Appeals Nos
260 to 263 of 1967
Appeals from the judgment and decree dated January 5 1965 of the Madhya Pradesh High Court Indore Bench in First Ap peals Nos 68 69 71 and 70 of 1961 respectively
C Setalvad Rameshwar Nath and Mahinder Narain for the appellants in all the appeals
B Sen and I N Shroff for the respondents in all the appeals
The Judgment of the Court was delivered by Hidayatullah CJ
These are four appeals by certificate against the common judgment of the High Court of Madhya Pradesh Indore Bench 16 December 19645 January 1965 dismissing four suits filed by the appellants to recover sales tax alleged to be realized illegally from them by the State of Madhya Pradesh the respondent in these appeals
The suits were earlier decreed by the District Judge Ujjain
The facts in the suits are common and were as follows The appellants are dealers in tobacco and have their places of business at Ujjain
They purchase and sell tobacco used for eating smoking and for preparing bidis
They get their tobacco locally or import it from extra state places
The former Madhya Bharat State enacted in 1950 the Madhya Bharat Sales Tax Act Act 30 of 1950 which came into force on May 1 1950
Under 665 section 3 of the Act every dealer whose business in the previous year in respect of sales or supplies of goods exceeded in the case of an importer and manufacturer Rs 5000 and in other cases Rs 12000 had to pay tax in respect of sales or supplies of goods effected in Madhya Bharat from 1st May 1950
Under section 5 the tax was a single point tax and it was provided that the Government might by a notification specify the point of the sales at which the tax was payable
The section also fixed the minimum and maximum rates of tax leaving it to Government to notify the actual rate
Government in pursuance of this power issued a number
of notifications on April 30 1950 May 22 1950 October 24 1953 and January 21 1954
All these notifications imposed tax at different rates on tobacco above described on the importer that is to say at the point of import
The tax was not levied on sale or purchase of tobacco of similar kind in Madhya Bharat
The tax was collected by the authorities in varying amounts from the appellants for different quarters
We are not concerned with the amounts
The appellants served notices under section 80 of the Code of Civil Procedure and filed the present suits for refund of the tax on the ground that it was illegally collected from them being against the constitutional prohibition in article 301 and not saved under article 304a of the Constitution
The State of Madhya Pradesh was formed on November 1 1955
In Bhailal vs MP1 the High Court of Madhya Pradesh declared the notifications to be offensive to article 301 of the Constitution on the ground that it was illegal to levy a tax on the importer when an equal tax was not levied on similar goods produced in the State
The decision was later confirmed on this point in State of MP vs Bhailal Bhai2
The appellants did not take recourse to the provisions of article 226 of the Constitution but filed their suits on December 21 1957
The suits were opposed by the State on the main ground that such a suit was barred by the provisions of section 17 of the Act which provides  17
Bar to certain proceedings
Save as is provided in section 13 no assessment made and no order passed under this Act or the rules made thereunder by the assessing authority appellate authority or the Commissioner shall be called in question in any Court and save as is provided in sections 11 and 12 no appeal or application for revision shall lie against any such assessment or order
 The State also pleaded that as appeals against the assessment were pending before the Sales Tax Appeal Judge the plaintiffs were 1 2  666 not entitled to file the suits
The District Judge following State of Tripura vs The Province of East Bengal1 and Bhailal Bhai Gokal Bhai vs State of MP2 held that such a suit lay when a declaration was sought that the provisions of law relating to an assessment were ultra vires and demand was made for refund of amounts illegally collected under it
On the second point the District Judge held that section 21 of the Act which allows the Commissioner or the appellate authority to order refund of tax wrongly paid did not apply since no such appeal was proved to have been filed and the tax was not wrongfully paid but wrongfully realised
On appeal by the State the High Court reversed the decision
Before the High Court it was conceded as it is conceded even now that the tax could not be imposed in view of the bar of article 301
The short question thus was whether the suit was barred expressly by section 17 of the Act or any implication arising from the Act
The contention on behalf of the appellants was that if it was a question of the correctness of the imposition within the valid framework of the statute rules or notifications section 17 might have operated but not when the imposition was under a void law
In the latter event the assessee was free to challenge the validity of the law in a civil suit and also to claim a refund
The High Court considered the matter in the light of the decisions of the Judicial Committee in Raleigh Investment Co vs Governor General in Council3 Secretary of State vs Mask4Firm I section Chetty  Sons vs State of Andhra Pradesh5 State of Andhra Pradesh vs Firm Subbayya  Sons6 and others and came to the conclusion that the suit was incompetent
The High Court conceded that both aspects of the case were well supported by authority
It is not necessary to enter into the reasons which weighed with the High Court because our discussion of the autho rities in this judgment will clearly expose the rival views and the one preferred in the High Court
The question that arises in these appeals has been before this Court in relation to other statutes and has been answered in different ways
These appeals went before a Divisional Bench of this Court but in view of the difficulty presented by the earlier rulings of this Court they were referred to the Constitution Bench and that is how they are before us
At the very start we may observe that the jurisdiction of the Civil Courts is all embracing except to the extent it is excluded by an express
provision of law or by clear intendment arising from such law
This is the purport of 1 A 1
R 3 1947 L R 74 1 A 50 A 1
R 4 1940 L R 67 1
A 222 A 1
R 5   A 1
R 6 A 1
R B
2 667 section 9 of the Code of Civil Procedure
How section 9 operates is perhaps best illustrated by referring to the categories of cases mentioned by Willes J in Wolverhampton New Waterworks co vs Hawkesford1 They are  One is where there was a liability existing at common law and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law there unless the statute contains words which expressly or by necessary implication exclude the common law remedy the party suing has his election to pursue either that or the statutory remedy
The second class of cases is where the statute gives the right to sue merely but provides no particular form of remedy  there the party can only proceed by action at common law
But there is a third class viz where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it 
The remedy provided by the statute must be followed and it is not competent to the party to pursue the course applicable to cases of the second class
 This view of Willes J was accepted by the House of Lords Neville vs London Express  Newspaper Ltd2
To which category do such cases belong in India  The con troversy in India has revolved round the principles accepted in Secretary of State vs Mask 3  and in Raleigh Investment Co vs Governor General in Council4
In the first case it was laid down by the Judicial Committee that the ouster of the jurisdiction of a Civil Court is not to be lightly inferred and can only be established if there is an express provision of law or is clearly implied
In the second case it was held that where a liability to tax is created by statute which gives special and particular remedies against illegal exactions the remedy contemplated by the statute must be followed and it is not open to the assessee to pursue the ordinary process of Civil Courts
To the latter case we shall refer in some detail presently
Opinion in this Court has however wavered as to how far to go with the dicta of the Privy Council in the two cases
Before however we go into the question we may refer to State of MP vs Bhailal5
In that case the notifications were declared ultra vires Article 301 of the Constitution and not saved by article 304a
It was therefore held that the portion of the tax already paid must be refunded by Government
The question then posed was 1  2 2 1940 67 I A 222
4 1947 74 I A 50
5  668 The question is whether the relief of repayment has to be sought by the tax payer by an action in a civil court or whether such an order can be made by the High Court in the exercise of its jurisdiction conferred by article 226 of the Constitution 2 This Court after examining the jurisdiction under article 226 concluded that the High Court had the power to order refund in proceedings for a writ since complete relief could not be said to be given if only a declaration were given
The Court howeverobserved  At the same time we cannot lose sight of the fact that the special remedy provided in Article 226 is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defences legitimately open in such actions Pointing out that where a defence of limitation could be raised or other issues of fact had to be tried it was held that the Court should leave the party aggrieved to seek his remedy by the ordinary mode of a civil suit
Therefore in those cases there were 31 appeals before this Court where the writ was asked for within three years this Court upheld the order of refund by the High Court in its writ jurisdiction but in those cases in which the parties had gone to the High Court after a lapse of 3 years the order of refund was questioned and not approved observing that the petitioners would be at liberty to seek such relief as they might be entitled to in a Civil Court if it was not barred by limitation
It will appear from this analysis of the case that this Court accepted the proposition that a suit lay
This it did without adverting to the provisions of the Act there considered to see whether the jurisdiction of the Civil Courts was barred or not either expressly or by necessary implication
This Court was of course not invited to express its opinion on the matter but only on whether the High Court in its extraordinary jurisdiction could order refund of tax paid under a mistake
Having held that in some cases the High Court should not order refund this Court merely pointed out that the civil suit would be the only other remedy open to the party
The case cannot therefore be treated as an authority to hold that the Civil Courts had jurisdiction to entertain such suits
We may now proceed to consider first the two cases of the Judicial Committee before examining the position under the rulings of this Court
In Secretary of State vs Mask1 the sole question was the jurisdiction of the civil court to entertain a suit to 1 1940 L R 67 1
A 222
669 recover an excess amount of customs duty collected from Mask and Co The suit was filed after an appeal to the Collector of Customs and a revision taken to the Government of India under the was dismissed
The suit was dis missed by the trial Judge on the preliminary ground that the Civil Court had no jurisdiction
An appeal by Mask and Co to the High Court succeeded and there was a remit
The appeal to the Judicial Committee followed
Section 188 of the provided inter alia Every order passed in appeal under this section shall subject to the power of revision conferred by section 191 be final The Judicial Committee first made a general observation 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 explicitly 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
 Then it proceeded to quote section 188 as above and observed By Ss 188 and 191 a precise and self contained code of appeal is provided in regard to obligation which are created by the statute itself and it enables the appeal to be carried to the supreme head of the executive Government
It is difficult to conceive what further challenge of the order was intended to be excluded other than a challenge in the Civil Courts   and came to the conclusion that the jurisdiction of the Civil Courts was excluded
The decision of the High Court was reversed and that of the trial Judge restored
The next case is the Raleigh Investment Co Ltd vs Governor General in Council1
This was an appeal to the Privy Council from a judgment of the Federal Court of India in civil appellate jurisdiction reversing a decree passed by a Special Bench of the Calcutta High Court in its original civil jurisdiction
It arose from a suit filed for recovery of a sum paid under protest pursuant to an assessment to income tax of the Investment Company on the ground that the computation was under a provision of the Income Tax Act which was ultra vires the Indian Legislature
One of the defences in the suit was that whether the said provision 1 1947 L R 74 IA 50 670 was ultra vires or not the Civil Courts were excluded from exercising their jurisdiction by section 226 of the Government of India Act 1935 and section 67 of the Indian Income Tax Act
The provision in question was held ultra vires by the High Court and it further held that neither of the two provisions was a bar to the civil courts  jurisdiction
The Federal Court in disagreement held that section 226 of the Government of India Act 1935 barred the jurisdiction and that the provision impugned was not ultra vires
The bar of section 67 of the Income Tax Act was not pressed before the Federal Court
When the case reached the Judicial Committee the case was considered under section 67 but not under section 226
The Judicial Committee was of the opinion that section 67 barred the jurisdiction
The Investment Company had raised the question before the Incometax authorities that Explanation 3 to para 41 of the Income tax Act 1922 was ultra vires
This was not accepted and the assessment was made
The Investment Company filed an appeal but did not proceed with it and the assessment was confirmed
The appellate authority also said in its order that the constitutional question could not be raised before it
The suit was then instituted
Section 67 of the Indian Income tax Act in specific terms stated No suit shall be brought in any civil court to set aside or modify any assessment made under the Act
 The result of the suit has already been stated The Judicial Committee considered this section and observed that the suit in form did not profess to modify the assessment but in substance it did so
The declaration that a certain provision was ultra vires was but a step
According to the Judicial Committee the assessment made under an ultra vires statute was not a nullity and the assessment ought to be taken to proceed on a mistake of law in the course of assessment
Therefore without going into the question whether the provision impugned was ultra vires or not the Judicial Committee considered the matter
The argument was that the assessment was not one under the Act  if effect was given to an ultra vires provision since the provision would be a nullity and non existent
To discover the force of the prohibition in section 67 the following tests were applied a Does the Act contain machinery by which the assessee can raise the question of the vires of the provision before the special authorities  b This test was not conclusive but one to be considered
671 c If there was no such machinery and yet the civil courts were barred the vires of section 67 itself might come in for consideration
The Judicial Committee however came to the conclusion that the Income tax Act gave the assessee an opportunity to raise the question under the Income tax Act
The provision for a case stated for the advisory opinion of the High Court was available and even if the authorities refused to state a case the High Court could be directly approached
The decision of the High Court was also subject to further appeal
Thus there was adequate machinery in the Income tax Act
The words of section 67 under the Act  were construed as the activity of an assessing officer acting as such
That this activity took into consideration an ultra vires provision did not take the matter out of these words
That phrase meant the provenance of the assessment and not the accuracy or correctness of the assessment or the machinery of the Income tax Act or the result of the activity
There was no difference between an incorrect apprehension of the provisions of the Income tax Act and the invalidity of a provision
The Judicial Committee explained that if this were not so all questions of the correctness of the assessment under the Income tax Act could be brought before the Court and I the section rendered otiose
The section made no distinction between tin inquiry into the merits of the assessment and jurisdiction to embark on an enquiry at all
The Civil Courts  jurisdiction in either case was invoked as to the correctness of the assessment and the language of the section precluded consideration of jurisdiction in such circumstances
The Income tax Act having a suitable and adequate machinery jurisdiction to question the assessment otherwise than by that machinery was therefore held barred
The Judicial Committee even doubted whether a provision such as section 67 was at all necessary in the circumstances
Both these cases thus appear to be decided on the basis of provisions in the relevant Acts for the correction modification and setting aside of assessments and the express bar of the jurisdiction of the Civil Courts
The presence of a section barring the jurisdiction was the main reason and the existence of an adequate machinery for the same relief was the supplementary reason
The provision for a reference of a question to the High Court was considered adequate to raise the issue of the validity of any provision of law under which the taxing authorities acted
This follows from the Raleigh Investment Co s case1
Mask  Co s case 2 was more concerned with the finality to the orders given by the 
Even so in the Mask  Co s case2 room was left for interference by the Civil Courts by observing that 1 1947 L R 74 1
A 50
2 1940 L R 67 I A 222
672 the Civil Courts had jurisdiction to examine into cases where the provisions of the Act had not been complied with or the statutory tribunal had not acted in conformity with the fundamental principles of judicial procedures
These observations were accepted by this Court in Firm of Illuri Subbayya Chetty Sow vs The State of Andhra Pradesh1 and in Kerala vs Ramaswami Iyer and Sons2
A passage from the latter case might bequoted here It is true that even if the jurisdiction of the civil court is excluded where the provisions of the statute have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure the civil courts have jurisdiction to examine these cases
 The observations of the Judicial Committee were thus completely accepted
We may now examine how the matter was further viewed in this Court
In two other cases this Court laid down that the validity of the provisions under which the authorities act is not a matter for those authorities to decide
In Circo s Coffee Co vs State of Mysore3 it was contended that section 402 of the Mysore Sales Tax Act 1957 was ultra vires and beyond the competence of the State Legislature
This Court observed  It is true that a question as to the vires of section 402 of the Sales Tax Act was raised but it is now settled by decisions of this Court that the question as to the vires of a statute which a taxing officer has to ad minister cannot be raised before him The same was again reiterated in C T Santhul Inathan Chettiar vs Madras4 in the following words   this Court has held in Venkataraman and Co vs State of Madras that the authorities under a taxing statute are not concerned with the validity of the taxing provisions and the questions of ultra vires is foreign to the scope of their jurisdiction
As no such point could be raised before the Income tax authorities neither the High Court nor the Supreme Court can go into these questions in a revision or reference from the decision of those authorities
This case was followed in Commissioner of Income tax vs Straw Products  emphasis supplied 1  2  3 19 section T C 66
4 C A 1045 of 1966 decided on 20th July 1967
67 3 The party was left to appropriate proceedings  without specifying what they would be
Perhaps a suit was meant
It follows that the question of validity of the taxing laws is always open to the Civil Courts for it cannot be the implication of any provision to make such a decision final or that even void or invalid laws must be enforced without any remedy
Therefore in Pabbojan Tea Co Ltd vs Dy
Commissioner Lakhimpur1 after quoting the observations of Viscount Simonds Pyx Granite Co Ltd vs Ministry of Housing and Local Govt
1960 AC 260 at p 286 It is a principle not by any means to be whittled down that the subject s recourse to Her Majesty s Courts for determination of his rights is not to be excluded except by clear words our brother Mitter added that the extreme proposition in Raleigh Investment Co s case 2  had not found favour with this Court
Our learned brother observed  This Court was not prepared to accept the dictum in the judgment Raleigh Investment Co to the effect that even the constitutional validity of the taxing provi sions would have to be challenged by adopting the procedure prescribed by the Income tax Act See Firm of Illuri Subbayya Chetty and Sons vs State of Andhra Pradesh  at 760
 The position was rather strengthened in K section Venkataraman  Co vs State of Madras3
The question then was whether a suit was not maintainable under section 18 A of the Madras General Sales Tax Act 1939 corresponding to section 67 of the Indian Income tax Act 1922
The suit followed the decision of this Court in Gannon Dunkerley and Co vs State of Madras 4 in which works contracts  of an indivisible nature were held not to fall within the taxing provisions of the Madras General Sales Tax Act 1939
Section 18 A was pleaded as a bar
It was held that since the provisions of the Madras General Sales Tax Act 1939 were declared ultra vires in their application to indivisible works contracts  the action of the authorities was outside the said Act and not under the Act for the purposes of section 18 A
The suit was held not barred
Subarao J as he then was speaking for the majority distinguished both the Raleigh Investment Co s case5 and the Commissioner of I T Punjab North West Frontier  Delhi Provinces Lahore vs Tribune Trust Lahore on the ground that no question of the 1 A I R 3  5 1947 L R 74 1
A 50
2 1947 L R74 T A 50
4 1059 section C R 379
6 1947 L R 74 1
A 306
674 vires of the law was raised in them
Referring to Raja Bahadur Kamakshya Narain Singh of Ramgarh vs CIT 1 and State of Tripura vs The Province of East Bengal3 Subbarao J pointed out that the suit was held maintainable in the latter and there was nothing in the former to support the contention that the question of ultra vires of a statutory provision could be canvassed only through the machinery provided under the statute
Referring next to the case of Firm of Illuri Subbayya Chetty and Sons  case3
the learned Judge said that the question whether section 18 A of the Madras General Sales Tax Act 1939 could apply where a particular provision of the Sales Tax Act was ultra vires was left open see p 243
The learned Judge next quoted the opinion of the majority in Bharat Kala Bhandar Ltd vs M C Dhamangaon4 to the following effect  But with respect we find it difficult to appreciate how taking into account an ultra vires provision which in law must be regarded as not being a part of the Act at all will make the assessment as one under the Act 
No doubt the power to make an assessment was conferred by the Act and therefore making an assessment would be within the jurisdiction of the assessing authoririty
But the jurisdiction can be exercised only according as well as with reference to the valid provisions of the Act
When however the authority travels beyond the valid provisions it must be regarded as acting in excess of its jurisdiction
To give too wide a construction to the expression under the Act  may lead to the serious consequence of attributing to tile legislature which owes its existence itself to the Constitution the intention of affording protection to unconstitutional activities by limiting challenge to them only by resort to the special machinery provided by it in place of the normal remedies available under the Code of Civil Procedure that is to a machinery which cannot be as efficacious as the one provided by the general law
Such a construction might necessitate the consideration of the very constitutionality of the provision which contains this expression
This aspect of the matter does not appear to have been considered in Raleigh Investment Co s case
 The learned Judge next considered whether these observations although obiter were departed from in Ms Kamla Mills Ltd vs The State of Bombay5 and came to the conclusion that that decision did not touch upon the question whether a suit would lie in 11947 F C R 130
2  3  4  5  675 a case where the assessment was made on the basis of a provision which was ultra vires the Constitution see p 246
Having considered these rulings the learned Judge examined the remedies provided by the Indian Income tax Act and found that all authorities were creatures of the statute and functioned under it and could not ignore its provisions since the said Act conferred no such right  on them
Whether the provisions were good or bad was not their concern
Pointing out that the reference to the High Court under the Indian Income tax Act was confined to questions arising from the order of the Appellate Tribunal the learned Judge observed that the question of ultra vires is foreign to the scope of the Tribunals  jurisdiction  and that if such a question were raised the Tribunal could only reject it on the ground that it had no jurisdiction to decide it and the High Court and the Supreme Court would be equally incompetent on appeal to go into the question
The learned Judge next considered the decisions of the High Courts into which it is not necessary to go here and on the strength of some observations which supported his view stated his view in the following words The legal position that emerges from the discussion may be summarized thus  If a statute imposes a liability and creates an effective machinery for deciding questions of law or fact arising in regard to that liability it may by necessary implication bar the maintainability of a civil suit in respect of the said liability
A statute may also confer exclusive jurisdiction on the authorities constituting the said machinery to
decide finally a jurisdictional fact thereby excluding by necessary implication the jurisdiction of a civil court in that regard
But an authority created by a statute cannot question the vires of that statute or any of the provisions thereof where  under it functions
It must act under the Act and not outside it
If it acts on the basis of a provision of the statute which is ultra vires to that extent it would be acting outside the Act
In that event a suit to question the validity of such an order made outside the Act would certainly lie in a civil court
 As the head note correctly states the effect of the decision was that the foundation laid by the Judicial Committee in Raleigh Investment Co s case1 for construing the expression under the Act  had no legal basis
It may be mentioned that in Bharat Kala Bhandar 2 case also it was held that there was no machinery provided in the Central Provinces and Berar Municipal Act for refund of tax assessed 1 1947 LR741A50
2 1965 3SCR499 676 and recovered in excess of constitutional limits and that the remedy furnished by that Act was inadequate for enabling the assessee to challenge effectively the constitutionality or legality of assessment or levy of tax by a municipality or to recover from it what was realised under an invalid law
see the judgment of Mitter J also in Pabbojan case1 at page 276
In Bharat Kala Bhan case 2 it was pointed out that    one of the corollaries flowing from the principle that the Constitution is the fundamental law of the land is that the normal remedy of a suit will be available for obtaining redress against the violation of a constitutional provision
The Court must therefore lean in favour of construing a law in such a way as not to take away this right and render illusory the protection afforded by the Constitution
 Again in Deputy Commercial Tax Officer Madras vs Raya laseema Constructions the problem was the same as was dealt with in Venkataraman s Co Ltd case 4 
The earlier case was followed and it was held that the sales tax authorities having given effect to an ultra vires provision section 18 A of the Madras General Sales Tax Act 1939 was no bar to the maintainability of the suit to recover tax paid under such an assessment since the authorities must be taken to have acted outside and not under the Madras General Sales Tax Act
This brings us to the case of Provincial Government vs J section Basappa5
There too three suits were filed alleging that the goods had passed to extra state points while they were still in the possession and ownership of the seller
Since the property in the goods remained in the seller till the goods had entered into other provinces the sales could not be subjected to a tax in Madras Presidency
Section 11 4 of the Madras General Sales Tax Act 1939 made orders of the taxing authorities final but the Act applied only to sales within the Presidency of Madras and not outside it
There was at that time no provision to oust the jurisdiction of the civil courts
Section 18 A of which we have spoken earlier and on which most of the cases turned was added much later
Many of the remedies such as were considered in Raleigh Investment Co s case6 and Venkataraman s case 4 were also added at the same time as section 18 A
The question thus had to be decided without an express provision ousting the jurisdiction of the Civil Courts and 1 A 1
R 3 17 section T C 505
5 1 7
2  4  6 1947 L R 74 I A 50
677 without the existence of ail adequate machinery for raising such an issue before the authorities
The only provision which had to be considered was section 114 which provided every order passed in appeal under this section shall subject to the powers of revision conferred by section 12 be final  The fundamental provisions of the Madras General Sales Tax Act 1939 as it then stood were that the sales must be within the Presidency of Madras
The authorities ignoring these provisions held that outside sales  were taxable
Relying upon the dictum of the Judicial Committee in Mask  Co s case1 as applied in Firm of Illuri Subbayya Chetty s case2 this Court held that the suits were competent
In the case of this Court last cited the following observation was made It is necessary to add that these observations though made in somewhat wide terms do not justify the assumption that if a decision has been made by a taxing authority under the provisions of the relevant taxing statute its validity can be challenged by a suit on the ground that it is incorrect on the merits and as such it can be claimed that the provisions of the said statute have not been complied with
Non compliance with the provi sions of the statute to which reference is made by the Privy Council must we think be non compliance with such fundamental provisions of the statute as would make the entire proceedings before the appropriate authority illegal and without jurisdiction
Similarly if an appropriate authority has acted in violation of the fundamental principles of judicial procedure that may also tend to make the proceedings illegal and void and this infirmity may affect the validity of the order passed by the authority in question
 The Divisional Bench relying upon this observation pointed out It was thus held that the civil court s jurisdiction may not be taken away by making the decision of a tribunal final because the civil court s jurisdiction to examine the order with reference to fundamental pro visions of the statute non compliance with which would make the proceedings illegal and without jurisdiction still remains unless the statute goes further and states either expressly or by necessary implication that the civil court s jurisdiction is completely taken away
Applying these tests it is clear that without a provision like section 18A in the Act the jurisdiction of the civil court would not be taken away at least where the action 1 1940 L R 67 1
A 222
2 1964 1 SC R 752
678 of the authorities is wholly outside the law and is not a mere error in the exercise of jurisdiction
Mr Sastri says that we must interpret the Act in the same way as if section 18A was implicit in it and that section 18A was added to make explicit what was already implied
We cannot agree
The finality that statute conferred upon orders of assessment subject however to appeal and revision was a finality for the purposes of the Act
It did not make valid an action which was not warranted by the Act as for example the levy of tax on a commodity which was not taxed at all or was exempt
In the present case the taxing of sales which did not take place within the State was a matter wholly outside the jurisdiction of the taxing authorities and in respect of such illegal action the jurisdiction of the civil court continued to subsist
In our judgment the suits were competent This case was therefore stronger than any so far noticed because of the absence of section 18 A and the elaborate machinery for adequate remedy was introduced later and the tax was illegal1y collected ignoring the fundamental provisions of the Madras General Sales Tax Act 1939
However in Kerala vs Ramaswami Iyer and Sons1 although it was not pointed out what express provision or clear intendment in the Madras General Sales Tax Act 1939 as it then stood barred a civil suit Basappa s2 case was declared to be wrongly decided
In that very case the learned Judges considered a rule which gave exemption but held that it did not give protection because it was enacted after the account period
What if it had been enacted before  The observations in Basappa s case1 that if a commodity was not taxable at all or was exempt the civil Court would have jurisdiction were however not accepted
It was sufficient to have said in Ramaswami Iyer s case2 that exemption or no exemption that was for the authorities to decide and not a matter for the Civil Courts
The argument of exemption was rejected by observing  There was in the Travancore Cochin General Sales Tax Act at the material time no express provision which obliged the taxing authority to exclude from the computation of taxable turnover the amount of salestax collected by the dealers emphasis supplied This reasoning shows that if it had been the suit might have been held competent
It is not necessary for us to pursue this matter further than to say that the observation that Basappa s case was wrongly decided is open to serious doubt
1  2   679 This leaves for consideration only the cases Firm of Illuri Subbayya Chetty and Sons vs State of Andhra Pradesh1 and Kamla Mills Ltd vs State of Bombay2
The case of Firm of Illuri Subayya Chetty1 arose under the Madras General Sales Tax Act 1939 and section 18 A was pleaded to make the suit incompetent
The transactions in respect of which tax was recovered were said to be of sales and not purchases and the latter only were to be taxed
It was held that section 18 A barred the suit because the attempt was to set aside or modify an assessment made under the said Act
It was pointed out that any challenge to the correctness of the assessment must be made before the appellate or revisional forums under the same Act since the character of the transaction was a matter into which the appellate and revisional authorities could go
A litigant who accepted the assessment when he could call it in question by other proceedings under the same Act could not begin a suit
The expression under the Act  was sufficient to cover even an incorrect assessment
The assessee firm succeeded in the suit but the High Court held it barred under section 18 A and also held against the assessee firm on the nature of the transaction
This Court first held that there was no provision in the said Act for bringing a civil suit to question the assessment
Therefore the matter must fall in section 18 A
This Court analysed the provisions of the said Act which provided by section 12 A 12 B 12 C and 12 D for special appeals including an appeal to the High Court the highest Civil Court in the State laying down further that the appeal should be heard by a Division Bench
In the light of this elaborate machinery the question of alternative remedy was approached
It was also pointed out that the assessee firm had itself included these transactions in its returns
Having conceded that the tax was payable and not having raised the issue before the appellate authorities constituted under the said Act it was held that the firm could not be allowed to raise the issue in a suit
This was enough to dispose of the appeal to this Court
The Constitution Bench however went on to examine the rulings of the Judicial Committee in Mask  Co s3 and Raleigh Investment Co s4 cases
Dealing with the former case this Court pointed out that non compliance with the provisions of the statute meant non compliance with such fundamental provisions of the statute as would make the entire proceedings before the appropriate authority illegal and without jurisdiction
I The defect of procedure must also be fundamental
In either case the defect must make the order invalid in law and void
The Court went on to observe  1  3 1940 L R 67 I A 222
2  4 1947 L R 74 I A 50
680 lm15 
In what cases such a plea would succeed it is unnecessary for us to decide in the present appeal because we have no doubt that the contention of the appellant that on the merits the decision of the assessing authority was wrong cannot be the subject matter of a suit because section 18 A clearly bars such a claim in the civil courts
 Referring next to the Raleigh Investment Co s case1 this Court pointed out that under the scheme of the Income tax Act the Judicial Committee thought that a question of vires of the provisions could also be considered but this Court did not think it necessary to pronounce any opinion whether this assumption was well founded or not
This point was later considered in Venkataraman s case2 by Subbarao J as he then was and we have sufficiently analysed the views of this Court
The case of Firm of Illuri Subbayya 3  may be said to be decided on special facts with additional reference to the addition of section 18 A excluding the jurisdiction of civil court and the special remedies provi ded in sections 12 A to 12 D by which the matter could be taken to the highest civil court in the State
This brings us to the last case on the subject
That is the Kamla Mills case4
That case was heard by a special Bench of 7 Judges and is of more binding value than the others
Kamla Mills Ltd was assessed to certain sales effected between 26 January 1950 and 31 March 1951 which the taxing authorities treated as inside sales  and the Company claimed to be outside sales  as determined under the Bengal Immunity Co Ltd vs State of Bihar and others5
The judgment in the last cited case was delivered on September 6 1955
The period for invoking remedies under the Bombay Sales Tax Act 1946 under which the assessment was made had expired
A suit was therefore filed to claim refund
The Bombay Act contained section 20 which read 20
Save as is provided in section 23 no assessment made and no order passed under this Act or the rules made thereunder by the Commissioner or any person appointed under section 3 to assist him shall be called into question in any Civil Court and save as it provided in sections 21 and 22 no appeal or application for revision shall lie against any such assessment or order
 The suit was dismissed on the preliminary point arising from this bar
A Letter Patent appeal in the High Court of Bombay also 1 1
A 50
3  2  4  5 681 failed
The case came before this Court on a certificate
It was referred to a Special Bench because section 20 was challenged as unconstitutional because it barred a suit even where the assessment was unconstitutional
This Court held that as there was adequate remedy to raise the question before the authorities by asking for rectification of the assessment the section could not be said to deprive him of remedy in such a way as to render the section itself unconstitutional as was hinted in Raleigh Investment Co s case1 about section 67 of the Indian Income tax Act
We are not concerned with that question
The next question which was considered was whether the jurisdiction conferred on the taxing authorities included the jurisdiction to determine the nature of the transaction or was the decision about the character of the transaction a decision on a collateral fact  This Court held that it was the former and not the latter
Therefore the decision was held to be merely an error in assessment which was capable of correction by the usual procedure of appeals etc
The bar of section 20 was therefore held to apply
During the course of the arguments the Special Bench considered Basappa s case 2  and distinguished it from the Firm of Illuri Subayya Chetty s case3 on the ground that the former was not barred by section 18 A as it did not exist
The Special Bench however made an observation to the following effect  In cases where the exclusion of the civil courts  jurisdiction is expressly provided for the consideration as to the scheme of the statute in question and the adequacy or the sufficiency of the remedies provided for by it may be relevant but cannot be decisive
But where exclusion is pleaded as a matter of necessary implication such consideration would be very important and in conceivable circumstances 1 night even become decisive
If it appears that a statute creates a special right or a liability and provides for the determination of the right and liability to be dealt with by tribunals specially constituted in that behalf and it further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted it becomes pertinent to enquire whether remedies normally associated with actions in civil courts are prescribed by the said statute or not The Special Bench refrained from either accepting the dictum of Mask  Co s case4 or rejecting it to the effect that even if jurisdiction is excluded by a provision making the decision of the authorities final the Civil Courts have jurisdiction to examine into 1 1947 LR 741 A50
3 72
2  4 1940 L R 67 1
A 222
682 cases where the provisions of the particular Act are not complied with
Neither of the two cases of Firm of Illuri Subayya1 or Kamla Mills2 can be said to run counter to the series of cases earlier noticed
The result of this inquiry into the diverse views expressed in this Court may be stated as follows  1 Where the statute gives a finality to the orders of the special tribunals the Civil Courts  jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Courts would normally do in a suit
Such provision however does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure
2 Where there is an express bar of the jurisdiction of the court an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court
Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive
In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all ques tions about the said right and liability shall be determined by the tribunals so constituted and whether remedies normally associated with actions in Civil Courts are prescribed by the said statute or not
3 Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act
Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals
4 When a provision is already declared unconstitutional
or the constitutionality of any provision is to be challenged a suit is open
A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit
1  2  683 5 Where the particular Act contains no machinery for refund  of tax collected in excess of constitutional limits or illegally collected a suit lies
6 Questions of the correctness of the assessment apart from its constitutionality are for
the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act
In either case the scheme of the particular Act must be examined because it is a relevant enquiry
7 An exclusion of the jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply
In the light of these conclusions we have to see how the present case stands
Section 3 was the charging section
It spoke of the incidence of the tax
In consisted of several sub sections
These sub sections laid the tax on dealers according to their tax able turnover and in the case of a dealer who imported goods into Madhya Bharat the taxable turnover was Rs 5000 
Section 4 made certain exclusions and exemptions and section 5 prescribed the rate of tax
That section read 51 The tax payable by a dealer under this Act shall be at a single point and shall not be less than Rs 1 9 0 per cent
or more than 6 14 per cent of the tax able turnover as notified from time to time by the Government by publication in the official gazette
Provided that Government may in respect of special class of goods charge tax up to 12 12per cent
on the tax able turnover
2 The Government while notifying the tax payable by a dealer may also notify the goods and the point of their sale at which the tax is payable In notifying the rate provision was made for rates in respect of importers the point of time being the import
As the import itself postulated movement of goods the matter fell within Article 301 and as trade and commerce is declared to be free throughout the territory of India it became unfree by reason of the tax
The tax would therefore have ex facie offended Article 301
This could however be avoided if the tax was saved by Article 304aThat required that similar goods manufactured or produced in Madhya Bharat had to bear an equal tax
Such equal tax was not imposed hence the notifications were struck down as making 684 discrimination and rendering trade and commerce unfree
This was the effect of Bhailal s case1
No doubt the Madhya Bharat Sales tax Act contained provi sions for appeal revision rectification and reference to the High Court the notifications being declared void the party could take advantage of the fact that tax was levied without a complete charging section
This affected the jurisdiction of the tax authorities because they could not even proceed to assess the party
The question was one falling in category Nos 3 and 4 rather than in category No 2 above
It was directly covered by the decision of this Court in Venkataraman s case  2  read with Circo s Coffee Co2 and Senthulnathan Chettiar s case2 already referred to We would have considered this matter again if Venkataraman s case 2  had been doubted before but it seems to have been followed in the last mentioned case and Pabbojan Tea Company s case5
If Kamla Mills Ltd case6 had not expressly left the question open we would have applied the earlier case of the Special Bench but as it is we are bound not by the Special Bench decision but by Venkataraman s case2
We must therefore allow these appeals with costs
The judgment of the High Court is set aside and suits are decreed
The order for costs shall be as in the suit
The costs in the High Court shall be borne as incurred
VPS Appeal allowed
 1  2  3 19 section T C 66 section C
4 C A 1045 of 1966 dated 20 7 1967
5 A 1


Summary:
By Notifications issued by the State Government under section 5 of the Madhya Bharat Sales Tax Act 1950 sales tax was imposed and collected from the appellants
They filed suits for refund of the tax on the ground that it was illegally collected from them being against the constitutional prohibition in article 301 and not saved under article 304a
In Bhailal vs State of MP 1960 MPLJ 6011 the petitioner therein challenged in a writ petition the levy of sales tax on the same grounds and the High Court declared the notifications to be offensive to article 301 and held that the imposition of tax was illegal
Following that decision the trial court decreed the suits filed by the appellants
In appeal before the High Court it was conceded by the State that the tax could not be imposed in view of article 301 but it was contended that the suits were not maintainable in view of section 17 of the Act which provides that no assessment made under the Act shall be called in question in any court
The High Court held that the suits were incompetent
In appeal to this Court HELD The suits were maintainable
684 D An enquiry into the diverse views expressed in the decisions of this Court shows that an exclusion of the jurisdiction of civil court is not readily to be inferred unless the following conditions apply  1 Where the statute gives a finality to the orders of the special tribunals the civil court s jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit
Such provision however does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure
682 A C 683 C Secretary of State vs Mask 1940 LR 67 IA 222 Firm Illuri Subbayya Chetty  Sons vs State of Andhra Pradesh  and Kerala vs Ramaswami Iyer and Sons  In Firm Illuri Subbayya Chetty  Sons  case the assessee conceded that the tax was payable and did not raise the issue before the appellate authorities under the Act
The suit for refund of tax was held not maintainable on those special facts with reference to the addition of section 18A excluding the jurisdiction of civil court and the special remedies provided in sections 12A to 12D in the Madras General Sales Tax Act 1939
This Court however did not think it necessary to pronounce any opinion on the Judicial Committee s view in the Raleigh Investment Co case 1947 LR 74 IA 50 that even the vires of the provisions could be considered by the Tribunals constituted under the Act
Dealing with Mask  Co s case it was pointed out that non compliance with the provisions of the statute meant non compliance with such fundamental 663 provisions of the statute as would make the entire proceedings before the appropriate authority illegal and without jurisdiction
679 G H 680 B D 2 Where there is an express bar of the jurisdiction of the an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court
682 D Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive
In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not
682 D F In Provincial Government vs J section Basappa 1964 5 SCR 517 it was held that the civil court had jurisdiction because at the relevant time a the Madras General Sales Tax Act 1939 did not have section 18A which was introduced later barring the jurisdiction of civil court b
the Act did not have the elaborate machinery for adequate remedy which was also introduced later and c the tax was illegally collected ignoring the fundamental provisions of the Act
Therefore the observation in Kerala vs Ramaswami Iyer  Sons that Basappa s case was wrongly decided is open to doubt
678 D H Ms Kamala Mills Ltd vs State of Bombay 1966 1 SCR 64 was a decision of a Special Bench holding that section 20 of the Bombay Sales Tax Act 1946 excluded the jurisdiction of the civil court in suits for refund of tax in cases where the decision of the authorities under the Act was merely an error in assessment capable of correction by the usual pro cedure of appeals etc
But the Bench observed that in such cases where the jurisdiction of the civil court is barred by providing an adequate machinery in the Act it becomes pertinent to enquire whether remedies normally associated with actions in civil court are prescribed by the statute or not  and thus expressly left open the question as to how far the bar would operate in cases where the charging provision is ultra vires
681 A B G  684 C D 3 Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act
Eve the High Court cannot go into that question on a revision or reference from the decision of the Tribunals
682 F G K section Venkataraman vs State of Madras 1966 2 SCR 229 Deputy Commercial Tax Officer Madras vs
Rayalaseema Constructions 17 STC 505 Circo s Coffee Co vs State of Mysore 19 STC 66 SC C T Senthulnathan Chettiar vs Madras CA 1045 of 1966
dated 20th July 1967 and Pabojan Tea Co Ltd vs Dy
Commissioner Lakhimpur   4 When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged a suit is open
A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit
682 G H In State of MP vs Bhailal  which confirmed the decision in this Court upheld the order of refund by the High Court in its writ jurisdiction held that in cases where a defence of limitation was open or other facts had to be decided the order of 664 refund was not proper and accepted the proposition that a suit lay in  such cases without adverting to the provisions of the Act to see whether the jurisdiction of civil court was barred either expressly or by necessary implication
Therefore this case cannot be an authority for holding that the civil court has jurisdiction to entertain such suits
668 5 Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected a suit lies
683 A Bharat Kala Bhandar Ltd vs Municipal Council Dhamangaon  6 Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suitdoes not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act
In either case the scheme of the particular Act must be examined because it is a relevant enquiry
6 83 B In the present case though the Madhya Bharat Sales Tax Act contains Provisions for appeal revision rectification and reference to the High Court the notifications having been rightly declared void in the earlier decision of the High Court the appellants could take advantage of the fact that tax was levied without a complete charging section
Since the tax authorities could not even proceed to assess the party their jurisdiction was affected and the case fell within categories 3 and 4 above and not in category 2
684 A C