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TMI Blog1957 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... of the dissolved firm and in O. S. No. 100 of 1949 and 34 of 1950 and M/s. Kanti Brothers are the plaintiff. All these suits were brought against the State of Madras in respect of the sales tax assessments. It was alleged in O. S. No. 28 of 1949 that a sum of ₹ 16,000/- were collected from the firm by coercion for the year 1945-46 and with respect to O. S. Nos. 100 of 1949 and 34 of 1950 for years 1947-48 and 1946-47, ₹ 37,632-2-9 and ₹ 3,402/- were imposed respectively upon the plaintiffs and while in the former case steps were being taken by the defendant-respondent for the collection of the amount by coercive process, in the latter it was stated that the plaintiffs had paid the sum under protest, though the claim with respect to this was confined to only ₹ 3,400/- in order to avoid payment of heavy court-fee. The plaintiffs alleged in all these three suits that the goods were being sent by railway to places beyond the Province of Madras, the railway receipts, invoices for the goods and the hundis being lodged with the bankers of the firm to be discounted and for collection of the amounts from the buyers with instructions to deliver the receipts to the buy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the sale being outside the State of Madras he held that the mere fact that the place of delivery shown as Veldurthi or Nandyal or Dronachalam insufficient to hold that the sales were completed at those places when the contracts show that the payment is to be made against R. R. and further he held that those sales were outside the Province in which goods were consigned to the name of the plaintiff or of a third party which amounted to ₹ 1,09,650-12-0 where the plaintiff was both consignor and the consignee and ₹ 86,060-10-0 where a third party was shown as consignee and either that party or the plaintiff is shown as the consignee. In the result his finding was that the sales outside the province amounted to ₹ 1,95,710-12-0. In O. S. No. 100 of 1949 he held that the sales outside the Province were the regard to transactions in which the goods have despatched to 'self' by the plaintiff prior to 1-1-1948 and those amounted to ₹ 9,26,775-2-6 and he therefore gave a declaration and injunction with respect to the tax of ₹ 9,267-12-0 said to be levied thereon. In respect to despatches after 1-1-1948 held that they are gales within the Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Province of Madras and the sale must be held to be outside the Province; that the assessments for 1946-47 and 1947-48 the subject matter of A. S. Nos. 295 and 298 of 1952 respectively were made under composite order both with respect to sales within the Province and sales outside the Province, as such these sales cannot be split up and the whole judgment must be held to be bad; and that the explanation to the definition of sale is ultra vires the State Legislature and in so far as A. S. No. 296, 1952 is concerned the assessment would be defective on that ground. 6. With respect to the first point, namely, the suit in O. S. No. 28 of 1949 is not in conformity with the suit notice, it is necessary to advert to the relevant allegations in the suit notice and the plaint to determine what the allegations were Ex. A-94 is the suit notice dated 10-9-1947 given by Shri Bheem Rao, Advocate, Kurnool, to the Secretary to the Government of Madras, and District Collector, Kurnool, on behalf of M/s. C. L. Shah and Co.; under S. 80. C. P. C. In that notice after setting out that his clients deal in groundnut oil, it was stated that the sale of the goods sold by them, according to the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o which objection has been taken by the Subordinate Judge as not being in conformity with one another has been clearly stated in both to be the illegal levy and collection of tax and the relief which the plaintiff claims both in the suit notice and the plaint is the refund thereof. The main requirements of the Section having been complied with, it does not make the suit defective because of the different words used by the plaintiff to describe the manner or the circumstances under which tax was paid by him or collected from him in the suit notice and in the plaint. All that S. 80, C. P. C. requires is that there should be a substantial compliance in the suit notice with respect to the matters specified in the section. If authority is necessary we may refer to the case of Secretary of State v. Perumal Pillai, ILR 24 Mad 279 (A), where a Bench consisting of Subrahmania Ayyar and Benson, JJ. following the case of Jones v. Bird, (1822) 5 B Ald 837 (B), held that the cause of action in the section should not be taken in a narrow sense, the object of the section being merely to inform the defendant substantially of the ground of complaint. In Jehangir v. Secretary of State, ILR 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within six months from this date as provided under S. 18 after deducting two months allowed for suit notice under S. 15(2) of the Limitation Act, i.e., it is within 8 months from the date of revision petition which fixes the last day of the filing of the suit either on 4-11-1948 or at the latest by 15-11-1948. He further contends that S. 18 of the Act does not apply to suits for illegal levy, assessment and collection of taxes, as the period of limitation is not that prescribed under S. 18 of the Act, but under S. 62 of the Limitation Act. 8. Under Sec. 18 of the Act a suit with respect to any act done or purporting to be done under the Act must be filed within six months from the act: complained of. The section is in the following terms: No suit shall be instituted against the Government and no suit, prosecution or other proceeding shall be instituted against any officer or servant of the State Government in respect of any act done or purporting to be done under this Act, under the suit, prosecution or other proceedings is instituted within six months from the date of the act complained of. The act complained of, according to the Subordinate Judge, is the illegal coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on any view of the matter in this aspect of the case is without force. 9. The next contention of the learned Advocate not only deals with the question of jurisdiction of Civil Courts to try suits with respect to recovery of tax but also determines whether Art, 62 of Limitation Act would apply, because if S. 18, as contended by him, is confined only to suits for compensation or damages against the State Government with respect to acts done or purporting to be done by them under that Act, the Court has not only jurisdiction to entertain suits relating to the levy, imposition and collection of tax but also Art. 62 would apply prescribing three years as the period of limitation for the recovery of tax. A case similar to the one we are considering arose for decision by Panchapakesa Ayyar, J., in State of Madras v. Abdul Radar, 1953-2 Mad LJ 181: AIR 1953 Mad 905) (I). The point for consideration in that case was whether in a suit for the recovery of ₹ 900/- said to have been collected legally from the plaintiff as sales tax by the defendants, State of Madras, the suit would become barred by limitation in six months under S. 18 of the Act or at least within a year under Art. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o cases relating to the imposition, levy or collection of sales tax illegally. Learned Advocate for the Government did not contest this proposition having regard to the aforesaid decisions. If S. 18 is not applicable to such suits the question is whether having regard to the provisions of the Act is the jurisdiction of the ordinary Civil Courts ousted or should remedy be found under the Act? This point was also considered by a Bench of the Madras High Court in 1951 2 Mad LJ 340: (AIR 1952 Mad 273) (K), and after discussing' the relevant cases on this point it was held that the Act with its subsequent amendments had not ousted the jurisdiction of the ordinary Courts. There can be no doubt that an assessee who is called on to pay a tax has a right to seek his remedy in a Court of law by challenging the legality of that order. This he is entitled to do unless that right has been barred or taken away statutorily. The fact that there is under the taxing statute a right of appeal or revision against assessments is not by itself sufficient to take away the right of the assessee to have recourse to a Court of law. Having regard to the fact that Civil Courts have jurisdiction to enterta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relative railway receipts were delivered to the parties concerned after payment only at the destination. Ex. A-25 is the statement which shows the buyer as consignor and consignee. The millers in each case have despatched the goods from stations within the State. All the contracts produced, that is, A-25, A-20, A-22, A-6, A-23 and A-38, etc., show that the places of delivery is F. O. R. Kurnool or places within the Kurnool District and that the terms and conditions of payment are that R. R. should be sent through the bank for payment. 12. In so far as the cause of transactions is concerned, there is no dispute on the evidence between the appellants and the respondent. The facts that have been held proved and which are admitted by both sides are that oil was purchased from the millers as well as merchants at Kurnool by the appellants for ready delivery. The delivery was F. O. R. at Kurnool or some other railway station in Kurnool District. The mode of transport is through the common carrier and payment was against Railway receipt at the place of destination through the Bank. The railway receipts disclose four types of transactions, (1) where the seller is the consignor and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he passing of the property in the goods to the buyer but these are not conclusive and may be negatived by the seller reserving to himself the right of disposal as under S. 25 until fulfilment of certain conditions thereby preventing the passing of the property in the goods from him to the buyer. Prima facie therefore the property passes to the buyer upon the goods being delivered to the railway or the common carrier. But that inference may be rebutted. For instance where he deals was the railway receipt in such a way as to show that he did not intend to part with the goods until payment in cash. Again the mere fact that payment is to be made against the delivery of R. R. in an F. O. R. contract is not conclusive of the fact the property in the goods has not passed to the buyer on the seller, delivering the goods to the railway. 14. It is now necessary to see what the contention of the seller was with respect to the passing of the property to the buyer. The contention of the learned advocate for the appellants is that the sellers clearly manifested their intention not to pass the property in the goods in Madras Property but only outside when they stipulated with the buyer that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out 5 months before the suit notice when the assessment had either taken place or was being made or at any rate it does not show why these letters had to be written; in the second place the interpretation, put by the buyer is not conclusive as to where the sale took place or property in the goods passed. We may here refer to the observations in M. Siddique and Co. v. Mysore Textiles Agencies, 1947 1 Mad LJ 249: (AIR 1947 Mad 455) (M), by a Bench consisting of Wadsworth, O.C. J. and Rajamannar, J., as he then was, which sums up the legal position thus : at page 251 (of Mad LJ): (at p. 456 of AIR): Having regard to the terms of S. 23 (2) of the Act, it must, we think, be held that the sale would be completed by the delivery of the goods to the railway for the purpose of transmitting them to the buyer, provided' that the seller did not reserve the right of disposal. Translating this into the terms of ordinary commerce, if the seller delivered the goods to the railway for conveyance to self at Calcutta, there would not be such an appropriation as would pass title to the purchaser. In order to complete the transaction it would be necessary to endorse the railway receipt and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority for the proposition that where in a suit it is possible to separate from the composite order on the basis of evidence the taxable and non-taxable items, the order is bad. There is no doubt that the nature of the remedy sought in the three appeals before their Lordships was by way of a writ under Art. 226 and on a petition, under Art. 32 of the Constitution. It is, therefore, necessary to examine the decision of the Supreme-Court with particular regard to the facts in that case. * * * 18. The appellants entered into an agreement with several nulls to buy as their agents on their account and on their behalf kapas in various markets of Madhya Pradesh and in this capacity they so worked from 1-10-49 to 30-9-1950. The Sales Tax Authorities included the kapas transactions in the appellants' turnover and ordered them to pay sales tax on the said transactions. It. was held that in so far as the post-constitution transactions were concerned they were bad as the ban imposed under Art. 286 (1) (a) and the explanation thereto could not be removed by the President's order. It was further held in the petition under Art. 32 that apart from the invalidity on the above groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee deemed to be the property of the Crown were included in the assessee's property and assessed. As their Lordships pointed out they were not an insignificant component of the total subject-matter of the assessment and they expressed the view that the course of action adopted by the Supreme Court of Canada in holding the assessee entitled to a declaration that the assessment and taxation of all personal property in question........except the dumptors were properly made and imposed was not warranted. In other words, the deletion of the three dumptor items and approving the assessment subject to this deletion was disapproved and it was dealing with this aspect they observed at page 816: ...When an assessments not for an entire sum, but for separate sums, dissected and earmarked each of them to a separate assessable item, a Court can sever the items and cut out one or mere along with the sum attributed to it, while affirming the residue. But where the assessment consists of the single undivided sum in respect of the totality of property treated as assessable, when one component (not admissible as 'de minimis') is on any view not assessable and wrongly include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly produced in this State at any time after the contract of sale or purchase in respect thereof was made. 21. The submission of the learned counsel for the appellant was that in effect the explanation enables sales tax to be levied not on sale of goods but only on contracts of sale by reason of the goods being in the State, that it is ultra vires the Madras Legislature to enact the statute having an extra territorial operation, that this Provision is repugnant to the provisions of the Sale of Goods Act and therefore should not prevail as the previous sanction of the Governor-General was not obtained for enacting the amendment introduced in 1947. This is the very contention raised before two benches, one of the Madras High Court in Louis Dreyfus Co. Ltd., Madras v. State of Madras 1954 2 Mad LJ 326:( (AIR 1954 Mad 932) (Q), the other in Pari Kameswara Rao v. State of Madras 1955 AP LT (Civ) 168: ((S) AIR 1955 Andhra 129) (R). Both these decisions proceed on assumption of the finality of the decision in Poppatlal Shah v. State of Madras, 1953-1 Lj739: (AIR 1953 SC 274) (S) and the State of Bombay v. United Motors (India) Ltd., 1953 SCJ 373: (AIR 1953 SC 252) (T). It was he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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