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TMI Blog1963 (4) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 1961. The Madura Mills Co. Ltd., the respondent, is a limited company dealing in yarn. In December, 1950, it returned a total turnover of Rs. 15,27,61,833-8-4 under the Madras General Sales Tax Act, 1939, before the Deputy Commercial Tax Officer, Madurai. The Officer determined the net turnover at Rs. 15,44,09,109-3-11. The assessee preferred an appeal from that assessment before the Commercial Tax Officer, Madurai South. It raised the contention that a sum of Rs. 1,44,294-14-4 was wrongly included by the assessing authority in the purchase value of cotton, as that amount represented the commission paid by it to Comorin Investment Trading Co., another limited company. It further contended that another sum of Rs. 81,546-0-1 representing the sale proceeds realised by selling the empty drums and other miscellaneous articles was not includible in the business turnover. The Commercial Tax Officer upheld the contention in relation to a sum of Rs. 1,44,294-14-4 and excluded it from the total turnover, but negatived the other contention in regard to the sum of Rs. 81,546-0-1. The respondent then preferred a revision petition before the Deputy Commissioner of Commercial Taxes, and rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall, subject to the provisions of sections 12 to 12-C, be final. Section 12(1) prescribes that the Commercial Tax Officer may suo motu or in cases in which an appeal does not lie to him, on application, call for and examine the record of any order passed or proceeding recorded under the provisions of the Act by any officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding and may pass such order with respect thereto as he thinks fit. Similar powers of revision have been given to the Deputy Commissioner and to the Board of Revenue under section 12, subsection (2), and section 12, sub-section (3), respectively. Section 12-A provides a remedy by way of further appeal by the assessee to the Appellate Tribunal objecting to an order of assessment. The Tribunal has power to entertain an appeal from an order of the Commercial Tax Officer, made under section 11 or section 12(1) or from that of Deputy Commissioner acting suo motu under section 12, sub-section (2). Subsection (9) of section 12-A enacts that every order passed by the Appellate Tribunal shall, subject to the provisions of sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight be viewed as an infringement of a right. It is true that a subject cannot be taxed except in accordance with the law, vide Article 265 of the Constitution. But it is equally true that there is no immunity guaranteed to the subject to be free from tax burden as a fundamental right under Chapter III of the Constitution. We have to bear in mind this aspect of the matter in dealing with the question whether the proceedings under the Act can be called civil proceedings within the meaning of Article 133 of the Constitution. Before we refer to the provisions of the Constitution and discuss the point raised before us regarding the maintainability of this application, we would like to refer to the provisions of the Indian Incometax Act which is also a taxing enactment, more or less of the same pattern as the Madras General Sales Tax Act. There are, of course, vital differences between the two enactments, particularly with regard to the High Court's jurisdiction in dealing with the orders of the subordinate taxing authorities. The jurisdiction of the High Court under section 66 of the Indian Income-tax Act is purely of a consultative or advisory character, and this has been pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssification of proceeding. In other words, the contention urged was that the dichotomy of civil and criminal, in relation to proceedings of a High Court, is complete and exhaustive, and what is not civil is criminal and what is not criminal is civil. In our opinion, this contention cannot stand a moment's scrutiny, if only the other provisions in the Constitution relating to appeals to the Supreme Court are looked into. Article 132 provides that an appeal shall lie to the Supreme Court from any judgment, decree or final order of a High Court in the territory of India, whether in a civil, criminal or other proceeding, if the High Court certifies that the case involves a substantial question of law as to the interpretation of the Constitution. The words "other proceeding" in this Article unmistakably show that the framers of the Constitution did not intend to bring about a complete classification of the proceedings under the two labels, civil and criminal. Article 134 deals with appeals in criminal matters. It is not necessary to refer to the terms of that provision. Article 135 enacts that, until Parliament by law otherwise provides, the Supreme Court shall also have jurisdiction an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ....Article 133 deals with appeals in civil matters and the same words are used here also. Article 134 deals with appeals in criminal matters, and the words used in it are: 'appeal......from any judgment, final order or sentence'. In Article 136, the words 'judgment' and 'decree' which are used in Articles 132 and 133 are retained........... It is obvious that these words greatly widen the scope of Article 136. They show that an appeal will lie also from a determination or order of 'any tribunal' in any cause or matter." The scheme of the constitutional provision relating to appeals to the Supreme Court rather suggests that the proceedings capable of being appealed against are susceptible of a bifurcation into two well defined categories of civil and criminal mutually exclusive but together exhaustive. A Division Bench of this Court consisting of Rajamannar, C.J., and Venkatarama Aiyar, J., considered the question whether the orders passed under section 21(2) of the Chartered Accountants Act are not open to appeal to the Supreme Court under Article 133 of the Constitution. One of the questions raised before the learned Judges was whether they constituted a civil proceeding. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of the proceeding and deals with it, presumably in the exercise of its ordinary powers of appellate or revisional jurisdiction. These arguments deserve serious consideration, particularly because they appear to be plausible and prima facie well founded Regarding the nature of proceedings arising out of taxing enactments, there are decisions of other High Courts which have taken the view that they are not civil proceedings. In Tobacco Manufacturers (India) Ltd. v. The State[1951] 2 S.T.C. 73; 30 Pat. 174., a Division Bench of the Patna High Court had occasion to consider whether an order passed by the High Court under section 21 of the Bihar Sales Tax Act is of a civil nature which would attract the applicability of Article 133 of the Constitution. The matter was referred to a Full Bench, as there was difference of opinion between the two learned Judges hearing the application for leave to appeal in the first instance. The opinion of the Full Bench was that the decision of the High Court under section 21 of the Bihar Sales Tax Act did not arise out of a civil proceeding. One of the points placed before the Full Bench was whether the decision of the High Court constituted a judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n income-tax cases, in cases which come up before different kinds of tribunals and in a variety of other cases. I agree with Das, J., therefore, that the observations made in those cases (Pritam Singh v. The State [1950] S.C.R. 453; A.I.R. 1950 S.C. 169. and Bharat Bank Ltd. v. The Employees of the Bharat Bank [1950] S.C.R. 459; A.I.R. 1950 S.C. 188.) seem to imply that income-tax cases and sales tax cases are not 'civil proceedings' within the meaning of the Constitution Act." A Full Bench of the Nagpur High Court in Sriram Gulabdas v. Board of Revenue (3), dealt with the question whether the proceedings under section 23 of the C.P. and Berar Sales Tax Act can properly be regarded as civil proceedings. It was held by a Full Bench (Hidayatullah, Deo and V. R. Sen, JJ.) that they were revenue proceedings and not civil proceedings. Hidayatullah, J. (as he then was), delivering the opinion of the Full Bench, stated thus at page 3: "I have no doubt that this is not a civil proceeding at all. These proceedings arise out of collection of revenue and are before this Court merely for the purpose of advice which the Board of Revenue seeks or which this Court enjoins upon the Board, upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hips' opinion, the correct meaning of the phrase 'assessment made under this Act' is an assessment finding its origin in an activity of the assessing officer acting as such. The circumstance that the assessing officer has taken into account an ultra vires provision of the Act is in this view immaterial in determining whether the assessment is 'made under this Act'. The phrase describes the provenance of the assessment: it does not relate to its accuracy in point of law." Again at page 54 Lord Uthwatt observed: "In conclusion, their Lordships would observe that the scheme of the Act is to set up a particular machinery by the use of which alone total income assessable for income-tax is to be ascertained. The incometax exigible is determined by reference to the total income so ascertained, and only by reference to such total income. Under the Act (section 45) there arises a duty to pay the amount of tax demanded on the basis of that assessment of total income. Jurisdiction to question the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay arising by virtue of the assessment. The only do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, the proceeding would not have been anything but a revenue proceeding. The mere fact that the petitioners filed two applications for writs in the High Court against the assessment orders does not, in my opinion, change the nature of the proceeding......... The proceeding was not a civil proceeding as there was no right of suit, and I do not think it can be said to be a civil proceeding within the meaning of Article 133 of the Constitution." The principle of this decision was followed by this Court in Dhanalakshmi Ammal v. Income-tax Officer [1958] 34 I.T.R. 738. At page 744, Rajamannar, C.J., quoting the above observations of the learned Chief Justice of the Patna High Court, observed thus: "If the application filed by the petitioner before us under Article 226 of the Constitution had been to quash the assessment order it may well be said that it is not a civil proceeding on the above reason. But such is not the relief sought by the petitioner." In The I Additional Income-tax Officer, Karaikudi v. R. Shanmugha Rajeswara Sethupathi [1963] 48 I.T.R. 647; 76 L.W. 18., we referred to these decisions and held that an order passed in a writ petition quashing the order of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of a dispute of that character, it would require, in the opinion of the Board, a specific limitation to exclude the ordinary incidents of litigation." It seems to us that the true principle is that the nature of the proceeding should have to be determined having regard to the nature of the rights of parties involved in a proceeding and not from the nature of the forum in which the rights happen to be decided. The fact that a civil court is seized of a particular dispute may be a relevant criterion throwing light on the nature of the proceeding, but would not by itself be either sufficient or conclusive to hold that such a proceeding is of a civil nature. It is not an axiom that whatever is determined by a civil court is a civil proceeding. We may again refer to the decision in Krishnaswamy v. Council etc. of IndiaA.I.R. 1953 Mad. 79; 23 Comp. Cas. 68. and the observations of Venkatarama Aiyar, J. (as he then was) in particular relation to the question whether an adjudication by the High Court arising out of the exercise of jurisdiction under a special enactment would attract the applicability of Article 133 of the Constitution. As pointed out already, that was a case in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or marital powers and the like. We are concerned in this case to find out whether a tax liability cast upon a subject under the taxing enactment involves a civil right or in other words whether an assessment proceeding, culminating in the High Court, can be said to be a civil proceeding. The right of the Government to tax the subject is a sovereign right. Notwithstanding the dictum of Marshal, C.J., in McCulloch v. Maryland4 L. Ed. 579. that the power to tax involves the power to destroy, it is now fairly settled law that there is no infringement of property or infraction of a fundamental right under the Constitution when the subject is burdened with a tax. It seems to us that an assessment to tax, however onerous it may be to the subject, is in no way associated with the rights of the subject in regard to ownership of property or of carrying on business or of following any profession or vocation. We do not wish to dilate upon the subject further, as we are clearly of opinion that a proceeding under a taxing enactment cannot be called a civil proceeding. It is not necessary to refer to decisions dealing with the question whether proceeding under special enactment can be called ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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