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TMI Blog1958 (8) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... to May 1956 they showed the real value of the goods as the wholesale price of the goods in the United Kingdom, and after May 1956 they reverted to their original practice of showing the invoice value. In this appeal we are concerned in all with 10 consignments. The first six consignments arrived in India in April 1956 and September 1956 and the value of these consignments was shown in the bill of entry as . 72-73 per gram. This was the invoice price. The Customs authority did not accept the invoice value and assessed these six consignments on the basis of the price of # 87-10-0 per gram and levied assessment on that basis. Thereupon the appellants made applications for refund claiming the difference between # 87-10-0 per gram and # 72-3-9 per gram. The Customs authority on its part issued what has been described as short levy notices. These notices were in respect of liability to pay a larger amount and it was stated in these short levy notices that pending finalisation of the investigation an amount was mentioned as an anticipated less charge. After the six consignments had arrived, the price of vitamin B.12 was reduced from # 72-3-9 to # 65-2-3. The seventh consignment arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roversy between the appellants and the Customs authorities, is this. What the Customs authorities have done and what they seek to justify is that they have taken into consideration identical goods Vitamin B.12 manufactured by Glaxo Ltd. of United Kingdom and imported by Voltas Ltd. and added to the invoice price shown in the invoice of Voltas Ltd. 12 1/2 per cent discount and the question that we have to decide is whether, looking to the language of the statute and the liability of the appellants to pay customs duty, this assessment is in accordance with law. 3. The first and the most imported question that has been debated at the Bar is whether the order made by the Customs authorities is an administrative order or a quasi-judicial order. The consequences of holding the order to be quasi-judicial are important and serious because the consequence is not merely this that in this particular case we would be in a position to issue a writ of certiorari against the Customs authorities and to correct any error of law apparent on the face of the record. If he consequences stopped at that, even then we would have to seriously consider the arguments advanced by the Advocate General and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test which has become a locus classicus in any decision dealing with quasi-judicial or administrative orders, and the test is the famous test laid down by Lord Justice Atkin in Rex v. Electricity Commissioners; Ex parte, London Electricity Joint Committee Co., (1924) 1 KB 171, and the test is -- if repetition may be forgiven - Whenever any body of persons having legal authority to determine questions affecting the rights of subject, and having the duty to act judicially, act in excess of their legal authority they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs. Therefore, this definition lays down three tests. You must have a body of persons who must have legal authority to determine questions, the second test is that the questions which they have to determine affect the rights of subjects, and the third test is that a duty must be imposed upon this body of persons to act judicially. These can be no doubt in this case that the first two tests are satisfied. The Customs officer who makes the assessment has to determine certain questions. There is also no doubt that these questions affect the rights of subjects and affec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion that that tribunal or authority has to act judicially. If that were the true test, undoubtedly the task of the Courts would be considerably simplified. Take this very case. It is perfectly true that the Customs authorities have to ascertain facts according to law. The Customs authorities have to determine what the nature of the goods is and what is the duty which the importer has to pay according to the provisions of the Sea Customs Act. It is equally clear that in ascertaining those facts the Customs authorities have not got to be influenced by any questions of policy or expediency. They must do their duty honestly and impartially. Therefore, if the test suggested by the Advocate General were sound, then without considering the other provisions of the statute we must come to the conclusion that the Customs authorities in passing orders of assessment must act judicially and that an order of assessment is a quasi-judicial order. But unfortunately such simple tests are always denied to Courts of law. When we look at the English decisions on which the Advocate General has relied, it will be found that the learned Judge there had emphasised the facts that each case must be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngland. The question was with regard to legal aid and a debtor applied for legal aid and a certificate for legal aid was given to him. The debtor then became insolvent and the trustee in bankruptcy then applied for the legal aid certificate which had been given to the debtor. The legal aid certificate was given to the trustee to continue the bankrupt's claim against he defendant which happened to be a company. Thereupon the company applied for an order of certiorari on the ground that the committee, under the Legal Aid and Advice Act of 1949 which had issued the certificate, had no power to grant a certificate to a trustee in bankruptcy, and the question that was raised and discussed at great length was whether the order passed by this committee was an administrative order or a quasi-judicial order, because a writ of certiorari could not have been issued unless it was held that the order passed by the committee was a quasi-judicial order. At pages 415 and 416 the provisions of the Legal Aid and Advice Act are set out, and in his able argument Sir Hartley Shawcross points out that it would be shocking if a committee consisting entirely of lawyers had not to make its decisions ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot refuse legal aid because the fund is becoming depleted or because they think that certain forms of action should be discouraged. They have to decide the matter solely on the facts of the particular case, solely on the evidence before them and apart from any extraneous considerations. In other words, they must act judicially, not judiciously. It is perfectly true that in the context of this case, considering the provisions of the Act, Mr. Justice Parker did attach great importance to the fact that the committee had to decide the matters on facts and evidence without permitting extraneous considerations to affect their decision. But to say that in this passage the English Court has laid down an unfailing and unvarying test, is to read this passage out of its context. This passage must be read with the caution which the learned Judge has administered earlier to which reference has been made. 7. A decision of the Privy Council was also strongly relied upon and that is the case of Secretary of State v. Mask and Co. There is a passage in the judgment of the Privy Council which, divorced from its context, may lead to the conclusion that where tribunals are set up which may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a statutory tribunal was set up was sufficient for a Court to take the view that it was the duty of that tribunal to act in conformity with the fundamental principles of judicial procedure. 8. Reliance was also placed by the Advocate General on a decision of the Calcutta High Court in Assistant Collector v. Soorajmull AIR1952Cal656 . That is a judgment of Chief Justice Haries and Mr. Justice Banerjee, and passage in the judgment of the learned Chief Justice which is relied upon for another purpose and in another context is that appeals and revision provided under the Sea Customs Act are in the nature of appeals from Caesar to Caesar and might not be regarded with any great confidence by persons in the position of the respondents in the case. But on the point that we are at present considering, reliance was placed on the judgment of Mr. Justice Banerjee, and Mr. Justice Banerjee, with respect, with admirable research, has set out all the relevant decisions on the point; he has also told us what the qualifications of a Judge should be, quoting Dr. Robson, but after all this he comes to the conclusion that he has simply applied the law laid down in Advani's case [1950]1SCR621 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons by whom the impugned decision is made but the nature of the process by which he or they are empowered to arrive at their decision. When it is a judicial process or a process analogous to the judicial, certiorari can be granted. And at p. 77 he poses the question: But it does not seem to follow necessarily from this that the Controller must be acting judicially in exercising the power. Can one not act reasonably without acting judicially? And at the same page he emphasises the duty to act judicially by saying: If he is not under a duty so to act then it would not be according to law that his decision should be amenable to review and, if necessary, to avoidance by the procedure of certiorari. And at p. 78 he cites with approval the judgment of Lord Hewart C.J. in Rex v. Legislative Committee of the Church Assembly, Ex parte, Haynes Smith, (1928) 1 KB 411: In order that a body may satisfy the required test it is not enough that it should have legal authority to determine questions affecting the rights of subjects; there must be super-added to that characteristic the further characteristic that the body has the duty to act judicially. Having cited th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er what the Sea Customs Act lays down. The charging section is Section 20: Except as hereinafter provided, customs duties shall be levied at such rates as may be prescribed by or under any law for the time being in force..... Then we have Section 22 which confers upon the Central Government the power to fix tariff values on any goods exported or imported by sea on which customs duties are by law imposed. This is a very important power because not only has Government a right by law to fix the duty which an importer has to pay, but under this section the Central Government has been given the power and the authority to fix the value artificially of the goods which are imported. In other words, the Central Government could say that the value of Vitamin B.12 shall be so many pounds per gram for the purpose of customs duty. Of course, we agree with the Advocate General that this power under Section 22 has to be exercised taking into consideration the international obligations into which India has entered and which India always respects. But apart from international obligations there is nothing to prevent the Central Government from fixing artificially any tariff value in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such value, quantity or description which it is in his power to furnish. And thereupon such person shall produce such document and furnish such information. Considerable emphasis was placed by the Advocate General on this part of Section 29 and what was urged is that this is an indication of the judicial process which the Customs Collector has to follow because if he has any doubt as to the real value, power has been conferred upon him to requisition the necessary materials not only from the owner of the goods but also from any other person, and therefore it is suggested that the Legislature did not desire that the Customs Collector should decide matters ex parte but that he should call for the necessary materials and evidence, decide on those materials and evidence, and therefore decide judicially and in accordance with the well known rules of natural justice. It is pointed out that this paragraph also casts a duty upon the person to produce the document and to furnish the information when he is called upon to do. In our opinion, this only deals with cases where the Customs Collector feels doubt. Normally Customs Collectors are so constituted that they do not feel doubt and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of this section, as compared with other taxing statutes to which we shall presently turn, is the almost extreme simplicity in which the power to assess has been conferred upon the relevant authority. The Legislature has given no direction whatever in this section as to how the assessment should be made, whether any notice should be given to the assessee, whether any inquiry should be held, and except the barest of language used the section contains no indication that the assessing authority has to proceed to assess according to judicial process or that while assessing it is the duty of the assessing authority to act judicially. It is very pertinent in this connection to turn to Section 182 which deals with penalties, and to note the language used by the Legislature in this Section 87. Section 182 provides: In every case, except the cases mentioned in Section 167. Nos. 26, 72 and 74 to 76, both inclusive, in which, under this Act, anything is liable to confiscation or to increased rates of duty; or any person is liable to penalty, such confiscation, increased rate of duty or penalty may be adjudged. and then follows the jurisdiction conferred upon the various authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the statute has provided: On the day specified in the notice issued under Sub-section (2), or as soon afterwards as may be, the Income Tax officer after hearing such evidence as such person may produce and such other evidence as the Income Tax Officer may require, on specified points, shall, by an order in writing, assess the total on the basis of such assessment. When one compares the language of this sub-section with the language of Section 87 of the Sea Customs Act, the contrast is not only apparent but striking. Sub-section (3) of Section 23 makes it obligatory upon the Income Tax Officer to hear the evidence as may be produced by the assessee. Sub-section (2) makes it obligatory upon the Income Tax Officer to issue a notice; and the whole language of Sub-section (3) clearly indicates that the Legislature intended that the Income Tax Officer should follow the judicial process in arriving at his conclusion. No such indication is given in Section 87 of the Sea Customs Act. The next section in the Income Tax Act to which attention might be drawn in Section 37. That section deals with the power of the Income Tax authorities and it provides: The Income Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment is an administrative order and not a quasi-judicial order, the other head of the argument which was submitted to us by the Advocate General that there is an error apparent on the face of the record, does not survive. We may point out that we listened to a very interesting argument and in this respect also our attention was drawn to the progress that the law has made in England and how the Courts have extended the jurisdiction in case where the Courts in the earlier days would not have thought of issuing a writ of certiorari, in respect of a matter when no question of jurisdiction arose but the question was confined to an error of law committed by a judicial or quasi-judicial authority acting within jurisdiction. 16. The order made by the assessing authorities is also challenged on the ground that the order, although it is appealable, gives no reasons for the decisions. Except in the case of the 10th consignment where the Collector ultimately made his order on 15-4-1957, it is not disputed that in making the assessment or in issuing the short levy notices no reasons were vouchsafed to the appellants as to how and why the assessing authorities came to a particular conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adequate remedy is open to the petitioner the court will not grant him relief under its extraordinary jurisdiction under Article 226 of the Constitution. The position here is rather unusual. In the nine consignments the order of assessment was made by the Customs Collector and under Section 188 the appeal lay to the Collector. But when the Collector passed an order of assessment with regard to the 10th consignment, he clearly indicated what his view on the merits of the petitioner's case was and we agree with the Advocate General that the Collector clearly prejudged the decision of the appeal. It is quite true that we cannot Judge administrative officers discharging judicial functions with the same strictness that would judge a Judge sitting in Court. A Judge has to maintain certain standards of detachment and objectivity, apart from being impartial. But an administrative officer has to do a considerable amount of administrative work, decide questions of policy, give directions, give instructions, which would be intolerable if they were done by a Judge sitting in Court. But making all possible concession for an administrative officer and the Collector of Customs, we cannot pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se we will not refuse to maintain the petition on the ground that the appellants have had recourse to the appellate tribunal set up under the Sea Customs Act. 18. Coming to the merits of the matter, if the order of assessment is an administrative order, there can be no doubt that by a writ of mandamus we could compel the assessing authorities to act according to law. But before such a writ could we issued, it must be clear on the language of the statute itself that the action of the authorities was in contravention of the law. The petitioners must satisfy us that there was a clear duty incumbent upon the assessing authorities to act in accordance with certain specific provisions of the law and that they had failed to discharge that duty and have acted in contravention of the law. What is urged by the petitioners in this case is that in assessing the goods of the petitioners, the assessing authorities have taken into consideration matters which are extraneous matters which the law does not permit them to take into consideration. What is pointed out is that under Section 30(b) in order to determine the real value what the assessing authorities have to do is to ascertain the cost a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Customs authorities is that Vitamin B.12 manufactured by Glaxo Ltd. in the United Kingdom and imported into India are goods which are sui generis, admittedly, there is another importer besides the appellants and that is Voltas Ltd. and the whole basis of the assessment made by the Customs authorities is the cost at which these goods were delivered to Voltas Ltd. We have a clear indication of the case of the Collector of Customs in the letter of the 15th April 1957 to which reference has been made, and this is what the Collector says: It has been found that goods of like kind and quality are being imported by another importer M/s. Voltas Ltd., Bombay, under a sole distributors' agreement entered into by them with the same suppliers. It has also been found necessary to enhance the invoice values charged by the suppliers to M/s Voltas in the proportion of 87.5 to 100 in order to arrive at the assessable value under Section 30(b) Sea Customs Act. The whole of the controversy between the parties which we said at the outset is in a very narrow compass, is this. The appellants have no grievance, and they can have no grievance, to the Collector assessing the goods impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs authorities are not bound by the price shown on the invoice by the importer. It would be an impossible position as far as the revenue of this country is concerned, if the Customs authorities had to accept whatever invoice was produced for their inspection and to determine the real value on the basis of that invoice. In fact, Section 30(b) does not refer to he invoice at all. The invoice is an important piece of evidence to determine what the real value is. But that piece of evidence may be discarded if the authorities take the view that it is not a genuine document or if they take the view that over and above the price which is being paid some other consideration has passed under the document. Take this very case. Although the invoice of Voltas Ltd. may show X pounds as the price of one gram of Vitamin B.12, if the Customs Authorities were satisfied that Voltas Ltd. were receiving 12 1/2 per cent discount and that discount was being paid to them and that that discount was not shown in the invoice but they had reason to believe that such a discount was credited to Voltas Ltd. in some way or other then undoubtedly they would be entitled to say that the invoice price shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is the net value after the deduction of the commission. The 'real value' of the goods in question was equal to the invoice value plus the undisclosed amount of the commission. Now, here, we have in this affidavit a series of statements unwarranted by law, unwarranted by facts, and which disclose a complete confusion of thought. In the first part of the paragraph the Collector does not say that Voltas Ltd. received any commission in respect of the invoices after the modification of their agreement with Glaxo Ltd. after 1-8-1956. He merely takes up the technical attitude that he is not aware of and does not admit. Then he takes up rather this curious attitude that he does not admit the agreement and the modification with Voltas Ltd., although the very assessment of the petitioners was on the basis of the agreement between Glaxo Ltd. and Voltas Ltd. Then he propounds a statement of law which is erroneous that an agent is entitled to commission on goods imported. Surely, this is not a principle of law but a matter of agreement. There is no obligation on an agent to receive commission. An agent may or may not take commission and it is purely a question of fact and not a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration would be as to what is the gross value shown in the invoices of importers other than the Agents-Distributors, without abatement of the 12 1/2 per cent discount given to Messrs. Voltas Ltd., as the Agents-Distributors. Now, this is an extraordinary volte face on the part of the Collector, because having based his assessment on the invoices of Voltas Ltd. he here tells us that Voltas Ltd. were Agents-Distributors of the English Company and that in order to ascertain the real value of the goods what has got to be found is the gross value shown by the importers other than the Agents-Distributors, and again he adds the insinuation without abatement of the 12 1/2 per cent discount given to Messrs. Voltas Ltd. as the Agents-Distributors. Well as we pointed out it was perfectly open to the Collector to have taken into consideration Vitamin B.12 imported by different importers. But he came to the conclusion advisedly under instruction from Government that Vitamin B.12 imported by other importers were not goods of the like kind and quality as the goods manufactured by Glaxo Ltd. and imported into India. Having come to that conclusion he based his assessment on the invoice of Vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his affidavit the Collector has also drawn attention to the relation subsisting between the English Company and the appellants and he has pointed out that the Indian company is a subsidiary company and that under an agreement between them a certain amount has to be remitted out of the profits to the English Company. It is also pointed out that the Indian company has purchased the Glaxo trade marks at a certain price and these are being written off from time to time in the balance-sheet of the Indian company. These are all very important considerations for assessing the Indian company to Income Tax, but they do not seem to have much relevance to the question which the Customs authorities had to decide as to what the goods cost in Bombay. If the suggestion is that the English company sent goods to the Indian company at a cheaper value or cheaper price because of the fact that these relations subsisted between the English Company and the Indian company then, as already pointed out, unless this relationship has some bearing on the question of the determination of the real value it cannot be taken into consideration for the purpose of assessing the goods of the petitioners. Sir Nusserw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the Collector, and Sir Nusserwanji wanted to take us through the cross-examination of that witness to show us that on the face of it is seemed curious that a modification of this sort should have been brought about without any correspondence, without any resolution being passed by the Board of Directors of Voltas Ltd.,or by Glaxo Ltd. in England. We have not permitted him to do so because, in our opinion, on this writ application we must decide the question on the record and not by evidence led in Court. The question that we have to decide is: What was the position at the date of the petition? Were the assessing authorities justified in adding 12 1/2 per cent to the invoices of Voltas Ltd. for the reasons stated by them on record? In our opinion, it is patent that the reasons given by the authorities are not reasons which can be supported in law. 26. A question was also argued with regard to the validity of the short levy notices to which reference has been made. The learned Judge has taken the view that those notices are valid and the Advocate General wanted to satisfy us that they did not fall within the purview of Section 39. We must not be considered to have upheld t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by us in this judgment. 30. Sir Nusserwanji agrees that for the purpose of appeal under Section 188 and revision under Section 191, the orders made by the Customs authorities on these 10 consignment sin the light of this judgment will be considered to be original orders of assessment and the petitioners will have a right of appeal within the period of limitation fixed under the relevant sections on the basis that the order of assessment was made when the decisions were given by the Customs authorities on these consignments. 31. With regard to the 10th consignment, we have already directed that the Collector will review in the light of this judgment the order of assessment made by him on 15-4-1957. If on this review it is found that the appellants are entitled to any refund, he will make the order of refund, because under an interlocutory order passed by this Court the goods covered by the 10th consignment were passed on the appellants paying the full amount of assessment under protest and without prejudice to their rights. 32. The result is that the decision of the learned Judge dismissing the petition with costs will be set aside and the directions mentioned in the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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