# M. N. Cl11bwala v. Fida Hussain Salieb Mudholkar I

- **Citation:** [1964] 6 S.C.R. 654
- **Court:** Supreme Court of India
- **Decided:** 1964-02-04
- **Case number:** Civil Appeals Nos. 86 to 97 of 1962
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, K. C. Das Gupta, J.C. Shah, N. Rajagopala Ayyangar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-n-cl11bwala-v-fida-hussain-salieb-mudholkar-i-3211
- **Pages:** 13

## Headnote

Sale& Tax-Assessments made by Superintendent of Taxes-Appeab
reiected by As,fistant Commissioner of Taxes and Revisions re;ected
by Commissioner of Taxes, Assam-No reference to High Court
6 S.C.R.
SUPREME COURT REPORTS
655
demanded although provided for in the Assam Sales Tax Act, 19471964
Writ Pelitions filed in High Court under Art. 226-EUect ofThan Sinth
Scheme of the Act-Tax on sales whether ultra vires-When can
v.
new points other than those on which certificate was granted by Supdt. of Taus
the High Court, be allowed to be raised in Supreme CourtExtent 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).
The <ti)pellants who are merchants carrying on business as dealers
in jute in Calcutta, submitted returns of turnover for purposes of salestax 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. 13 2 ( 1 ) of the Constitution.
Before the Supreme Court the appellants applied for leave under 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 Jaw 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 re.sorted
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 tbe
decision of a court or Tribunal correct errors of fact.
656
SUPREME COURT REPORTS
[1964)
1964
The scheme of the Assam Sales Tax Act iS that all questions of
rAiat Silllll
fact are to be decided by the taxing authorities. The opinion of the
Y.
High Court can be obtained on questions of law arisiog out of the
s.,41. of Tazt1 decisions of the taxing authorities. The High Court has under the Act
no power to decide questions of fact which are exclusively within the
campetence of the taxing authorities.
Sliah /.
(ii) Explanation to s. 2(12) of the Act is not ultra virt1 tho Assam
Legislature.

## Text

1964
M. N. Cl11bwala
v.
Fida Hussain
Salieb
Mudholkar I.
1964
Ft!bruary, 4
654
SUPREME COURT REPORTS
could not be effectively carried out by the landlord by parting with possession in favour of the stail-holders by reason
of which the performance by the landlords of their duties
and obligations could easily be rendered impossible if the
stall-hoiders adopted an unreasonable attitude. If
the
landlords failed to perform their obligations they would be
exposed to penalties under the Act and also >too<l in danger
of having their licences revoked.
Could, in such circumstances, the landlords have ever intended to part with possession in· favour of the stall-holders and thus place themselves at the mercy of these people? We are, therefore, of
the opinion that the intention of the parties was to bring
into existence merely a licence and not a lease and the word
'rent' was used loosely for 'fee'.
UjJon this view we must allow the appeal, set aside the
decree of the High Court and dismiss the suit of the respondents in so far as it relates to reliefs (ii) (e), (f) and (g)
granted by the High Court against the appellants are concerned.
So far as the remaining reliefs granted by the
High Court are
concerned, its decree will stand.
In the
result we allow the a?peal to the extent indicated above but
in the particular circumstances of the case we order costs
throughout will be borne by the parties as incurred.
Appeal partly allowed.
THANSINGH NA THMAL AND ORS.
v.
A. MAZID, SUPERINTENDENT OF TAXES
(P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. C. DAS
GUPTA, J.C. SHAH AND N. RAJAGOPALA AYYANGAR JJ.)
Sale& Tax-Assessments made by Superintendent of Taxes-Appeab
reiected by As,fistant Commissioner of Taxes and Revisions re;ected
by Commissioner of Taxes, Assam-No reference to High Court
6 S.C.R.
SUPREME COURT REPORTS
655
demanded although provided for in the Assam Sales Tax Act, 19471964
Writ Pelitions filed in High Court under Art. 226-EUect ofThan Sinth
Scheme of the Act-Tax on sales whether ultra vires-When can
v.
new points other than those on which certificate was granted by Supdt. of Taus
the High Court, be allowed to be raised in Supreme CourtExtent 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).
The <ti)pellants who are merchants carrying on business as dealers
in jute in Calcutta, submitted returns of turnover for purposes of salestax 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. 13 2 ( 1 ) of the Constitution.
Before the Supreme Court the appellants applied for leave under 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 Jaw 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 re.sorted
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 tbe
decision of a court or Tribunal correct errors of fact.
656
SUPREME COURT REPORTS
[1964)
1964
The scheme of the Assam Sales Tax Act iS that all questions of
rAiat Silllll
fact are to be decided by the taxing authorities. The opinion of the
Y.
High Court can be obtained on questions of law arisiog out of the
s.,41. of Tazt1 decisions of the taxing authorities. The High Court has under the Act
no power to decide questions of fact which are exclusively within the
campetence of the taxing authorities.
Sliah /.
(ii) Explanation to s. 2(12) of the Act is not ultra virt1 tho Assam
Legislature.
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. Kapi/a 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 undt:r 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 question> 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 r,:>laces in the State of
Assam and despatched bales of jute to diverse factories
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
6 S.C.R.
SUPREME COURT REPORTS
657
.
'
between.March 1948 to March l9SO. The Superintendent
1964
of Taxes called upon:the a:;>pellants under s.17(2)"'of"the ·-r,;a-;;5,n~h
Act to pro:lt,ce ·thdr !:>ooks of account and other evidence ·
v.
'
-
Supdt. of Tqxes
in support°<Ji thcit rrp_::-as and granted them time to enable
them to cor!'ply ,.,.;,;, the.· requisition, . but ·the appellants
::1iah 1•
failed to do so.
The Superintendent of Taxes . then made
"best judgment assessments" exercising his powe~. 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 Commissioner 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 therefore 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 Commissioner 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 examinmg 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.
SUPREME COURT REPQRTS
1964
about February and being ready for marketing some time
Than Singh
about the month of June.
The Commissioner further
S d
•·1 T
observed that the contracts were made on diverse dates
up t. o
axes
.
.
-
between March and September and deliveries under the
Shah J.
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 tJ\e 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 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 1that the Explanation to s. 2 ( 12) was,
in respect of the 11eriod 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 tho taxing
'
6 S.C.R.
SUPREME COURT REPORTS
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 Stiite of Assam at the time of the
contracts of sale, the High Court declined to consider
whether the conclusions of ,foe taxing authorities on questions
of fact wer:: correct. But the High Court held that the
plea about the vires of s. 2 (12) and the Exiplanation 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 arppealing 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 pUI1pOSC 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,
1964
Than Singh
v.
Supdt. of Taus
Shah /.
660
SUPREME COURT REPORTS
1964
if he is not satisfied that the return furnished by the dealer
nan Singh
is correct and complete, serve on the dealer a notice
v.
1
requiring him either to attend in person and to produce or
~upa1.
of
axes
.
•
__
cause to be produced any evidence on which he may rely
Shah .r.
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 correctaess of the decision of the Commissioner, 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-qiayer 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
Assi~tant 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
6 S.C.R.
SUPREME COURT REPORTS
661
of tax liability is that all questions of fact are to be decided
1964
by the taxing authorities and on questions of law arising
Than Singh
out of the decision of the taxing authorities the opinion of ,
,1
•·, T ••
~upu .
.J
a,.eL
High Court may be obtained. The High Court has however
-
no power to decide questions of fact, which are exclusively
SW J.
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
su,pported 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 Qf 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 couched i.n wide terms and the exercise thereof is
not subject to any restrictions except the territorial restrictions which are exipressly 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 a.n 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
SUPREME COURT REPORTS
1961
claimed. The High Court does not therefore act as a court
Than Singh
of appeal against the decision of a court or tribunal, to
.\upat. ~I Taz., correct errors of fact, and does not by assuming jurisdiction
-·
under An. 226 trench upon an alternative remedy provided
·S/utlt J.
by statute for obtaining relief.
Where it is o;ien 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 Com·
missioner refused to refer the case.
But they did not do
so and moved the High Court in its jurisdiction under Art.
22,6 of tl!e Constitution, and invited the High Court to
re-open 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 Superintendent of Taxes and the Assistant Commissioner.
The appellants who are dealers registered under the
Assam Sales Tax Act submiNed 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 iiL 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
purposei of the Assam Sales Tax Act situation of the goods
6 S.C.R.
SUPI{EME COURT REPORTS
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
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
<1;ipear 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 UQplication 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 oil behalf of the appellants
contends that there is clear evidence on the record to show
tbat even ap;ilying the test laid down by the Commissioner
1964
Than Singh
v.
Supdt. of Taxes
Shah J.
1964
Than Singh
v.
Supdt. of Taxes
S/!ah J.
SUPREME COURT REPORTS
some ot 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 Commissioner that the goods were within the State of Assam
at the date of the contraot 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 1;iay 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 contracts could not have been
in existence within the Province at the date of the reSQective
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 situs of the goods at 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 asce~tain 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,
6 S.C.R.
SUPREME COURT REPORTS
665
because the facts on which it is founded are not proved,
196'
the proceeding must end.
If, however, the adjudication of
Than Singh
the Commis_sioner. is_ vitiated because. there is no .e~idence Supdt. : 1 iu.,
to support Jt or 1t 1s based on con1ectures, susp1c1ons or
-
irrelevant materials, or the proceedings of the taxing authoShah J.
rities are otherwise vitiated so that there has been no fair
trial, the High Court may undoubtedly advise the
Commissioner on questions properly referred to it in the manner
provided by the Act. But the High Court can.not 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 agpellate authority in clear
violation of the statutory provisions and to bypass the
machinery provided by the Act.
We accordingly decline to entertain the applicittion 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 arttempted 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 situs of sale for the purpose of levy
666
SUPREME COURT REPORTS
1964
of sales-tax by fixing upon the actual situation of the goods
Than Singh
within the Province at 1the date of the contract, for the
..
..
v.f
T
purposes of levying tax on sales. The Legislature has thereby
... qJt:o.
o
axes
-
not overstepped the limits of its authority : The Tata Iron
Shah J.
& Steel Company Ltd. v. The State of Bihar('). No argument has therefore been advanced before us to support the
plea of unconstitutionality.
1964
February, 4
All the appeals fail and are dismissed with costs. One
hearing fee.
Appeals dismissed.
H. R. S. MURTHY
v.
COLLECTOR OF CHITTOOR AND ANOTHER
(P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. c. DAS
GUPTA, J. C. SHAH AND N. RA.TAGOPALA AYYANGAR JJ.)
Mining Lease-Notice of demand for payment of land cess-ValidityLand cess, if recoverable as an arrear of land revenue-If a tax
on mineral rights-Expression ''Royalty'', 1ne1111ing of-If include.s
royalty payable under a mining lease-Madras District Boards Act
(Mad. Act No. XIV of 1920), ss. 78 and 79-Mines and Minerals
(Regulation and Development) Act, (Lill of 1948), and Act LXV/l
of [957, Entry 49 of the State List.
Under the terms of a mining lease the lessee worked the mines and
won iron ore in a tract of land in a village in Chittor district and bound
himself to pay a dead rent if he used the leased land for the extraction
of iron ore, to pay a royalty on iron ore if it Were used for extraction
of iron and in addition to pay a surface rent in respect of the surface
area occupied or used. The lessee working the mines extracted ore
and marketed it. After separation from Madras in 1953, the District
of Chittoor became part of the Andhra State. In 1955 a demand was
made for the payment of land cess under ss. 78 and 79 of the Madras
District Boards Act and including in the computation of the
''annual
rent value", the amounts payable to Government in each year under
the mining lease both as surface rent and royalty. On challenge to the
validity of this notice by the lessee, the High Court quashed the notices.
(I) [19S8] S.C.R. !3S5.