C.M. Lodha, C.J.
1. This is a defendant's first appeal from the judgment and decree dated February 29, 1968, passed by the District Judge Pair, whereby the learned District Judge decreed the plaintiff-respondent's suit for the recovery of Rs. 2,14,520/-, on account of arrears of excise duty for the period commencing from April 1, 1949 to March 31, 1950.
2. The defendant Maharaja Shree Umaid Mills Ltd., Pali, incorporated under the Marwar Companies Act, 1923 has its registered office at Pali, and is running a cloth and yarn Mill at Pali, since 1941. The plaintiff's case is that under the Rajasthan Excise Duties Ordinance, 1949 (XXV of 1949) (which will hereinafter be referred to as 'the Ordinance') the defendant was liable to pay to the State of Rajasthan excise duty on the stock of manufactured cloth lying in the Mills on April 1, 1949 and also on the cloth manufactured during the period from April 1, 1949 to March 31,1950, at the rates set forth in the Schedule to the Ordinance. It is averred that the total amount, which became payable on account of the excise duty under the Ordinance for the said period, works out to Rs. 2,14,520/- but nothing was paid by the defendant to the State of Rajasthan. The plaintiff goes on to state that under Articles 278 and 295 of the Constitution of India, the President of India entered into an agreement with the then Rajpramukh of Rajasthan on February 25, 1950, whereby the patties agreed to accept the recommendations of the Indian States Finance Enquiry Committee 1948-49, contained in Part I of its report read with Chapters I, II, III of Part II of its report, in so far as they applied to the State of Rajasthan together with the recommendations contained in Chapter V of Part II of the said report. It is alleged that by virtue of the said agreement, the Union of India became entitled to recover the excise duty which was payable by the defendant to the State of Rajasthan as from April 1, 1949, to the date, the Central Excise and Salt Act, 1944 (hereinafter referred to as 'the Act of 1944') was extended to the State of Rajasthan by Section 11 of the Finance Act of 1950, i.e., before April 1, 1950. The plaintiff averred that by a notice dated February 7, 1951, the Superintendent, Central Excise, Jodhpur, called upon the defendant to pay the sum of Rs. 2,14,520/- within a period of thirty days from the date of receipt of the notice and also issiud certificates of recovery under Section 11 of the Act of 1944 and Section 10 of the Ordinance of 1949. It is further alleged that the Superintendent, Central Excise, Jodhpur, also made an application under Section 257 of the Rajasthan Land Revenue Act, 1956, to the Collector, Pali for effecting recovery of the said sum of Rs. 2,14,520/- and on the proceedings being resisted by the defendant, the Additional Collector, Pali, by his order dated September 19, 1964, held that the certificates could not be executed through the revenue agency and returned the same unexecuted. On the aforesaid facts, the plaintiff prayed for a decree for Rs. 2,14,520/-, against the defendant with interest at the rate of 6% per annum from the date of the suit upto the date of the decree and from the date of the decree to the date of payment.
3. The suit was resisted by the defendant appellant on a number of grounds. It pleaded that nothing becomes payable by the defendant to the State of Rajasthan under the Ordinance of 1949. It also denied its liability to pay the amount of the excise duty claimed by the plaintiff. In the additional pleas, the defendant pleaded that no rules had been framed under the Ordinance at all and the Jaipur Excise Duties Rules of 1945, which had been notified to be applicable under the Ordinance, were never published. It was also pleaded that nothing was done by the officers of the Rajasthan Government for creating liability against the defendant for any amount of the excise duty. It was pleaded in the alternative that there was no provision in the Jaipur Excise Duties Rules for the purpose of levying, collecting or recovering duty on the goods already cleared from the premises of the Mills. The defendant questioned the validity of the notice dated February 7, 1951, issued by the Superintendent, Central Excise, Jodhpur, calling upon the defendant to pay the amount on the ground that the Superintendent had no authority to issue a notice of demand as he was not an officer under the Ordinance under which the duty was sought to be levied and collected. The defendant also challenged the jurisdiction of the civil court to try and decide the suit. Bar of limitation was also pleaded. Besides the abovementioned objections, the defendant pleaded that the plaint was not properly signed, verified and presented.
4. The plaintiff filed an additional written statement on January 7, 1976, and on the pleadings of the parties, the trial Court framed the following issues on March 11, 1967:-
(1) Is the plaintiff entitied to duty on 13455678 yards instead of on 1340589 yards as admitted by the defendant to-day and also on 273600 yards instead of on 228000 yards, as admitted by the defendant to-day ?
(2) Was excise duty payable to the State of Rajasthan ?
(3) Is the plaintiff entitled to recover that excise duty for reasons given in para 4 of the plaint ?
(4) Is the suit not triable by a civil court for reasons given in para 14 of the written statement ?
(5) Is the suit barred by time ?
(6) (A) Was the person signing and verifying the plaint authorised to do so and if so, properly ?
(B) If not, to what effect ?
(7) Was the Rajasthan Excise Duties Ordinance, 1949, levying duty on cloth maufactured and cleared from the Mills prior to 19-9-49, ultra vires of the Constitution ?
(8) (A) Is the presentation of the suit invalid for reasons given in para 19 of the written statement ?
(B) If so, has the defect been rectified on 19-2 67 ?
(9) Is the plaintiff estopped from making the claim for reasons given in para 20 of the written statement ?
(10) Is the suit not maintainable for reasons given in paras 10 to 13 of the written statement ?
'11) (A) Was any assessment of the excise duty made and if so, by a competent authority ?
(B) If not, is the amount not recoverable as explained in para 21 of the written statement ?
(12) To what relief, if any, the plaintiff is entitled ?
5. The plaintiff examined two witnesses, namely, P.W. 1 Shri G. N Kala, retired Assistant Collector, Central Exice, Jodhpur, and P.W. 2 Amba Lal, Inspector, Central Excise, Jodhpur, at the relevant time. The defendant produced DW. 1 Mohan Lal Gupta, Secretary of the Mills. The plaintiff also relied upon a number of documents in support of its case.
6. The learned District Judge, Pali, arrived at the following findings in respect of the various issues :-
1. That the total yardage for the purpose of the excise duty in question was 13455678, yardage having been calculated at 3 yards per lb ;
2. That Section 3 of the Ordinance made the defendant liable to pay the excise duty in question ;
3. That by virtue of the agreement dated February 25, 1950, between the President of India and the then Rajpramukh of Rajasthan, the Union of India became entitled to claim and to recover all excise duty which the State of Rajasthan was entitled to recover from the defendant for the period from April 1, 1949 to March 31, 1950, and that the Ordinance and the Rules framed thereunder had been properly promulgated in the Official Gazette, as held in Union- of India v. Maharaja Kishangarh Mills Ltd. A.I.R. 1961 Supreme Court 683.;
4. That the arrears of the excise duty in question became a debt due 'te. the Union of India which was entitled to recover the same by a civil siuit ;
5. That the suit was within limitation under Article 112 of the Limitation Act, which prescribes a period of 30 years ;
6. That the plaint was signed and verified by a duly authorised person and was also presented by an authorised person in accordance with law.
7. That the excise duty could be levied retrospectively and the same can be recovered by a suit; and
8. That assessment of excise duty was duly made and the duty was demanded according to law by the Central Excise Officer by notice of demand Ex. 2 and this was enough compliance with the provisions of law-
7. As a result of the aforesaid findings, the learned District Judge decreed the plaintiff's suit for Rs. 2,14,520/-, on account of the excise duty in question and further directed that the plaintiff shall get interest at 6% on the decretal amount from the date of the suit till realisation.
8. The learned counsel for the appellant has reiterated practically all the objections which the defendant had taken in the trial court. At the commencement of his arguments, he contended that the Ordinance was promulgated on September 5, 1949, but the duty has been levied retrospectively with effect from April 1, 1949. Excise duty, according to the learned counsel, could not have been levied retrospectively. In our opinion, this contention is devoid of force. We may, however, state here, in fairness to the learned counsel, that, later on in the course of his argument, he too conceded that he was unable to support this contention, In Ghhotabhai Jethabhai Patel and Co. v. Union of India and Ors., A.I.R. 1952 Nagpur 139. it was held that if Parliament has the power to enact a law retrospectively, the nature of the tax is not altered by the mere Fact that the rate is increased retrospectively. In United Provinces v. Atiqua Begum 1940 F.C.R. 16. it was held that it cannot be doubted that Parliament, unless it infringes some provisions in the Constitution, has the competence to enact law retrospectively. The matter has been set at rest by the Supreme Court in Chhotabhai Jethabhai v. Union of India A.I.R. 1962 S.C. 1006 It was held therein that the fact that the imposition of duty of excise retrospectively deprived a citizen of his right to pass it on to others, did not make it an unreasonable restriction on the exercise of the fundamental right to hold property within the meaning of Article 19(5) of the Constitution. Thus there is no room for argument that imposition of excise duty with retrospective effect is beyond legislative competence of the Union or a State, as the case may be.
9. The next contention of the learned counsel is that the excise duty in question was not assessed according to law and as such the plaintiff is not entitled to recover the same. In order to substantiate this point, learned counsel relied on a number of provisions of the Ordinance and the Rules. Hence, for a correct appraisal of the contentions raised on behalf of the appellant, it would be necessary to examine the relevant provisions of the Rajasthan Excise Duties Ordinance and the Rules made thereunder.
As already stated, the Rajasthan Excise Duties Ordinance, 1949, was promulgated by the then Raj Pramukh of Rajasthan on September 5, 1949 and was published' in the Rajasthan Gazette, Extraordinary, No. 70, dated September 17, 1949. It came into force at once. We may, therefore, for the sake of convenience, reproduce the relevant sections of the Ordinance, which have been referred to by the learned counsel in the course of their arguments -
'Section 2 (iii).--'Excise Officer' means any officer of the Excise Department of Rajasthan or any person invested by the Government with the powers of an Excise Officer under this Ordinance ;'
'Section 3. Duties specified in the First Schedule to be levied,-
(1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods which are produced or manufactured in Rajasthan whether in stock on the first day of April 1, 1949, or thereafter produced or manufactured, and at the rates set forth in the First Schedule.
'Section 10. Recovery of sums due to Government-In respect of duty and any other sums of any kind payable to the Government under any of the provision of this Ordinance or of the rules made thereunder, the officer empowered by the Government to levy such duty or require the payment of such sums may deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due, which may be in his hands or under his disposal or control or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is hot so recovered, he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the officer in charge of the sub-division in which such person resides or conducts his business and the said officer, on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as if it were an arrear of land revenue.'
'Section 26. Power of Government to make rules.-(1) The Government may make rules to carry into effect the purposes of this Ordinance.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may-
(i) provide for the assessment and collection of duties of excise, the authorities by whom functions under this Ordinance are to be discharged, the issue of notices requiring payment the manner which in the duties shall be payable, and the recovery of duty not paid ;
(ii) prohibit absolutely, or with such exceptions, or subject to such conditions as the Government thinks fit, the production or manufacture or any process of the production or manufacture of excisable goods, or of any component parts or ingredients or containers thereof, except on land or premises approved for the purpose ;
(iii) prohibit absolutely, or with such exceptions or subject to such conditions as the Government thinks fit the bringing of excisable goods into the United States from any other place ;
(iv) regulate the removal of excisable goods from the place where produced, stored or manufactured or subjected to any process of production or manufacture and their transport to or from the premises of a licensed person, or a bonded warehouse, or to a market ;
(v) regulate the production or manufacture, of any process of the production or manufacture, the possession, storage and sale of excisable goods, or of any component parts or ingredients or containers thereof, so far as such regulation is essential or the proper levy and collection of the duties imposed by this Ordinance ;
(vi) provide for the employment of officers of the state to supervise the carrying out of any rules made under this Ordinance ;
(vii) require a manufacturer or the licensee of a warehouse to provide accommodation within the precincts of his factory or warehouse for officers employed to supervise the carrying out of regulations made under this Ordinance and prescribe the scale of such accommodation ;
(viii) provide for the appointment, licensing, management and supervision of bonded warehouses and the procedure to be followed in entering goods into and clearing goods from such warehouses ;
(ix) provide for the distinguishing of goods which have been manufactured under licence of materials which have been imported under licence and of goods on which duty has been paid, or which are exempt from duty under this Ordinance ;
(x) so far as such imposition is essential for the proper levy and Collection of duties imposed by this Ordinance, impose on persons engaged in the production or manufacture, storage or sale (whether on their own account or as brokers or commission agents) of excisable goods, their duty of furnishing information, keeping records and making returns, and prescribe the nature of such information and the form of such record and returns, the particulars to be contained therein, and the manner in which they shall be verified ;
(xi) require that excisable goods shall not be sold or offered or kept for sale in the United States except in prescribed containers, bearing a banderol, stamp or label of such nature and affixed in such manner as may be prescribed ;
(xii) provide for the issue of licences and transport permits and the fees, if any, to be charged therefor ;
(xiii) provide for the detention of goods, plant, machinery or material, for the purpose of exacting the duty, the procedure in connection with the confiscation, otherwise other than under Section 9 of the goods in respect of which breaches of the Ordinance or Rules have been committed, and the disposal of goods so detained or confiscated ;
(xiv) authorise and regulate the inspection of factories and provide for the taking of samples, and for the making of tests of any substance produced therein, and for the inspection or search of any place or conveyance used for the production, storage, sale or transport of excisable goods and so far as such inspection or search is essential for the proper levy and collection of the duties imposed by this Ordinance ;
(xv) authorise and regulate the composition of offences against, or liabilities incurred under this Ordinance or the rules made thereunder ;
(xvi) provide for the grant of a rebate of the duty paid on goods which are exported out of Rajasthan ;
(xvii) exempt any goods from the whole or any part of the duty imposed by this Ordinance ;
(xviii) authorise the Commissioner to provide, by written instructions, for supplemental matters arising out of any rule made by the Government under this section.
(3) In making rules under this section, the Government may provide that any person committing in a breach of any rule, shall where no other penalty is provided by this Ordinance, be liable to a penalty not exceeding two thousand rupees and that any article in respect of which any such broach is committed, shall be confiscated.'
'28. Publication of rules and notifications.-All rules made and notifications issued under this Ordinance shall be made and issued by publication in the Rajasthan Gazette. All such rules and notifications shall thereupon have effect as if enacted in this Ordinance.'
'29. Bur of suits etc.-(1) No suit shall lie against the Government or against any officer of the Government in respect of any order passed in good faith or any act in good faith done or ordered to be done under this Ordinance.
(2) No suit, prosecution, or other legal proceeding shall be instituted for anything done or ordered to be done under this Ordinance after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of.'
'30. Bepeal and savings.-All laws dealing with matters covered by this Ordinance, in force at the commencement thereof in any part of Rajasthan are hereby repealed ;
But any duty levied, assessment made, thing done or action taken under or in pursuance of any such law hereby repealed shall, unless otherwise provided by or under this Ordinance, be valid and be deemed to have been levied, made, done or taken, as the case may be, under or in pursuance of this Ordinance as if it were then in force.'
'31. Interpretation.-The provision of the General Clauses Act, 1897, of the Central Legislature shall mutatis mutandis apply so far as it may be, to the interpretation of this Ordinance in the same manner as they apply to the interpretation of a Central Act of the Indian Legislature.'
10. It is worthy of note that no rules were framed under the Ordinance. However, by notification dated September 15, 1949, issued under Section 5 read with Section 26 of the Ordinance, the Jaipur Excise Duties Rules, 1945 (hereinafter called 'the Rules') were made applicable under the said Ordinance and were directed to be treated as the rules framed under the Ordinance till the new rules were framed. We are concerned with these Rules only. The relevant rules from the Jaipur Excise Duties Rules, 1945, are reproduced below for ready reference,-
'2 (viii) 'Officer' means Customs and Excise Officer ;'
'2 (ix) 'proper form' means the appropriate form as prescribed in Appendix I to these Rules ;'
'2 (x) 'proper officer' means the officer in whose jurisdiction the land or premises of the producer of any excisable goods, or of any persons engaged in any process of production of, or trade in, such goods, or containers thereof, whether as a grower, curer, wholesale dealer, broker or commission agent, or manufacturer, or intended grower, curer, wholesale dealer, broker, commission agent or manufacturer, are situate ;'
'9. Time and manner of payment of duty.-No excisable goods shall be removed from any place where they are produced or manufactured or any promises appurtenant thereto, which may be specified by the Commissioner in this behalf, whether for consumption, export, or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these Rules or as the Commissioner may require and except on presentation of an application in the proper form and on obtaining the permission of proper officer on the form :
Provided-that such goods may be deposited without payment of duty in a store-room or other place of storage approved by the Commissioner under Rule 27 or Rule 47 or in a warehouse appointed or licensed under Rule 101 or may be exported under bond as provided in Rule 13 :
Provided further that the Commissioner may, if he thinks fit, instead of requiring payment of duty in respect of each separate consignment of goods removed from the place or premises specified in this behalf, or from a store-room or warehouse duly approved, appointed or licensed by him, keep with any person dealing in such goods, an account-current of the duties payable thereon, and such account shall be settled at intervals not exceeding one month, and the account-holder shall periodically make deposit therein sufficient in the opinion of the Commissioner to cover the duty due on the goods intended to be removed from the place of production, manufacture or storage-'
'10. Recovery of duty short-levied, or erroneously refunded.-When duty has been short-levied through inadvertence, error, collusion or misconstruction on the part of an officer, or through mis-statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty; after having been levied, has been, owing to any such cause, .erroneously refunded, the person chargeable with the duty so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or repay the amount paid to him in excess, as the case may be, on written demand being made within three months from the date on which the duty was paid or adjusted in the owner's account-current, if any or from the date of making the refund.'
'11. No refund of charges erroneously levied or paid, unless claimed within three months.-No duty which has been paid, or has been adjusted in an account-current maintained with the Commissioner under Rule 9, and of which the repayment wholly or in part is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be refunded unless a written claim is lodged with the proper officer within three months from the date of such payment or adjustment as the case may be.'
Note : Form ARI is separately annexed and marked as Appendix 1, which forms part of this judgment.
11. Learned counsel for the appellant has urged that the rules made under the Jaipur Excise Duties Act, 1945, were not published as required by Section 27 of the Jaipur Act nor they were published after the promulgation of the Rajasthan Ordinance of 1949. Under Section 28 of the said Ordinance and consequently, the Rules will not be deemed to have come into force at all. In the alternative, he has submitted that by virtue of Section 30 of the Ordinance of 1949, the rules made under the Jaipur Act will be deemed to have been repealed. In short, the contention of the learned counsel is that the Rules never became a part of the statute. Pursuing this line of argument, the learned counsel has further argued that Section 3 of the Ordinance makes it incumbent that duties of excise on excisable goods, which are produced or manufactured in Rajasthan, whether in stock on April 1, 1949 or thereafter, produced or manufactured at the rate set forth in Schedule I shall be levied and collected in such' manner as may be prescribed. The word 'prescribed' has been defined in Section 2 (ix) as 'prescribed by Rules made under this Ordinance.' The manner of levy and| collection, it is submitted by the learned counsel, is prescribed by Rules 9 and 52 but since the procedure prescribed under Rule 9 and/or 52 was not followed and could not be followed, no excise duty became due from the defendant and at any rate no civil suit can lie for recovery of the same. In support of his contention, the learned counsel has relied upon Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd. , AIR 1972 S.C. 2563 : 1978 E.L.T. (J 416). Kerala Polythene Industries v. Superintendent of Central Excise, Trivandrum and Ors. 1977 Tax L.R. 1650. and State of Rajasthan and Ors. v. Ghasilal. A.I.R. 1965 S.C. 1954.
12. On the other hand, the submission of the learned counsel for the respondent is that Section 3, which is a charging Section, creates a liability to pay the tax and even in the absence of the Rules, an assessee could bind himself to pay voluntarily the tax due since the same had become payable under the charging section 3 of the Ordinance. It has also been urged by him that it must be presumed, in the facts and circumstances of the case, that the Jaipur Rules were duly published, as required under the Jaipur Act and it was not necessary to publish the same in extenso over again under the Ordinance. In this connection, strong reliance has been placed on Union of India v. Maharaja Kishangarh Mills Ltd. (supra). It has also been urged that the excise duty in the present case became a debt for which the Union of India can file a civil suit.
13. We shall first take up the question of maintainability of the suit. The learned counsel for the appellant has contended that the Ordinance itself provides for remedies for adjudication of the disputes and the method for recovery of the tax and therefore the jurisdiction of the civil court is barred. In support of his contention, he has relied on Venkataraman and Co. v. State of Madras, A.I.R., 1966 S.C. 1089. Slate of Kerala v. Ramaswami Iyer and Sons, A.I.R. S.C. 1738.
Premier Automobiles v. K.S. Wadke; and Union of India v. Elgin Mills Co11 We have gone through all these authorities and are of opinion that the principle of law laid down therein has no application to the facts and the circumstances of the present case.
14. In Venkalaraman and Co. v. Slate of Madras the question raised before the Supreme Court was whether a suit for the refund of the sales tax assessed under the provisions of the Madras General Sales Tax Act, 1939, declared to be ultra vires the powers of the State legislature, would lie. It was held per majority that the sales tax authorities had acted outside the Act and not under it in making the assessment on the basis of the relevant part of the charging Section which was declared to be ultra vires by the Court Section 18A of the Act, which provided that no suit or other proceeding shall, except as expressly provided in this Act, be instituted in any court to set aside or modify any assessment made under this Act, was pressed into service by the opposite party but their Lordships observed that as the relevant part of the charging section was held to be ultra vires, Section 18A cannot operate as a bar to the maintainability of a suit. In delivering the judgment of the majority, Subba Rao J. observed,-
'If a statute imposes a liability and creates an effective machinery for deciding questions of law or fact arising in regard to that liability, it may, by necessary implication, bar the maintainability of a civil suit in respect of the said liability. A statute may also confer exclusive jurisdiction on the authorities constituting the said machinery to decide finally a juricdictional fact thereby excluding by necessary implication the jurisdiction of a civil court in that regard.'
15. In State of Kerala v. Ramaswami Iyer and Sons9 it was held that the jurisdiction of the civil court may be excluded expressly or by clear implication arising from the scheme of the Act but where the Legislature sets up a special Tribunal to determine the question relating to the rights or liabilities which are the creation of a statute, the jurisdiction of the civil court would be deemed to be excluded by implication. The Appeal before the Supreme Court arose out of a suit filed by the assessee for a decree for the amount claimed to be in excess of the tax lawfully due from them under the Act and the question was whether the jurisdiction of a civil court to try the suit is excluded. The Supreme Court, however, held that the Travancore Cochin General Sales Tax Act was a complete code dealing with the levy, assessment, collection and refund of the tax and for the purpose of making assessment of the tax, the authorities have power to decide all questions arising before them and the orders of the appellate authorities, subject to the exercise of the revisional jurisdiction, are declared final. It was further observed that liability to pay tax arises by virtue of the provisions and the quantum of the liability may be determined under the Act alone. The jurisdiction of the Civil Court in these matters was therefore impliedly barred by the scheme of the Act.
16. In Premier Automobiles v. K.S. Wadke, A.I.R. 1975 S.C. 2238 it was held with reference to the provisions of the Industrial Disputes Act, 1947, that what the Union sought to challenge by the institution of a suit was the termination of the award and it was clear that the suit was in relation to the enforcement of a right created under the Act. Consequently, the Supreme Court observed that the remedy in Civil Court was barred and the only remedy available to the workmen was the raising of an industrial dispute which was actually raised shortly after the institution of the suit.
17. In Union of India v. Elgin Mills Co., 1979 Tax Law Reports. 2508-1979 E.L.T. (J 640). it was held that the Central Excise and Salts Act has made adequate provisions for the adjudication of disputes and the provisions made thereunder have been made final. Therefore, the civil court's jurisdiction in adjudicating disputes under the said Act is impliedly barred.
18. It is sufficient to point that the case on hand is completely distinguishable. The suit is not for adjudication of any dispute under the Ordinance but it is a suit for recovery of arrears of duty which, according to the plaintiff', has become a debt.
19. It will be noticed that, in the present case, the plaintiff has not raised any dispute regarding the levy or the assessment. On the other hand, the plaintiff 's case is that the arrears of tax became a debt for which a suit is maintainable.
20. In Jagdish Pratap v. State of U.P. A.I.R. 1973 Supreme Court 1059. Jaganmohan Reddy J., speaking for the Court, observed as follows : -
'...it may be stated that once a notice of demand is served on the assessee for payment of tax due under the Act, and the assessee makes a default after the date for payment specified therein has expired, a debt is created in favour of State. This debt the State can recover by any of the modes open to it under the general law.'
In this connection, their Lordships further observed,-
'That right which the State or the Revenue has for recovering arrears of tax which is a debt due to it, is a general right conferred on it under the law either by a suit or by some other method open to it. Section 32 (U.P. Agricultural Income-tax Act 3 of 1948), though it does not have an Explanation analogous to Section 46 nonetheless does not preclude either specifically or by necessary implication a right to recover the arrears of tax due by a suit. The method prescribed in this section is one of the modes of recovery which is summary remedy. It is, however, open to the State to adopt any method available to it for the recovery of tax in the same way as it would be open to it to recover ordinary debt due to it. It can institute a suit and obtain a decree with costs against the assessee or other persons liable to pay. It could also probably, without obtaining a decree or attachment, apply to a Court for the payment of dues if there are funds lying to the credit of the assessee in the Court, or it may perhaps demand payment in the hands of the receiver appointed in respect of any property of the assessee, if due notice to all the parties interested in the fund is given. On these aspects, however, we do not propose to express any views. As already observed, after an assessment is made upon the assessee quantifying the tax due from him and a demand for the payment thereof is issued within the period specified therein, it creates a debt payable by the assessee in favour of the State. It is well established that once a debt is created, the State has the right to recover it by any of the modes open to it under the general law, Unless as a matter of policy only a specific mode to the exclusion of any other is prescribed by the law. No such prohibition is enacted in Section 32 of the Act.'
(Underlining is ours).
It may be mentioned here that their Lordships expressed their agreement with the view taken in Inder Chand v. Secretary of State, A.I.R. 1942 Patna 87. wherein the Patna High Court had held that a suit was maintainable by the Crown for recovery of the income-tax dues against the assessee and also in Chaganti Raghva Reddy v. State, A.I.R. 1959 A.P. 631. wherein a similar view was taken. Their Lordships went on to observe that in principle as will as in the consistent views of the High Courts, it is beyond doubt that where a taxing statute provides for a summary mode of recovery which is not exhaustive, it will be open to the State to have recourse to any other mode open to it under the general law.
21. Thus in view of the law laid down by Supreme Court in Jagdish Pratap's case,12 we do not consider it necessary to further labour on this point and must accept it as a settled law that once the assessment is made upon the assessee quantifying the tax due and a demand notice for payment thereof is issued, it creates a debt in favour of the State against the assessee for which the State can maintain a suit.
22. The contention of the learned counsel for the appellant is that the tax in question did not become due to. the State of Rajasthan inasmuch as neither assessment of the tax has been made nor a demand for the same had been created in accordance with law. To put it more precisely the argument of the learned counsel for the appellant is that the duty in question never became due to the State of Rajasthan and that in any case the notice of demand Ex. 2 dated February 7. 1951, cannot be said to have created a debt in favour of the State.
Since Ex. 2 is the back-bone of the suit, it would be worthwhile to reproduce it in extenso,
OFFICE OF THE SUPERINTENDENT OF CENTRAL EXCISE,
No. IV (a) 8 (13) 50/9 Dated the 7th Feb., 1951NOTICE OF DEMAND FOR PAYMENT OF EXCISE DUTY
M/s Maharaja Shri Umaid Mills Ltd.,
Take notice that on behalf of the Central Government, I hereby demand payment by you of the sum of Rs. 2,14,520/ (Rupees two lacs fourteen thousand five hundred and twenty only) as detailed below, being uncollected excise duty on cloth cleared during the period 1.4.49 to 31.3.50 for home consumption from your mills without payment of the appropriate excise duty as declared by you. This sum must be paid into Pali (Marwar) Treasury within 30 days of the receipt of this demand notice through ordinary treasury challan for credit to the Head 'II Union Excise Duties-Duty on cloth'.
Particulars Yardage and rate Duty amountof cloth of duty (i) Perfect & 13455678 2,10,245.00 Seconds @/-6 per yd.(ii) Fents, ragsetc. 91200 lbs. 273600 yds.1 lb. weight @/- 3 per yd.being taken equal to 3 yds.) 4,275.00Total 2,14,520.00Less amount paid to RajasthanGovernment NilNet payable amount Rs. 2,14.520.00(Rupees two lacs fourteen thousand five hundredand twenty only).Sd/-7.2.51Superintendent,Central Excise: JodhpurC. No. IV (a) 8 (13) 50/9 Dated 7.2.51
Copy forwarded to the Inspector of Central Excise Incharge the Maharaja Shri Umaid Mills Ltd., Pali (Marwar) for information. He should countersign the treasury challan forms if presented by the Mills. The amount is creditable to the usual head of account 'II-Union Excise Duties-Duty on cloth'.
Copy submitted to the Deputy Collector/Asstt. Collector of Central Excise, Ajmer/Jodhpur, for favour of information.
23. It is argued that the cloth in question in respect of which the duty in question has been levied had been cleared before the notice Ex. 2 was issued and there had been no assessment of tax as prescribed by the Rules. It is submitted that in order to have brought into existence a valid assessment, the procedure as prescribed in Rules 9 and 52 of the Rules should have been followed.
24. Rule 9 no doubt provides that excisable goods shall not be removed from any place where they are produced or manufactured until the excise duty leviable thereon has been paid and except on presentation of an application in the proper form and on obtaining permission in the proper form. Second proviso to the rules further provides that the Commissioner may instead of requiring payment of the duty in respect of each separate consignment of the goods, removed from the place of production or manufacture or from the store-room or a warehouse, keep with the assessee an account current of the duties payable thereon and current account shall be settled on an interval not exceeding one month. Rule 52 further provides how the excise duty is to be collected before claiming clearance of the goods.
25. In this connection, it would not be inappropriate to refer to the following observations of their Lordships in Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd. (supra):
'Although Rule 52 makes an assessment obligatory before goods are removed by a manufacturer, yet, neither that rule nor any other rule, as already indicated above, has specified the detailed procedure for an assessment. There is no express prohibition anywhere against an assessment at any other time, in the circumstaences of a case like the one before us, where no 'assessment', as it is understood in law, took place at all. On the other hand, Rule 10A indicates that there are residuary powers of making a demand in special circumatances not foreseen by the framers of the Act or the Rules. If the assessee disputes the correctness of the demand an assessment becomes necessary to protect the interests of the assessee. A case like the one before us falls more properly within the residuary class of unforeseen cases. We think that, from the provisions of Section 4 of the Act read with Rule 10A, an implied power to carry out or complete an assessment, not specifically provided For by the rules, can be inferred.'
26. Now, in the present case, the goods had already been cleared before any proceedings, for collecting the tax, were taken. It may be recalled that the Rajasthan Excise Duties Ordinance 1949, was issued on September 5, 1949, whereas the duty was levied on the stock of goods on the 1st day of April, 1949. It is also clear from the facts narrated in the earlier part of this judgment that the Union of India became entitled to recover the duty in question which the State of Rajasthan was entitled to recover by virtue of an agreement entered into between the President of India and the Raj Pramukh of Rajasthan on February 25, 1950, whereby the parties agreed to accept the recommendations of the Indian States Finance Committee 1948-49 contained in Part I of its report read with Chapters I, II, and III of Part II of its report, in so far as they applied to the State of Rajasthan together with the recommendations contained in Chapter V of Part II of the said report. By virtue of the said agreement, which overrides Article 278 of the Constitu tion, the Union of India stepped into the shoes of the State of Rajasthan and become entitled to claim and recover all excise duty which the State of Rajasthan was entitled to recover from the defendant as on April 1, 1949, before the Centra) Excises and Sale Act of 1944 was extended to the State of 'Rajasthan by Section 11 of the Finance Act of 1950. In Union of India v. Maharaja Kishangarh Mills Ltd.1, while dealing with the question of the authority of the Union of India to realise the arrears of excise duty, the Supreme Court observed as follows :-
'Thus, the combined operation of Articles 277 and 278 read with the agreement vests the power of levy and collection of the duty in the Union of India. It is only in the absence of an agreement like the one in the instant case that the Rajasthan Government could continue to levy and collect the duty in question. The agreement between the two Governments completely displaced the operation of Act 277 in regard, inter alia, to the levy of this duty so far as State of Rajasthan is concerned. It is clear, therefore, that the High Court was in error in holding that Article 277 was any answer to the claim of the Government of India and should override the provisions of Article 278 read with the agreement. On a proper construction of these provisions, in our opinion, the result is just to the contrary. In this view of the matter, it is not necessary to consider the other argument's advanced on behalf of the appellants, whether Artciel 295 should prevail over Article 277.'
The position is, therefore, unassailable that the Government of India, by process of law, stepped into the shoes of the Government of Rajasthan in respect of arrears of the tax in question. At this stage, we may also reproduce the following relevant portion of the report of the Committee which is incorporated as a term of the agreement referred to above,-
'With effect from the prescribed date, the Centre will take over all 'federal' sources of Revenue and all 'federal' items of expenditure in State together with the administration of the Departments concerned. The Centre must also take over all current outstandings (including pending assessments, refunds and arrears), liabilities, claims etc. and all productive and unproductive capital assets connected with these Departments.'
27. However, the main attack of the learned counsel for the appellant in this connection is that the tax in question did not become due to the State of Rajasthan from the Mills under the Ordinance and hence the Central Government also could not recover the tax. It has been argued that the excise duty in dispute does not fall within the ambit of the term 'current outstandings' (including pending assessments, refunds and arrears) liabilities, claims etc., so as to give rise to a right of suit to the Union of India.
28. It is important to note that with effect from the prescribed date it has been provided in the agreement that the Centre will take over all federal sources of revenue and all federal items of expenditure in State together with administration of the Departments concerned. That clearly means that excise duty which was federal source of revenue was taken over by the Centre. It has been made further clear in the agreement that the Centre will take over all current outstandings (including panding assessments, refunds and arrears), liabilities, claims etc. This only means that the right to recover excise duty vested in the Centre. In this view of the matter the argument of the learned counsel that the Union of India did not acquire the right to recover the excise duty in question loses all its force. As already stated, in the peculiar facts and circumstances of the case, the procedure laid down in the rules for assessment and calculation of duty in question could not be followed. Does it mean then that the tax could not be recovered at all or the tax had not become due. Plaintiff's case is that the Superintendent, Central Excise, Jodhpur, assessed the amount of tax and issued a notice of demand calling upon the defendant to make the payment of the suit amount. It appears that the Chief Officer of the Mills Shri Mohan Lal Gupta (DW. 1) submitted a statement of cloth manufactured by the mill during the period April 1, 1949 to March 31, 1950, on the basis of which the Superintendent of Central Excise, Jodhpur, called upon the defendant to pay the tax due. The contention on behalf- of the appellantdefendant is that this sort of notice cannot come within the ambit of the term 'assessment order' and unless an assessment order is passed and a demand is created, the tax cannot be said to have become due.
29. In Slate of Rajasthan v. Ghasi Lal,7 while dealing with the provisions of the Rajasthan Sales Tax Act (29 of 1954), their Lordships observed as follows :-
'Section 3, the charging section, read with Section 5, makes tax payable i.e. creates a liability to pay the tax that is the normal function of a charging section in taxing statute. But till the tax payable is ascertained by the assessing authority under S.,10, or by the assessee under Section 7(2), no tax can be said to be due within Section 16(1) (b) of the Act, for till then there is only a liability to be assessed to tax.'
30. In Chhatturam and Ors. v. Commissioner of Income-tax, A.I.R. 1947 F.C. 22. their Lordships of the Privy Council, while dealing with the provisions of the Income tax Act (1922) observed as follows :-
'The jurisdiction to assess and the liability to pay the tax, however, are not conditional on the validity of notice....The liability to pay the tax is founded on Sections (3) and (4), Income-Tax Act, which are the charging Sections. Section 22 etc. are the machinery sections to determine the amount of tax.'
Lord Dunedin in Whitney v. Inland Revenue Commissioners, 1926 A.C. 37. stated the position in law as follows:-
'Now, there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next there is the assessment. Liability does not depend on assessment, that ex-hypothesis has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery if the person taxed does not voluntarily pay.'
31. In Cockerline and Co. v. Inland Revenue Commissioners 1932 16 Tax Case 1. at page 19, Lord Hanworth, M.R., after quoting the passage from Lord Dunedin's judgment, reproduced above, observed as follows : -
'Lord Dunedin, speaking, of course, with accuracy as to these taxes, was not unmindful of the fact that it is the duty of the subject to whom a notice is given to render a return in order to enable the crown to make an assessment upon him, but the charge is made in consequence of the Act, upon the subject the assessment is only for the purpose of quantifying it.'
Their Lordships of the Federal Court further observed that in India these well-considered pronouncements are accepted without reservation as laying down the true principles of taxation under the Income-tax Act.
32. In Wallace Brothers v. The Commissioner of Income-tax, A.I.R. 1948 P.C. 118 while dealing with the Income-tax Act, 1922 as amended in 1939, it was held that the liability to tax arises by virtue of the charging section alone and it arises not later than the close of the previous year though quantification of the amount payable is postponed.
Thus, it is amply clear from the principles discussed in the above quoted authorities that Section 3 of the Ordinance undoubtedly ceated a liability of the assessee to pay the tax and as soon as the tax was quantified, it will be deemed to have been assessed.
33. Learned counsel for the Union of India has urged that the defendant Mills submitted a statement of the cloth removed by it from the Mill premises and the tax has been assessed on the basis of the facts and figures supplied by the Mills itself. In this connection, he has referred to Form A.R. 1 at page 105, appended to the Rules. In other words, the contention of Mr. Than Chand Mehta is that Ex. 2 is a composite document containing the assessment, that is quantification of the tax as well as the demand, and therefore, the tax in question must be taken to have become due from the defendant by virtue of this notice and failure on the part of the defendant to pay the tax within the specified time gave rise to the plaintiff's right to institute a suit and recover the arrears of tax as a debt. On the other hand, Mr. S.C. Bhandari, learned counsel for the appellant, contended that there being no provision in the rules for levy and collection of the excise duty on cloth already cleared out of the Mills, no duty can be levied in respect of it. In this connection, he has placed reliance on Chhotabhai Jethabhai Patel v. Union of India2 and Chhotabhai v. Union of India.4
34. In Chhotabhai Jethabhai Patel v. Union of India' it was observed-
'Under Article 265 of the Constitution, no tax shall be levied or collected except by authority of law So, not only the levy but also the collection of the tax must be sanctioned by laws. Charging Section 3(1) of the Central Excises and Salt Act, 1944 provides that 'there shall be levied and collected in such manner as may be prescribed duties of excise....' 'prescribed' means prescribed by rules under the Act. An examination of the rules under Central Excises Act, 1944 reveals that apart from Rule 10 or Rule 160, there is no power or authority to collect the duty in respect of excisable goods which have already been removed from the warehouse. Neither Rule 10 nor Rule 160 prescribes the mode of collecting duty in respect of such goods.'
The learned Judges further observed,-
'There is no rule at all to cover a case of the kind created by Sub-section (2) of Section 7 under which the Union Government is empowered to collect duties which have not been collected but which would have been collected even after the goods have been cleared and removed from the warehouse. The Collector or the Central Excise Officers are empowered to exercise powers conferred by the rules and if the rules have not provided, as to cover a case of this kind they cannot proceed to collect a tax, though it has been properly levied and is payable to the Government.'
It may be pointed out that Rule 10 referred to by the learned Judges of the Nagpur High Court did not cover the duty in respect of the goods which had already been removed from the warehouse and therefore it was held that no resort could be had for collection of the excise duty under the rules but in the last paragraph of their judgment, the learned Judges observed,-
'As we have held that Section 7(2) is valid and governs the case, none of the respondents is in any way prohibited from collecting the tax in accordance with law.'
This clearly means that the remedy under the ordinary law to collect the tax was left open to the, respondents provided the other conditions for maintaining a suit were fulfilled. The same matter in respect of the same assessee came up again for consideration before their Lordships in Chhotabhai Jethabhai Patel and Co. v. Union of India4 though for a different period. It appears that a fresh Rule 10A had been meanwhile framed to meet the situation. Rule 10A conferred residuary powers for recovery of sums due to the Government and their Lordships were pleased to observe that the words 'deficiency in duty if the duty has, for any reason, been short levied' are wide enough to include cases of deficiency arising like those in the circumstances of the present case, viz., where eight annas out of the fourteen annas of the duty remains to be collected.
On the basis of the aforesaid authorities, learned counsel for the appellant has submitted that in absence of a provision similar to Section 10 A, no levy or collection of excise duty can be made.
35. In Assistant Collector of Central Excise v. National Tobacco Co. of India,6 while dealing with the Central Excise Rules, 1944 as they stood before August 1, 1959, with particular reference to the terms 'levy' and 'assessment', the Supreme Court hold that Rule 52 shows that an assessment is obligatory before every removal of manufactured goods but the rules however neither specify the kind of notice which should precede assessment nor lay down the need to pass an assessment order. The Supreme Court observed as follows :-
'16. It will be noticed that in Chapter III, the term 'assessment' was used only in the former Rule 10-B, corresponding to the present Rule 9-B while dealing with provisional assessment of duty. But, Rule 52 shows that an 'assessment' is obligatory before every removal of manufactured goods. The rules however, neither specify the kind of notice which should precede assessment nor lay down the need to pass an assessment order. All we can say is that rules of natural justice have to be observed for, as was held by this court in K.T.M. Nair v. State of Kerala 1961 (3) SCR 77 at p. 54 (AIR 1961 SG 552) 'the assessment of a tax on person or property is at least of a quasi-judicial character.' '
'20. The term 'levy' appears to us to be wider in its import than the term 'assessment'. It may include both 'imposition' of a tax as well as assessment. The term 'imposition' is generally used for the levy of a tax or duty by legislative provisions indicating the subject matter of the tax and the rates at which it has to be taxed. The term 'assessment' on the other hand, is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount. The Division Bench appeared to equate 'levy' with an 'assessment' as well as with the collection of a tax when it held that 'when the payment of tax is enforced, there is a levy'. We think that, although the connotation of the term 'levy' seems wider than that of 'assessment', which, it includes, yet, it does not seem to us to extend to 'collection'. Article 265 of the Constitution makes a distinction between 'levy' and 'collection'. We also find that in N.B. Sanjana v. The Elphinstone Spg. & Wvg. Mills Co. Ltd., AIR 1971 SC 2039 at p. 2045 this Court made a distinction 'levy' and 'collection' as used in the Act and the Rules before us. It said there with reference to Rule 10-
'We are not inclined to accept the contention of Dr. Syed Mohammad that the expression 'levy' in Rule 10 means actual collection of some amount. The charging provision Section 3(1) specifically says : 'There shall be levied and collected in such a manner as may be prescribed the duty of excise.... It is to be noted that Sub-section (1) uses both the expressions 'levied and collected' and that clearly shows that the expression 'levy' has not been used in the Act or the Rules as meaning actual collection.'
36. Reliance has also been placed by the learned counsel for the appellant on Kerala Polythene Industries v. Superintendent, Central Excise6 wherein the validity of Rule 10A of the Central Excise Rules, 1944, was challenged and it was held that Rule 10A is fully within the scope of the rule-making power conferred by Section 3(1) of the Central Excises and Salt Act, and consequently Rule 10A was not ultra vires the rule making power conferred by the Act on the Central Government.
37. Mr. S.C. Bhandari has laid great stress on the point that the function of the assessing authority under the Central Excises and Salt Act, 1944, or for the matter of that under the Ordinance, is of a qussi-judicial nature and the authority is not absolved of the obligation of complying with the rule of natural justice of affording adequate hearing to the assessee before finally disposing of a matter relating to assessment. He has pressed upon us that if a person is assessed to tax without giving him an opportunity of being heard, the levy of tax based on such an assessment, would be invalid as being violative of the principle of natural justice : Audi Alteram Partem. In sup. port of his contention, learned counsel has relied upon State of Orissa v. Dr. (Miss) Binapani Dey and Ors.; A.I.R. 1967 S.C. 1069. Nawabkhan Abbaskhan v. State of Gujarat; A.I.R. 1974 S.C. 1471. President, Commonwealth Cooperative Society Ltd., Emaculam v. Joint Registrar General of Co-op Societies, Trivendrum and Anr.; A.I.R. 1971 Kerala 34. Ratan Chand and Ors. v. Panchayat Samiti, Sojat and Ors.; A.I.R. 1967 Raj 142. and Orient Paper Mills Ltd. v. Deputy Collector, Central Excise and Ors.. A.I.R. 1971 Orissa 25. We do not consider it necessary to discuss the facts and principle of law laid down in these authorities, as, in our opinion, it is trite that a party, to whose prejudice an order is intended to be passed, is entitled to a hearing. These rules apply equally to judicial tribunals and bodies of persons invested with authorities to adjudicate upon the matters involving civil consequences. If there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such powers. This is of course a basic concept of the rule of law. But, in the present case, we are of opinion that there has been no violation of principles of natural justice. The duty has been calculated on the date supplied by the Mill itself and no prejudice whatsoever has been caused to the Mills in calculating the duty. The goods, as already noticed, had been cleared away and the assessee himself submitted a statement of the goods only with one objection viz, that in case of fents and seconds cloth weighing 1 lb. should he taken as 2 yards and not 3 yards, The assessing authority accepted the statement submitted by the assessee and assessed the tax on that basis. Thus, it appears to us that in the present case there has been no violation of the principles of natural justice. The assessment in the facts and circumstances of the case must be deemed to have been made in consonance with the principles of natural justice. In other words, the tax was properly quantified and a demand for payment there was legally and properly made by notice Ex. 2. We are, therefore, of opinion, that it would not be incorrect to. hold that the tax had been quantified and a demand notice thereof had been issued with the result that the amount became arrears of tax due for which a suit could lie.
38. In this connefction, attention may also be drawn to the form at page 105 of the Rules (Appendix I enclose with the judgment). According to this form, the required information is to be supplied by the owner or his authorized agent. The requisite items of information are : (1) total number of packages ; (2) quantity of goods on which duty is assessed ; (3) rate of duty ; and (4) total duty payable. After this information is furnished, the duty has to be calculated at the rate prescribed. Thus, the form prescribed at page 105 of the Rules envisages a sort of self-assessment and a short assessment memo. D.W. 1. Mohan Lal has himself stated that if there is any mistake in their calculation the same is corrected by the Inspector. He has further stated that the duty is paid on the corrected assessment and no seperate assessment order is received and this is the only assessment. He has also stated that he received the demand notice Ex. 2 after he had submitted Ex. 1, Ex. 1A, Ex. 11 and Ex. 11 A. He goes on to state that he does not know on what basis the calculation was done in Ex. 2 and that after receipt of Ex. 2, he did not send any amended statement nor raised any objection that the amount demanded was incorrect. In this connection, attention may also be drawn to the form of notice of demand for payment of duty prescribed in the Rules vide Rule 25. Form D.D. 1 is contained at page 104 of the Rules and is being reproduced here for ready reference :-
Notice of demand for payment of duty
Take notice that on behalf of the Government of Jaipur, I hereby demand payment by you of the sum of Rs...(Rupees...) being the excise duty on the undermentioned...weighed in my presence this day. This sum must be paid into...Treasury within ten days from the date of this demand and on production of the Treasury receipt you may apply to me for a permit to remove the goods for sale of manufacture.
Assessment particulars '
No. of packages...
Rate of duty....Customs and Excise Deptt.
Receipt the sum of Rs...
A perusul of Ex. 2, demand notice, would show that it contains all the necessary particulars of assessment.
It further appears to us that the defendant has withheld the original requisition made by the Department calling for particulars of production figures.
Schedules I and II, appended to the plaint, go to show that the following note has been appended to the Schedules : -
Note : Yardage of fent bales are approximate and each bale contains 380 lbs.
N.S.-Out of 17908 bales of cloth delivered during the year beginning from 1st April, 1949 to 31st March, 1950, as shown above, 262 bales of second quality each bale containing 380 lbs. was delivered. These lbs. have been converted into approximate yards at 2 1/2 yds. per lb- According to 2 yds. per lb. the total yardage of these bales come to 248900 yds. But if these pounds are converted at 3 yds. per lb., the total yards come 298680 yds. The difference of 49780 yds. may kindly be added to 13405898 yds. if so desired (13405898+49780=13455678).
For Maharaja Shree Umaid Mills Ltd.
Sd./- B.R. Singh, Assistant Manager 16/12.'
(See page 8 of the paper book).
The above extracted note shows that the defendant knew that the production figures had been called for, for the purpose of assessment. Only what the Mills wanted was that the duties should be calculated/computed in the case of fents and bales of second quality at 2 1/2 yds. per lb. This was the only objection raised as to the calculation of duty.
39. In Chhatturam and Ors. v. Commissioner of Income-tax, Bihar,15 it was held that the jurisdiction to assess and the liability to pay the tax, however, are not conditional on the validity of the notice, under Section 22(1) and (2) of the Income-tax Act. It is also necessary to point out that no objection as to want of notice before passing the assessment order was raised by the defendant in the written statement and no prejudice is shown to have been caused to the defendant for the alleged want of notice in this behalf. On the other hand, in the facts and circumstances of the case, we are inclined to think that the amount of duty was calculated on the basis of the data furnished by the Mill itself, we may, here, state that we are not impressed by Mr. Bhandari's argument that the mills gave the data innocently without the least idea that it was being demanded for the purposes of assessment of the duty.
40. Learned counsel for the appellant has also urged that the Jaipur Rules were not published as required by Section 27 of the Jaipur Act and consequently, they did not become law. In this connection, he has invited our attention to Section 27 of the Jaipur Act which provides that all Rules made and notifications issued under this Act, shall be made and issued by publication in the Jaipur Gazette and thereupon all such Rules and Notifications shall have effect as if enacted in this Act. Learned counsel has also referred to Section 28 of the Ordinance, which is in the same terms as Section 27 of the Jaipur Act. He has also urged that under Section 30 of the Ordinance, Jaipur Rules stood repealed. In our opinion, none of these contentions has any force. In the first place, it would be reasonable to presume under Section 114 of the Evidence Act after passage af such a long time and Section 114, illustration (e) provides that the Court may presume that an official act has been regularly performed and that Jaipur Rules must have been duly published as required by Section 27 of the Act. We are further of opinion that it was not necessary to publish them over again, in extenso, under Section 28 of the Ordinance. A Notification had been issued in the Rajasthan Gazette, Part IV, dated Margh Shirsh Krishna 7, Smt. 2006, 1949, that in exercise of the powers conferred upon it by Sections 5 and 26 of the Ordinance, the Rajasthan Government directs that unless new Rules are framed under the Ordinance, the Rules framed under the Jaipur Excise Duties Act, 1945, would be applicable, mutatis mutandis, in the whole of Rajasthan, and will be deemed to have been made under the said Ordinance. This was sufficient compliance with Section 28 of the Ordinance. We may, here, also refer to the observations in Union of India and Ors. v. Maharaja Kishangarh Mills Ltd. (in liquidation1,1 which are to the following effect,-
. 'It is manifest that if the opinion of the Full Bench on the second question referred to as to publication and authentication of the Rules is correct, then no other question will arise for datermination by this Court. If the Rules under the Rajasthan Excise Duties Ordinance, 25 of 1949, had not been properly promulgated and authenticated, then the Ordinance by itself could not be sufficient for the levy and collection of the tax sought to be imposed. It is, therefore, necessary for us first to determine that controversy....'
The aforesaid controversy was answered in favour of the Union of India and their Lordships held that the correct conclusion from the record, as it stands, is that the authentication covers the entire Notification including the Ordinance proper and its Rules framed thereunder, which became part of the status. Learned counsel, however, urges that the points raised before the Supreme Court as to the publication and authentication of the Rules was different from the one which he seeks to argue here. There the question was whether the Rules had been properly promulgated and authenticated. It is true that the question of publication of the Rules under the Jaipur Act or, for the matter of that, under the Ordinance of 1949, was not directly in issue before their Lordships of the Supreme Court, but it cannot be denied that the Supreme Court held the Rules to be valid and we do not see any adequate reason for coming to a different conclusion.
40A. There is yet another aspect of the case and it is this, that neither the assessment of the duty in question nor demand of duty in the present case, are based on the Rules. We have already held above that the present case is not governed by the Rules at all, as neither the assessment nor the demand of duty could be made within the four corners of the Rules, and therefore assuming for argument's sake, that the Rules were not published and thereby
41. Learned counsel for the appellant also urged that the plaintiff did not allege in the plaint that the assessment had been made and it was for the first time that in the rejoinder, the plea was taken that the duty had been assessed. We may observe straightaway that we are not impressed by this contention. In paras 2, 3 and 5 of the plaint, it has been clearly avarred that the liability to tax was quantified at Rs. 2,14,520/- and there is also reference to that effect in the notice of demand Ex. 2, Which contains particulars of assessment.
42. Learned counsel has also urged that there is provision for an appeal under Section 24 of the Ordinance and also for revision in Section 25. He submits that if a regular assessment order had been passed, the Mill would have gone in appeal against the assessment order, but since no assessment order in the eye of law was passed, the defendant was deprived of right of appeal and/or revision. As we have already observed, notice Ex. 2. is a composite order and therefore, if the defendant was aggrieved of the order, it could have gone in appeal. It appears to us that, as a matter of fact, it could not have any grievance against that order, as the duty has been calculated on the facts and figures supplied by the defendant itself.
43. The next contention of the learned counsel for the appellant is that, at any rate, the Superintendent, Central Excise,, was not competent to assess the duty and issue a demand notice for the same. It is submitted that under Rules 9 and 52, it is the 'proper officer' who has to assess the amount of duty on the goods. 'Officer' and 'proper officer' have been defined in Rule 2 clauses (vii) and (x) respectively. 'Officer' has been defined to mean Customs and Excise Officer. It is further pointed out that Excise Officer has been defined in Section 2 Clause (iii) of the Ordinance as any officer of the Excise Department of Rajasthan or any person invested by the Government of the powers of any officer under the Ordinance. In this connection reference has also been made to Section 13 of the Finance Act, 1950. Section 13 of the Finance Act, 1950 may be reproduced here for ready reference :-
'13. Repeals and Savings-(1) If immediately before the 1st day of April, 1950, there is in force in any Part B State other than Jammu and Kashmir or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of Cooch Behar any law relating to income-tax or super tax or tax on profits of business, that law shall cease to have effect except for the purpose of the levy, assessment and collection of income-tax and super-tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income-tax Act, 1922, for the year ending on the 31st day of March, 1951, or for any subsequent year, or, as the case may be, the levy assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949 :
Provided that any reference in any such law to an officer, authority, tribunal or Court shall be construed as a reference to the corresponding officer, authority, tribunal or Court appointed or constituted under the said Act, and if any question arises as to who such corresponding officer, authority, tribunal or Court is, the decision of the Central Government thereon shall be final:
Provided further that where under any such law, tax is chargeable on the total income including agricultural income, the assessment shall be made by the corresponding officer or authority referred to in the preceding proviso only in respect of income other than agricultural income and the tax payable on such income shall be an amount bearing to the total amount of tax which would have been payable under the State law if a combined assessment had been made, the same proportion as such income bears to the total income including the agricultural income, so however that for this purpose any reduction of tax allowed on the agricultural income by the State law shall not be taken into account.
(2) If immediately before the 1st day of April, 1950, there is in force in any Stale other than Jammu and Kashmir a law corresponding to, but other than, an Act referred to in Sub-section (1) or (2) of Section 11, such law is hereby repealed with effect from the said date; and if immediately before the said date there is in force in the State of Jammu and Kashmir a law corresponding to the Indian Post Office Act, 1898, such law is hereby repealed with effect from the said date :
Provided that such repeal, shall not effect (a) the previous operation of the corresponding law, or (b) any penalty, forfeiture or punishment ordered in respect of an offence committed against any such law, or (c) any investigation, legal proceeding or remedy in respect of such penalty, forfeiture or punishment and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if this Act had not been passed.'
44. By virtue of Section 11 of the Finance Act, 1959, the Central Excises and Salt Act, 1944, was extended to Rajasthan, which was then a Part B State so that on April 1, 1950, the Ordinance of 1949 stood repealed. It is argued that for Income-tax purposes under the first proviso to Section 13(1), provision has been made that any reference in such law to an officer, authority, tribunal or Court shall be construed as a reference to the corresponding officer, authority, tribunal or Court appointed or constituted under the said Act and if any question arises who such corresponding officer, authority, tribunal or Court is, the decision of the Central Government shall thereon be final, but no such provision has been made in Sub-section (2) regarding the Central Excises and Salt Act, 1944 and, therefore, the Excise Officer of the Central Government cannot be construed as the corresponding officer or authority under the Ordinance. In other words, the contention of learned counsel is that it was only the Rajhsthan Excise Officer who could assess and issue demend notice. In our opinion, this contention is without force. As already observed above, the Centre took over adminsitration of the department concerned and as a necessary corollary, officers of the Central Government could only take necessary steps in the matter of assessment, collection etc. In fact, we find it extremely difficult to accept the proposition propounded by the learned counsel for the appellant that even though the Union of India stepped into the shoes of the Rajasthan Government and took over all current outstandings including pending assessments, refunds and arrears, liabilities and claims etc., yet the officers of the Central Government were not competent to exercise the rights and discharge the liabilities which had devolved upon the Central Government by virtue of the agreement entered into between the President and the Rajpramukh on February 25, 1950f referred to above. We have no doubt in our minds that after the transfer of the department from the State Government to the Central Government, the 'proper officers' would be the officers of the Central Government within whose jurisdiction the defendant Mills was situated. It may be pertinent to point out that in Union of India v. Maharaja Kishangarh Mills Ltd.1 the notice of demand was served by the Superintendent of the Central Excise but the notice was not held to be invalid on the ground that it had been issued by an unauthorized person.
45. Reliance has also been placed on secton 6 of the General Clauses Act, which is applicable to the Ordinance by virtue of Section 31 of the Ordinance, which provides, inter alia, that repeal of an enactment shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed, nor shall affect any investigation or legal proceeding in respect of any such right, privilege, obligation, liability, penalty or punishment. In support of his argument, the learned counsel relied upon Amadalavalasa Co-operative Agricultural and Industrial Society Ltd. and Anr. v. Union of India and Anr.24 and 0. Ekambarappa and Ors. v. Excess Profits Tax Officer, Bellary. A.I.R. 1967 S.C. 1541.
In Amadalavalasa's case, A.I.R. 1976 S.C. 958. while interpreting the provisions of the Emergency Risks (Goods) Insurance Act (62 of 1962) and the Emergency Risks (Factories) Insurance Act (63 of 1962), the Supreme Court observed that the principle behind Section 6 of the General Clauses Act is that all the provisions of the Acts would continue to be in force for purposes of enforcing the liability incurred when the Acts were in force and any investigation, legal proceeding, remedy, may be instituted, continued or enforced as if the Acts had not expired. So also in 0. Ekambarappa's case25 it was held that though the Excess Profits Tax Act was repealed so far as the area of Bellary district was concerned, Section 6 of the General Clauses Act applies even in the case of a partial repeal or repeal of a part of an Act and that the liability to pay excess profits tax accrued immediately at the end of the chargeable accounting period and not when it was quantified by assessment proceedings and that liability was preserved under Section 6(c) of the General Clauses Act even though the Act stood repealed so far as Bellary district was concerned with effect from November 1, 1956. It was further held that the notice issued under Section 15 of the Excise Profits Tax Act was legally valid. Thus, the result of the applicability of Section 6 of the General Clauses Act is that the liability to pay penalty survived the repeal of the Act and could be enforced by the Central Excise Department of the Government of India in whom the right to levy and collect the duty vested. As a necessary corollary, the 'proper officer' referred to in Rule 52 for the purpose of assessment and collection of tax would, after the repeal of the Ordinance, be the officer of the Central Excise Department within whose jurisdiction the defendant's Mill is situate.
46. At this stage, we may also take into consideration another argument of the learned counsel for the appellant that the assessment could not have been made after the goods had been cleared. This argument ignores the provision in Rule 52 of the Jaipur Rules under which the presence of the goods on the spot is not necessary for purposes of assessment. At any rate, there is no prohibition against making an assessment after the goods have been cleared. It is also pertinent to note that the second proviso to Rule 9 permits clearance af goods without payment of duty at the time of clearance and the account-current of the duties payable can be settled at intervals not exceeding one month. In Orient Paper Mills v. Union of India A.I.R. 1967 S.C. 1564. Hidayatullah, J. as he then was, observed as follows :-
'It will thus be seen that in the case of manufactured goods the payment of duty and the clearance of goods may be synchronous or the payment may be postponed although the good may be removed.'
In a case like the present, the assessment of the goods already cleared is a matter separate from and independent of the question of the mode of recovery of the duty. We are, therefore, of opinion that the contention of the learned counsel that because the goods had already been cleared, no assessment could be made cannot be accepted.
47. The next contention raised by the learned counsel for the appellant is that the suit is barred by limitation under Section 29(2) reads as under :-
'No suit, prosecution, or other legal proceeding shall be instituted for anything done or ordered to be done under this Ordinance after expiration of six months from the accrual of the cause of action or from the date of the act or order complained of.'
It is contended that the suit should have been brought within six months from the date of accrual of the cause of action. It is argued that Section 29(2) of the Ordinance governs suits by the Government also. It has also been argued that Article 112 of the Limitation Act is a general article governing suits by the State but the present suit will be governed by the special provision contained in Section 29(2) of the Ordinance. Reliance has been placed by the learned counsel on R.C. Jail Parsi v. Union of India and Anr. A.I.R. 1962 S.C. 1281. and Public, Prosecutor. Madras v R. Raju and Anr. A.I.R. 1972 S.C. 2504.
48. In R.C. Jail Parsi's case,27 it was held that when a suit for recovery of statutory cess is filed by the Central Government, period of limitation of 60 years under Article 140 should be computed when the right to sue accrues The right to sue accrued when the defendant refused to pay the case demanded. In Public Prosecutor, Madras v. R. Raju (supra), the contention that Sub-section (2) of Section 40 of the Central Excises and Salt Act, 1944, [which is similar to Section 29(2) of the Ordinance] is confined in its operation only to Government servants was repelled and it was held that the Sub-section is applicable to any person against whom suits or proceedings or prosecution shall lie for anything done or ordered to be done under the Act. It was a case where the complaint against the respondents was that they wanted to evade payment of the duty by using or affixing cut and torn banderols. Books of accounts were not propsrly and correctly maintained, there was shortage of banderols in stock and unbanderolled matches were found. It was held that all these are infractions of the provisions in respect of things done or ordered to be done under the Act and the various rules and prosecution started after six months is barred by limitation under Section 40(2) of the Act of 1944.
Thus, it would be clear that the authorities relied upon by the learned counsel for the appellant have no application to the facts and circumstances of the present case. As already pointed out above, the arrears of duty in the present case became a debt for which the Government was competent to maintain a suit for which limitation prescribed under Artticle 112 of the Limitation Act is 30 years. Thus, in agreement with the lower court, we hold that the suit is within limitation as the amount in question fall due in the year 1949 and the suit has been brought well within 30 years on September 2, 1966.
49. The next objection of the learned counsel for the appellant is that the plaint was not properly presented and, therefore, the suit is liable to be dismissed. It may be necessary to state a few facts giving rise to this objection. The suit was presented on September 2, 1966 by Shri Narain Chand Mehta, Advocate. The Vakalatnama filed along with the plaint is in favour of Shri Than Chand Mehta as well as Shri Narain Chand Mehta, and it is signed by Shri G.N. Kale, Assistant Collector, Central Excise, Jodhpur. The objection by the defendant is that Shri Narain Chand Mehta was not appoint' ed by the President of India or any person duly authorized in accordance with law by the Union of India in this behalf. It is conceded that Shri G.N. Kale had authority to sign and verify the plaint but he had not been authorised to act for the Government, and, therefore, cannot be deemed to be the recognized agent, by whom appearances, acts and applications under the Code of Civil Procedure may be made or done on behalf of the Government. In support of this contention, reliance has been placed on Firm Mohan Lal Ramchandra v. Union of India29. In our opinion, the contention raised by the learned counsel is devoid of force. We have gone through the authority relied by the learned counsel and are of opinion that the principle laid down therein has no application to the case on hand. In that case the Government Pleader had acted without general or special authority in writing from the Central Government empowering him to do so and it was held that he is not exempt from the requirement of Sub-rule (1) of Rule 4 of Order III. In the present case, however, reference may be made to Ex. 19/A, which is a gazette notification whereby all Assistant Collectors, Central Excise, have been authorized to act for the Government in respect of any judicial proceeding. Order III, Rule 4, C.PC provides that no pleader shall act for any person in any court, unless he has been appointed for the purpose by such person by a document in writing signed by such person or by his recognized agent or by gome other person duly authorized by or under a power of attorney to make such appointment. Thus, in our opinion, Shri G.N. Kale was competent to appoint a, lawyer on behalf of the Government of India. But that is not all. A fresh power of attorney by the President in favour of Shri Than Chand Mehta and Shri Narain Chand Mehta was filed in court on January 5, 1967, along with a fresh plaint and it was mentioned therein that the President of India agrees to rectify all. acts done by the Advocates Shri Than Chand Mehta and Shri Narain Chand Mehta. Taking the worst view of the matter, improper presentation of a plaint is a mere irregularity which can be cured at any stage and if any authority is needed on the point, reference may be made to Kanhaiya Lal v. The Panchayati Akhara30, Nadella Satyanarayana v. Vamanorri Venkata Subbiah31 and Shiv Narain v. Deputy Director (c), Mathura and Ors.32. In our opinion, this argument is completely devoid of substance.
50. The last objection, though faintly argued by the learned counsel for the appellant, is regarding quantity of cloth which is covered by issue No. 1. Learned counsel submitted that the lower court has erred in calculating the yardage of cloth at 3 years per lb. It should have been calculated at 2 1/2 meter per lb. It may be pointed out that in the statements Ex. 1 and Ex. 1A. filed by the defendant Mills, a note as reproduced above at page 32 has been appended. The execution of Ex. 1 and Ex. 1A by Shri B.R. Singhvi on behalf of the defendent Mills has been fully proved and has not been challenged before us. It is clear from the note appended to Ex. 1 and Ex. 1A that the defendant had no objection to yardage being calculated at the rate of. 1 lb.= 3 yds. It was also submitted that Ex. 1 and Ex. 1A were superseded by Ex. 11 and Ex. 11A which do not contain such an endorsement. But this argument need not detain us as, in our opinion, endorsement, or no endorsement, if it is even otherwise proved that 1 lb. of fents and seconds contained 3 yards of cloth. P.W. 2 Amba Lal, Inspector, Central Excise, Jodhpur has stated that on checking he found that 1 lb. of fents and seconds contained 3 yards of cloth. He also states that he made enquiries at the Mills and was told that on an average 3 yards of cloth was equal to 1 lb. in weight. D.W. Mohan Lal, Manager of the Mills, has not denied the aforesaid assertion made by Shri Amba Lal. We are, therefore, clearly of the opinion that the learned District Judge was right in coming to the conclusion that the yardage should be calculated at 3 yards per pound.
51. The result is, that we do not find force in any of the contentions raised on behalf of the appellant and dismiss the appeal with costs.