Vitthalbhai Naranbhai Patel vs Commissioner Of Sales Tax, M.P., Nagpur on 6 September, 1960

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

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: Not extracted

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

The case arose as an appeal that carried a certificate issued under Article 132 sub‑paragraph (1) of the Constitution by the former High Court at Nagpur. During the hearing, the appellant sought additional leave to proceed under Article 132 sub‑paragraph (3), arguing that other questions had been wrongly decided, a petition that the Court indicated would be considered later. The appellant owned the firm C P General Agency and possessed a sales‑tax registration certificate covering the period from 13 November 1947 to 1 November 1948. For that interval he filed a return under the Central Provinces and Berar Sales Tax Act declaring a gross turnover of Rs 73,713‑6‑0 from goods listed in Schedule I and Rs 1,28,923‑7‑3 from other goods. He also paid an advance tax amounting to Rs 2,239‑6‑6 at the time of filing the return, thereby complying with the statutory requirement for advance payment. The Assistant Commissioner of Sales Tax made an assessment on 17 March 1953, computing the appellant’s total turnover as Rs 13,93,635‑10‑6 and levying a total tax of Rs 44,153‑3‑6. In his return, the appellant claimed exemption on sales of bidis amounting to Rs 12,99,389‑9‑9 on the basis that those bidis were exported from taxable territory before any sales contract was concluded. He explained that he maintained two godowns for bidis in Ujhani and Haldwani, Uttar Pradesh, which were administered by the Central Bank of India on his behalf. He further asserted that the bidis were delivered in response to orders issued by the Central Bank, which also functioned as his banker.

The appellant filed an appeal against the assessment before the Commissioner of Sales Tax, seeking reversal of the tax liability. During the pendency of that appeal, the Sales Tax Act was amended to require the appellant to deposit the assessed tax as a condition precedent for the admission of any appeal. The appellant failed to make the required deposit, and consequently the Commissioner dismissed the appeal as non‑compliant with the statutory prerequisite. Thereupon, the appellant approached the High Court at Nagpur under Article 226 of the Constitution, praying for a writ of mandamus to compel the Commissioner to hear and determine the appeal without the deposit. In the accompanying petition, the appellant contended that sales from Uttar Pradesh godowns were exempt under the Explanation to Section 2(g) of the Sales Tax Act and also fell within protection of Article 286 of the Constitution. The sole relief sought in the petition was an order directing that the appeal be reheard, without any claim for a tax refund or other compensation. The High Court examined the petitioner’s writ application together with a number of other petitions that had been filed in the same proceeding. In doing so, it recognized that the constitutional issue raised by the petitioner was a prominent matter before the Court.

The High Court addressed all the pending petitions together through a single order and dismissed each of them, relying principally on the precedent set by the United Motors case. In doing so, the Court appears to have completely overlooked the special issue that was central to the present dispute, namely the question of whether the appeal possessed the necessary competency to be entertained. It is relevant to note that at the time the petitions were originally presented before the High Court, the Supreme Court had already issued its decision in Hoosein Kasam Dada’s case, a ruling that was well‑known to the parties and the court. When the appellant subsequently sought a certificate of appeal to the Supreme Court, he reiterated exactly the same grounds that he had set out in his initial petition. The appellant framed his petition under Articles 132 and 133 of the Constitution, apparently with the intention of raising all of those grounds before the Supreme Court. However, the High Court granted the certificate only under Article 132(1), thereby limiting the scope of the appeal to the matters specifically mentioned in that clause. Because the certificate was so restricted, the appellant later filed an application during the hearing, seeking to raise additional grounds of appeal. After considering this late application, the Court decided to reject it and informed the counsel that the reasons for this rejection would be communicated at a later stage.

Dr. Barlingay began by arguing that the High Court had erred in its interpretation of the term “sale” as defined in the statute. He asserted that a clear distinction must be drawn between a contract for sale and a completed sale under the Sale of Goods Act, and that his case involved only a contract for sale, not a sale occurring within the taxable territories. Consequently, he maintained that the goods were not situated within the taxable area at the material time, and therefore neither the statutory definition of “sale” nor the Explanation to Section 2(g) could be applied. The Court observed that this point did not fall within the ambit of arguments concerning constitutional interpretation, which were the only matters covered by the certificate. Moreover, the Court noted that an application to raise these additional grounds could have been filed much earlier, and allowing it at this late stage would disadvantage the opposite side. Even assuming the Court were inclined to permit the application, the record of the appeal contains virtually no material beyond counsel’s bare assertion that sales or contracts of sale had not occurred before the goods left the taxable territories. The assessment order of the Assistant Commissioner makes only a faint reference to this issue, and the petition itself fails to provide sufficient averments to sustain the claim. For these reasons, the Court conveyed to counsel that the application to introduce other grounds would be dismissed. The Court further observed that the original petition before the High Court had not seriously engaged with any constitutional interpretation, and that the High Court, had it not been hearing multiple petitions together, would not have needed to consider Article 286 at all.

The Court observed that the issue concerning the interpretation of the Constitution did not arise in the present appeal, and therefore it was not considered further. The remaining matter for the Court’s consideration was whether the principle laid down in Hoosein Kasam Dada’s case should be applied to the present facts. The Court found that this raised difficulties. The petition before the Court was the same one that had been filed in the High Court, and the Court was not willing to permit any amendment to that petition. The original petition did not state the dates on which the tax return had been filed, and consequently the Court could not rely on the dictum of this Court in Hoosein Kasam Dada’s case. Counsel for the petitioner, Dr. Barlingay, inferred the filing date of the return from the dates appearing on the challans that accompanied the payment of tax to the treasury. He argued that those dates showed that the return had been filed before the amendment of the statute and that this inference was sufficient to bring the principle of Hoosein Kasam Dada’s case into play. The Court noted that the decision in Hoosein Kasam Dada’s case was based on the proposition that when a suit is instituted, all rights become fixed and no obstruction to a prospective appeal may be placed unless the law is made retrospective, either expressly or by clear implication. In the present case the record did not disclose the exact moment when the suit commenced, and the Court could not be satisfied that the commencement occurred before the statutory amendment. Since the requisite factual foundation was lacking, the rule from Hoosein Kasam Dada’s case could not be applied. Moreover, there was no allegation that the right of appeal had vested and was subsequently taken away. For these reasons, the Court concluded that the appeal could not succeed and ordered that it be dismissed with costs.