1. The petitioner in these two revision petitions is a dealer in fried-gram knows as 'Hurigadale' as has been mentioned in the charge-sheet itself. He has been convicted in C.C. Nos. 537 and 538 of 1951-52 on the file of the City Magistrate, Mysore, for failure to pay sales tax for the years 1948-49 and 1949-50 within 21 days from the date of service of demand notice. It is contended that the petitioner did not file an appeal against the demand notice under Section 14 of the Sales Tax Act and that he did not take any steps to question his liability to pay the sales tax under Sections 15 and 16 of that Act.
2. According to the prosecution, under Section 22 of the Act no assessment made under it shall be called in question in any Court save as provided in Sections 14 to 16 of the Act. It has however to be noticed at this stage that Section 6 of the Act makes it clear that the Government may by notification in the Official Gazette make an exception, or reduction in rate in respect of any tax payable under the Act. It is not disputed that 'Hurigadale' is exempted from the levy of sales tax. It is argued that this is however a point which should have been taken up in an appeal against the order of the Sales Tax Officer and as the petitioner has failed to do so he is prevented by Section 22 of the Act from raising the question in a civil or criminal Court.
3. As observed in the case reported in Rama Iyer v. Government of Mysore ( 2 S.T.C. 122; A.I.R. 1951 Mys. 70),
'The remedy allowed under Section 20(b) for the enforcement of payment of assessed tax in a criminal court is of a summary nature. Where, therefore, it is proved to the satisfaction of the Court that the assessee has become liable under the Act for payment of sales tax, it is not the province of a criminal Court to enter into an enquiry about the correctness of the levy or the validity thereof.'
4. It was argued in that case for the assessees 'that they are not liable to pay the tax by reason of the fact that the turnover does not exceed Rs. 10,000 per year and the Assessing Officer has to prove their liability without which the tax levied is invalid and illegal.'
5. Such an argument was rightly not accepted, if I may say so with respect. Whether the income exceeded Rs. 10,000 or not was a matter that the Sales Tax Officer had jurisdiction to decide and the correctness of his decision cannot be questioned in a civil or criminal Court. If however in that case the finding of the Sales Tax Officer was that the turnover was less than Rs. 10,000, the result might have been different, as an assessment could only be said to be one made under the Sales Tax Act if the turnover exceeded Rs. 10,000. It has to be remembered however that the Sales Tax Act is a special enactment is which there are provisions under which the Sales Tax Officer could ascertain whether the assessee is a person liable to pay tax, whether his turnover is Rs. 10,000 and whether he is dealing in a commodity which is not exempt from sales tax. If the makes a mistake in respect of these facts an appeal can be filed and if the appellant is not satisfied with the result of the appeal, he can file a revision petition against that decision under Section 15 of the Act. He can also have recourse to Section 16. But he cannot question the correctness of the finding in any civil or criminal Court as the order is passed under the Sales Tax Act.
6. This however does not mean that if, on the finding of the Sales Tax Officer, it cannot be said that the person is liable to pay sales tax or that the commodity with which he deals is liable for assessment under the Sales Tax Act or that he is a dealer within the meaning of the word as defined in the Sales Tax Act, it can be taken that any assessment has been made under the Sales Tax Act. It is only an assessment made under the provisions of the Sales Tax Act that is not liable to be questioned, under Section 22 of that Act. If the assessment made or an order passed is ultra vires and is entirely outside the scope of the Sales Tax Act the assessment or an order made can be challenged in the ordinary Courts, civil or criminal, as it is an order made beyond the scope of the Sales Tax Act and not an order made under the Act which alone is contemplated under Section 22 of that Act. As succinctly put in the notes on the Madras General Sales Tax Act on Section 16(a) after the amendment of that section (By Sundara Vyas, Second Edition),
'Both before and after amending the Act a challenge of the assessing authority's act 'outside' the Act is entertainable in the criminal Court. So if the action taken is ultra vires and is 'outside' the purview of the Act the matter is open to challenge even in a criminal Court both in regard to validity and liability as well. This is the law both before and after 1-1-1948. For instance, if an officer taxes something that is not taxable, the assessment is not one under the Act.'
7. Dealing with a similar provision Venkataramana Rao, C.J., observed in the case reported in Gururajachar v. Rangiah (52 Mys. H.C.R. 455),
'The House Rent Controller is a special tribunal created by the Statute for a specific purpose. It can only act within the limits of the powers conferred by the statute. If the said limits are exceeded or are not conformed to, the decision of the tribunal is liable to be challenged by an action in a civil Court.'
8. There is hardly any doubt that the same principles apply to the special Tribunal created under the Sales Tax Act. So long as the decision is within the limits of the Act, it cannot be challenged in any civil or criminal Court. But for instance if the Sales Tax Officer assesses a person who, according, it cannot be said that its validity or the liability under it cannot be questioned in any civil or criminal court. There are numerous decisions considering a similar provision under the Income-tax Act. As pointed out in a decision by Raymond, A.J.C., and Kennedy, A.J.C., reported in Dayaram Ramdas v. Secretary of State ((1925) 78 I.C. 940; A.I.R. 1925 Sind 130),
'Where an Income-tax Officer professes to tax income and income only, his order is one under the Income-tax Act, and if it is erroneous it is capable of rectification on appeal to the Commissioner. A civil court has no jurisdiction to question the propriety of such an order, as its jurisdiction is expressly barred under Section 52 of the Income-tax Act of 1918.
It is only where an Income-tax Officer assesses something which is not income or levies the assessment on classes of income exempted by the Act, that he over-steps the limits of his jurisdiction and his assessment ceases to be under the Act within the meaning of Section 52 of the Income-tax Act of 1918'.
9. Again as observed in Haji Rehmatulla Haji Tarmahomed v. Secretary of State ((1926) 92 I.C. 351; A.I.R. 1926 Bom. 50),
'The provisions of Section 39 of the Income-tax Act of 1886 do not operate to bar a suit in which it is claimed that an assessment is ultra vires'.
10. In the case reported in Bombay Co. Ltd. v. State ( 3 S.T.C. 91; 1952 K.L.T. 59) it was found that a case had been made out for the issue of a writ of certiorari for quashing the proceedings of the original and appellate tribunals which has sanctioned the levy of the sales tax on sales which are exempted from the levy of such a tax.
11. As already stated it could be easy to cite a number of authorities on the point, but it would be sufficient for the purpose of the case of quote from the summary of decisions given in the Commentary on Indian Income-tax Act by A. C. Sampath Iyengar (3rd Edition) in dealing with Section 67 :-
'Next, the prohibition applies only when the assessment is one made under this Act. No assessment can be said to be made 'under the Act' if it is ultra vires or in excess of jurisdiction. A manifest defect of jurisdiction may be founded on the character and constitution of the assessing authority or on the nature of the subject matter of the enquiry, or on the absence of some preliminary proceeding necessary to give jurisdiction to the authority. Thus for instance, if an Income-tax Officer ignoring the assessee's objection to the place of assessment and without referring the objection to the proper authority should proceed to assess, his act would be in excess of jurisdiction and the assessment would be ultra vires. Likewise, if the income that is sought to be assessed is on the facts as found, not assessable to tax at all, there would be no jurisdiction to assess. Again, if without making any enquiry whatever, e.g. whether the assessee is a resident or not, or whether the income is of an assessable nature or otherwise, the Income-tax Officer should proceed to assess, he would be assuming a jurisdiction which did not vest in him and his proceedings would be void. Where the defects in assessments are jurisdictional, the ordinary civil court would have jurisdiction to declare the assessment ultra vires and also to grant a refund.
The above class of cases must be distinguished from cases where an enquiry was made by the proper Income-tax Officer and he has arrived at a decision, though wrongly, giving himself jurisdiction to assess. Where the Legislature sets up an authority or a tribunal to deal with certain limited matters it may do one of two things. It may say, in effect, that the Tribunal shall have jurisdiction to do certain things, if a certain state of facts exists and not otherwise. In such event, it is not for the Tribunal to conclusively decided whether that state of facts exists : and if it should exercise the jurisdiction without the existence of such facts, its decision might be questioned in a court of law. But the Legislature may do another thing. It may entrust the Tribunal with a jurisdiction which includes the jurisdiction to determine whether the preliminary state of facts exists, as well as the jurisdiction to proceed further and do something more on finding such state of facts to exist. In this latter event, it is erroneous to say that the Tribunal cannot give itself jurisdiction by wrongly deciding the facts.
The Legislature having given the Tribunal jurisdiction to determine all the facts, including the preliminary facts, its decision cannot be challenged. It is all one jurisdiction, a comprehensive one and not a double jurisdiction. Thus, if an Income-tax authority should hold that the executor of an estate is chargeable and that he is the person to whom the income accrued, or that a certain income was received in British India, though wrongly, or should assess the income without allowing any deduction justly allowable in respect of land revenue paid on the estate or hold that the income of the assessee was not below the taxable limit, or that there was no trading loss in a business, or that the assessee was a resident in British India in the year it would have jurisdiction to so decide and its decision, though erroneous, cannot be assailed in a Court of law.
The right to challenge in a Court of law arises only where the income-tax authority has no jurisdiction to assess on the undisputed facts, or on the facts as found by it or as assumed by it to exist. That is to say, if on certain facts the authority should hold it has jurisdiction in law and if that 'view of the law' should be erroneous, the civil Court would be entitled to interfere and not otherwise. The distinction, in other words, is as between a jurisdiction arising on an erroneous decision of fact, as opposed to one usurped on an erroneous view of the law. In the former case, the jurisdiction of the Income-tax Officer cannot be attacked, since he is given jurisdiction to decide it, rightly or wrongly; in the latter case it can be on the ground that the assessment is not one 'made under the Act.''
12. In this case the sales tax has been levied though on facts found by the Sales Tax Officer the petitioners is dealing in a commodity exempt from sales tax. It cannot, therefore, be said that the assessment is one made under the Sales Tax Act. The petitioner was not liable to pay sales tax levied either for the year 1948-49 or for the year 1949-50. The revision petitions are allowed. The petitioner is acquitted of the offence of which he stands convicted. The conviction and sentence are set aside. Fine if levied will be refunded.
13. Conviction set aside.