Madhya Pradesh High Court
Commissioner Of Sales Tax vs Hukumchand Mills on 6 May, 2004
Equivalent citations: 2004(3)MPHT22, [2005]139STC1(MP)
Author: S.K. Seth
Bench: Deepak Verma, A.M. Sapre, S.K. Seth
ORDER S.K. Seth, J.
1. This review petition, at the instance of revenue, is directed against the common order dated 19-12-1995 passed by the Full Bench comprising of Hon'ble three Judges in M.C.C. No. 365 of 1985; M.C.C. No. 366 of 1986; M.C.C. No. 367 of 1986 and M.C.C. No. 446 of 1986. By the order impugned four reference applications made under Section 44(1) of the M.P. General Sales Tax Act, 1958 since repealed (hereinafter referred to as 'Act') were disposed off and the question referred by the Tribunal in each application was answered in the affirmative i.e., in favour of the respondent herein and against the revenue. It was further held that Division Bench decision in Commissioner of Sales Tax v. Gwalior Rayon Silk Mfg. Co. Ltd., Nagda, (1989) 3 TLD 106 does not lay down correct law in so far it holds that sale of food articles in the canteen were exigible to tax.
2. For the assessment years 1974 to 1976 and 1978 turnover of canteen sales run by the respondent, a public limited company and a registered dealer under the Act (hereinafter referred to as 'assessee') were assessed to sales tax together with other taxable turnover by the assessing officer under the provisions of the Act. In first appeals, contentions of assessee were not accepted and the assessment orders were maintained. Second appeals preferred by the assessee were allowed and it was held by the Board of Revenue that assessee was mainly engaged in the manufacture and sale of cloth and yarn, but since it employed more than 250 workers, therefore, as per provisions of the Factories Act and Rules framed thereunder, assessee had to establish and run the canteen as welfare measure. Canteen located in the Mill was held to be a service institution; therefore, turnover of canteen sales could not be added to other taxable turnover of the assessee for the years in question. Against the said orders, revenue placing reliance on a decision of Supreme Court in case of State of Tamil Nadu v. Burma Shell Oil Stores & Distributing Co. of India Ltd., 31-STC 426, sought reference by filing applications under Section 44 of the Act. Applications were allowed by the Board of Revenue and accordingly in each matter Statement of Case was referred to this Court for the decision on the following question of law :--
"Whether in the facts and circumstance of this case, the Board of Revenue, acting as a Tribunal under the M.P. General Sales Tax Act, was justified in holding that the canteen sales were not exigible to tax ?"
3. Initially as per Rules, references were listed before Division Bench which was of the view that there is a conflict between two Division Bench decisions reported in (1987) 20 V.K.N. 351 and (1989) 3 TLD 106 therefore, by order dated 12-4-1989 it was directed that matter be placed before Hon'ble the Chief Justice for constituting Larger Bench to resolve the conflict. By virtue of order of Hon'ble the Chief Justice, all four M.C.Cs. as mentioned herein above were heard and decided by the Full Bench by common order dated 19-12-1995 as mentioned hereinabove. It is against this order of the Full Bench, Revenue has filed the present review application along with an application under Section 5 of the Limitation Act 1963, for condonation of delay. At this stage it is pertinent to point out that in the interregnum period, assessee went into liquidation and an Official Liquidator was appointed, therefore notices were issued to Official Liquidator who has filed reply to application under Section 5 of the Limitation Act opposing condonation of delay. Looking to the issue involved in the case, delay was condoned and Shri G.M. Chaphekar, learned Senior Counsel was requested to address the Court as Amicus Curiae. Since the matters were heard and decided by the Full Bench of three Hon'ble Judges of the Court that is why, this review application has been laid before us.
4. We have heard Shri G.M. Chaphekar, learned Senior Counsel as Amicus Curiae, Shri Amit Agarwal, learned Government Advocate for the Revenue, and Shri Arvind Shukla, Official Liquidator at length. Perused the record.
5. Shri Agarwal, learned Counsel for the Revenue, contended that Full Bench without considering the decision of the Supreme Court in the case of State of Tamil Nadu (supra), wrongly held that the sale of food articles in the canteen set up by assessee were not exigible to tax while deciding the reference applications. According to him, this by itself is sufficient ground to review the decision of Full Bench. In support, he has placed reliance on the decision of the Supreme Court in the case of Thungabhadra Industries Ltd. v. The Government of Andhra Pradesh, AIR 1964 SC 1372. He also placed reliance on the decisions of the Mysore and Himachal High Court reported in AIR 1972 Mysore 44 and AIR 1981 HP 1 (FB). He further contended that reliance placed on the decision of the Supreme Court reported in 24 STC 487 for interpreting 'Business' was inappropriate in as much as in the said case the question before the Supreme Court was whether amount of freight charges could form part of sale price or not. Shri Agarwal, learned Counsel for the Revenue placing reliance on the decision of the Andhra Pradesh High Court reported in 30 STC 26, which was approved by the Supreme Court in State of Tamil Nadu (supra) submitted that law declared by the Supreme Court was binding on the Full Bench and as such finding recorded by Full Bench that the sale of food articles in the Canteens located in the Mills of assessee were not exigible to sales is unsustainable in law. He further contended that declaration made by the Full Bench that Division Bench decision reported in 3 TLD 106 does not lay down correct law is equally bad and unsustainable. He further placed reliance on the decision of Supreme Court in State of Tamil Nadu v. Board of Trustees of Port of Madras, reported in (1999) 4 SCC 630 to contend that incidental sales relating to and concerned with the main business though without profit motive, would form part of taxable turnover of main business and as such are liable to tax under the Act. In this view also, according to learned Counsel canteen sales were exigible to sales tax.
6. On the other hand, Shri G.M. Chaphekar, learned Senior Counsel appearing as Amicus Curiae submitted that firstly no review is maintainable against the order impugned and secondly even if it is held that review is maintainable, then also no review is called for in the facts and circumstances of the case. Developing his arguments he submitted that although Clause 2 (bb) defining 'business' was inserted in the Act with retrospective effect, but in view of the decision of the Supreme Court in State of Gujarat v. Raipur Manufacturing Company Limited, AIR 1967 SC 1066, main business of the assessee was to manufacture and sell cloth, therefore, no inference can be drawn from sale of food articles from canteen established by assessee that it was also business intended to be carried on by assessee in selling food articles. According to him Full Bench was right in placing reliance on the decision of the Supreme Court in Northern India Caterers v. Governor, Delhi, AIR 1978 SC 1591, and its review, AIR 1980 SC 674 especially in view of the facts as were found by the Tribunal (Board of Revenue). He further contended that in the present case Full Bench was dealing with a situation where it was found as a fact that canteens were established with dominant object to provide service to the employees therefore canteen, sales turnover could not be added to taxable turnover derived from the main business activity. In this connection he cited Division Bench decision between the same parties for the assessment year 1977 reported in 20 VKN 351. This judgment has attained finality as Revenue did not prefer any appeal to the Supreme Court; where as in 3 TLD 103 fact situation was altogether different in as much as in that case Tribunal had found that canteen sales after retrospective insertion of Clause 2 (bb) in Section 2 of Act, were exigible to tax after 15-4-1964 and not prior thereto. Thus, according to Shri Chaphekar, in view of facts as found by the Board of Revenue, this Court in both cases, i.e., 3 TLD 106 and 20 VKN 351 correctly laid down the law. Next submission of Shri Chaphekar was that in disguise of review application, Revenue cannot be permitted to assail the order against which no appeal was preferred by it in the Supreme Court. In this connection, he also relied upon decision of Supreme Court in the case of M/s. Thungabhadra (supra), especially Para 11 of said Judgment. Shri Arvind Shukla, Official Liquidator while adopting the contentions of Shri Chaphekar, submitted that view taken by the Full Bench is proper and does not require review. He also cited the decision of Supreme Court in matter of Commissioner of Sales Tax v. Sai Publication Fund, JT 2002 (3) SC 295.
7. After having heard learned Counsel and the Official Liquidator, in the considered opinion of this Court following questions arise for consideration :--
"(1) Whether failure to consider an existing decision of the Supreme Court having a bearing on the controversy amounts to an error apparent on the face of record within the meaning of Order 47 Rule 1 of the Code of Civil Procedure ?
(2) Whether in the facts and circumstances of the present case, Revenue has made out a case for review ?"
8. Judicial discipline requires due respect has to be given to a binding decision of Court, higher in judicial hierarchy, specially when it is a decision of the Supreme Court which lays down the law of land and has a direct bearing on the controversy involved in the case. If such decision is ignored, would it be then a good ground for review ?
9. For the first time this question had cropped up before a Bench consisting of D.M. Chandrashekhar and M. Santosh, JJ. of Mysore High Court, AIR 1972 Mysore 44. After noticing divergent views of various High Courts and following the test laid down by Rajagopala Ayyangar, J. in M/s. Thungabhadra (supra), it was held that Article 141 of the Constitution of India provide that law declared by the Supreme Court is binding on all Courts within the territory of India. Hence where there is a decision of Supreme Court bearing on a point and where a Court has taken a view on that point which is inconsistent with the decision of the Supreme Court, no elaborate arguments are required to point out such an apparent error on the face of the record. Following decision of Federal Court in Jamna Kuer v. Lal Bahadur, AIR 1950 FC 131, it was further held by the Mysore High Court Division Bench, that the question as to how the error apparent on the face of the record occurred is of no relevance for the purpose of review and that it is immaterial whether such error occurred due to Counsel's mistake or had crept in by reason of oversight on the part of the Court. The view taken by the Mysore Division Bench has been accepted by the Full Bench of Himachal Pradesh, AIR 1981 HP 1. The Full Bench formulated two questions for the decision. First question was whether any subsequent decision of the Supreme Court or Larger Bench taking a different or contrary view on a point of law is good ground for review. Presently we are not concerned with the first question which was answered in negative but are more concerned with second question. The second question was whether taking a view on a point while pronouncing decision by the Court, contrary to the existing decision of the Supreme Court or High Court is good ground for review. While dealing with second question, the Full Bench in Paragraphs 15 and 16 held as under :--
"15. The second part of the question relates to a situation where a Court has failed to notice an existing contrary decision of the High Court or the Supreme Court on a point covered by its judgment. Now failure to notice a decision on a question of law of the Supreme Court, which is the law of the land under Article 141 of the Constitution, is not the same thing as failure to notice a binding decision of the High Court. So we would divide the question into two parts : (a) failure to notice a decision of the Supreme Court; (b) failure to notice a binding decision of the High Court.
16. Failure to notice an existing decision of the Supreme Court on question of law results in not applying the law which should have been applied. Therefore, a contrary decision would amount to a mistake or error apparent on the face of the record. The error would be obvious and no elaborate reasoning would be necessary to find it."
10. We are in respectful agreement with the views expressed by Mysore and Himachal Pradesh High Court. All Courts in India are bound to follow the decision of the Supreme Court and the law laid down by the Supreme Court is binding on all Courts and Tribunals. When some principle of law has been laid down by the Supreme Court, it is the duty of the High Court or Subordinate Courts to follow the decision of the Supreme Court and to ignore the well settled law by a judicial pronouncement of the Supreme Court and to pass order contrary to it would be gross impropriety. It amounts to 'judicial adventurism' as has been held by the Supreme Court at page 462 in Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd., (1997) 6 SCC 450. Thus, we are of the view that overlooking a point of law already settled by a judicial pronouncement of Supreme Court, if a contrary view is taken by the High Court, it results in non-application of law and the decision would inevitably suffer from an error apparent on the face of record for which no elaborate arguments or reasoning would be required to point out such error and it would be good ground for review. High Court as Court of Record has plenary jurisdiction to keep all its records correctly and in accordance with law. Hence if any apparent error is noticed in respect of order passed by it, it is the duty of the High Court to correct the mistake.
11. Now coming to the second point, it would be profitable to remember that 'review' means the act of looking, offer something again with a view to correction or improvement. The power of review can be exercised for correction of mistake. However, while correcting the so called apparent error on the face of record, one should not forget that review is by no means an appeal in disguise for correction of an erroneous decision. This limited power can not be exercised to substitute a view. The possibility of two views on a legal question is no ground for review. A litigant can not seek review of a judgment merely for the purposes of rehearing and a fresh decision of the case. A review proceeding can not be equated with the original hearing of the case. This is what exactly Shri Agarwal sought by arguing elaborately on the strength of a decision rendered in the case of State of Tamil Nadu (supra). In the considered opinion of this Court, Shri Chaphekar is right when he submitted that both decisions of the Supreme Court viz., State of Tamil Nadu v. Burma Shell Oil Stores & Distributing Co. of India Ltd. (supra) and Northern India Caterers v. Governor, Delhi (supra) stand on different footings based upon facts involved in each case. According to Shri Chaphekar, the line of reasoning in Northern India case is altogether different from the reasoning adopted while deciding the State of Tamil Nadu (supra). He further rightly contended that while deciding the review petition in Northern India's case (supra), Supreme Court had made it clear that where food is supplied in eating house as part of service than the transaction cannot be held to be a sale as would be clear from the following extract :--
"We have no hesitation in saying that where food is supplied in an eating-house or restaurant, and it is established upon the facts that the substance of the transaction, evidenced by its dominant object, is a sale of food and the rendering of services is merely incidental, the transaction would undoubtedly be exigible to sales tax. In every case it will be for the taxing authority to ascertain the facts when making an assessment under the relevant sales tax law and to determine upon those facts whether a sale of the food supplied is intended."
12. We can also draw support from the fact that State of Tamil Nadu (supra) was decided by the Supreme Court on 10-10-1972, still, in view of the facts as found by the assessing authorities in Northern India case, earlier decision in State of Tamil Nadu was not taken note of by the Supreme Court while deciding the Northern India Caterers (India) Ltd., on 7-9-1978 or its review on 21-12-1979. Thus, it is clear that decision in Northern India case turned on its facts which were different from the facts of the State of Tamil Nadu (supra), wherein it was found as a fact by the taxing authorities that sale of food article in canteen run by assessee was not part of any service. Thus in the considered opinion of this Court, both decisions lay down different propositions of law and equally hold their respective fields. In the considered opinion of this Court the decision in State of Tamil Nadu, even if cited before the Full Bench at the time of arguments, it would not have tilted the balance in favour of the Revenue or changed the complexion of the ultimate result of the Full Bench. Board of Revenue acting as Tribunal had found as fact that canteen run by the assessee was service institution, therefore placing reliance on Northern India (supra), Board of Revenue found in favour of assessee with regard to canteen sales. This finding of fact as recorded by the Board of Revenue was not open to challenge in Reference under Section 44 of the Act. In CIT v. Imperial Chemical Industries (India) (P) Ltd., (1969) 1 SCC 629 it was held as under :--
"It is manifest that the finding of the Appellate Tribunal on this question is a finding on question of fact and the High Court was not entitled to interfere with this finding. It is well established that the High Court is not a Court of Appeal in a reference under Section 66 (1) of the Act and it is not open to the High Court in such a reference to embark upon a reappraisal of the evidence and to arrive at findings of fact contrary to those of the Appellate Tribunal. It is the duty of the High Court while hearing the reference to confine itself to the facts as found by the Appellate Tribunal and to answer the question of law in the context of those facts."
Same view was once again reiterated by the Supreme Court in Kilasho Devi Burman v. CIT, (1996) 7 SCC 613 :--
"The High Court in a reference under the taxation statutes exercises advisory jurisdiction in regard to questions of law. It is only when it has before it a question that asks whether the Tribunal has, upon the evidence on record before it, come to a conclusion which is perverse that it may go into facts for this is a question of law. A conclusion is perverse only if it is such that no person, duly instructed, could, upon the record before him, have reasonably come to it."
It was further held in the said decision as under :--
It is the Tribunal that finds facts. It sets these out in the Statement of Case whereby it refers questions of law to the High Court. The High Court, in reference proceedings, can not go behind the facts found. Where the High Court is of the view that it is requisite that facts other than those found need to be ascertained it must call upon the Tribunal to submit a Supplemental Statement of case. Even when, as here, the High Court is required to decide whether the findings of fact reached by the Tribunal are perverse, the High Court is confined to the evidence that was before the Tribunal. The High Court cannot look at evidence that was not before the Tribunal when it reached the impugned findings to hold that these findings are perverse."
13. Thus it is clear that Reference applications made by the Board of Revenue had to be decided in the background of facts as found by the taxing authorities and the Full Bench which heard and decided the Reference applications was bound by the facts while deciding and answering the question referred by the Board of Revenue. In this view of the matter, in the considered opinion of this Court, no apparent illegality was committed by the Full Bench while deciding the Reference applications without discussing the decision of the Supreme Court in State of Tamil Nadu (supra), which was distinguishable on facts and as such the order of the Full Bench does not suffer from an error apparent on the face of the record and therefore no review can be granted on that score.
14. In view of the foregoing discussion, we need not dilate upon other authorities cited at the Bar as they are not material or germane for deciding the controversy involved in the present case. Thus, we hold that in view of the facts as found by the Board of Revenue, Full Bench rightly answered the reference in favour of assessee even without referring to the decision of Supreme Court in State of Tamil Nadu (supra). Thus, no case for taking a different view in this Review is made out and the same is dismissed as such but with no order as to costs. Before parting with the case we must record our sincere appreciation for Shri G.M. Chaphekar, learned Senior Counsel, who rendered invaluable assistance as Amicus Curiae.