Introduction to the Case:
The given case is dated 30th November 1950 and the presiding judges on the case were Fazal Ali, Saiyid Mukherjea, B.K Aiyar and N. Chandrasekhara. The judgment of this case was given by Justice Fazal Ali.[1]
Procedural History
The main reference in the given case was given to the Bihar Sales Tax which passed in 1944. Section 4 of the Act stated that whichever dealer had a gross turnover that exceeded Rs. 5000 in the year immediately preceded by the when the Act came into force was liable to pay taxes for the sales that were affected by the Act after notification.[2]Another section that was applicable in the given case and formed the bases of the case was Section 7 of the Act that a dealer in order to pay taxes and Section 4 and carry out business as a dealer, had to be registered under the Act and there was a need to possess a registration certificate for the same.[3] This was the basic law that had set the foundation of the case.
Facts
The appellant in consonance with the given provisions filed an application for registration dated 19th December 1944 and the registration certificate for the same was issued on 21st December 1944.[4] On 8th October 1945, a notice was issued to the appellant by the Sales Tax Officer asking him to produce his accounts on 10th November explaining why a penalty should not be imposed on him under Section 10(5) of the Act in addition to the tax that was to be assessed on him.[5]
The appellant did appear before the authorized officer but received several adjournments till 16th March 1946 he could not appear.[6] Thereafter, he was ordered to pay Rs. 4,526-13-0 by the Sales Tax Officer.[7] Following this, the appellant went through a series of steps. He filed an appeal against the penalty to the commissioner which was dismissed on 6th June 1948, and then a petition to the Board of Revenue for revision but it was also dismissed dated 28th May 1947.[8]
He further moved to the Board of Revenue to refer the case to the High Court for the certain question of law but one of the board members Mr. N. Baksi rejected on 4th December 1947 which the observation that no case has been made on the predecessor’s orders.[9] This led to the appellant filing an application to High Court for the Board to call the case in High Court which resulted in the Court instructing the board to state the case properly and order the rejection of application.[10] The case was reheard by the board and the application was rejected, following which an application was made to the High Court again for the Board to state the case but it was rejected yet again.[11]
Finally, the appellant filed for leave to appeal to the Federal Court in the High Court which was granted.[12]
Issue
The main issue in the case is
- If the application filed by the appellant in the High Court is applicable and if the High Court has an Original or Appellate Jurisdiction in the matter or if it has a consultative role.[13]
- Another foundational issue that has led to the formation of the main issue of the case, which was if the penalty levied by the Sales Tax Officer was correct or an error.
Judgement
In the judgement, the court held that the appeal was dismissed.[14] It was stated that in the given matter the High Court had a consultative jurisdiction and not an original or appellate jurisdiction following which the court could not give order or judgment on the appeal.[15] Also, this was not an appellate jurisdiction considering there was no appeal previously that existed in the court.[16]
Rule of Law
The important sections from the Bihar Sales Tax Act, 1944 which have been referred to, to determine the case are Section 7 and Section 21 though some reference has been made to Section 10 of the same Act.[17] Section 7 states that any dealer who has to carry out business has to be registered under the Act as a dealer and should obtain that registration certificate.[18] Section 21 provides the appellant to apply to the High Court directly if the Board of Revenue refuses to refer the case to High Court.[19] Apart from this the Letter Patents of the Patna High Court play a very important role and references have been made to precedential cases as well.
Holding
The laws which were referred to for the judgement were based on the argument given by the appellant and respondents. Clause 31 of the Letters of Patna High Court was primarily referred to for the judgement which stated that a person could appeal to the Privy council in any matter apart from criminal jurisdiction, it was from a final judgement, decree or order or an appeal from the same made from original jurisdiction of High Court or Division Court and appeal does not lie in the High Court.[20]
But Clause 10 of the same reference states, that in the case the matter which is the issue should not be of an amount less than ten thousand rupees or it should involve directly or indirectly some claim or demand of property whose worth is no less than ten thousand rupees; or it could be any final judgement, decree or order which is fit to be appealed in front of the Privy Council.[21]
Also, Section 21 of Bihar Sales Tax, 1944 has a pivotal role in the judgement. The Section states that if the Board of Revenue refuses to refer the case to High Court, the applicant can file in the High Court an application against this refusal.[22] If the High Court is not satisfied with the refusal it can ask the Board to state a case and refer it to the High Court.
The case Tata Iron and Steel Company v. Chief Revenue Authority Bombay was also used as a precedent in the given case which dealt with this case completely.[23] Under this case itself the Judge, Lord Atkinson said that the order made by the judge was merely advisory and did not hold any other jurisdiction.[24]
Rationale
The given laws could have been applied in favour of the appellant if it was shown that the order which was given under the appeal was the final order and that it was given as a result of original or appellate jurisdiction.[25]
In the case, the order which has been appealed cannot be deemed as a ‘final order’ as it does not have a binding force on the party of the cases.[26] Section 21 of the Bihar Sales Tax Act also requires the judge to decide the question of law and give the copy of its judgement to the Board of Revenue and the board disposes of the case in consonance of the High Court judgement.[27] It cannot be ignored that Board has to consider what has been stated by the High Court and its legal position but it is not binding and ultimately the Board possesses the power of decision making. [28]
Dicta
Section 10 (5) of the Bihar Sales Tax Act is referred in the given case but did not have much application in the judgement.[29] The Section states that if according to the Commissioner, upon information is satisfied that dealer is liable to pay tax and is not registered, he can alter the dealer’s opportunity to be heard and according to the best of his judgement asses an amount and of tax and an additional penalty which cannot exceed one and a half of the amounts of tax.[30]
Another was the reference to the case of Lahore High Court i.e. Feroze Shah Kaka Khel v. Income-tax Commissioner, Punjab and N.W.F.P which was referred to grant the appellant the leave to appeal to the Federal Court. In the case which was appealed in front of the Privy Council dismissed the appeal on merits and found the objections on competency serious ones, they refrained from giving any further opinions.[31]
Also, at the end of the judgement, though the appeal was dismissed the court on hearing the parties stated that according to them the sales tax authorities including the Commissioner and the Board of Revenue were at error on imposing the penalty on the appellant according to Section 10(15) of the Act but it could not be implemented because the appellant was registered under the Section 7 of the Act.[32]
Arguments of the Parties
Appellant:
The appellant’s main argument was that the application which was refused again and again cannot be dismissed and the High Court needs the address the law in question under the Section 21 of Bihar Sales Tax,1944.[33]
Also, it used the case from the Lahore High Court mentioned previously to support its argument of appeal in the Privy Council that was the Federal Court at that time.[34]
Respondents:
The counsel of the respondents raised an objection when the trial had just commenced, that the appeal that had been filed that the appeal wasn’t competent. To support the same argument, they gave they referred to the case of Sri Mahanth Harihar Gir v. Commissioner of Income Tax, Bihar and Orissa in which the special bench of Patna High Court held that no appeal was laid in the Council under Clause 31 of Letter Patent of Patna High Court that said of the High Court dismissing an application under Income-tax Act and direct the Commissioner to state the case.[35] This case was considered to be completely exhaustive in dealing with the laws related to such applications and appeals. They also pointed out that case of Lahore High Court which the appellant was referring to was not actually held as a precedent for many other High Courts and so the previous decisions of the Patna High court were correct.[36]
Comments
In the given case, though the appeal could be dismissed based on the various laws applicable, it was the responsibility of the court to take Suo-moto cognizance if there seemed to be an error in the functioning of the Government institution which was causing inconvenience to the appellant. Also considering that the Section which could get the decision in favour of the appellant was enforceable, they could have filed another case in the High Court so that the element of Original Jurisdiction was met with and could solve the problem.[37]
References:
[1]Seth Premchand Satramdas v State of Bihar, (1950) INSC 32, (30 November 1950)
[2]Bihar Sales Tax Act, 1944, Act No. 6, 1944 ( India)
[3]Id
[4] Supra note 1
[5] Supra note 1
[6]Supra note 1
[7]Supra note 1
[8]Supra note 1
[9]Supra note 1
[10]Supra note 1
[11]Supra note 1
[12]Supra note 1
[13]Supra note 1
[14]Supra note 1
[15]Supra note 1
[16]Supra note 1
[17]Supra note 1
[18]Supra note 2
[19]Supra note 2
[20]Supra note 1
[21]Supra note 1
[22]Supra note 2
[23]Tata Iron and Steel Company v. The Chief Revenue Authority of Bombay, (1923) 25 BOMLR 908, (1923)
[24]Id
[25]Supra note 1
[26]Supra note 1
[27]Supra note 2
[28]Supra note 1
[29]Supra note 2
[30]Supra note 2
[31]Feroze Shah Kaka Khel v. Income-Tax Commissioner, Punjab , N.W.F.P, Lahore A.I.R 1931 Lah. 138
[32]Supra note 1
[33] Supra note 2
[34]Supra note 28
[35]Sri Mahant Harihar Gir v. Commissioner of Income-tax, Bihar and Orissa A.I.R 1941 Pat. 225
[36]Supra note 1
[37]Supra note 1
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