# SALES TAX OFFICER, JODHPUR AND ANOTHER v. M/S. SHIV RATAN G. MOHATTA

- **Citation:** [1965] 3 S.C.R. 71
- **Court:** Supreme Court of India
- **Decided:** 1965-02-12
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sales-tax-officer-jodhpur-and-another-v-m-s-shiv-ratan-g-mohatta-3453
- **Pages:** 7

## Headnote

A
SALES TAX OFFICER, JODHPUR AND ANOTHER
v.
M/S. SHIV RATAN G. MOHATTA
February 12, 1965
71
B
IP.B. GAJENDRAGADKAR, C.J., M. HIDAYATULLAH, J.C. SHAH AND
S.M. SIKRI, JJ.]
CoJ>stitution of India. Arts. 226 and 286(1) (b)-Questions of fact
to determine whether sale in the course of
import~Therefore if
State sales tax leviable-VFhether should be decided in writ proceed-ings.
C
The Sales Tax Officer rej«cled the assessee's claim that he was
not liable :.a be assessed to sale.5. tax in respect of certain sales of cement imported from Pakistan because (i) he was not a deal€f within the meaning of s.2(f) of the Rajasthan Act 29 of 1954, and (ii) the
sales in question were iii the cJurse of the import within the meaning of Art. 286(1) (b) of the Constitution. In the order of assessment. there was no 'discussion of the question of applicability of
D
Art. 286(1) (b).
The assessee therefore filed a petition under Art. 226 challenging the assessment order on the grounds taken before the Sales Tax
Officer and aiso claiming that the latter had failed to c<Jnsider the
impact and effect of Art. 286 (1) (b) on the facts of the case. The State
objected to the maintainability of the petition on the ground that the
!)2titioner should have avciled of the alternative remedy of
appeal
E
provided under the Rajasthan Sales Tax Act, but the High Court overru'ed this objection for the reeson, inter alia, that the petitioner had
challenged th~ appellant's jurisdiction to assess him to sales tax in
view of the provisions of Art. 286(1) (b). Upon dealing with the merits
cf the case, the High Court held that on the facts of the case it was
cl,ea: that the sales in question took place when the goods \\'ere in the
course o; imioort and therefore, by virtue of Art. 286(1) (b) were not
F
liable to sales tax. The court therefore quashed the order of assessment.
On appeal to this Court, it was contended on behalf of
the State that the High Court should have refused to entertain the
petition as many of the crucial facts had not been brought on the record by the respondent, and further-more, it was not established that
the cement was sold in the course of import into India.
G
HELD: The High Court should not have decided the disputed
questions of fact, but should merely have quashed the assessment
order on the ground that the Sales Tax Officer had not dealt with
the question raised before him and remanded the case. [77 Bl
OBITER: The High c·ourt should have declined to
entertain
the petition, as in this case there were no exceptional circumstanH
ces to warrant the exercis€ of the extraordinary jurisdiction under
Art. 226. It was not the object of Art. 226 to convert High Courts
into original or appellate assessing authorities whenever the assessee chose to attack an assessment order on the ground that a sa1e
was made in the course of import and was therefore exempt from
tax. The fact that an assessee might have to deposit sales tax when
filing an appeal could not in every case justify his bypassing the
remedies provided by the Sales Tax Act. There must be something
mor2 :n a case to warrant the entertainment of a petition under
.Art. 226, something going to the root of the jurisdiction of the Sales
72
SUPREME
COURT
REPORTS
[1965] 3 s.c.R.
Tax Officer something to show that it would be a case of ,palpable
A
injustice td the assessee to force him to adopt the remedies provided by the Act. f75 G, Hl
A.V. Venkateswaran v. Ramehand Sobhraj
Wadwani,
A.I.R.
1961 S.C. 1506, referred to.
C!vrL APPELLATE JURISDICTION: Civil Appeal No. 652 of 1964.
Appeal from the judgment and order dated May 7, 1963 of
B
the Rajasthan High Court in D.B. Civil Misc. Writ Petition No.
157 of 1962.
G.C. Kasliwal, Advocate-General for Rajasthan. K.K. Jain,
for the appellants.
M.D. Bhargava and B.D. Sharma, for the respondent.
c

## Text

A
SALES TAX OFFICER, JODHPUR AND ANOTHER
v.
M/S. SHIV RATAN G. MOHATTA
February 12, 1965
71
B
IP.B. GAJENDRAGADKAR, C.J., M. HIDAYATULLAH, J.C. SHAH AND
S.M. SIKRI, JJ.]
CoJ>stitution of India. Arts. 226 and 286(1) (b)-Questions of fact
to determine whether sale in the course of
import~Therefore if
State sales tax leviable-VFhether should be decided in writ proceed-ings.
C
The Sales Tax Officer rej«cled the assessee's claim that he was
not liable :.a be assessed to sale.5. tax in respect of certain sales of cement imported from Pakistan because (i) he was not a deal€f within the meaning of s.2(f) of the Rajasthan Act 29 of 1954, and (ii) the
sales in question were iii the cJurse of the import within the meaning of Art. 286(1) (b) of the Constitution. In the order of assessment. there was no 'discussion of the question of applicability of
D
Art. 286(1) (b).
The assessee therefore filed a petition under Art. 226 challenging the assessment order on the grounds taken before the Sales Tax
Officer and aiso claiming that the latter had failed to c<Jnsider the
impact and effect of Art. 286 (1) (b) on the facts of the case. The State
objected to the maintainability of the petition on the ground that the
!)2titioner should have avciled of the alternative remedy of
appeal
E
provided under the Rajasthan Sales Tax Act, but the High Court overru'ed this objection for the reeson, inter alia, that the petitioner had
challenged th~ appellant's jurisdiction to assess him to sales tax in
view of the provisions of Art. 286(1) (b). Upon dealing with the merits
cf the case, the High Court held that on the facts of the case it was
cl,ea: that the sales in question took place when the goods \\'ere in the
course o; imioort and therefore, by virtue of Art. 286(1) (b) were not
F
liable to sales tax. The court therefore quashed the order of assessment.
On appeal to this Court, it was contended on behalf of
the State that the High Court should have refused to entertain the
petition as many of the crucial facts had not been brought on the record by the respondent, and further-more, it was not established that
the cement was sold in the course of import into India.
G
HELD: The High Court should not have decided the disputed
questions of fact, but should merely have quashed the assessment
order on the ground that the Sales Tax Officer had not dealt with
the question raised before him and remanded the case. [77 Bl
OBITER: The High c·ourt should have declined to
entertain
the petition, as in this case there were no exceptional circumstanH
ces to warrant the exercis€ of the extraordinary jurisdiction under
Art. 226. It was not the object of Art. 226 to convert High Courts
into original or appellate assessing authorities whenever the assessee chose to attack an assessment order on the ground that a sa1e
was made in the course of import and was therefore exempt from
tax. The fact that an assessee might have to deposit sales tax when
filing an appeal could not in every case justify his bypassing the
remedies provided by the Sales Tax Act. There must be something
mor2 :n a case to warrant the entertainment of a petition under
.Art. 226, something going to the root of the jurisdiction of the Sales
72
SUPREME
COURT
REPORTS
[1965] 3 s.c.R.
Tax Officer something to show that it would be a case of ,palpable
A
injustice td the assessee to force him to adopt the remedies provided by the Act. f75 G, Hl
A.V. Venkateswaran v. Ramehand Sobhraj
Wadwani,
A.I.R.
1961 S.C. 1506, referred to.
C!vrL APPELLATE JURISDICTION: Civil Appeal No. 652 of 1964.
Appeal from the judgment and order dated May 7, 1963 of
B
the Rajasthan High Court in D.B. Civil Misc. Writ Petition No.
157 of 1962.
G.C. Kasliwal, Advocate-General for Rajasthan. K.K. Jain,
for the appellants.
M.D. Bhargava and B.D. Sharma, for the respondent.
c
The Judgment of the Court was delivered by
Sikri, J. This appeal by certificate of fitness granted by the
Ra jasthan High Court is directed against its judgment dated May
7, 1963, quashing the order of assessment dated March 5, 1962,
made by the Sales Tax Officer, Jodhpur City, in so far as it levied
J)
sales tax on the turnover of Rs. 23,92,252.75 np.
The respondent, Mis Shiv Ratan G. Mohatta, which is a
partnership firm having .its head office at Jodhpur, hereinafter referrd to as the assessee, claimed before the Sales
Tax Officer
that they were not liable to be assessed lo sales tax in respect of E
the ab~ve turnover because, firstly, the assessee was not a dealer
within s.' 2(f) of the Rajasthan Sales Tax Act (Rajasthan Act
XXIX of 1954) with respect to this turnover, and secondly, be·
cause the sales were in the course if import within Art. 186 (])(b)
of the Constitut:on. Although the Sales Tax Officer set out the
facts
of
the
case
relating
to
the
secJnd
ground,
F
he deemed it sufficient to assess this turnover on the ground that
the assessee was a dealer within s. 2(f) of the Rajasthan Sales Tax
Act, without adverting to the second ground. The facts on which
the assessee had relied. upon to substantiate his second ground
were these. The ·Zeal-Pak Cement Factory, Hyderabad
(Pakistan), hereinafter called the Pakistan Factory, manufactured
ceG
ment in Pakistan. The Pakistan Industrial Development Corporation, hereinafter called the Pakistan Corooration, entered into an
agreement with Mis Milkhirain and So~s (P) Ltd., Bombay, for
the export of cement manufactured in Pakistan to India. The State
Trading Corporatian of India entered into an agreement with the
said M/ s Milkhiram & Spns for the purchase of, inter alia, 35,000
H
long tons of cement to be delivered to it F.O.R. Khokhropar in
Pakistan, on the border of Rajasthan. The State Trading Corporation appointed .the assessee as its agent. broadly speaking, to
look after the import and the sale of the imported cement. The
modus operandi ad-0pted by the assessee for the sale of the cement
was as follows. It would obtain from a buyer in Rajasthan an
order under an agreement, a sample of which is ·on the record
S,T.O. 11. M/8 SHIV RA.TAN (Sikri, J.)
73
A The agreement fixed the price and the terms of supply. By one
clause the assessee disclaimed any responsibility regarding delay
in despatch and non-receipt of consignment or any loss, damage
or shortage in transit due to any reason whatsoever. The agreement further provided that "all claims for loss, damage or shortage, etc., during transit will lie with the carriers and our payB ments are not to be delayed on any such account whatsoever." It
was further provided in the agreement that the dues were payable in
advance in full, or 90% in advance and the balance within 15
days of billing plus sales tax and other local taxes. Clause 6 of the
agreement is in the following terms:
c
D
"A Post Card Loading Advice will be sent to you by
the Factory as soon as the wagons are loaded in respect
of your orders, and it will be your responsibility to arrange for unloading the consignment timely according
to Railway Rules. Ourselves, and the suppliers will not be
responsible for demurrage etc. on any account whatsoever. If the consignment reaches earlier than the Railway
Receipt, it is the responsibility of buyer to arrange for
and get the delivery timely against indemnity bond etc.
All the Railway Receipts etc. will be sent by registered
post by the Suppliers in Pakistan.".
After this agreement had been entered into, the assessee would
E send despatch instructions to the Pakistan Corporation. These
instructions indicated the name of the buyer-consignee and the
destination, and provided that the railway receipt and DI A should
be sent by registered post to the consignee. These instructions were
sent with a covering· letter to the Pakistan Corporation requesting
that these instructions be passed on to the Pakistan Factory for
I' necessary action. The Pakistan Corporation would then forward
these despatch instructions to the Zeal-Pak Cement Factory. Later,
the Pakistan Factory would advise the consignee that they had
"consigned to the State Bank of India, Karachi, the particular
quantity as per enclosed railway receipt and invoice." The State
Bank of India, Karachi, would endorse the railway receipt in fa6
vour of the consignee and send it to him by post. The consignee
would take delivery either by presentation of the railway receipt
or by giving indemnity bond to the Station Master undertaking
to deliver the railway receipt on its receipt.
The Sales Tax Officer did set out most of these facts and the
H contentions of the assessee in the assessment order but disposed
of the case with the following observations:
"All the above went to prove that the assessee was an
Agent of the non-resident dealer for the supplies in the
State. The Assessee was an importer and hence submitted
an application to the Custom Authority for the same. It
booked orders and issued sale bills. Under the terms of
an agreement of appointment of Agent, sale was to be effec-
74
SUPREME
COURT
REPORTS
(1965] 3 S.C.R,
ted by the Agent. Again while obtaining 'Jrders from the
A
buye_rs under condition S Sales Tax was to be paid by
the buyers to the assessee.
Thus to all intents and purposes the assessee is a dealer
who is liable for payment of Sales Tax to the State. They
have rightly collected this amount fr.om the buying dealers
B
and retained with them. This should come to the Government.".
We can find no discussion in the order on the question
raised by the assessee that the sales were made irl the course of
import within Art. 286(l)(b) of the Constitution.
The assessee then filed a petition under art. 226 of the Constitution and raised two contentions before the High Court, namely, (I) that the Sales Tax Officer failed to consider the impact and
the effect of Art. 286(l)(b) on the facts of the case, and (2) that
c
the Sales Tax Officer illegally held that the petitioner for all intents and purposes was a dealer liable to pay sales tax. The State D
raised an objection to the maintainability of the petition on the
ground that the petitioner should have availed of the alternative
remedy bf appeal provided under the Rajasthan Sales Tax Act, but
the High Court overruled this objection on the ground that "the
contention of the petitioner is that in view of Art. 286(l)(b) of the
Constitution, the respondent had no jurisdiction to assess the
E
petitioner to pay the 'Sales tax on the sale of goods in the course
of the import into the territory of India", and that even if there
was no total lack of jurisdiction in assessing the petitibner to pay
sales tax, the principle enunciated in A.V. Venkateswarn v Ramchand Sobharaj Wadhwani (') applied, and it was a case which
should not be dismissed in limine.
F
Then the High Court proceeded to deal with the merits of
the case. It first dealt with the question whether the petitioner was
a dealer within the meaning of s. 2(f) of the Rajasthan Sales Tax
Act, and came to the conclusion that the petitioner must be
deemed to be a dealer within the said s. 2(t).
G
Then it proceeded to deal with the question whether the
sales. had ta~en place in the course of import. The High Court held
that m the crrcumstances of the case these sales had not occasioned
th~ movement of goods but it was t~e first sale made by M / s MilkhJTam and Sons to the State Tradmg Corporation which had ocIl
casioned the movement of goods. Seconidly, it held that in the
circumstances of the case "the property in goods after the deliyery had bee~ taken by the petitioner on behalf of the State Trad1~g Corporation passed t? the State Trading Corporation. and
simultaneously to the ultimate buyers. Thus the property in the
(1) [1962] l S.C.R. 753.
I
~
S.T.O. v. Mjs SHIV RATAN (Sikri, J.),
75
A goods passed to the ultimate buyers in Rajasthan when the goods
had not reached the territory of India and were in course of import. In view of the authority of their I .ordships of the Supreme
Court fo J.V. <;okal and Co. (Private) Ltd. v. The Assistant Collector of Sales Tax (Inspection) & Others, ('), it must be takt:n
that the sale took place when the goods were in the course of the
B import and they should not be liable to the payment of the Sales
Tax by virtue of Art. 286(1)(b). ". In the result, the High Court
quashed the order of assessment in so far as it sought to levy tax
on the turnover in dispute. The Sales Tax Officer, Jodhpur, and
the State of Rajasthan having obtained certificate of fitness from
C the High Court filed this appeal.
The learned Advocate-General has raised two points before
us: First, on the facts of this case the High Court should have refused to entertain the petition, and secondly, that it has not been
established that the cement was sold in the course of import withD in Art. 286(l)(b).
Regarding the first point, he urges that an appeal lay against
the order of the Sales Tax Officer; no question of the validity of
the Sales Tax Act was involved and the taxability of the turnover
depended on where the property passed in each
consignment.
E This involved consideration of various facts and, according to him.
the crucial facts had not been brought on the record by the assessee
on whom lay the onus to establish that the sales were in the course
of import. He says that the assessee should have proved that each
railway receipt was endorsed by the State Bank of India, Karachi,
to the buyer before each consignment crossed the frontier.
F
We are of the opinion that the High Court should have declined to entertain the petition. No exceptional circuinstances exist in
this case to warrant the exercise of the extraordinary jurisdiction
under Art. 226. It was not the object of art. 226 to convert High
Courts into original or appellate assessing authorities whenever an
G
assessee chose to attack an assessment order on the ground that a
sale was made in. the course of import and therefore exempt from
tax. It was urged on behalf of the assessee that they would have
had to deposit sales tax, while filing_ an appeal. Even if this is so,
does this mean that in every case in which the assessee has to deposit sales tax, he can bypass the remedies provided by the Sales
H Tax Act? Surely not. There must be something mpre in a ca~e to
warrant the entertainment of a petition under art. 226, something
going to the root of the jurisdiction of the Sales Tax Officer, something to show that it would be a case of paipable injustice to the
assessee to force him to adopt the remedies provided by the Act.
But as the High Court chose to entertain the petition, we are not
inclined to dismiss the petition on this ground at this stage.
] 1960] 2 S.C.R. 8•12.
16
SUPREME
COURT
REPORTS
(1965] 3 S.C.R.
Regarding the second point, the learned Advocate-General A·
.argues that the onus was on the assessee to bring his case within
Art. 286(1)(b) of the Constitution in respect of the sales to the various consignees. He says that there is no evidence on record as to
when, the State Bank of India endorsed the railway receipt in favour of the ultimate buyer in respect of each consignment and
w.ithout this evidence it cannot be said that the title to the goods B
passed to the ultimate buyer at Khokhropar or in the course of import. He further urges that it would have to be investigated in each
case as to when the State Bank endorsed the railway receipt and
when the goods crossed the customs barrier. He says that it is not
contested that the ultimate buyer took delivery of goods without
producing the railway receipt by virtue of special arrangements C
entered into with the railway, and according to him, it is only when
the delivery was taken by the buyer in Rajasthan that the title
passed. By that time, accodring to him, the course of import had
ceased.
·
We do not think it necessary to consider the various arguD
ments addressed by the learned Advocate-General or the soundness of the view of the High Court on this point, because we are
of the opinion that the High Court should not have gone into this
question on the facts of this case. The Sales Tax Officer had not
dealt with the question at all, and it is not the function of the
High Court under art. 226, in taxing matters, to constitute itself E
into an original authority or an appellate authority to' determine
questions relating to the taxability of a particular turnover. The
proper order in the circumstances of this case would have been to
quash the order of assessment and send the case back to the Sales
Tax Officer to dispose of it according to law. Under the Rajasthan Sales Tax Act, and other Sales Tax Acts, the facts have to be F
found by the assessing authorities. If any facts are not found by
the Sales Tax Officer, they would be found by the appellate authority, and it is not the function of a High Court to find facts. The
High Court should not encourage the tendency on the part of the
assessees to rush to the High Court after an assessment order is
made. It is only in very exceptional circumstances that the High
G
Court should entertain petitions under art. 226 of the Constitution
in respect of taxing matters after an assessment order has been
made. It is true, as said by this Court in A. V. Venkateswarn v.
Ramchand Sobharaj Wadhwani(') that it would not be desirable
to lay down inflexible rules which should be applied with rigidity H
in every case, but even so when the question of taxability depends
upon a precise determination .of facts and some of the facts are
in dispute or missing, the High Court should decline to decide such
questions. It is true that at times the assessee alleges some additional facts not found in the assessment order and the State, after a
fresh investigation, admits these facts, but in a petition under art.
11) [1962] l S.G,R. 753.
$.T.O. v. M's SHIV RATAN (Sikri, .J.)
77
A 226 where the prayer is for quashing an assessment order, the
High Court is necessarily confined to the facts as stated in the
order or appearing on the record of the case.
In this case, as already indicated, we have come to the conclusion that the High Court should not have decided disputed
8 questions of fact, but should merely have quashed the assessment
order on the ground that the Sales Tax Officer had not dealt with
the question raised before him and remanded the case. Accordingly, we allow the appeal, set aside the order of the High Court, quash
the assessment order in so far as it relates to the turnover of
Rs. 23,92,252.75 np, and remit the case to the Sales Tax Officer
0 to decide the case in accordance with law. He will find all the
facts necessary for the determination of the question and come
to an independent conclusion untrammelled by the views expressed by the High Court. We may make it clear that we are not expressing any view wheth~r the finding of the High Court that the
property in the goods passed simultaneously at Khokhropar
ttJ
D the State Trading Corporation and the ultimate buyer is· correct
or not. There would be no order as to costs in this appeal.
Appeal allowed.
li'B(D)2SCI-7