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Antarim Zila Parishad Vs. Bharat Cold Storage (Private Ltd.) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 3294 of 1960
Judge
Reported inAIR1966All182
ActsCode of Civil Procedure (CPC) , 1908 - Sections 9; Uttar Pradesh District Boards Act, 1922 - Sections 131
AppellantAntarim Zila Parishad
RespondentBharat Cold Storage (Private Ltd.)
Appellant AdvocateShambhu Prasad, Adv.
Respondent AdvocateB.R. Avasthi, Adv.
DispositionAppeal allowed
Excerpt:
.....section 131 of u. p. district boards act, 1922 - violation of provision of taxing statute - held, civil suit cannot be filed for challenging validity and legality of an order of assessment. - - section 131 had better be quoted in extenso. if, on the other hand, the assessment complained of is beyond the competence of the board and is, therefore, an illegal imposition, the civil court should certainly have jurisdiction to interfere. boards act, as has already been noticed, clearly bars the jurisdiction of an authority other than the one provided in the act to question the legality of any valuation or assessment or the liability of a person to be assessed or taxed. it is settled law that the exclusion of the jurisdiction of the civil courts is not to be readily inferred but that such..........has been prescribed and the assessing authority has assessed tax in excess of the maximum limit, a civil suit can lie to challenge the order of assessment. the leading judgment of the full bench was delivered by malik c.j. and he is reported to have made the following observations at page 385 column 1:'i will take up the question of the jurisdiction of the civil court first. if an assessment is made within the frame work of the act but the assessment is wrong it may not be possible for the civil court to give to the asses-see any relief and his remedy may be confined to an appeal under the act. if, on the other hand, the assessment complained of is beyond the competence of the board and is, therefore, an illegal imposition, the civil court should certainly have jurisdiction to.....
Judgment:

C.B. Capoor, J.

1. This second appeal has been preferred by the Antarim Zila Parishad, district Farrukhabad.

2. Bharat Cold Storage Private Ltd., the respondent, to the appeal, was assessed by the appellant for the assessment year 1.956-57 to a tax of Rs. 2,000 on the circumstances and property of the respondent aN appeal was preferred against the order of assessment to the District Magistrate of Farrukhabad which was not pressed and was dismissed on the 3rd of May, 1956. The contention raised by the respondent company before the assessing authority and the appellate authority was that during the period under consideration it suffered a loss to the tune of Rs. 17,339 and, as such, it was not liable to be assessed to circumstances and property tax. That contention did not find favour with the assessing authority and has been reiterated in the suit filed by the respondent company against the appellant for an injunction restraining it from realising the amount of tax assessed.

2-a. The suit was resisted by the appellant, inter alia, on the ground that the civil Court had no jurisdiction to entertain the suit in view of the provisions of Section 131 of the District Boards Act, 1922. That plea was repelled by the trial and the lower appellate Courts and the suit for injunction was decreed. Aggrieved by the judgment and decree of the learned Civil Judge, Farrukhahad, this appeal has been filed.

3. The only contention advanced on behalf of the appellant is that the suit was not cognizable by the civil Court, The relevant provisions of the U. P. District Boards Act, 1922 are contained in Sections 108, 114, 115, 128 and 131. Section 108 inter alia, empowers District Board to continue a tax already imposed on persons assessed according to their circumstances and property in accordance with Section 114. The relevant portion of the last mentioned section rims as below:--

'The power of a Board to impose a tax on circumstances and property shall be subject to the following conditions and restrictions, namely-

(a) the tax may be imposed on any person residing or carrying on business in the rural area, provided that such person has so resided or carried on business for a total period of at least six mouths in the year under assessment.

(b) no tax shall be imposed on any person whose total taxable income is less than Rs. 200 per annum.'

Section 11.5 provides for the framing of preliminary proposals. Section 128 provides for the filing of an appeal against an assessment or any alteration in assessment of a tax on circumstances and property to the District Magistrate or such other officer as may be empowered by the State Government in this behalf. Section 131 had better be quoted in extenso. It runs, as below:--

1. 'No objection shall be taken to a valuation or assessment, nor shall the liability of a person to be assessed or taxed be questioned in any other manner or by any other authority than is provided under this Act or under the United Provinces Local Rates Act, 1940.

2. The order of the appellate authority confirming, setting aside or modifying an order in respect of valuation or assessment or liability to assessment or taxation shall be final, provided that it shall be lawful for the appellate authority, upon application or on his own motion, to review any order passed by him in appeal by a further order passed within three months from the date of his original order.' It has been specifically provided in the last mentioned section that the liability of a person to be assessed or taxed is not to be questioned and the valuation of an assessment is not to be objected to in any other manner or by any other authority than the one provided, inter alia, under the Act. Jurisdiction of the civil or criminal courts to question the valuation or assessment or the liability of a person to assessed or taxed has been expressly barn Another fact which emerges from the provisions of law is that the order of the appellate authority is final except to this extent that it is open to that authority itself to review any order passed by it in appeal. It, therefore, appears that under the provisions of the District Boards Act an appeal can be filed against the order of assessing authority and that the order of the appellate authority shall be final except that it can be reviewed by that authority itself. The order is not liable to be challenged or questioned in the municipal Courts of the land.

4. The contention advanced on behalf of the respondent was that as during the period under consideration the income that accrued to it was less than Rs. 200/- it was not liable to be assessed to tax and that a suit was not maintainable in the civil Courts challenging the order of assessment. On a plain reading of Section 131 referred to above such a suit would not lie. Reliance on behalf of the respondent has been placed upon the following rulings;

1. District Board, Farrukhabad v. Prag Dutt : AIR1948All382 ; (2) Secretary of State v. Mask and Co. ; (3) Devi Prasad v. Municipal Board, Kanauj, ILR (1950) All 72: (AIR 1946 All 741); and (4) Municipal Board, Mau Nath Bhanjan v. Raghunath Prasad : AIR1954All121 .

5. In the first of the aforesaid cases Prag Dutt and others filed a suit in the civil Court challenging the tax assessed on them on the ground that they did not carry on any business within the area under the management of the District Board and were, therefore, not liable to pay the tax. The trial Court recorded a finding against the plaintiffs on that question. On appeal it was urged on behalf of the plaintiffs that in view of the professions Tax limitation Act (XX of 1941) they were not liable to be assessed to circumstances and property tax in excess of Rs. 50/. This contention found favour with the learned District Judge and the view expressed by him was upheld by a Full Bench of this Court.

The aforesaid decision is, therefore, an authority for this proposition only that if by virtue of a certain provision of law maximum amount of tax has been prescribed and the assessing authority has assessed tax in excess of the maximum limit, a civil suit can lie to challenge the order of assessment. The leading judgment of the Full Bench was delivered by Malik C.J. and he is reported to have made the following observations at page 385 column 1:

'I will take up the question of the jurisdiction of the civil Court first. If an assessment is made within the frame work of the Act but the assessment is wrong it may not be possible for the civil Court to give to the asses-see any relief and his remedy may be confined to an appeal under the Act. If, on the other hand, the assessment complained of is beyond the competence of the Board and is, therefore, an illegal imposition, the civil Court should certainly have jurisdiction to interfere.'

6. The decision in the second case far from supporting the contention advanced on behalf of the respondent negatives it. The dispute between the Mask and Co. and the Custom Authorities was as to whether the betel nuts which were imported by the former were boiled or raw sliced. The Custom Authorities has assessed duty on the footing that the betel nuts were boiled. After exhausting the remedies provided under the relevant Act Mask and Co. filed a suit in the civil Court. The suit was dismissed on the ground that the civil Court had no jurisdiction to entertain it. The decision of the question hinged on a consideration of the provisions of the Sea Customs Act. Section 188 of that Act reads as follows:--

'188. Any person deeming himself aggrieved by any decision or order passed by an officer of Customs under this Act may within three months from the date of such decision or order, appeal therefrom to the Chief Customs Authority, or in such cases as the Local Government directs to any Customs-Collector and empowered in that behalf by name or in virtue of his office by the Local Government.........'

Every order passed in appeal under this Section shall, subject to the power of revision conferred by Section 191 be final.'

It will have been noticed that Section 188 of the Sea Customs Act did not expressly exclude the jurisdiction of the civil and criminal Courts and despite that the jurisdiction of the civil Court was held to be barred. Section 131 of the U. P. District: Boards Act, as has already been noticed, clearly bars the jurisdiction of an authority other than the one provided in the Act to question the legality of any valuation or assessment or the liability of a person to be assessed or taxed.

7. On behalf of the respondent reliance has been placed upon the following observations made in the aforesaid case.

'It is settled law that the exclusion of the jurisdiction of the civil Courts is not to be readily inferred but that such exclusion must either be explicitly expressed or clearly implied, ft is also well settled that even if jurisdiction is so excluded, the Civil Courts have jurisdiction to examine into the cases where the provisions of the Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.'

Even though the aforesaid observations are in the nature of obiter dicta, they are entitled to respect. In the case of Firm of Illuri Subbayya Chetty and Sons v. State of Andhra Pradesh, : [1963]50ITR93(SC) , Gajendragadkar, J; as his Lordship the Chief Justice of India then was, speaking for the Court made the following observations with regard to the aforesaid observations of their Lordships of the Judicial Committee.

'It is necessary to add that these observations, though made in somewhat wide terms do not justify the assumption that if a decision has been made by a taxing authority under the provisions of the relevant taxing statute its validity can be challenged by a suit on the ground that it is incorrect on the merits and as such, it can be claimed that the provisions of the said statute have not been complied with. Non-compliance with the provisions of the statute to which reference is made by the Privy Council must, we think be non-compliance with such fundamental provisions of the statute as would make the entire proceedings before the appropriate authority illegal and without jurisdiction. Similarly, if an appropriate authority has acted in violation of the fundamental principles of judicial procedure, that may also tend to make the proceedings illegal and void and this infirmity may affect the validity of the order passed by the authority in question. It is cases of this character where the defect or the infirmity in the order goes to the root of the order and makes it in law invalid and void that these observations may perhaps be invoked in support of the plea that the civil Court can exercise its jurisdiction notwithstanding a provision to the contrary contained in the relevant statute. In what cases such a plea would succeed it is unnecessary for us to decide in the present appeal because we have no doubt that the contention of the appellant that on the merits, the decision of the assessing authority was wrong, cannot be the subject-matter of a suit because8-18-A clearly bars such a claim In the civil Courts.'

8. The aforesaid observations were quoted with approval by the Supreme Court in the case of Provincial Govt. of Madras (now A. P.) v. J, S. Basappa : [1964]5SCR517 .

9. The facts of the former Supreme Court case : [1964]5SCR517 (supra) were that I. S. Chetty and Sons were assessed to tax on a turnover representing the sale of groundnuts and tax was realised from them. Under the provisions of the Madras General Sales Tax Act tax was leviable on the purchase and not on the sale of groundnuts and a regular suit was filed in the civil Court challenging the correctness and legality of the order of assessment. Section 18-A of the aforesaid Madras General Sales Tax Act provided that no suit or other proceeding, shall except as expressly provided in the Act, be instituted in any Court to set aside or modify an assessment made under this Act. Their Lordships of the Supreme Court held that the suit was not maintainable. Section 18-A referred to above and Section 131 of the U. P. District Boards Act are couched more or less in the same language. The second of the Supreme Court cases referred to above depended upon an interpretation of the provisions of the Madras General Sales Tax Act prior to the incorporation therein of Section 18-A. It was observed by their Lordships that without a provision like Section 18-A which was added to the Act in 1951, the jurisdiction of the civil Court would not be taken away at least where the action of the authorities is wholly outside the law and is not a mere error in the exercise of jurisdiction. The argument that Section 18-A should be held to be implicit in the Act was repelled by their Lordships.

10. It is thus clear that the violation of any and every provision of a taxing statute would not be a sufficient ground for the filing of a civil suit challenging the validity and legality of an order of assessment.

11. Applying the principles laid down by the Supreme Court in the case of Firm I. S. Chetty and Sons, : [1963]50ITR93(SC) it is clear that in the face of the provision contained in Section 131 of the U. P. District Boards Act a civil suit would not lie to challenge the liability of the respondent to be assessed to tax on the ground that during the assessment year concerned the income that accrued to it was less than Rs. 200/-. The question of the quantum of income of an assessee is within the exclusive jurisdiction of the assessing and appellate authorities constituted under the U. P. District Boards Act and indeed if it were otherwise the municipal Courts of the land will be flooded with numerous cases and the object of the legislature in providing the bar of jurisdiction will be defeated.

12. On behalf of the respondent it was contended that while the quantum of income assessed cannot be open to challenge in the municipal Courts, a civil suit would lie on the ground that the income was below the taxable limit. To my mind there is no distinction in principle between the two cases as in each casethe question is as to whether the quantum of income determined by the assessing and appellate authorities is correct or not.

13. The 1950 and 1954 Allahabad cases 0065/1949 : AIR1949All741 and : AIR1954All121 ), relied upon on behalf of the respondent are distinguishable from the instant case. Those cases were under the U. P. Municipalities Act. In the former case the contention of the assessee was that he did not reside or carry on business within the limits of the Municipal Board and in the latter it was held that the jurisdiction of the Civil Court was not barred in a case in which the order of assessment was wholly illegal. The aforesaid cases do not need detailed examination in view of the pronouncement of the Supreme Court in 1964 cases : [1963]50ITR93(SC) and : [1964]5SCR517 referred to above.

14. I find I am unable to endorse the conclusion reached by the learned Courts below and hold that the plaintiff-respondent's suit was not maintainable and the Civil Court was barred from taking its cognizance.

15. The appeal is accordingly allowed andthe plaintiff's suit is dismissed with costs throughout.


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