Central Potteries Ltd v. State of Maharashtra & Others

VENKATARAMA AIYAR, J.-The sole point for determination in this appeal, which is directed against the Judgment of the High Court of Bombay is whether the appellant is not liable to pay tax under the provisions of the Central Provinces & Berar Sales Tax Act, 1947 (Act 21 of 1947), on the ground alleged that it had not, been validly regis· tered as a dealer under s.8 of the Aot. The facts bearing on this contention are that the Central Provin<Jes & Berar Sales Tax Act, hereinafter re­ ferred to as "the Act", received the assent of the Governor-General on May 23, 1947 and came into force on June !, 1947. On May 27, 1947 a noti­ fication No. 601 was issued by the Provincial Government publishing draft rules which it "pro­ posed to m<tke, in exercise of the powers conferred bys. 28 of the Act" and on August 15, 1947, the rules ~s finally adopted were published. In the meantime two other notifications Nos. 597 and 599 had been issued on May 27, 1947, No. 597 under s.8 of the Act fixing August 15, 1947 as "the d'ate by or on which all dealers liable to pay tax under the said Act shall got themselves registered" and No. 599 under s.3 of the Act appointing the District Excise Officers as the Sales Tax Officers for "receiving applications for registration and for. issuing certificates under section 8 of the Act". The appellant is a Company carrying on business in the manufacture and sale of potteries chinaware in Nagpur. On July 2, 1947 it presented, pursuant to the notifications aforesaid, an application to the Sales Ta~ Officer for n1gistering itself as a dealer under the Act. On this appliuation a cert,ificate was issued on July 21, llJ47 and actually deliTered 1 S.C.R. SUPREME COURT REPOH,TS 169 to the appellant on September 13, 1947. Thereafter the appellant had been duly submitting returus as provided in the Act and assessment were made thereon and taxes paid from the period commen­ cing from June 1, 1947 to ,June 30, 1951. Some .timo thereafter the idea dawned on tho a.ppellant that the proceedings taken by the respondents under the Act were unauthorised, that the assessments were illegal and that in consequence it was en­ titled to refund of the amouuts paid a8 dales tux. And so, on December 18, 1951, it institl•ted the suit out of which tho present appeal arises claim­ ing a refund of Rs. 6,650-ll-9 being the amount paid for sales tax during the period June 1, 1947 to June !JO, 1951 and a sum of 11,s. 2,000/- as damages, in all Rs. 8,650-11-9. Though a number of grounds were put forward in support of the claim, it is necessary now to deal wit.h only one of them, and that is that the Sa.ies Tax Officer who issued the registration certificate to the appel­ lant on July 21, 1947 was not authorised to , do so under t.hat Act and in consequence all the assess­ ments and recoveries of tax were illegal and void. The basis for this contention is thats. 3(1) of the Act confers authority on the State Government to appoint any person to be a. Commissioner of Sales Tax, and ''such other persons under any pres­ cribed designations" to assist him as it thinks fit. By notification No. 595 dated May 27, 1947 the Government appointed in exercise of the powers conferred by s. 3( l) the Excise Commissioner, CentraJ Provinces & Berar to be the Commissioner of Sales Tax, Central Provinces & Berar. The validity of this notification is not now in question. The attack is on the notification No. 599 dated May 27, .19~7 whereby . the Government acting under s. 3 of the Act directed that the District Excise Officers in charge of dic:1tricts shall be the Sales Tax Officers for purpose of registration of certificates under s.8 of the Act. It is said that 1962 Central P~tteries Ltd. v. Stale of Af aharashtra Ai.Jar J. 1962 Central fotteries Ltd. v. State of 1\faharae htra Atyar J. 170 SUPREME COUitT REPORTS [l!J63J s. 3( 1) authorises the Government to appoint "other persons under any prescribed designations", that the word "prescribed" is defined in s. 2(e) as meaning "prescribed by rules made under this Act" and that as the rules finally came into force only on August 15. 1947 the appointment of District Ex:cise officers as Sale Tnx Officers for the purpose of s. 8 on May 27, 1947 was in contravention of s. 3(i) and that in c011s"q11cnce the issue registration certificate on July 21, 1947 by iLn officer appointed under this notification was void. The Civil Judge of Nagpur who tried the suit held that as the certificate of registration was delivered to the appellant on 1-:leptember 13, 194 7 i.e. after the rules had been finally published on August 15, 1947, the irregularity, if any, in the issue of registration certificate on July 21, 1947 had been cured. He also further held that the liability of the appellant to pay salf's tax was not affected by the invalidity of the registration under s. 8. In the result he dismissed the suit with costs. Against thia decision appellant preferred an appeal to the High Court of Nagpur and that was heard by a Bench of the Bombay High Court to which it stood transferred under the States Reor­ ganisation Act. The ]earned Judges held that the questie>n whether the registration of the <tppel­ lant as dealer under s. 8 of the Act was valid or not did not call for a decision as even if it was invalid that did not affect its liability to be asses­ sed to eales tax and in that view they dismissed the appeal with costs but granted a certificate under s. 109 C.P.C. and Art. 132(2) of the Cons­ titution. In our judgment the High Court is clearly correct in its view that the appellant was liable to pay the tax under the Act irrespective of whether I S.C.R. SUPREME COURT REPORTS 171 the registration under s. 8 was valid or not. That liability arose under s. 4 which is the charging section. Section 4 is as follows:- 34(1) (a). In Madhya Pradesh excluding the merged territories every dealer w h o~c turn. over during the. year proceeding the com­ mencement of this Act exceeded the taxable quantum shall be liable to pay tax in accor· dance with the provisions of this Act on a11 sales effected after the commencement of this Act." This liability is not conditional on the registr~tion of the dealer under s. 8. Section 8 ( 1) enacts that no dealer shall, while being liable to pay tax under this Act carry on business as a dealer unless hti has been registered as such and possesses a registration certificate". Section 11(i) provide~ that ''If the Commissioner is satisfied that the returns furnished by a registered dealer in respect of any period are correct and complete, he shall assess tbe dealer on them". These provisions do not, to any extent, effect the substantive liability to be assessed to tax which is imposed bys. 4-A dealer who fails to get himself registered would be hit iJy s. 8(1) and may loss the benefit conferred by s. 11( I) but the Act does not put him in a better position than a dealer who has got himself regfatered under s. 8(1) and absolve ·him from his liability to J!ay tax under s. 4. The position of the dealer who has obtained a certi­ ficate of registration which turns out 1.o be invalid cannot on principal, be distinguish from that of one who has failed to obtain a certificate. ·It was argued for the appellant that it would ma.ke a difference in the procedure prescribed for making assessment whether a dealer was registered or not, It was said that under s. 10(1) while every registered dealer is under an obligation to make re­ turns for the purposes,of assessment, a dealer who is not registered becomes liable to send the return 1962 C1ntral Potteries Ltd. Stat. of M ahoro shtro Aiyar .J. 1962 Cenlrol l:>otterics Ltd. v. State oj" MahatashJr'J Aiyar J, 172 SUPREME couriT .REPORTS (1963] only if he is required to do so by the Commissioner by notiec served in the prescribed manner and Rule 2:2 which has been framed for carrying out the pur­ pose of s. 14(1) provides that if the Commissioner is of opinion that a dealer other than a registered dealer is liable to pay tax, he may send a notice to him in a form prescribed therein, requiring him to furnish returns. n is contended that the jurisdiction of the :->ales Tax Officer to take proceedings for assessment with respect to non-registered dealers depends, on the issue of a notice such as is prescribed bys. 10 and rule 22 and that as no such notice had heen issued in the case of the app9llant, the assess­ ment proceedings must be held to be incompetent, if the registration certificate is invalid. We see no force in this contention. The taxing authorities derive their jurisdiction to make assessments under s. a and 11 of the Act, and not under s. 10, which is purely procedural. The appellant had itself, acting under s. lO(l) been submitting voluntarily returns on which the assessments had been made and it is now idle for it to contend that the procee­ dings taken on its own returns are without jur­ isdiction. In this connection it should be remembered that there is a fundamental distinction between want of jurisdiction and irregular assumption of jurisdiction, and that whereas an order passed by an authority with respect to a mattar over which it has no jurisdiction is a nullity and is open to collateral attack, an order passed by an authority which has jurisdiction over the matter, but has assumed it otherwise than in the mode prescribed by law, is not a nullity. Lt may be liable to be questioned in those very proceedings, but subject to that it is good, and not open to collateral attack. Therefore even if the proceedings for assessment were taken against a non-registered dealer without the i3sue of a notice under s. 10 ( 1) that would be a mere irregularity in the assumption 1 S.C.R. SUPRE~IE COURT REPORTS 173 of jurisdiction and the order of assessment passed in those proceedings cannot be held to be without jurisdiction and no suit will lie for impe<tehing them on the ground that s. lU { l) had not been followed. This must a fortiori be so when the appeJJant hits itself submitted to jurisdiction and made a return. We accordingly agree with the learned Judges that even if the registration of the appellant as a dealer under s. 8 is bad that has no effect on the validity of the proceedings taken against it under the Act and the assessment of tax made thereunder. We should add that s. ~l of the Act bare tho jurisdiction of Ci vii Courts to entertain suits ea.Hing in question any orders passed by tho authr)rities under the Act, and in the view which we have t<1ken it is unnecessary to gn into the question \Vhether in view of this section the preacnt :-;uit is maintainable. There are no merits whatsoever in this appeal and it is dismissed with costs. Appeal d-isniis.w?A.1. STAT.E OF ANDHRA PRADESH v. DUVVURU BALARAMI R~DDY (B. P. SINHA, c. J;, P. B. GAJENDRAG.\DKAR, K. N. W.ANCHOO, N. RA.JGOPALA AY\'ANGAR, and T, L. V1mKATARAIHA ArY.-\R, JJ.) Subsoil Right-Shrotriem inam-W hen includes sub-soil rights. The respondents has obtained leases for mining mir::a from the owners of a certain 8ltrolri'.em village for one year with a stipulation that the lessors were bound to renew the !cases for such periods as may be desired by the lessees. Shortly, there­ after, the village waseanoifie.d and the estate of the owners wns resumed by the pptllant. The respondent conten<led tha~ 1!162 Central l'1•Utrics Ltd. v. Si.ate of M al:oro!hlra Afyar J. 1962 April 2.