Vitthalbhai Naranbhai Patel vs C.S.T. M.P. Nagpur

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Appeal (civil) 415 of 1957

Decision Date: 6 September 1960

Coram: S.K. Das, M. Hidayatullah, K.C. Das Gupta, J.C. Shah, N.R. Ayyangar

In the matter titled Vitthalbhai Naranbhai Patel versus C.S.T. M.P. Nagpur, the Supreme Court of India delivered its judgment on 6 September 1960. The case was recorded as Appeal (civil) 415 of 1957, with Vitthalbhai Naranbhai Patel as the petitioner and C.S.T. M.P. Nagpur as the respondent. The bench that heard the appeal comprised S.K. Das, M. Hidayatullah, K.C. Das Gupta, J.C. Shah and N.R. Ayyangar, and the judgment was reported in AIR 1967 SC 344. The opinion was authored by Justice Hidayatullah. The matter before the Court was an appeal that had been granted a certificate under Article 132(1) of the Constitution by the former High Court at Nagpur. While the appeal was being heard, the appellant sought, under Article 132(3), permission to bring the appeal before the Supreme Court on the basis that certain questions had been wrongly decided; the Court noted that it would consider that petition later. The appellant owned a business known as C.P. General Agency and possessed a sales‑tax registration certificate covering the period from 13 November 1947 to 1 November 1948. For that period he filed a return under the Central Provinces and Berar Sales Tax Act, stating a gross turnover of Rs 73,713‑6‑0 for sales of goods listed in Schedule I of the Act and Rs 1,28,923‑7‑3 for sales of other goods. He also paid an advance tax of Rs 2,239‑6‑6.

On 17 March 1953 the Assistant Commissioner of Sales Tax made an assessment of the appellant’s liability. The assessment calculated the total turnover at Rs 13,93,635‑10‑6 and imposed a total tax of Rs 44,153‑3‑6. In the return that the appellant had filed, he claimed an exemption on the sale of bidis amounting to Rs 12,99,389‑9‑9, contending that those bidis were exported from the taxable territories before any contract of sale was concluded. The appellant’s claim of exemption rested on the fact that he maintained two godowns for bidis at Ujhani and Haldwani in Uttar Pradesh, which were administered by the Central Bank of India on his behalf. The goods stored in those godowns were delivered in response to orders placed by the Central Bank of India, which also acted as the appellant’s banker. After the assessment, the appellant filed an appeal before the Commissioner. By the time the appeal was presented, the Sales Tax Act had been amended to require the appellant to deposit the assessed tax as a condition precedent to the admission of any appeal. The appellant failed to make this deposit, and consequently the appeal was dismissed. Thereafter, the appellant moved the High Court at Nagpur under Article 226 of the Constitution, seeking a writ of mandamus that would compel the Commissioner to hear and determine the appeal without the required deposit of the assessed tax. In the petition, the appellant asserted that the sales from the Uttar Pradesh godowns were exempt pursuant to the explanation to section 2(g) of the Sales Tax Act and also under Article 286 of the Constitution.

In this case, the appellant filed a petition that sought only one form of relief, namely that the earlier appeal should be ordered to be reheard. The petition was heard by the High Court, and the constitutional aspect of the dispute featured prominently in the proceedings. The High Court resolved all the petitions together by issuing a common order that dismissed them, relying on the precedent set by United Motors (1953 SCR 1069; 1953 (4) STC 133). The Court appeared to have completely overlooked the special question raised in this matter, and it made no comment regarding the competence of the appeal itself.

It is important to note that when the petition was presented before the High Court, the Supreme Court had already delivered its judgment in Hoosein Kasam Dada’s case (1953 SCR 987; 1953 (4) STC 114), and that decision was known to the parties. When the appellant later applied for a certificate to appeal to the Supreme Court, he reproduced the same grounds that he had relied upon in the original petition. He presented the application under Articles 132 and 133 of the Constitution, apparently intending to raise all of those grounds before the Supreme Court.

However, the High Court granted the certificate only under Article 132(1), thereby restricting the appeal to the matters specified in that clause. Because the certificate was limited, the appellant filed an additional application during the hearing, seeking to raise the other grounds that had been excluded. The Supreme Court examined that application and decided to reject it, informing the counsel that the reasons for the rejection would be given later.

Dr Barlingay, appearing for the appellant, argued that the High Court had misinterpreted the definition of “sale” in the Sales Tax Act. He maintained that a clear distinction existed between a contract for sale and a completed sale as defined in the Sale of Goods Act. According to his submission, no actual sale had taken place within the taxable territories; only a contract for sale existed, and the goods were not present in the taxable territories at the material time. Consequently, he claimed that neither the definition of “sale” nor the explanation to section 2(g) of the Sales Tax Act should apply to the case.

The Court observed that this contention did not fall within the scope of constitutional interpretation that the certificate permitted. An application to raise additional grounds could have been filed long before the hearing commenced, and allowing it at that late stage would surprise the opposite party. Even if the Court were inclined to entertain the application, the record of the appeal contained hardly any material beyond the counsel’s argument that no sale or contract of sale had occurred before the goods left the taxable territories. Only a faint reference appeared in the assessment order of the Assistant Commissioner, and the petition itself lacked sufficient averments to sustain the plea.

For these reasons, the Court intimated to counsel that the application to urge the other grounds would be dismissed.

In this appeal, the Court observed that the question of interpreting the Constitution had not arisen in the original petition filed in the High Court. The Court noted that the petition had been heard together with other petitions, and therefore the High Court had not needed to consider Article 286; consequently that issue did not arise before this Court. The remaining question for the Court was whether the principle laid down in Hoosein Kasam Dada's case ( 1953 SCR 687; 1953 (4) STC 114) should be applied. The Court found difficulty in applying that precedent because the present petition, which originated in the High Court, could not be amended. Furthermore, the petition did not state the dates on which the return was filed, a requirement for invoking the dictum of the cited case. Counsel inferred the filing date of the return from the dates on the challans that accompanied the tax payment in the treasury. Counsel argued that this inference placed the filing before the amendment of the law, thereby satisfying the condition for applying the principle. The Court examined the decision in Hoosein Kasam Dada's case, which held that when a suit commences, all rights become crystallised. It further held that no obstruction to a prospective appeal can be created unless the law is made retrospective, either expressly or by clear implication. From the record of the present case, the Court could not determine when the suit had commenced. Without a conclusive proof that the commencement occurred before the amendment, the Court held that the rule from Hoosein Kasam Dada's case could not be invoked. Moreover, the record contained no allegation that a right of appeal had vested and was subsequently taken away. For these reasons, the Court concluded that the appeal could not succeed and therefore dismissed it, ordering the appellant to pay costs.