# l961 March30. SUPREME OOURT REPORTS [1963] CENTRAL POTTERIES LTD v. STATE OF MAHARASHTRA & OTHERS

- **Citation:** [1963] 1 S.C.R. 166
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** Civil Appeal No. 205 of 1961
- **Bench:** B. P. Sinha, P. B. Gajendragadkar, K. N. Wanciioo, N. RAJAGOPALA AYYANGAR an<l 'l'. L. VENKATARAMA AIYAR
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/l961-march30-supreme-oourt-reports-1963-central-potteries-ltd-v-state-of-2532
- **Pages:** 8

## Headnote

Sales 1'ao;-Assessment-Liability to pay tax, if depends
upon being registered as dealer-Want of jurisaiction and irregular
a.'l.r;um.ption of juriadiction-Distinction-0. P. and Berar
Sales 1'ax Act, 1947 (G. P. & Berar 21 of 1947), s. 3, 4 (1),
8. IO, 11.
The appellant was a company carrying on business in
the
manufacture of sale of
potteries and Chinaware in
Nagpur. The Central Provinces and Berar Sales Tax Act
came i .. to force on.June 1st 1947. On May 27, 1947, notifica·
tions Nos. 597 and 599 were issued.
Notification No. 597 fixed
August 15, 1947 as the date by which the dealers liable to pay
tax under the said Act were to get themselves registered and
by notification No. 599 the District Excise Officer was appointed as the Sales Tax Officer for receiving application for
registration and for issuing certificates. The appellant company presented an application to the said officer and the
certificate was issued on July 21st 1947 but actually delivered
to the appellant on September 13, 1947. Thereafter, the appcl·
!ant had been duly submitting returns and paid taxes till
June 30th
1951.
The
appellant
instituted a
suit in
December 1951 contending that the Sales Tax Officer who
issued the Registration Certificate to the appellant on
July 21st, 1947, was not authorised to do so under the Act,
and the recoveries of tax from him were illegal and void,
The Trial Court held that the certificate of registration was
deliv~red to the appellant on 13th September, 1947, i.e.
after the Rules had been finally published on August 15, 1947,
and the irregularity if any in the issue of the certificate had
been cured and further held that the liability of the appellant
to pay sale's tax was not affected by the invalidity of the
registration under s. 8. On appeal the High Court held that .
the question whether the 'registration of the appellant 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 10 be assessed to sales tax, and dismissed the appeal.
The appellant came up in appeal by certificate to the Supreme
Court.
I S.C.R.
SUPREME COURT REPOR'fS
167
The question was whether the appellant was not liable
1161
to
pay
tax
under
the
prov1S1ons
of
the
Central
Central PoC11rie1
Provinces and Berar Sales Tax Act 191-7 on the ground
Ltd.
alleged that it had not been valiJly registered as a dealer under
v.
s. 8 of the Act.
St•t• of Alo/wr.,.,,.
Held, that the High Cc)urt was con c:ct in its view that
the appellant was liable to pay the tax under the Act
irrespective of whether the registration under s. 8 was valid
or not. The liability arose under s. 4 of the Ai::t which was
the charging section and the liability was not conditional on
the registration of the dealer under s. 8 of the Act.
The position of the dealer who has obtained a certificate
of registration which turns out to be invalid cannot on principle be distinguished from that of one who has frtiled to obtain
a certificate. 'I he provision of ss. 8 and 11 do not, to any
extent, affect the substantive liability to be assessed to tax
which is imposed by s. 4 of the Act.
There is a fundamental distinction between want of juris·
diction and irregular assumption of jurisdiction.
Whereas the
order passed by an <.uthority with respect to a matter 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 as assumed it otherwise than
in the mode prescribed by law is not a nullity.
It 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 proceedin~s for assessment were taken against
a non-registered dealer without tl:c issue of a notice under
s. IO (I) that would be a mere irregularity in the assumption
of jurisdiction and the ordered of a assessment passed in those
proceedings cannot be held to be without jut isdiction and no

## Text

l961
March30.
SUPREME OOURT REPORTS [1963]
CENTRAL POTTERIES LTD.
v.
STATE OF MAHARASHTRA & OTHERS
(B. P. SINHA, c. J., P. B. GAJENDRAGADKAR,
K. N. WANCIIOO, N. RAJAGOPALA AYYANGAR
an<l 'l'. L. VENKATARAMA AIYAR, JJ.)
Sales 1'ao;-Assessment-Liability to pay tax, if depends
upon being registered as dealer-Want of jurisaiction and irregular
a.'l.r;um.ption of juriadiction-Distinction-0. P. and Berar
Sales 1'ax Act, 1947 (G. P. & Berar 21 of 1947), s. 3, 4 (1),
8. IO, 11.
The appellant was a company carrying on business in
the
manufacture of sale of
potteries and Chinaware in
Nagpur. The Central Provinces and Berar Sales Tax Act
came i .. to force on.June 1st 1947. On May 27, 1947, notifica·
tions Nos. 597 and 599 were issued.
Notification No. 597 fixed
August 15, 1947 as the date by which the dealers liable to pay
tax under the said Act were to get themselves registered and
by notification No. 599 the District Excise Officer was appointed as the Sales Tax Officer for receiving application for
registration and for issuing certificates. The appellant company presented an application to the said officer and the
certificate was issued on July 21st 1947 but actually delivered
to the appellant on September 13, 1947. Thereafter, the appcl·
!ant had been duly submitting returns and paid taxes till
June 30th
1951.
The
appellant
instituted a
suit in
December 1951 contending that the Sales Tax Officer who
issued the Registration Certificate to the appellant on
July 21st, 1947, was not authorised to do so under the Act,
and the recoveries of tax from him were illegal and void,
The Trial Court held that the certificate of registration was
deliv~red to the appellant on 13th September, 1947, i.e.
after the Rules had been finally published on August 15, 1947,
and the irregularity if any in the issue of the certificate had
been cured and further held that the liability of the appellant
to pay sale's tax was not affected by the invalidity of the
registration under s. 8. On appeal the High Court held that .
the question whether the 'registration of the appellant 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 10 be assessed to sales tax, and dismissed the appeal.
The appellant came up in appeal by certificate to the Supreme
Court.
I S.C.R.
SUPREME COURT REPOR'fS
167
The question was whether the appellant was not liable
1161
to
pay
tax
under
the
prov1S1ons
of
the
Central
Central PoC11rie1
Provinces and Berar Sales Tax Act 191-7 on the ground
Ltd.
alleged that it had not been valiJly registered as a dealer under
v.
s. 8 of the Act.
St•t• of Alo/wr.,.,,.
Held, that the High Cc)urt was con c:ct in its view that
the appellant was liable to pay the tax under the Act
irrespective of whether the registration under s. 8 was valid
or not. The liability arose under s. 4 of the Ai::t which was
the charging section and the liability was not conditional on
the registration of the dealer under s. 8 of the Act.
The position of the dealer who has obtained a certificate
of registration which turns out to be invalid cannot on principle be distinguished from that of one who has frtiled to obtain
a certificate. 'I he provision of ss. 8 and 11 do not, to any
extent, affect the substantive liability to be assessed to tax
which is imposed by s. 4 of the Act.
There is a fundamental distinction between want of juris·
diction and irregular assumption of jurisdiction.
Whereas the
order passed by an <.uthority with respect to a matter 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 as assumed it otherwise than
in the mode prescribed by law is not a nullity.
It 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 proceedin~s for assessment were taken against
a non-registered dealer without tl:c issue of a notice under
s. IO (I) that would be a mere irregularity in the assumption
of jurisdiction and the ordered of a assessment passed in those
proceedings cannot be held to be without jut isdiction and no
suit will lie for impeaching them on the ground that s. 10 (I)
had not been followed
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 205 of 1961.
Appeal from the judgment and decree dated
June 16, 1959, of the Bombay High Court
{Circuit Bench) at Nagpur in F. A. No. 32 of I 955.
Bkankar Anand, M. S. Gupta and Gari.pot Ra,i
for the appellants.
-
M. 0. Set,alvad, Attorney Ueneral for lnd-ia,
1951
Central PotUriu
ltd.
••
State of M alrarashtra
Aiyar J.
l1lS
SUPREME OOURT REPORTS [1963]
C. K. Daphtary, Solicitor General of India, H. N.
Sanyal, Additwnal Solicitor General of India, N. S.
Bindra and P. D. Menon, for the respondent No. 3 .
l!J62. March 30. The Judgment of the Court
was delivered by
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 referred 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 notification No. 601
was issued by the Provincial
Government publishing draft rules which it "proposed 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 commencing 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 entitled 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 claiming 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 appellant on July 21, 1947 was not authorised to , do so
under t.hat Act and in consequence all the assessments 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 prescribed 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 Reorganisation Act.
The ]earned Judges held that the
questie>n whether the registration of the <tppellant 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 assessed 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 Constitution.
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 commencement 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 certificate 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 returns 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 purpose 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 assessment 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 proceedings taken on its own returns are without jurisdiction.
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, thereafter, 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.