to that effect, has conferred wide powers on the civil courts enabling the courts to entertain disputes falling within the exclusive jurisdiction of a special authority. For instance, where the special authority so constituted fails to deliver proper justice or unless expressly or impliedly barred, the civil courts can very well entertain such matters.
As very well established by the recent ruling of the Delhi HC, the civil court can now exercise its jurisdiction upon matters relating to Sections 397 and 398 of the Act where a question of common law is also under dispute. The powers conferred on civil courts are wide enough so as to enable them to keep a check on such special authorities constituted under a particular statute. Thus complete exclusion of civil courts from exercising jurisdiction over matters falling within the jurisdiction of a special authority under a specific statute is a far-fetched possibility, which is expected not to be favoured by the judiciary for preserving the efficacy of the proper functioning of the judicial and quasi-judicial authorities.