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TMI Blog1959 (9) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... n Original Suits Nos. 32, 31, 35, 36, and 37 of 1952 on the file of the District Court. All these suits were tried together and common evidence was recorded in Original Suit No. 31 of 1952; they were disposed of by a common judgment on the 30th day of November, 1953, by which all the suits were dismissed. Regular Appeal No. 106 of 1955 is by the plaintiff in Original Suit No. 28 of 1952 on the file of the District Court, Bellary. This and four other suits. viz., Nos. 25, 26, 27 and 29 of 1952 were tried together and common evidence was recorded in Original Suit No. 29 of 1952. They were disposed of by a common judgment dated the 30th day of November, 1953, by which all the suits were dismissed. The plaintiff in Original Suit No. 25 of 1952 had also filed Regular Appeal No. 105 of 1955 before this Court, but that appeal abated by reason of the appellant having died on 31st January, 1956, and the petitions presented in July, 1957, to this Court to set aside the abatement and bring on record the legal representative of the deceased appellant were dismissed this Court declining to excuse the delay in seeking to set aside the abatement. Second Appeals Nos. 531 and 532 of 1954 arise re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng goods and expressed their dissent from them. It was pointed out that the question whether a commission agent was or was not a dealer within the meaning of the Act was a mixed question of fact and law and that therefore the decision thereon must necessarily depend upon the nature of the business transacted by the commission agent. The opinion of the Full Bench was that where the commission agent acts merely as a broker, that is to say an agent employed for the purpose of making a bargain for another and in the course of such agency merely brings about privity of contract between the buyer and the seller without himself either buying or selling, cannot be a dealer. If, however, the nature of the transaction is such that the commission agent sells goods under the authority or with the consent of the owner he certainly transfers property in goods and that therefore the transaction would be a sale within the meaning of clause (h) of section 2 of the Madras General Sales Tax Act being a transfer of property in goods by one person to another, and the commission agent would therefore be a dealer within the meaning of clause (b) of the same section as a person who carries on the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in respect of cotton under section 5 of the Act and prayed for the refund of the said fee levied from him. The prayer in Original Suit No. 36 of 1952 out of which regular Appeal No. 109 of 1955 arises is similar. The sums claimed are Rs. 1,130-12-9, Rs. 2,226-4-6 and Rs. 2,604-8-6 being the tax collected from the plaintiff in respect of his commission agency turnover for the years 1947-48, 1948-49 and 1949-50. In Original Suit No. 37 of 1952 out of which Regular Appeal No.110 of 1955 arises, the prayers are for the recovery of similar tax paid for the years 1947-48, 1948-49 and 1949-50 in the sums of Rs. 2,356-11-0, Rs. 5,415-5-6 and Rs. 6,748-7.0 respectively with interest, for recovery with interest of a fee of Rs. 150 paid for a commission agency licence under section 8 of the Act for one year and total fees of Rs. 350 paid during the 3 years in respect of licences for commission agency business in cotton taken out under section 5 of the Act; the plaint also contains a prayer for an injunction restraining the defendant from proceeding to collect tax imposed on the plaintiff by way of provisional assessment in respect of the year 1950-51. The plaint in Original Suit No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated the terms of the licences and thus forfeited the exemption claimable by virtue of such licence. In cases of dealings in cotton covered by licence under section 5 of the Act, the turnover had in fact been exempted from tax and the relief by way of refund of licence fee is resisted on the same ground, viz., that the plaintiffs concerned are dealers within the meaning of the Act. Two other technical pleas are also taken, viz., that the suits are not maintainable at law and secondly that they are barred by limitation having been filed beyond the period of six months prescribed under section 18 of the Act. The learned District Judge while rejecting the technical pleas raised by the defendant State upheld its contention that all the plaintiffs were dealers within the meaning of the Act. He took the view that the facts established by evidence were not the same as or similar to those in Veerabhadrappa's case[1950] 1 S.T.C. 245; I.L.R. 1951 Mad. 257. , so as to establish the plaintiffs' contention that they were mere brokers. In Original Suit No. 9 of 1951 on the file of the Additional District Munsiff of Bellary out of which Second Appeal No. 531 of 1952 arises the plaintiff clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishes that they were mere brokers and therefore not dealers within the meaning of the Act at all. They, therefore, contend that they were not liable to pay any tax at all and the tax levied upon them has been illegally levied and that therefore they are entitled to come to Court asking for the reliefs set out in their plaints. On behalf of the respondent-State while controverting this contention of the appellants it has been further urged that the suits themselves were not maintainable and alternatively if they can be said to be maintainable as suits permitted to be filed by virtue of section 18 of the Act, they should have been filed within the period of six months prescribed therefor under the said section. As the technical pleas raised on behalf of the State go to the root of the matter, it is proper that we should consider those pleas in the first instance. In the judgment of the learned District Judge there is hardly any discussion on these points. On the question of limitation he simply followed the decision of the Madras High Court reported in State of Madras v. Abdul Khader[1953] 4 S.T.C. 202; (1953) 2 M.L.J. 181., and held that the suits are governed by Article 62 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Original Suit 37 of 1952 was filed on the 3rd of October, 1951, and Original Suit 28 of 1952 on the 3rd of July, 1951. The learned counsel on behalf of the appellants in the Second Appeals argues that before the incorporation of section 18-A into the Act suits to set aside or modify orders of assessment passed under the Act were held to be maintainable and that therefore his clients' suits cannot be defeated by an appeal to that section and further they were held to be governed by Article 62 of the First Schedule of the Indian Limitation Act. The learned counsel on behalf of the appellants in the Regular Appeals contends that although his suits were filed after the 15th of May, 1951, they relate to assessments or orders completed or passed before that date and that therefore the right of suit which he did possess before the coming into force of section 18-A cannot be said to have been taken away by that section, which is only prospective in operation and not retrospective. In the light of these contentions it is necessary to examine the legal position under the Act as it stood before the amendment of 1951 as well as the position subsequent thereto. There is no obscurity regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reference to a common law right and the right to resort to the ordinary civil Courts in the event of any invasion of that right, his Lordship obviously has in mind the general provisions of section 9 of the Code of Civil Procedure, according to which Courts are given jurisdiction to try all suits of civil nature excepting only suits of which the Court's cognizance is either expressly or impliedly barred. To the same effect are the observations of Lord Thankerton in Secretary of State v. Mask and Co. A.I.R. 1940 P.C. 105; I.L.R. 1940 Mad. 599. where his Lordship states that it is settled law that the exclusion of jurisdiction of the civil Courts is not to be readily inferred, but that such exclusion must either be explicitly expressed or clearly implied. He also adds that the determination of the question must rest on the terms of the particular statute under consideration and decisions on other statutory provisions are not of material assistance except in so far as general principles of construction are laid down. In cases where the statute contains specific provision limiting or excluding the jurisdiction of civil Courts, the extent of the exclusion or the ambit of the civil Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er proceeding is instituted within six months from the date of the act complained of." There can be no question that the liability to pay sales tax was created by this Act itself and it cannot be described as a common law liability. A person aggrieved by the imposition of such a liability on him by an order under section 9 was given a right of appeal under section 11. The Board of Revenue also had the lower in revision to correct the mistakes of the taxing officers. In one sense, therefore, a machinery was created by the statute providing remedies to assessees aggrieved by improper or unjust orders of assessment. It is also clear that the Act as it then stood did not contain any provision expressly excluding or ousting the jurisdiction of civil Courts. On the contrary, the provisions of sections 17 and 18 prescribing certain restrictions in respect of certain class of suits suggested that there was a right of suit independently of or notwithstanding the Act and that the statute proceeded to restrict that right only in particular cases. The effect of these provisions, therefore, militates against any suggestion of an implied ouster of the jurisdiction of civil Courts by reason of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y local board, its president, etc., in respect of any act done or purporting to be done in execution or intended execution of the Act or any rule, bye-law, etc., under it, unless two months notice had been given to the proposed defendant and every such proceeding should be commenced within six months after the date on which cause of action arose. There are similar provisions in the City Municipal Act and the District Municipalities Act. Thus, under those Acts provision is made for previous notice and a certain period of limitation in respect of suits against local boards and its officers or servants and in respect of taxation the jurisdiction of civil Courts is ousted only in so far as the taxing authorities comply in substance and effect with the provisions of the statute. That these are not isolated provisions but have a history behind them is clear from the discussion contained in Justice Varadachariar's judgment in Meyyappa Chettiar's case[1936] 4 I.T.R. 341; I.L.R. 1937 Mad. 211. already referred to. In that judgment his Lordship states that one well-known class of cases where the statute law has advisedly enacted only a restricted exclusion of civil jurisdiction is that relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a Full Bench of the Madras High Court in Panchayat Board, Thiruvothiyur v. The Western India Matches Company I.L.R. 1939 Mad. 566; A.I.R. 1939 Mad. 421., held that the section is limited to suits for compensation or damages and hence suits against local boards for refund of house tax alleged to have been illegally collected do not fall within that section and that therefore the latter class of suits is not governed by the limitation of six months prescribed in that section. Following the principles stated in that decision, Panchapakesa Ayyar, J., of the same High Court held in State of Madras v. Abdul Kadar Tharaganar[1953] 4 S.T.C. 202; (1953) 2 M.L.J. 181. , that a suit for refund of sales tax illegally collected is not governed by the rule of limitation prescribed in section 18 of that Act, but by Article 62 of the First Schedule of the Indian Limitation Act as for a suit for money had and received. The learned counsel for the appellants have also brought to our notice the Bench ruling of the Andhra Pradesh High Court reported in Santhanna v. The State of Madras (Now Andhra Pradesh) [1958] 9 S.T.C. 80; A.I.R. 1958 A.P. 670., which has followed the above rulings of the Madras H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 it was possible, as already pointed out, to argue that there was no express bar against suits of that nature and further that the implication of the statute was in favour of such a right of suit rather than against it. With the introduction of the new hierarchy of tribunals with the High Court at its apex, every conceivable question which can be raised with reference to an assessment order including even a question about the constitutional validity of the Act itself can be raised by the assessee. It may be that officers and even the appellate tribunal being only creatures of the statute do not have the power to go into questions of constitutional validity of the statute, but no such limitation can be postulated with reference to the High Court and a point of law which the High Court 'can decide, we have no doubt, would include a point about the constitutional validity of the statute or of any of its provisions or the rules made thereunder. Thus both by explicit expression and by clear implication the right of suit to set aside or modify an assessment order is taken away. As the wording of section 18-A is the same as that of section 67 of the Indian Income-tax Act, it is unneces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de jurisdiction in a civil Court to set aside or modify an assessment." In the latter case their Lordships observe that the only remedies open to the taxpayer are to be found within the four corners of the Act and that this view of his rights harmonizes with the provisions of section 67 that no suit shall be brought in any civil Court to set aside or modify any assessment made under the Act. The argument that the present suits for refund of tax said to be illegally collected are not in truth suits to set aside or modify the orders of assessment cannot be accepted. In form they may not be suits to set aside or modify the assessment orders; in substance, linwever, they do seek to do so because under section 10 of the Act there is an obligation to pay the tax assessed and so long as the order and the notice of demand stand repayment cannot be ordered. Dealing with a similar argument, this is what their Lordships in Raleigh Investment Co.'s case[1947] 15 I.T.R. 332; 74 I.A. 50. state: "In form the relief claimed does not profess to modify or set aside the assessment. In substance it does, for repayment of part of the sum due by virtue of the notice of demand could not be ordered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find it difficult to follow this argument. The section has been incorporated into the Act. When therefore, it refers to the Act such reference must be read as relating to the relevant provision of the Act whether it existed before the amendment or was brought in by the amendment. The assessment orders mentioned in the section are those described as "made under this Act". The plain meaning of the expression would take in orders already made before the amendment also. If the intention was to restrict the operation of the section only to orders made after the amendment came into force, the wording would have been different. As the section stands and as the statute stands as amended, we do not see any reason to restrict the operation of the section in the manner contended on behalf of the appellants. There is also no question of any retrospective operation being given to the section. On and after the coming into operation of the section, no suits are to be filed to set aside or modify any assessment made under the Act. The section does not purport to affect pending suits or suits which have already been filed before the 15th of May, 1951. On the date on which the suits, which are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be questioned in any criminal Court in any prosecution. His Lordship puts it on the ground that before 1st of January, 1948, the accused person had the right to question the validity of an assessment and that no man can be said to lose such an existing right unless deprived specifically and unequivocally by the new enactment. One may ask, with respect, whether such a right, if any, has not been specifically or unequivocally taken away by the section which is very clear in its wording. Indeed the earlier decisions of the Madras High Court proceeded not so much on the basis of the right of the assessee to question the validity of the assessment as on the general principle that the burden was upon the prosecution to establish affirmatively that the accused was legally liable to pay the tax and had failed to pay it. The alteration in the law, therefore, is merely in the matter of mode of proof rather than in respect of any rights of any party. Although to make a law to punish that which at the time when it was done was not punishable is contrary to sound principles and to our Constitution, a law which merely alters the procedure or the mode of proof may, we apprehend, with perfect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether and establish privity of contract between them or they were entrusted with the custody and dominion over the goods by the sellers with authority to transfer the property therein to the purchasers. Although the actual facts or the circumstances relating to the transactions carried on by these appellants is largely a question of fact depending upon the evidence adduced in each case, the question whether on the facts so established the commission agents were mere brokers or agents with authority to transfer property is a matter of law. The appellant in Second Appeal No. 531 of 1954, who is the plaintiff in Original Suit No. 9 of 1951 on the file of the Court of the District Munsiff of Bellary, examined four witnesses in substantiation of his claim that he was only a broker. P.W. 1 Pedda Malla Reddi and P.W. 2 Konda Reddi are two ryots who bring their goods, viz., groundnuts, for sale through the plaintiff. P.W. 3 Bhimalingappa is a clerk of one of the purchasers. P.W. 4 Narayanappa is plaintiff's own clerk. Briefly the description of the transactions as given by these witnesses is as follows: The ryots bring their goods to the plaintiff's shop early in the morning. These are bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber the names of the purchasers of his goods. There is no doubt however that the transactions are put through in the presence of both the selling ryot and the purchasing merchant and the price is settled in consultation with the ryot, who sells only if the price is acceptable to him. It has also been elicited from P.Ws. 1 and 2 that they look to the plaintiff alone for payment of the money to them and hold him responsible both for the goods and for the payment of the money. The commission and other deductions made are consented to by both the parties. The only witness examined for the defendant-State is the Deputy Commercial Tax Officer, who was the assessing authority as Assistant Commercial Tax Officer during the relevant period. He admits that he was not present when the actual sales took place. Therefore, his evidence is of no assistance to the Court in ascertaining the exact circumstances in which the transactions took place. His statement therefore that "the buyers have no contact with the seller principal" is of no value in the face of the clear evidence on behalf of the plaintiff that the transactions are put through in the presence of both the buyer and the seller and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a sentence in his evidence along with a sentence in the evidence of another witness and to construct a legal theory that the plaintiff had what the lawyers call full dominion over the goods with the authority to transfer property within the meaning of the Sale of Goods Act. In the light of the evidence that the goods are first placed in the plaintiff's shop separately marked by them, that the prices are settled after discussion between the ryots and the intending purchasers and that the ryots agree to sell the goods when the prices fixed are acceptable to them, these sentences extracted from the evidence of the two witnesses do not, in our opinion, mean anything more than that they utilize the premises of the plaintiff and his services to find a purchaser for goods and to sell them at a price acceptable to them. Examined in the proper perspective, the facts established by the evidence do not have the legal effect contended for on behalf of the respondent-State. The factual position is that the sale takes place in the presence of the selling ryots and the purchasing traders and every element in the completion of the contract of sale is settled and decided after discussion between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the completion of the bargain. This fact is not disbelieved by the learned District judge. He actually states that "there is nothing strange in their being present at the time of the weighment and the sale" and further that "it is also quite possible that they take part in the bargaining of the deduction or allowance to be made for the earth and other rubbish found in the goods brought by them," but strangely enough concludes "but so far as the sale is concerned there is no privity of contract between them and the purchasers." It is difficult for us to accept how the last inference flows when it is accepted that the sellers are present on the occasion and take active part in the bargain and in the settlement of the price. Once that fact is established, it is in our opinion impossible to contend that the owner of the goods, who is present at the transaction, discusses and settles the prices and says that he is selling the goods, has nothing to do with the transaction of sale. In our opinion, the only possible inference is that he himself concludes the contract of sale. The plaintiff's part is only to bring the two parties together and to establish privity of contract between them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nobody's case that the transaction of sale of the type concerned in this case was anything but a single transaction or that it could be theoretically split up into two transactions of a purchase by the dallali from the ryots and an immediate sale by him to the traders. On the question of limitation we have, following the opinion of the Madras High Court, held that the suit is governed by Article 62 of the First Schedule of the Indian Limitation Act and not by the period of six months mentioned in section 18 of the Madras General Sales Tax Act. The payments of tax the recovery of which is claimed in this suit, were made in July and December, 1949, and the suit was filed on the 6th of January, 195 1, and was therefore in time. The result is Second Appeal No. 531 of 1954 is allowed and the appellant's suit, Original Suit No. 9 of 1951 on the file of the Court of the District Munsiff of Bellary, is decreed as prayed for. The appellant will have his costs from the respondent in all the three Courts. Proceeding now to consider the merits of the claim of the apellant in Second Appeal No. 532 of 1954, it has first to be observed that the question in the form in which it has been disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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