Patna High Court
State Of Bihar vs Arthur Butler & Co. Ltd. on 24 April, 1956
Equivalent citations: AIR1957PAT182, [1956]7STC379(PAT), AIR 1957 PATNA 182
ORDER
1. In this case the Board of Revenue has referred the following questions of law for the opinion of the High Court under Section 25 of the Bihar Sales Tax Act, 1947:
"(1) Whether the assessee is entitled upon the facts and circumstances of the case, to a deduction of 30 per cent, over gross turnover under Rule 16 of the Bihar Sales Tax Rules with respect to articles supplied to several contractors when the assessee himself as not a contractor executing a 'contract' within the meaning of Section 2 (b) of the Bihar Sales Tax Act, 1947? and (2) Whether the assessee is entitled upon the facts and circumstances of the case, to a deduction of Rs. 1,20,492-11-0 on account of sales transacted between the period 1st of July, 1947, to 30th September, 1948, in execution of contracts entered into prior to 1st of July, 1947, but not prior to lst of October, 1944, having regard to the amendment made by Act VI of 1949?"
On behalf of the opposite party, Messrs. Arthur Butler & Co. Limited, a preliminary objection is raised on the ground that the reference is incompetent it was submitted that the State of, Bihar made an application in revision to the Board of Revenue against the order of the Commissioner under Section 24 (4).
That application was dismissed by the Board of Revenue and thereupon the State of Bihar applied under Section 25 to the Board of Revenue requiring it to refer to High Court the two questions of law stated above.
The Board of Revenue refused the application holding that no question of law arose in the case. It should be noticed that this application under Section 25 (1) was signed by the Commissioner of Sales Tax although the State of Bihar is described as the petitioner in the body of the application. Against the order of refusal the State of Bihar made an application to the High Court under Section 25 (2) of the Bihar Sales Tax Act. The application was heard ex parte by the High Court, and on the 26th of July, 1954, a Division Bench of this High Court ordered the Board of Revenue to state a case and make a reference on the two questions of law.
The point taken by Mr. Untwalia is that the High Court has no jurisdiction to call for a reference under Section 25 (3) because the application under Section 25 (2) was made not by the Commissioner of Sales Tax but on behalf of the State of Bihar. The submission put forward by Mr. Untwalia is that only the dealer or the Commissioner is competent to make an application to the Board of Revenue under Section 25 (1), and in case the Board refused to make a reference only the dealer or the Commissioner may apply to the High Court against such refusal.
Counsel submitted that the Commissioner of Sales Tax did not make an application to the High Court under Section 25 (2) in this case arid, therefore, the reference made by the Board of Revenue is incompetent and the High Court is not bound to answer the questions of law upon which the Board of Revenue has stated a case. In our opinion the preliminary objection raised by Mr. Untwalia is well-founded and must prevail. It is, necessary in this connection to quote the language of Section 25:
"Statement of case to High Court -- (1) Within ninety days from the passing by the Board of Revenue of any order under Sub-section (4) of Section 24 affecting any liability of any dealer to pay tax under this Act, such dealer or the Commissioner may, by application in writing together with a fee of one hundred rupees, where such application is made by a dealer, require the Board to refer to the High Court any question of law arising out of such order;
(2) If, for reasons to be recorded in writing, the Board of Revenue refuses to make such reference, the applicant may, within forty-five days of such refusal, either --
(a) withdraw his application and if the applicant who does so, is a dealer, the fee paid by him shall be refunded, or
(b) apply to the High Court against such refusal.
(3) If upon the receipt of an application under Clause (b) of Sub-section (2), the High Court is not satisfied that such refusal was justified, it may require the Board of Revenue to state a case and refer it to the High Court and on receipt of such requisition the Board shall state and refer the case accordingly. ....."
Section 25 (5) is also important. Section 25 (5) states:
''The High Court upon the hearing of any such case shall decide the question of law raised thereby, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and shall send to the Board of Revenue a copy of such judgment under the seal of the Court and the signature of the Registrar, and this Board shall dispose of the case accordingly."
The submission put forward by the learned Government Advocate is that the Commissioner of Sales Tax was only acting on behalf of the State of Bihar and it is only a matter of procedural irregularity if the State of Bihar made the application instead of the Commissioner of. Sales Tax. Counsel submitted that it was a case of misdescription of the party making the application, and such misdescription would not affect the jurisdiction of the High Court to entertain the application under Section 25 (3) or to call for a reference from the Board of Revenue. We are unable to accept this argument as right.
The jurisdiction of the High Court under Section 25 is a special jurisdiction; it is circumscribed by the conditions and qualifications prescribed by the section itself. Unless the preliminary conditions prescribed by Section 25 are strictly complied with, it is clear that the High Court cannot acquire special jurisdiction to call for a reference or to deal with the reference after it has been made by the Board of Revenue. In a matter of this kind the principle is very clear. The principle is this -- when a statute confers special jurisdiction upon a Tribunal the conditions and qualifications annexed to the grant of that special jurisdiction must be strictly complied with.
These conditions and qualifications are the essential foundation of its jurisdiction and it is not competent to a tribunal to dispense with what the Legislature has made the essential conditions of that jurisdiction. It follows that in the present case the High Court cannot acquire special jurisdiction to deal with the reference unless the preliminary conditions are strictly complied with. This view finds support from Trustees Corporation (India) Ltd. v. Commissioner of Income-tax, Bombay, 57 Ind App 152: (AIR 1930 PC 151) (A), in which Lord Blanesburgh said:--
"Their Lordships are fully alive to the circumstances in which the High Court was considered to direct that these further questions should be referred to it for consideration, and the result in the present case of the order then made merely serves to confirm the view of the Board that the High Court, will, in future oases be well advised to require, before they seek to entertain any questions under Section 66 of the Income-tax Act that the preliminary requirements of the section are strictly complied with. The stringency of these requirements is clearly deliberate. It is the intention of the enactment that the High Court is not to be flooded with such applications. The object is salutary and in their Lordships' judgment the High Court will be well advised before they entertain any question tinder the section, always to see that the preliminary statutory conditions have been fully observed."
That is also the principle laid down by a Division Bench of this Court in Doma Sao Kishun Lal v. State of Bihar, AIR 1952 Pat 357 (B). The principle has been affirmed in a more recent case -- State of Bihar v. Telu Ram Jain, 4 STC 252: (AIR 1953 Pat 176) (C), and Messrs. Ramji Soman Choudhary v. State of Bihar, AIR 1953 Pat 249 (D). There is also another decision to the same effect in State of Bihar v. West Bokaro Ltd., AIR 1956 Pat 47 (E). Applying the principle laid down in these cases we are satisfied that the High Court had no jurisdiction to call for a deference on the 26th July, 1954.
2. It was, however, argued by the learned Government Advocate that the High Court is now hearing the reference under Section 25 (5) and it was not open to the opposite party at this stage to contend that the reference is incompetent or that the High Court ought not to answer the questions of law raised by the Board of Revenue in the statement of the case. In support of this proposition the leaded Government Advocate relied on Commissioner of Income-tax, West Bengal v. Diana Engineering Co., AIR 1954 Cal 575 (F).
But we do not think that the principle of that decision applies to the present case. The reason is that at the time of admission of the application made under Section 25 (2) (b) of the Sales Tax Act there was no hearing given to the assessee opposite party in this case. The order of admission was made by the Bench on the 26th of July, 1954, ex parte, and without granting a hearing to the assessee. If notice had been, given to the assessee at the time of admission, it would have been open to the assessee to take the point that the application was incompetent since it was not made by the Commissioner, of Sales Tax as required by Section 25 (2) (b).
It is true that under the newly framed rule of the High Court, namely, Rule 5 of Ch. XII (c); an application under Section 25 (2) (b) is placed for admission before a Bench after service of notice is effected on the opposite party. But that rule was not in existence when the present application was made by the State of Bihar under Section 25 (2) (b) before the High Court on the 13th of November, 1953. That is the reason why no notice was given to the opposite party and no hearing was given to the opposite party at the time when the Bench called for a statement of the case.
The position, however, is different with regard to an application made under Section 66 (2) of the Income-tax Act. In such a case the rule made by the High Court provides that notice should be given to the opposite party and a hearing should be granted to him before, the High Court Orders the Appellate Tribunal to make a statement of the case. We do not, therefore, consider that the decision reported in AIR 1954 Cal 575 (F) has any bearing on the present case. We do not consider that any question of estoppel arises against the opposite party.
In other words, the opposite party cannot be prevented from raising at this stage the question that the application made under Section 25 (2) (b) is incompetent because it was made not by the Commissioner of Sales Tax but by the State of Bihar in violation of the statutory provisions contained in Section 25 (2) (b). The argument of learned Government Advocate on this point must, therefore, fail.
3. For these reasons, we hold that the reference made by the Board of Revenue in- this case is not competent and the High Court has no jurisdiction to hear the reference or to answer the questions of law raised in the reference. There will be no order as to costs of the hearing of this application.