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The State of Madras Represented by the Deputy Commercial Tax Officer Vs. the Madura Mills Co., Limited - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtChennai High Court
Decided On
Reported in(1964)1MLJ342
AppellantThe State of Madras Represented by the Deputy Commercial Tax Officer
RespondentThe Madura Mills Co., Limited
Cases ReferredDhanalakshmi Vilas Cashew Company v. Cashew Industries Staff Association I.L.R.
Excerpt:
- g.r. jagadisan, j.1. this is a petition by the state of madras for leave to appeal to the supreme court of india from the judgment of this court in tax case no. 162 of 1958. leave is asked for under article 133 of the constitution of india. the respondent, the madura mills co., ltd., opposed the application, and raised a preliminary objection that the application is not main tenable under article 133 or under sections 109 and 110, civil procedure code, as the proceedings which terminated in this court in the order sought to be appealed from are not civil proceedings. this is the main question which has now been argued before us, and if we were to uphold the objection of the respondent, the application will have to be rejected in limine, without going into the question whether the case is.....
Judgment:

G.R. Jagadisan, J.

1. This is a petition by the State of Madras for leave to appeal to the Supreme Court of India from the judgment of this Court in Tax Case No. 162 of 1958. Leave is asked for under Article 133 of the Constitution of India. The respondent, the Madura Mills Co., Ltd., opposed the application, and raised a preliminary objection that the application is not main tenable under Article 133 or under Sections 109 and 110, Civil Procedure Code, as the proceedings which terminated in this Court in the order sought to be appealed from are not civil proceedings. This is the main question which has now been argued before us, and if we were to uphold the objection of the respondent, the application will have to be rejected in limine, without going into the question whether the case is a fit one for a necessary certificate under Article 133.

2. We shall now briefly set out the facts which gave rise to Tax Case No. 162 of 1958, disposed of by us on 13th September, 1961. The Madura Mills, Co., Ltd., the respondent, is a limited company dealing in yarn. In December, 1950-51, it returned a total turnover of Rs. 15,27,61,833-8-4 under the Madras General Sales Tax Act, 1939, before the Deputy Commercial Tax Officer, Madurai. The Officer determined the net turnover at Rs. 15,44,09,109-3-11. The assessee preferred an appeal from that assessment before the Commercial Tax Officer, Madurai South. It raised a contention that a sum of Rs. 1,44,294-1-4, was wrongly included by the assessing authority in the purchase value of cotton, as that amount represented the commission paid by it to Commorin Investing Trading Co., another limited company. It further contended that another sum of Rs. 81,546-0-1, representing the sale proceeds realised by selling the empty drums and other miscellaneous articles was not includible in the business turnover. The Commercial Tax Officer upheld the contention in relation to a sum of Rs. 1,44,294-14-4, and excluded it from the total turnover, but negatived the other contention in regard to the sum of Rs. 81,546-0-1. The respondent then preferred a revision petition before the Deputy Commissioner of Commercial Taxes, and raised an objection that it should not have been assessed to tax on amounts collected by it by way of tax amounting to Rs. 6,57,974-4-9. No objection was raised by the respondent in regard to any other matter dealt with by the Commercial Tax Officer. By an order, dated 31st August, 1954, the Deputy Commissioner dismissed the revision petition. The Board of Revenue, Madras, issued notice to the respondent on 4th August, 1958, proposing to revise the assessment of the Deputy Commercial Tax Officer on the ground that a sum of Rs. 7,74,62,706-1-6 was wrongly excluded by the assessing authority. This was objected by the respondent, and one of the grounds of objection was that the proceedings initiated by the Board of Revenue were barred by limitation. The Board overruled the objections of the assessee, and by its order, dated 25th August, 1958, fixed a net turnover of the respondent at Rs. 23,17,15,948-18-2. From this decision the respondent preferred an appeal under Section 12(c) of the Madras General Sales Tax to this Court in Tax Case No. 162 of 1958 We allowed the appeal and set aside the order of the Board mainly on the ground that the proceedings of the Board were beyond the period of limitation prescribed by the statute. It is this decision which is now the subject-matter of the contemplated appeal by the State to the Supreme Court of India.

3. The Madras General Sales Tax Act, 1939, does not contain any special provision to enable the State or the aggrieved subject to prefer an appeal to the Supreme Court of India from a decision of this Court arising out of the proceedings under the Act. The Act is a self-contained, exhaustive code, governing assessment and levy of sales tax. A hierarchy of authorities has been constituted under the Act to enable the aggrieved party to canvass the correctness or validity of the assessment proceedings. First, there is the assessing authority which makes the assessment on the submission of the return made by the assessee. A right of appeal is granted to the assessee from the order of the assessing authorty under Section 11 of the Act. It is open to the appellate authority to pass such orders as it thinks fit. Section 11, Sub-section (4) provides that every order passed in appeal shall, subject to the provisions of Sections 12 to 12-C, be final. Section 12(1) prescribes that the Commercial Tax Officer may suo motu or in cases in which an appeal does not lie to him, on application, call for and examine the record of any order passed or proceeding recorded under the provisions of the Act by any officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceedings and may pass such order with respect thereto as he thinks fit. Similar powers of revision have been given to the Deputy Commissioner and to the Board of Revenue under Section 12, Sub-section (2) and Section 12, Sub-section (3) respectively. Section 12-A provides a remedy by way of further appeal by the assessee to the Appellate Tribunal objecting to an order of assessment. The Tribunal has power to entertain an appeal from an order of the Commercial Tax Officer, made under Section 11 or Section 12(1) or from that of Deputy Commissioner acting suo motu under Section 12, Sub-section (2). Sub-section (9) of Section 12-A enacts that every order passed by the Appellate Tribunal shall, subject to the provisions of Sub-section (6) and Section 12-B be final. Sub-section (6) enables the Appellate Tribunal, on an application of the assessee or the Deputy Commissioner, to review any order passed by it under Sub-section (4). Section 12-B gives the power of revision to the High Court. The High Court, on perusing the revision petition and after giving both parties to the petition a reasonable opportunity of being heard, determines the question of law raised and either reverses, affirms or amends the order against which the petition was preferred or remits the matter to the Appellate Tribunal with its opinion on the question of law raised or passes such order in relation to the matter as it thinks fit. Under Section I2-C appellate power is granted to the High Court against the orders passed by the Board of Revenue suo motu under Section 12, Sub-section (3). Any assessee objecting to an order of the Board passed suo motu may file an appeal within the time prescribed and in the prescribed form accompanied by a fee of Rs. 100. The High Court, shall, after giving both the parties to the appeal a reasonable opportunity of being heard, pass such order thereon as it thinks fit. Section 12-D provides that every petition, application or appeal preferred to the High Court under -section 12-B and Section 12-C shall be heard by a Bench of not less than two judges and in respect of such petition, application or appeal the provisions of Section 98 of the Code of Civil Procedure, 1908, shall so far as may be, apply. The remedy of an aggrieved assessee or the State, as the case may be, to have an illegal or erroneous order of assessment cancelled or set aside lies only within the four corners of this special enactment, and in fact Sections 9 to 12-D are the fascicule of sections which provides the necessary machinery. It is obvious that an order of assessment however erroneous or wrongful it may be, cannot be called in question in a civil Court. By way of abundant caution however, the Legislature has introduced Section 18-A and that reads:

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.

The Act, therefore, is purely a taxing enactment dealing with a subject-matter of taxation not affecting the rights of a subject except to the extent to which a statutory obligation to pay the tax might be viewed as an infringement of a right. It is true that a subject cannot be taxed except in accordance with the law-vide: Article 265 of the Constitution. But it is equally true that there is no immunity guaranteed to the subject to be free from tax burden as a fundamental right under Chapter III of the Constitution. We have to bear in mind this aspect of the matter, in dealing with the question whether the proceedings under the Act can be called civil proceedings within the meaning of Article 133 of the Constitution.

4. Before we refer to the provisions of the Constitution and discuss the point raised before us regarding the maintainability of this application, we would like to refer to the provisions of the Indian Income-tax Act, which is also a taxing enactment, more or less of the same pattern as the Madras General Sales Tax Act. There are, of course, vital differences between the two enactments, particularly with regard to the High Court's jurisdiction in dealing with the orders of the Subordinate taxing authorities. The jurisdiction of the High Court under Section 66 of the Indian Income-tax Act is purely of a consultative or advisory character and this has been pointed out on more than one occasion by the Supreme Court of India. The High Court can call upon the Income-tax Appellate Tribunal to draw up a statement, of the case and refer the questions of law and after the questions are referred, they would be answered and the reference would be remitted to the Tribunal to pass a final order in the light of the answers given to the questions. The High Court does not pass any final order or judgment in. relation to the assessment from and out of which the questions of law are said to arise and are referred to this Court. It is, however, significant to note that there is a special provision, Section 66-A under the Indian Income-tax Act, providing for leave to appeal to the Supreme Court of India in an appropriate and fit case. The absence of such specific provision in the Madras General Sales Tax Act, 1939, has to be taken note of, as it seems to us that this has a bearing upon the real nature of proceeding (assessment) to tax a subject under any taxing enactment. We may immediately refer to Article 133 of the Constitution. Omitting the unnecessary portions, the Article may thus be extracted:

133(1) An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies:

(a) that the amount or value of the subject-matter of the dispute in the Court of first instance and still in dispute on appeal was and is not less than twenty thousand rupees or such other sum as may be specified in that behalf by Parliament by law; or

(b) that the judgment, decree or final order involves directly or indirectly some claim or question respecting property of the like amount or value; or

(c) that the case is a fit one for appeal to the Supreme Court....

4. Now the crucial words which we have to consider in the debate raised before us are judgment, decree or final order in a civil proceeding. We shall assume that there is a judgment, decree or final order in the instant case, and there can be no doubt that this is one of a High Court. But can it be said that judgment, decree or final order was given in a civil proceeding? The learned Government Pleader contended that the words civil proceeding ought to be construed and understood as any and every proceeding which is not a criminal proceeding, and there cannot be any other classification of proceeding. In other words, the contention urged was that the dichotomy of civil and criminal in relation to proceedings of a High Court is complete and exhaustive, and what is not civil is criminal and what is not criminal is civil. In our opinion, this contention cannot stand a moment's scrutiny, if only the other provisions in the Constitution relating to appeals to the Supreme Court are looked into. Article 132 provides that an appeal shall lie to the Supreme Court from any judgment, decree or final order of a High Court in the territory of India, whether in a civil, criminal or other proceeding, if the High Court certifies that the case involves a substantial question of law as to the interpretation of the Constitution. The words other proceeding in this article unmistakably show that the framers of the Constitution did not intend to bring about a complete classification of the proceedings under two labels, civil and criminal. Article 134 deals with appeal in criminal matters. It is not necessary to refer to the terms of that provision. Article 135 enacts that, until Parliament by law otherwise provides, the Supreme Court shall also have jurisdiction and powers with respect to any matter to which the provisions of Article 133 or 134 do not apply if jurisdiction and powers in relation to the matter were exercisable by the Federal Court immediately before the commencement of the Constitution under any existing law. It is not contended that this provision is applicable and it is unnecessary to consider its precise scope. But the phraseology of Article 136 which is the provision under which the Supreme Court has power to grant Special Leave to appeal can be usefully compared with that of Article 133.. Article 136 reads:

(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant Special Leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any Court or Tribunal in the territory of India.

(2) Nothing in Clause (1) shall apply to any judgment, determination, sentence or order passed? or made by any Court or Tribunal constituted by or under any law in relation to the Armed Forces.

The sweeping words of this provision clearly indicate that the proceedings forming the subject-matter of an appeal need not fall into two demarcated groups, civil and criminal. Referring to Article 136, the Supreme Court observed as follows in Pritam Singh v. The State : 1950CriLJ1270 .

The points to be noted in regard to this article are firstly, that it is very general and is not confined merely to criminal cases, as is evident from the words appeal from any judgment, decree, sentence or order which occur therein and which obviously cover a wider range of matter; secondly, that the words used in this article are in any cause or matter, while those used in Articles 132 to 134 are civil, criminal or other proceedings and thirdly, that while in Articles 132 to 134 reference is made to appeals from the High Courts, under this article an appeal will lie from any Court or Tribunal in the territory of India.

The scope of Article 136 was considered by the Supreme Court in another decision: in Bharat Bank, Ltd. v. Employees of Bharat Bank, Ltd. : (1950)NULLLLJ921SC . Fazl Ali, J., observed at page 462:

It is fully recognised that the scope of Article 136 of the Constitution is very wide, but the significance of the language used in the section can be appreciated only by comparing it with the articles which precede it.... Article 133 deal with appeals in civil matters and the same words are used here also. Article 134 deals with appeals in criminal matters, and the words used in it are appeal.... from any judgment, final order or sentence. In Article 136, the words judgment and decree which are used in Articles 132 and 133 are retained...It is obvious that these words greatly widen the scope of Article 136. They show that an appeal will lie also from a determination or order of any Tribunal in any cause or matter.

The scheme of the constitutional provision relating to appeals to the Supreme Court rather suggests that the proceedings, capable of being appealed against, are susceptible of a bifurcation into two well-defined categories of, civil and criminal, mutually exclusive but together exhaustive.

5. A Division Bench of this Court consisting of Rajamannar, C.J., and Venkatarama. Iyer, J., considered the question whether the orders passed under Section 21(2) of the Chartered Accountants Act are not open to appeal to the Supreme Court under Article 133 of the Constitution. One of the questions raised before the learned Judges was whether they constituted a civil proceeding. That decision is reported in Krishnaswami v. Institute of Chartered Accountants : AIR1953Mad79 . Dealing with the question whether the proceedings in Court can be exhaustively classified into civil and criminal, Venkatarama Ayyar, J., delivering judgment of the Bench, observed as follows at page 865:

The argument for the petitioner is that, whatever is not a criminal proceeding must be a civil proceeding; that Article 134 provides for appeal against orders passed in criminal proceedings, and that all other orders must be held to have been passed in civil proceedings and that they will be open to appeal under Article 133.... But the question that has to be decided is whether that is the scheme that has been adopted in the Constitution.

It cannot be affirmed that every order passed in proceedings other than criminal is open to appeal under Article 133, as made in civil proceeding. The learned Judges arrived at this conclusion after referring to various provisions of the Constitution the decision of the Supreme Court referred to above, the decision of the Patna High Court in Tobacco Manufacturers v. The State I.L.R. (1950) Pat. 174 and the decision of the Nagpur High Court in Zikar v. The State I.L.R. (1952) Nag. 130. There is thus sufficient and clear authority for the position that the words civil proceeding in Article 133 ought not to be understood as any proceedings which are not of criminal nature. The nature of the proceeding, whether it is civil or not, cannot be ascertained by merely applying a negative test that the proceeding is not one in relation to a criminal or quasi criminal proceeding.

6. We have, therefore, to address ourselves to the question whether the proceeding arising out of the taxing enactment which is mainly concerned with the legality and validity of assessments under that Act, can aptly be described as proceeding of a civil character. It is urged by the learned Government Pleader that the liability of a subject to pay tax involves a right of property, and that, therefore, such a liability should be deemed to be one giving rise to a civil right to avoid the liability. It is also urged that whatever may be the nature of the proceeding before the taxing authorities or before the specially constituted Tribunal under the Act, it assumes the garb of civil proceeding after the High Court gets seized of the proceeding and deals with it, presumably in the exercise of its ordinary powers of appellate or revisional jurisdiction. These arguments deserve serious consideration, particularly because they appear to be plausible and prima faice well founded.

7. Regarding the nature of proceedings arising out of taxing enactments, there are decisions of other High Court which have taken the view that they are not civil proceedings. In Tobacco Manufacturers v. The State I.L.R. (1950) Pat. 174 a Division Bench of Patna High Court had occasion to consider whether an order passed by the High Court under Section 21 of the Bihar Sales Tax Act is of a civil nature which would attract the applicability of Article 133 of the Constitution. The matter was referred to a Full Bench, as there was difference of opinion between the two learned Judges, hearing the application for leave to appeal in the first instance. The opinion of the Full Bench was that the decision of the High Court under Section 21 of the Bihar Sales Tax Act did not arise out of a civil proceeding. One of the points placed before the Full Bench was whether the decision of the High Court constituted a judgment, decree or final order. The full Bench held that it was not a judgment, decree or final order. We must mention that the jurisdiction of the High Count under Section 21 of the Bihar Sales Tax Act was not of the same type as the jurisdiction of this Court under Section 12-Bor 12-C of the Madras General Sales Tax Act.

8. The jurisdiction under Section 21 of the Bihar Sales Tax Act was similar to the jurisdiction of the High Court under Section 66 of the Indian Income-tax Act. The High Court dealt with the proceedings under the Bihar Act under an advisory or consultative jurisdiction. The High Court had no power to dispose of the assessment proceedings, itself terminating it in one way or the other favourable or unfavourable to the assessee. We are referring to that decision as an authority for the proposition that the proceeding under a taxing enactment is not a civil proceeding. The conclusion of the Patna High Court was primarily based upon the decision of the Judicial Committee in Raleigh Investment Co., Ltd. v. Governor-General-in-Council (1947) 2 M.L.J. 16 : (1947) L.R. 74 I.A 50 : 1947 F.C.R. 59 : F.L.J. 45 to which we shall refer later. The following observations of Sarjoo Prasad J., in Tobacco Manufacturers v. The State I.L.R. (1950) Pat. 174 may be quoted to appreciate the reasoning on which the conclusion was based:

The learned Government Pleader has contended that proceedings under the taxing statute stand entirely on a different footing inasmuch as the ruling authority in such cases proceeds to levy taxes in exercise of its sovereign rights. The proceeding, therefore, under the taxing statute cannot be regarded as a civil proceeding. He relied upon a decision of the Judicial Committee of the Privy Council in Raleigh Investment Co., Ltd. v. Governor-General-in-Council (1947) 2 M.L.J. 16 : (1947) L.R. 74 I.A 50 : 1947 F.C.R. 59 : F.L.J. 45 where it was pointed out that jurisdiction to question the assessment of income-tax otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay, arising by virtue of the assessmen.... it is quite clear from this decision that the proceeding under the taxing statutes are something quite different from civil proceedings...The provisions of Article 136 of the Constitution Act indicate that the Supreme Court can grant Special Leave in civil cases, in criminal cases, in income-tax cases, in cases which come up before different kinds of Tribunals, and in a variety of other cases. I agree with Das J., therefore, that the observations made in those cases Pritam Singh v. The State : 1950CriLJ1270 . and Bharat Bank, Ltd v. Employees of Bharat Bank, Ltd. (1850) S.C.R. 459 seem to imply that income-tax cases and sales tax cases are not civil proceedings within the meaning of the Constitution Act.

A Full Bench of the Nagpur High Court in Messrs. Shriram Gulabodas v. Board of Revenue I.L.R. (1963) Nag. 871 dealt with the question whether the proceedings under Section 23 Central Provinces and Berar Sales Tax Act can properly be regarded as civil proceedings. It was held by a Full Bench (Hidayatullah, V.R. Sen and Deo, JJ.,) that they were revenue proceedings and not civil proceedings. Hidayatullah, J., (as he then was), delivering the opinion of the Full Bench stated that (at page 874):

On the first point I have no doubt that this is not a civil proceeding at all. These proceedings arise out of collection of revenue and are before this Court merely for the purpose of advice which the Board of Revenue seeks or which this Court enjoins upon the Board, upon certain points of law. The essence of the proceedings, the collection of revenue and not the decision of any dispute of a civil nature in the strict sense.

9. We may point out that the jurisdiction of the Nagpur High Court under Section 23 of Central Provinces and Berar Sales Tax Act was also of consultative character. But that would not affect the question whether the proceedings before the High Court under that Act could be called a civil proceeding or not within the meaning of the said expression in-Article 133 of the Constitution.

10. The decision of the Judicial Committee in Raleigh Investment Co., Ltd. v. Governor-General-in-Council (1947) 2 M.L.J. 16 : (1947) L.R. 74 I.A 50 : 1947 F.C.R. 59 : F.L.J. 45 is of great assistance in deciding the question now before us. What was actually decided by the Judicial Committee was that an assessee, assessed to tax under the Indian Income-tax Act, could not call in question the validity of assessment in a civil Court by reason of inhibition contained in Section 67 of the Act. Their Lordships pointed out that the Indian Income-tax Act provided a complete machinery for assessment and levy of tax, and that the aggrieved subject should seek his remedy only within the limits of that Act and would not be permitted to travel outside and seek relief in civil Courts of the land. Their Lordships seem to indicate that even without an express provision, like Section 76, of the Act the jurisdiction of the civil Court to enquire into the validity of assessment would be barred. The necessary implication of this decision is that proceedings under a taxing enactment are not civil proceedings. If they were really civil proceedings, it would follow that the aggrieved subject would suffer an infringement of a civil right; and if that were the true position, his right to approach a civil Court for a proper remedy which every violation of civil right gives rise to, cannot be held to be barred. Indeed their Lordships of the Judicial Committee have observed that even in a case where a particular provision of the Income-tax Act is challenged as ultra vires, it would not be open to the subject to by-pass the statutory machinery and resort to the civil Court. At page 63, Lord Uthwatt, delivering the judgment of the Court, observed thus:

Under the Act the Income-tax Officer is charged with the duty of assessing the total income of the assessee. The obvious meaning, and in their Lordships' opinion, the correct meaning of the phrase assessment made under this Act is an assessment finding its origin in an activity of the assessing officer acting as such. The circumstance that the assessing officer has taken into account an ultra vires provision of the Act is in this view immaterial in determining whether the assessment is made under this Act. The phrase describes the provenance of the assessment; it does not relate to its accuracy in point of law.

Again at page 64 Lord 11th watt, observed:

In conclusion, their Lordships would observe that the scheme of the Act is to set up a particular machinery by the use of which alone total income assessable for income-tax is to be ascertained. The income-tax exigible is determined by reference to the total income so ascertained, and only by reference to such total income. Under the Act (Section 45) there arises a duty to pay the amount of tax demanded on the basis of that assessment of total income. Jurisdiction to question the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay arising by virtue of the assessment. The only doubt, indeed, in their Lordships' mind, is whether an express provision was necessary in order to exclude jurisdiction in a civil Court to set aside or modify an assessment.

11. It seems to us that there cannot be a civil proceeding in relation to which the aggrieved subject would have a right to approach a civil forum. We have already pointed out that, so far as the Sales Tax Act is concerned, Section 18-A prohibits the institution of suits arising out of assessments passed under the Act. It is quite logical to assume that deprivation of a right to attack assessment orders in a civil Court necessarily implies that the statutory rights and obligations arising under the taxing enactment are not of a civil nature.

12. Assessment to tax by the authority is certainly not a civil proceeding. At all stages of the dispute regarding assessment, before the special authority or the Tribunal, it is only a revenue proceeding, to use a convenient expression to emphasise its true nature, distinguishing it from a civil proceeding. It maintains and preserves the same character even in its ultimate stage in the venue of the High Court, either in the shape of prerogative writs under Article 226 of the Constitution or in the form of revision proceeding under Article 227 of the Constitution. This is the view taken by the Patna High Court in Allen Berry & Co., Ltd. and Ors. v. Income-tax Officer : [1955]28ITR70(Patna) . The petitioners in that case who were assessed to tax under the Indian Income-tax Act, challenged the assessment order before the High Court in the petitions filed under Articles 226 and 227 of the Constitution. These petitions were dismissed and applications were filed for leave to appeal to the Supreme Court under Article 133 of the Constitution. The Division Bench held that the orders complained of were not the orders passed in the civil proceeding. S.K. Das, C.J., set out the grounds for refusing leave in these terms:

It seems clear to me that every writ application is not necessarily a civil proceeding ; it may be a civil proceeding, or a criminal proceeding, or other proceeding, according to the nature of the application and the questions raised and decided in the proceeding. It is well settled that suit would not have been maintainable by the petitioners in respect of the two assessment orders ; and if the petitioners had proceeded under the machinery of the Indian Income-tax Act the proceeding would not have been anything but a revenue proceeding. The mere fact that the petitioners filed two applications for writs in the High Court against the assessment orders, does not, in my opinion, change the nature of the proceeding.... The proceeding was not a civil proceeding as there was no right of suit, and I do not think it can be said to be a civil proceeding within the meaning of Article 133 of the Constitution.

The principle of this decision was followed by this Court in Dhanalkshmi Animal v. Income-tax Officer : (1957)2MLJ567 . At page 744, Rajamannar, C.J., quoting the above observations of the learned Chief Justice of the Patna High Court, observed thus:

If the application filed by the petitioner before us under Article 226 of the Constitution had been to quash the assessment order it may well be said that it is not a civil proceeding on the above reasoning. But such is not the relief sought by the petitioner.

In First Additional Income-tax Officer, Karaikudi v. Shanmugha Rajeswara Sethupath I.L.R. : [1963]48ITR647(Mad) , we referred to these decisions and held that an order in a writ petition quashing the order of assessment made by the Income-tax Officer assessing to tax the compensation amount received by the assessee under, the provisions of the Estater Abolition Act, is not a civil proceeding in respect of which leave to appeal can be granted under Article 133 of the Constitution.

13. We shall now consider the question whether the proceedings are stamped with a civil character by reason of the fact that the High Court has dealt with it in exercise of the appellate power under Section 12-C of the Act. As a general proposition it may be broadly stated that, when matters are referred for adjudication to a civil Court, the normal procedure of that Court including the right of appeal from an adjudication of that Court to a higher Court as prescribed by the law would be attracted. This principle is laid down in National Telephone Company Limited v. Postmaster-General L.R. (1913) A.C. 546. which is an oft quoted case. Viscount Haldane, Lord Chancellor, enunciated this proposition of law as follows:

When a question is stated to be referred to an established Court without more, it in my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from the decisions likewise attaches.

This rule is not of universal application and carries with it its own qualifications and limitations. To illustrate the restricted use of this rule, we may refer to the decision in Rangoon Botatouny Company Ltd. v. The Collector Rangoon (1912) 23 M.L.J. 276 : L.R. 39 IndAp 197 : I.L.R. 40 Cal. 21 (P.C.).

There the proceedings were in the nature of an arbitration and the order sought to-be appealed from was in the nature of an award, and it was held that no appeal would lie challenging that award, notwithstanding the fact that the decision was one rendered by a civil Court. In Secretary of State for India v. Chellikani Rama Rao it is true that the principle laid down in National Telephone Company Limited v. Postmaster-General L.R. (1913) A.C. 546, was applied. But it is clear that the right involved in that case and which formed the subject-matter of the decision was one in relation to property. The proceedings arose under the Forest Act; but the dispute related to the ownership of islands in a tidal river. The Privy Council observed as follows:

The claim was the assertion of a legal right to possession of a property in land ; and if the ordinary Courts of the country are seized of a dispute of that character, it would require, in the opinion of the Board, a specific limitation to exclude the ordinary incidents of litigation.

It seems to us that the true principle is that the nature of the proceeding should have to be determined having regard to the nature of the rights of parties involved in a proceeding and not from the nature of the forum in which the rights happen to be decided. The fact that a civil Court is seized of a particular dispute may be a relevant criterion throwing light on the nature of the proceeding, but would not itself be either sufficient or conclusive to hold that such a proceeding is of a civil nature. It is not an axiom that whatever is determined by a civil Court is a civil proceeding.

14. We may again refer to the decision in Krishnaswami v. Institute of Chartered Accountants : AIR1953Mad79 and the observations of Venkatarama Ayyar, J., (as he then was) in particular relation to the question whether an adjudication by the High Court arising out of the exercise of jurisdiction under a special enactment would attract the applicability of Article 133 of the Constitution. As pointed out already, that was a case in which the question was whether a decision of the High Court under Section 21 of the Chartered Accountants Act was a civil proceeding which would enable a certificate of fitness of leave to appeal to the Supreme Court being granted. It was held that the proceeding was not of a civil nature within the meaning of Article 133. At page 874, the learned Judge observed as follows:

It was next argued that the reference under Section 21 of the Chartered Accountants' Act was to-the High Court as a Court, that a right of appeal against orders made by the High Court is conferred by Section 109 of the Civil Procedure Code and that, on the principle that when matters are referred for the adjudication of a civil Court, that will attract the normal procedure of that Court including a right of appeal, an appeal would lie to the Supreme Court.... But these authorities, National Telephone Company, Limited v. Postmaster-General L.R. (1913) A.C. 546 and Secretary of State of India v. Chellikani Rama Rao do not lay down that whatever proceedings come before a civil Court must be held to be civil proceedings. That must depend on the nature of the proceedings.

Regard must be had also to the character of the dispute. There is nothing in these two decisions-to support the contention that all matters which are referred to the determination of civil Courts must be held to be civil proceedings without reference to their nature.

This is clear authority of a Division Bench of this Court against the contention of the-learned Government Pleader that the decision of this High Court sought to be appealed from is a judgment, decree or final order in civil proceedings by reason of only the fact that it is of the High Court.

15. What then is a civil proceeding We apprehend that there is no straight and satisfactory formula which can be called in aid to decide this question. A proceeding in a civil Court may normally be a civil proceeding. But there may be special statutory rights, which might be permitted to be agitated in a civil forum by special provisions ; these rights may not be civil rights and the proceedings, pertaining to them would not be civil proceedings. Rights which a municipal Court will enforce at the instance of the citizen or subjects may properly be termed civil rights. They consist of the power of acquiring and enjoying property or exercising paternal or marital powers and the like.

16. We are concerned in this case to find out whether a tax liability cast upon a subject under the taxing enactment involves a civil right or in other words whether an assessment proceeding, culminating in the High Court, can be said to be a civil proceeding. The right of the Government to tax the subject is a sovereign right. Notwithstanding the dictum of Marshall, C.J., in M'Culloch v. The State of Maryland 4 L. Ed. 579. that the power to tax involves the power to destroy, it is now fairly settled law that there is no infringement of property or infraction of a fundamental right under the Constitution when the subject is burdened with a tax. It seems to us that an assessment to tax, however onerous it may be to the subject, is in no way associated with. the rights of the subject in regard to ownership of property or of carrying on business or of following any profession or vocation. We do not wish to dilate upon the subject further, as we are clearly of opinion that a proceeding under a taxing, enactment cannot be called a civil proceeding.

17. It is not necessary to refer to decisions dealing with the question whether proceeding under special enactment can be called civil proceeding. The question whether such proceedings are civil proceedings or not would depend upon the nature-of the proceedings and the rights involved therein. The Punjab High Court held in Union of India v. Qabool that it is not open to the High Court to grant a certificate, under Article 133 for leave to appeal under the United Provinces Town Improvements Act of 1919, against an award of a Tribunal constituted under the said enactment. The Kerala High Court held in Dhanalakshmi Vilas Cashew Company v. Cashew Industries Staff Association I.L.R. (1961) 2 Ker. 43 that a civil proceeding that is contemplated under Article 133 is a proceeding in which rights to property or other civil rights are involved and that it is of no consequence whether such a proceeding arose out of a suit or out of an application under Article 226 of the Constitution. Each case proceeded on its own facts and we do not think that any useful purpose would be served by referring to the numerous decisions on the subject.

18. In our opinion, the application for leave to appeal to the Supreme Court under Article 133 cannot be sustained. In this view, it is not necessary to consider whether on the merits of the case, a certificate of fitness for leave should or should not be granted. The application fails and is dismissed with costs.


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