Patna High Court
Tata Iron And Steel Co. Ltd. vs Union Of India (Uoi) on 21 December, 1973
Equivalent citations: 1977(1)ELT160(PAT)
JUDGMENT S.K. Jha, J.
1 These two first appeals are directed against a common judgment and decree dated the 26th February, 1969, passed by the Subordinate Judge, Jamshedpur dismissing the plaintiff appellant's suits on the short ground of their non-maintainability on account of the lack of jurisdiction of the Civil Court to go into the question involved in the suits.
2. Since in these appeals is involved a limited question of law as to whether the suits are maintainable under Section 9 of the Code of Civil Procedure or are barred under the provisions of the Central Excises and Salt Act, 1944 (1 of 1944) (herainafter referred to as the Excise Act'). it is not necessary for we to go into any detailed statement of facts pleaded specially as no finding of fact has been recorded by the court below. The appellant is the well known Tata Iron and. Steel Company Limited of Jameshedpur engaged in the manufacture of iron, steel and allied products including steel ingots. First Appeal No. 222 of 1969 arises out of Money Suit No. 62 of 1966 whereas First Appeal No. 221 of 1969 arises out of Money Suit No. 61 of 1966 both instituted by the appellant in the court below. Money Suit No. 62 aforesaid was for a money decree for a sum of Rs. 2,80,593.44 paise whereas in Money Suit No. 61 of 1966 a money claim of Rs 41,79.141.68 was made. Both these sums were prayed to be recovered by way of refund from the defendants respondents as having been allegedly illegally realised without any authority of law as excise duty in the purported exercise of the defendants respondent's power under the Excise Act. The point involved is common and the facts please are also common in both the suits except with regard to the amounts involved and the item of produce which has been subjected to excise duty. Whereas in Money Suit No. 62 of 1966 from which First Appeal No. 220 of 1969 arises the claim in based upon the alleged illegal realisation of excise duty on steel ingots out of steel scrap which had already borne excise duty, in First Appeal No. 221 of 1969 arising out of Money Suit No. 61 of 1966, the plaintiff has based its claim on such realisation of Central Excise duty on steel ingots manufactured out of the old iron and steel scraps termed by the appellants 'the pre-excise stock of skull scrap' The appellant's main case was that both the aforesaid types of steel ingots, produced either from out of steel scraps which had already borne excise duty or from the pre-excise stock of skull scraps, are exempt from excise duty by a Notification G.S.R. No. 75 of 1962 issued on the 24th April 1962 under the provisions of the Excise Act and as such realisation of the aforesaid two sums purported to be the excise duty was without any authority of law and wholly without jurisdiction. In view of the Notification aforesaid the plaintiff appellant applied refund of the excise duties aforesaid illegally realised from it but the Assistant Collector of Excise (defendant respondent No. 3) rejected the claim for refund. The plaintiff preferred an appeal before the Collector of Central Excise (defendant respondent No. 2) which also failed. Ultimately, a revision application to the Central Government (defendant respondent No. 1) was also rejected.
3. It may be mentioned here that during the pendency of the suits in the court below two writ applications were filed in this court under Articles 226 and 227 of the Constitution of India being Civil Writ Jurisdiction Case No. 1239 of 1965 and 1238 of 1965 relating to the very claims made by the plaintiff in the present suits, but those writ applications were founded upon the main grounds that the provisions of the Excise Act and the rules made thereunder were unconstitutional and that there had been a violation of the principles of natural justice in so far as no reasonable opportunity was given to the appellant (petitioner in those cases) for being heard and as such the orders passed by the Central Excise authorities were without jurisdiction. In these writ applications it was held that the Act and the Rules were not unconstitutional, but the writ applications were allowed and the orders of the Central Excise authorities were quashed on the ground that there had been a violation of the principles of natural justice and direction was issued to the Assistant Collector of Central Excise, Jamshedpur to re-hear the refund claims of the appellant and dispose them of according to law. The decisions of this court in those writ applications were given on the same date, that is, the 7th December, 1966 and those cases have since been reported in A.I.R. 1967 Patna 375 and A.I.R. 1967 Patna 377. The fact that the present suits were pending in the court below in respect of the same claims was brought to their Lordships notice by way of preliminary objection to the maintainability of those writ applications, but their Lordships rejected this contention and held that ordinarily when the alternative remedy of civil suit had been availed of, it will not be proper for this Court to exercise its extraordinary jurisdiction under Article 226 of the Constitution, by the Civil Court's jurisdiction under the taxing statutes is of a very limited nature and, therefore, where the main grievance of a party is that the principles of natural justice were violated, the power of the High Court will not be reflected by the fact that a Civil Suit has been filed by the aggrieved party. It transpires from the records that on a rehearing of the matter the Assistant Collector of Central Excise again rejected the plaintiff appellant's claim for refund which was the subject matter of Money Suit No. 62 of 1966 by an order dated the 18th December, 1968 and the claim involved in money Suit No. 61 of 1966 by an order dated the 1st May, 1968. Thereafter, the appellant filed an application dated the 29th January, 1969 under order 6, Rule 17 of the Code of Civil Procedure for amendment of the plaint of money Suit No. 62 of 1966 and prayed for substituting the aforesaid order dated the 18th December, 1968 in place of the order dated the 18th February, 1964 which was the date of the original order passed by the Assistant Collector. Similarly, on the 12th August 1968 such an application for amendment of the plaint was filed in Money Suit No. 61 of 1966 in which a prayer was made for substitution of the order dated the 1st May, 1968 in place of the original order of the Assistant Collector dated the 28th March, 1964. These applications for amendment having been moved, as it appears from the original records of the cases, the learned subordinate Judge passed an order to the effect that the orders on these amendment applications will be passed after hearing and decision of the question of maintainability of the suits and the jurisdiction of the Civil Court to try these suits. It further appears that no orders were ultimately passed on these amendment applications, as presumably, the learned Subordinate Judge by his judgment and decrees dismissed the suits on the ground that they were not maintainable as the Civil Courts had no jurisdiction to try them. These amendment petitions will be discussed on merits at an appropriate place.
4. As has already been indicated above, out of several issues framed in these suits, only the two preliminary points covered by the two issues were taken up and decision on them given by the learned Subordinate Judge in the judgment under attack. These issues were "(1) Is the suit maintainable ?
(2) Has this Court jurisdiction to try those suits ?"
Both these issues being inter-connected were gone into together and the learned Subordinate Judge dismissed both the suits upon a finding that the suits were barred under the provisions of Section 40 of the Excise Act.
5. The only question which falls for determination in these appeals is as to whether the cognizance of suits of the present nature is or is not expressly or by necessary implication barred under Section 40 or is any other section of the Excise Act., thereby precluding the Civil Court from entertaining any such suit under Section 9 of the Code of Civil Procedure. The only relevant provisions of Excise Act Which need be referred to here are Sections 35, 36 and 40. Section 35 reads as follows :
* * * * The learned Subordinate Judge has taken recourse to the provisions of Section 40 quoted above for holding that the cognizance of suits of the present nature was expressly barred. In my view, the decision of the learned Subordinate Judge on this question is manifestly erroneous. Section 40 protects the Government or any of its officer for acts done under the Act in good faith. The provisions of Section 40 provide an immunity to the officers purporting to exercise their powers under the Act bona fide, thereby barring suits either of tortuous nature for compensations or damages on the one hand and Criminal prosecutions on the other. The questions regarding collection of illegal taxes or orders imposing tax or duty or penalty are not covered by Section 40. While dealing with a similar question relating to the construction of Section 225 of the Madras Local Boards Act (14 of 1920) a Full Bench of the Madras High Court in Panchayat Board, Thiruvottiyur v. West India Matches Co, (AIR 1939 Madras 421) held in support of the view I have taken with regard to the construction of Section 40 of the Excise Act. Section 225(1) of the Madras Local Boards Act aforesaid which feel for consideration before the Full Bench in the aforesaid case provided that no suit or other legal proceeding shall be brought against any Local Board, or the president or any Member, Officer, or servant thereof or against any person acting under the direction of such Board, President, Member, officer or servant in respect of any act done or purporting to be done in execution or intended execution of this act...until the expiration of two months next after notice in writing, stating the cause of action, the nature of the reliefs sought, the amount of compensation claimed...has been left at the office of the local Board, and Sub-section (2) of the Act, same section laid down that every such proceeding shall, unless it is a proceeding for recovery of immovable property or for a declaration of title thereto, he commenced within six months, after the date on which the cause of action arises or in the case of continuing injury or damage, during such continuance or within months after the ceasing thereof. It was argued in that case that the suit of the plaintiff company for refund of the levy and collection of illegal and ultra vires taxes was barred by limitation provided by Section 225(2) of that Act. This argument was repelled and it was held that a suit filed against the municipal council for the recovery of a sum wrongfully collected by the municipality as tax was beyond the purview of Section 225 quoted above and it was further held that such provisions were applicable only to suit for compensations or damages for wrongful and malafide acts. For the aforesaid reason, it cannot he held that Section 40 of the Excise Act puts any bar to the institution and maintainability of suits of present nature.
7. Mr. K.P. Verma, Learned Government Advocate, appearing on behalf of the respondents raised a plea that though Section 40 may not be said to be a barring provision yet the provisions of Section 35 read with Section 36 must be deemed to have by necessary implication put a bar on the Civil Courts taking cognizance of suits of the present natures. Section 35(1) provides for an appeal against any decision or order passed by a Central Excise Officer and Sub-section (2) of Section 35 lays down that every order passed in appeal shall be final and only subject to the power of revision conferred by Section 36. It was argued that since finality has been attached to an appellate order passed under Section 35 which has been made subject to only revisional interference under Section 36. It must be held that any order passed under the Act cannot be collaterally attached by bringing a suit in the Civil Courts. In my view there is no substance even in this argument on behalf of the respondents. Where a levy of tax is made outside the scope of the Act or is alleged to have been made without any authority of law or in clear violation of the statutory provisions or rules or notification having force of law, then such a levy is assailed on the ground of illegal assumption of jurisdiction and in such cases the jurisdiction of the Civil Court cannot be held to be ousted by the provisions of Sections 35 and 36. In the present cases, in paragraph 17 of the plaint of Money Suit No 61 of 1666 and in paragraph 18 of the plaint of Money Suit No. 61 of 1966. It has been clearly averred that the duty realised was exempt under Notification No. 75 of 1962 and that the realisation thereof and the refusal to make a refund was illegal, without authority of law and without jurisdiction. It is a different matter that on a consideration of the merits of the claim put forward the plaintiff may not succeed in establishing that the duty in question was not exempt under the aforesaid notification. In that event, the appellants, suits may fail on merits, but it cannot be said that the cognizance of such suits would be barred by necessary implication in view of the provisions of Sections 35 and 36 aforesaid. As has been held by the Judicial Committee of the Privy Council in Secretary of State v. Mask & Co. (67 Ind, App. 222 = A.I.R. 1940 P.C. 105) while dealing with the provisions of Section 188 of the Sea Customs Act (VIII of 1878), it is settled law that the exclusion of the jurisdiction of the Civil Courts is not to be readily inferred, but that such exclusion must either be explicity expressed or clearly implied. It is also well settled that even if jurisdiction is so excluded, the Civil Courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with, or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. Similarly, while dealing with a case relating to Section 18A of the Madras General Sales Tax Act which puts an express prohibition on the Civil Court's jurisdiction the Supreme Court hold in the case of Firm of Illuri Subbayya Chetty and Sons v. State of Andhra Pradesh (A.I.R. 1964 Supreme Court, 322) :
"In dealing with the question whether Civil Court's jurisdiction to entertain a suit is barred or not, it is necessary to bear in mind the fact that there is a general presumption that there must be a remedy in the ordinary Civil Courts to a citizen claiming that an amount has been recovered from him illegally and that such a remedy can be held to be barred only on very clear and unmistakable indications to the contrary. The exclusion of the jurisdiction of Civil Courts to entertain civil causes will not be assumed unless the relevant statute contains an express provision to that effect or leads to a necessary and invitable implication of that nature. The mere fact that a special statute provides for certain remedies may not by itself necessarily exclude the jurisdiction of the Civil Courts to deal with case brought before it in respect of some of the matters covered by the said statutes."
8. Unless therefore, there are compelling reasons to come to a conclusion that even where the levy and the realisation of taxes or duties are being challenged as being without any authority of law and wholly without jurisdiction, the Civil Court's jurisdiction is barred, the Civil Court will be jealous to guard its own jurisdiction against any such inference of its ouster. There are no such compelling reasons either in the Excise Act or in the rules framed thereunder. I have taken of the provisions of Sections 35, 36 and 40 of the Excise Act finds support from a number of decisions. Union of India v. Vittappa Kamath (A.I.R. 1957 Madras 110), Union of India, represented by the Secy. to Government, Ministry of Finance, New Delhi v. Balabhadra Ramaiah and Ors. (A.I.R. 1961 Andhra Pradesh, 540). Bemmidala Pernaish v. Union of India (A.I.R. 1967 Andhra Pradesh, 338) and Union of India v. Ghasi Ram Laxmi Narain (A.I.R. 1967 Allahabad, 546) all these cases have taken a similar view of the provisions of the Excise Act in question. In the case of Balabhadra Ramaiah (Supra) which is a decision of a learned Single Judge of the Andhra Pradesh High Court it has been expressly held that a suit for the refund of a duty illegally levied and not collected in accordance with the statutory provisions was maintainable. I respectfully agree with the view taken in that case by the learned Single Judge, as I find no reason to take any different view of the matter. In the case of Bammidala Pernaish v. Union of India (Supra) a Division Bench of the Andhra Pradesh High Court was considering the same question as falls for our consideration in the present cases and on an exhaustive review of the case law and the principles involved Jaganmohan Reddy, J. has taken the same view of the different provisions of the Excise Act discussed above.
9. The learned Subordinate Judge has further held that the observations of this Court in A.I.R. 1967 Patna, 375 were themselves sufficient for the decision of the two issues in these suits against the plaintiff appellant. The observations of this Court alluded to by the learned Subordinate Judge are to the effect that the Civil Court's jurisdiction under taxing statutes is of a very limited nature and it cannot take upon itself the jurisdiction of the assessing authority an examine on facts whether duty is payable or not. The learned Subordinate Judge has clearly drawn an erroneous inference from the aforesaid observation. All that their Lordships had said in that case was that the Civil Court's jurisdiction under taxing statutes is of a very limited nature in so far as the constitutional validity of the Acts and the Rules may be convassed before a Civil Court and the only other ground on which the Civil Court interfere must be limited ground referred to by the Privy Council in Mask's case. It is true that the Civil Court cannot take upon itself the jurisdiction of the assessing authority of the appellate or revisional authority, but at the same time it also must be emphasised that where the levy or collection of any so called tax or duty is wholly without authority of law, then the Civil Court's jurisdiction for declaring that such a levy or collection has been made without jurisdiction and to pass a decree for the refund thereof is not barred under the piovisions of the Excise Act or the rules framed thereunder. It cannot, therefore, be held that the present suits for a declaration that the duty in question had been realised illegally and without jurisdiction and for a decree for the refund thereof is per so barred by the provision of Excise Act. As has already been indicated above, the success or failure of the plaintiff appellant will depend whether or not the duty in question was exempted under Notification No. 75 aforesaid, but that will be a decision on the merits of the suits.
10. This brings us to the question relating to the petitions for amendment of the plaints filed on behalf of the appellant. There does not seem to be any valid reason, nor was any advanced by lear and counsel for the respondents, why the amendments as prayed for be not allowed, in the facts and circumstances of the present cases.
11. In the result, therefore, I would allow both these appeals, set aside the judgment and decrees, passed by the court below and remand these cases to it. The court below shall now make the aforesaid necessary amendments in the plaints and proceed to hear and dispose of the cases in accordance with law and in the light of the observations made above. There shall, however, be no order as to costs.
Appeals allowed and cases remanded.