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Rajab Ali Pirani Vs. State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax;Limitation
CourtAndhra Pradesh High Court
Decided On
Case Number C.C.C. Appeal No. 65 of 1961
Judge
Reported in[1967]19STC312(AP)
AppellantRajab Ali Pirani
RespondentState of Andhra Pradesh
Appellant Advocate S.V. Kondapi, Adv.
Respondent AdvocateThird Government Pleader and ; D. Venkatappayya Sastry, Adv.
DispositionAppeal dismissed
Excerpt:
.....the sales tax authorities. section 14 of the limitation act provides :in computing the period of limitation prescribed for any suit, the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or in a court of appeal, against the defendant, shall be excluded, where the proceeding is founded upon the same cause of action and is prosecuted in good faith in a court, which from defect of jurisdiction, or other cause of a like nature is unable to entertain it. court of appeal and is prosecuted in good faith in a court which from defect of jurisdiction or other cause of a like nature is unable to entertain it. strictly construing the section, therefore, it could not be held that, the writ petition was dismissed..........plaintiff was a registered partnership firm carrying on business in the manufacture and sale of agricultural implements. for the year 1950-51 the sales tax officer (c) circle, secunderabad, had wrongfully levied a tax of rs. 2,344 and for the subsequent year a sum of rs. 5,208. the assessments were ex parte and though the appellant preferred an appeal before the appellate commissioner, it was dismissed without going into the merits of the case. a revision was filed and even there the appellant was unsuccessful. later he filed a writ petition under article 226 of the constitution; but the high court without going into the merits of the case, dismissed the writ petition mainly on the ground that the plaintiff-appellant had an alternative remedy by way of a regular suit. later on,.....
Judgment:

Sharfuddin Ahmed, J.

1. The appellant instituted a suit against the Government of Andhra Pradesh, through the Chief Secretary (O.S. No. 88/1 of 1956) before the III Additional Judge, City Civil Court, Secunderabad, for the recovery of certain amounts from the sales tax department. It was stated that the plaintiff was a registered partnership firm carrying on business in the manufacture and sale of agricultural implements. For the year 1950-51 the Sales Tax Officer (C) Circle, Secunderabad, had wrongfully levied a tax of Rs. 2,344 and for the subsequent year a sum of Rs. 5,208. The assessments were ex parte and though the appellant preferred an appeal before the Appellate Commissioner, it was dismissed without going into the merits of the case. A revision was filed and even there the appellant was unsuccessful. Later he filed a writ petition under Article 226 of the Constitution; but the High Court without going into the merits of the case, dismissed the writ petition mainly on the ground that the plaintiff-appellant had an alternative remedy by way of a regular suit. Later on, application for leave to appeal to the Supreme Court was dismissed and a special leave petition filed before the Supreme Court also met with the same fate. It was finally rejected on 3rd October, 1955. The appellant was therefore obliged to file a suit as the assessment for the years mentioned was arbitrary, wrong and baseless. It was further urged that the authorities had no jurisdiction and the assessment was made ex parte. The appellant, being a dealer in agricultural implements from scrap iron, was exempt from the payment of the sales tax in accordance with Section 2(f) of item 29 of Schedule I under the Act.

2. It was contended on behalf of the defendant-respondent that the appellant was a dealer in goods or articles manufactured out of iron and steel. His claim that he was only a dealer in agricultural implements from scrap iron was not correct. The tax for the year 1951-52 had not been paid by the appellant and accordingly as he had failed to furnish the statements and produce account books, the Sales Tax Authorities had assessed to the best of their judgment. It was further urged that the suit was time-barred under Section 24 of the Hyderabad General Sales Tax Act which was the law applicable at the relevant period.

3. A rejoinder was filed reiterating the position taken by the appellant in the plaint. On these pleadings the learned trial Judge framed as many as nine issues and after examining the plaintiff-appellant and the Sales Tax Officer as D.W. 1 and marking some documents, dismissed the suit of the appellant with costs. The appeal is directed against this judgment.

4. The two grounds urged by the learned counsel for the appellant, Sri Kondapi, before this Court are : that the appellant, being a dealer in agricultural implements prepared out of scrap iron, is exempted from payment of sales tax and the imposition of the sales tax by the officer was arbitrary. The second ground is that the suit was within time having been filed within six months from the date of the last order, i.e., the order of the Supreme Court rejecting the petition to special leave, i.e., 3rd October, 1955.

5. So far as the question of limitation is concerned, under Section 24 of the Hyderabad General Sales Tax Act, it is laid down that:

No suit shall be instituted against the Government and no suit, prosecution or other proceedings shall be instituted against any officer or servant of the Government in respect of any act done or purporting to be done under this Act, unless the suit, prosecution or other proceeding is instituted within six months from the date of the act complained of.

6. The tax was admittedly levied on 13th February, 1951, and the suit was instituted on 11th June, 1955. Therefore, it could not be, according to the section, within the prescribed limit of six months. The learned counsel for the appellant however urged that under Section 14 of the Limitation Act, the appellant is entitled to compute the period spent by him in proceeding in good faith in writ petition against the order of the Sales Tax Authorities. Section 14 of the Limitation Act provides :

In computing the period of limitation prescribed for any suit, the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or in a court of appeal, against the defendant, shall be excluded, where the proceeding is founded upon the same cause of action and is prosecuted in good faith in a court, which from defect of jurisdiction, or other cause of a like nature is unable to entertain it.

7. The pre-requisites for the application of this section are that the plaintiff has been prosecuting with due diligence another civil proceeding in a. court of appeal and is prosecuted in good faith in a court which from defect of jurisdiction or other cause of a like nature is unable to entertain it. This Court sitting in writ jurisdiction is certainly a court of appeal within the meaning of that section. But the question is whether the time spent in pursuing the matter in the High Court can be computed for the purpose of appeal as it could not be held that this Court from defect of jurisdiction was unable to entertain the petition. The jurisdiction of this Court in writ petition is certainly wide enough to cover cases of this nature. Strictly construing the section, therefore, it could not be held that, the writ petition was dismissed from the defect of jurisdiction or other cause of a like nature. But, in the cases cited before me, it has been held that this section has to be liberally construed and though the causes of a like nature have to be of similar nature as defect of jurisdiction, failure to secure relief on the ground of having alternative relief should be construed to be from defect of jurisdiction. In Narayana v. Commissioner, H.R. & C.E., A.P. I.L.R. (1962) A.P. 865 Umamaheswaram, J., held that:

The terms of Section 14 of the Limitation Act are applicable to a case where the plaintiff bonafide litigated his right under Article 226 of the Constitution in the High Court. The words 'Court of appeal' in Section 14 have to be construed in a broad sense as including a court which has power to bring under review the decision of an inferior court.

8. Following the earlier decision in Biradavolu Kalahastiah v. Tangirala Chengamma 1958 A.L.T. 749 the learned Judge found that the provisions of Section 14 are applicable and that the time taken in the High Court in proceeding with the writ application is deductible under Section 14 of the Limitation Act. In the said case the learned Judge however did not advert to the fact whether the last limb of Section 14 was attracted or not; but in the previous case (Kalahastiah v. Chengamma 1958 A.L.T. 749) this aspect of the case also was considered and following a Bench decision of the Madras High Court in Koppolu Venkataswami v. Uttarkar Sara Bai (1943) (2) M.L.J. 41 it was held that when a revision petition was admitted by a Judge of the High Court, it meant that it was a fit one for further consideration by that Court and that the prosecution of the civil revision petition should be deemed to be bonafide. On a perusal of the judgment, however, it appears that even there this aspect was not fully considered. But in Janki Pershad v. Ram Kripal A.I.R. 1951 Pat. 486 it was observed that:

The words 'or other cause of a like nature' in Section 14(2) should be liberally construed. They must be construed ejusdem generis with defect of jurisdiction, that is to say, the defect must be of such a character as to make it impossible for the court to entertain the suit or application and to decide it on merits.

9. Decisions which have taken a different view are also available; for example, a Bench of the Patna High Court in Radha Kishun v. Firm Sri Niwas Ram Kumar A.I.R. 1944 Pat. 225 has held that Section 14 of the Limitation Act would only be attracted when there is refusal to interfere by the High Court due to defect of jurisdiction or any cause of a like nature. I am inclined to follow the dictum that Section 14 requires liberal construction. The discussion is more or less of an academic nature inasmuch as it has been conceded that according to the decision of the Supreme Court in Provincial Government of Madras (Now Andhra Pradesh) v. J.S. Basappa [1964] 15 S.T.C. 144 it has been held that the period of limitation prescribed in Section 18 of the Madras General Sales Tax Act, 1939, applies to suits for damages and compensation in respect of acts done under the Act and does not apply to suits for refund of tax alleged to be illegally collected. Section 18 of the Madras Act is in pari materia with Section 24 of the Hyderabad General Sales Tax Act. Therefore, the period of limitation will be three years from the date of the levy of the sales tax. In that view the suit will be within time coupled with the fact that Section 14 of the Limitation Act will be attracted to it. Therefore, so far as the question of limitation is concerned, it has to be answered in favour of the appellant.

10. The next question for consideration (which is the main question) is whether the appellant is liable to exemption of sales tax in view of Section 2(f) of item 29. This item 29 of Schedule I exempts raw iron and steel and agricultural implements manufactured from the same, from the operation of the Act, that is, goods thus manufactured are exempted from the sales tax. The question is what is the material on record to show that the appellant was manufacturing agricultural implements from the scrap iron. What is scrap iron has not been defined anywhere; but if it is to be deemed to be the same stuff as raw iron mentioned in item 29 of Schedule I, agricultural implements manufactured from that stuff have to be exempted. Unfortunately, the appellant has not furnished any information to the Sales Tax Authorities in regard to the manufacture of his goods. The order of assessment is based on the personal inspection of the assessing authority. The lower court has elaborately dealt with this aspect of the case and reproduced a part of the order to substantiate the case of the department that for want of account books and other relevant statements, the Sales Tax Authorities are bound to levy tax according to the best of their judgment. The relevant passage is as under :

M/s. Peerani & Co. are the oldest and the leading iron merchants at Secunderabad. Although several extensions were granted to the assessee he had not filed the return as required under Rule 11 of the Act. At last on 22nd January, 1951, in response to a notice under Rule 13 of the Rules, he appeared before me and a few cash memos, muster rolls and note books said to contain the sales, were produced. These books contained total sales shown in cash memos. The assessee had no record of the purchases made by him. He had no account showing the wages paid to the workmen or other expenses incurred by him for manufacturing the various articles.

The assessee has three courtyards at Ranigunj containing materials and at each place, several workmen are doing work. Besides this he has workshops at Nallagunta. My enquiries reveal that he has branch of his own at Bombay. They also have a foundry in the industrial area under a different name. All the brothers manage the businesses. They also have business in second-hand motor parts and motors.

I visited their shops and inspected all the courtyards containing iron material and there are over fifty to sixty workmen working under them. The material could easily be estimated to be worth over two lakhs of rupees. They purchased the material from the military disposals and auctions all over India. The attitude of the assessee was very unhelpful in giving any information regarding business. The closed books of other dealers of the same business at Ranigunj disclosed a turnover of about Rs. 4,00,000 during the previous year. This dealer is far bigger than the other dealers. The total business could, therefore, be easily estimated at Rs. 4,50,000 ; for the assessment order filed by the party estimated the sales at Rs. 4,00,000 in the previous year. They have inspected the premises and estimated the sales. The assessee declared that he had no bank account at that time and it was found that he had accounts by the I. T. authorities.

The workshops were inspected several times and it was noticed that 50 per cent, of the total estimated sales of Rs. 4,50,000 could be taken as taxable sales and the rest as agricultural implements. I, therefore, determine his total turnover for 1950-51 at Rs. 4,50,000 and the taxable turnover at Rs. 2,25,000 on the above basis. The tax at the rate of 0-0-2 thereon would amount to Rs. 2,314. I order that the amount of Rs. 1,918 should be paid in one instalment, and two instalments of Rs. 234 each should be paid as indicated in the demand notice.

11. The Sales Tax Officer has been examined to substantiate his case. He stated that he inspected the premises and made an order as the result of his own observations and that the appellant did not cooperate with him in either producing the account books or any statements. Therefore, it could not be urged that the assessment by the department was liable to be reviewed. The learned counsel for the appellant contended that allowing 50 per cent, of the total estimate towards agricultural implements was arbitrary-there being no basis for it; but, as stated above, the appellant having failed to produce any account books or statements, the assessing authority had to fall back on his own inspection. According to him, he visited the premises more than once and as a result thereof found that part of the raw material was being used for manufacturing agricultural implements and part of it for other purposes. Therefore, he was justified in levying tax on half the turnover for the purpose of sales tax. It is well settled that the quantum of tax cannot be the subject-matter of the dispute before this Court. It is only when the assessment is arbitrary and without jurisdiction that the Courts can interfere. In the instant case the appellant having failed to produce any reliable data, the assessing authority was within its jurisdiction in imposing the tax according to Section 12 of the Hyderabad General Sales Tax Act.

12. I think the order of the lower court, therefore, refusing to interfere with the finding of the Sales Tax Authorities is in conformity with the data on record. In the result the appeal is dismissed with costs.


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