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indo-marine Agencies (Kerala) Pvt. Ltd. Vs. Sales Tax Officer and 3 ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case NumberO.P. No. 4689 of 1976-G
Judge
Reported in[1980]45STC163(Ker)
Appellantindo-marine Agencies (Kerala) Pvt. Ltd.
RespondentSales Tax Officer and 3 ors.
Appellant AdvocateChakkappan Kalliath;and C.J. Antony, Advs.
Respondent AdvocateThe Government Pleader
DispositionPetition dismissed
Cases ReferredBurman v. Commercial Tax Officer
Excerpt:
- - 8. sections 3, 5 and 10, when read together, clearly show that a collector of a district in one state is empowered to collect the amount due to the collector of a district of another state in accordance with the certificate issued by the latter......[1967] 2 a.c. 337 at 353). an order purportedly made in the exercise of a statutory power, whether void or voidable, is presumed to be valid until rebutted 'by a party to legal proceedings in a court of competent jurisdiction who has locus standi to challenge the validity' of the order in question (lord diplock in hoffmann-la roche & co. a.g. v. secretary of state for trade and industry [1975] a.c. 295 at 366). as aptly put by h.w.r. wade, administrative law, 4th edition, page 300:the reality of the matter, therefore, is that the court will invalidate an order only if the right remedy is sought by the right person in the right proceedings and circumstances. the order may be hypothetically a nullity, but the court may refuse to quash it because of the plaintiff's lack of standing, because.....
Judgment:

T. Kochu Thommen, J.

1. The petitioner-company was assessed to sales tax under Section 35 of the Bombay Sales Tax Act, 1959, for the year 1972-73, by exhibit P4 dated 13th March, 1975. A penalty was imposed upon it under exhibit P5 dated 13th August, 1975. A notice of demand was served on it by the third respondent, Deputy Tahsildar, Mattancherry, Cochin, under Section 7 of the Kerala Revenue Recovery Act. These orders are challenged by the petitioner.

2. The counsel for the petitioner, Shri Chakkappan Kalliath, submits that exhibit P4 levying sales tax in respect of the sales in question is null and void, as such levy is barred under article 286 of the Constitution. Consequently, exhibit P5 imposing penalty upon the petitioner is also null and void. The counsel further submits that the notice issued under Section 7 by the third respondent, the Deputy Tahsildar, is invalid as he is not a competent officer to initiate proceedings for collection of revenue due and payable to the Collector of Bombay. The counsel also submits that the provisions of either the Kerala Revenue Recovery Act, 1968, or the Revenue Recovery Act, 1890, do not authorise collection of revenue in one State on behalf of the authorities of another State.

3. The contention that exhibits P4 and P5 are null and void for the reason that the imposition of tax is barred under article 286 of the Constitution is based on the assumption that the sales in question took place in the course of import. No such contention is stated by the petitioner to have been urged before the authorities in Bombay. Whether or not the sales were effected in the course of import is essentially a question of fact which has to be determined by the competent authorities. Even assuming that this question had been urged by the petitioner and wrongly determined by the Sales Tax Officer in Bombay, exhibit P4 assessment was not challenged before the statutory authorities in Bombay. In the circumstances, the petitioner cannot be heard to contend that exhibit P4 is a void order and, therefore, it is open to it to resist recovery on the strength of such order. Assuming that exhibit P4 is void, the petitioner ought to have promptly approached the competent court and had that order declared void by due process of law.

4. An order, although void in law, remains for many purposes effective and operative until it is challenged and its invalidity is declared by a competent body or court. It is not open to a person to ignore an order made against him by a competent authority in the purported exercise of its statutory power solely on the ground that the order is null and void and resist all consequences flowing from it. It is not correct to say that an order, which is void, is void in the sense that it has no effect at all. An order may be void ab initio, but it remains in effect and continues to operate until its invalidity is declared by the court. Upon such declaration, the order goes out of existence as from the date on which it was made. But, until then, a void order is only voidable and it continues to operate against the person against whom it was made, and he is bound by the consequences flowing from the order (see the principles stated by Lord Morris of Borth-y-Gest in Ridge v. Baldwin [1963] 2 W.L.R. 935 at 992-993; Lord Wilberforce in Calvin v. Caw [1979] 2 All E.R. 440 at 445). An order which is ultra vires, i. e., an order, which is unauthorised by law and, therefore, outside jurisdiction, is null and void; whereas an order which is intra vires, i. e., within jurisdiction, but vitiated by an error on the face of the record, is only voidable (see Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147). A void order, when quashed, is deprived of all legal effect right from its inception whereas a voidable order remains valid even when it is quashed for the period of its operation (see H.W.R. Wade, Administrative Law, 4th Edition, page 297). But the distinction between 'jurisdictional errors' (using that expression in the sense in which it was understood by the House of Lords in the Anisminic [1969] 2 A.C. 147) and errors within jurisdiction, which is the criterion for distinguishing a void order from a voidable order, is so fine that it has reached almost the 'vanishing point' (per K.K. Mathew, J., in M.L. Sethi v.R.P. Kapur A.I.R. 1972 S.C. 2379 at 2385) or it is rapidly being eroded (per Lord Denning, Pearlman v. Keepers and Governors of Harrow School [1978] 3 W.L.R. 736 at 743). 'Void' and 'voidable' are concepts developed in the private law of contract and they are 'ill-adapted to the field of public law' (Lord Diplock in Hoffmann-La Roche and Co. A.G. v. Secretary of State for Trade and Industry [1975] A.C. 295 at 366; see also Lord Morris of Borth-y-Gest in Ridge v. Baldwin [1963] 2 W.L.R. 935 at 992-993; Lord Upjohn in Durayappah v. Fernando [1967] 2 A.C. 337 at 353). An order purportedly made in the exercise of a statutory power, whether void or voidable, is presumed to be valid until rebutted 'by a party to legal proceedings in a court of competent jurisdiction who has locus standi to challenge the validity' of the order in question (Lord Diplock in Hoffmann-La Roche & Co. A.G. v. Secretary of State for Trade and Industry [1975] A.C. 295 at 366). As aptly put by H.W.R. Wade, Administrative Law, 4th Edition, page 300:

The reality of the matter, therefore, is that the court will invalidate an order only if the right remedy is sought by the right person in the right proceedings and circumstances. The order may be hypothetically a nullity, but the court may refuse to quash it because of the plaintiff's lack of standing, because he does not deserve a discretionary remedy, because he has waived his rights, or for some other legal reason. In any such case, the 'void' order remains effective and is, in truth, valid.

5. Exhibits P4 and P5, even if invalid, are effective and operative against the petitioner in so far as it did not seek the right remedy at the right time in the right proceedings in the right forum.

6. As regards the contention that the Deputy Tahsildar (third respondent) is not competent to issue exhibit P7 for the reason that the Collector (second respondent), who is the competent authority under Section 69 of the Kerala Revenue Recovery Act, is not entitled to delegate his power, it has only to be stated to be rejected in the light of the decision of this Court in Tahsildar, Alwaye v. Antony 1977 K.L.T. 26 overruling an earlier decision to the contrary in Antony v. Tahsildar, Alwaye 1975 K.L.T. 440.

7. I now come to the last contention, viz., the authorities under the Kerala Revenue Recovery Act are not competent to collect revenue at the behest of the authorities in Bombay. This contention is based on the fact that the Revenue Recovery Act, 1890, in Section 3, does not specifically say that the Collector of a district is competent to send a certificate to the Collector of another district of any other State. All that Section 3 says is that the Collector of a district may send a certificate to the Collector of another district and the latter is bound to proceed to recover the amount in accordance with such certificate. Section 5 also speaks of the Collector of a district recovering amounts due under a certificate issued by the Collector of another district. Section 10 refers to the duties of the Collectors to remit money collected on the basis of such certificates. It says:

Where a Collector receives a certificate under this Act from a Collector of another State...he shall remit any sum recovered by him by virtue of that certificate to that Collector, after deducting his expenses in connection with the matter.

8. Sections 3, 5 and 10, when read together, clearly show that a Collector of a district in one State is empowered to collect the amount due to the Collector of a district of another State in accordance with the certificate issued by the latter. The Revenue Recovery Act, 1890, being a Central Act, applies to the country as a whole, and the Collector of a district means a Collector of a district anywhere in the country. A certificate issued by a Collector of a district is enforceable in another State, as in the case of a certificate issued by the Collector of another district in the same State. This is the view held by the High Court of Karnataka in Burman v. Commercial Tax Officer [1971] 28 S.T.C. 637, which, with respect, I fully endorse.

9. For the reasons stated by me, I see no merits in the various contentions raised by the petitioner. Counsel for the petitioner, however, submits that Section 4 of Act 1 of 1890 enables the petitioner to institute a suit for repayment of the amounts paid by it in certain cases and that, in the instant case, the petitioner should not be denied such right. The petitioner, no doubt, has such rights as are available to it under Section 4 and, on that point, there is no dispute.

10. The original petition is accordingly dismissed. No costs.


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