vil Appeals Nos
2403  2404 of 1966
Appeals from the judgment and order dated April 4 1963 of the Assam and Nagaland High Court in Civil Rule Nos 90 of 1960 and 382 of 1961
DN Mukherjee for the appellant
Naunit Lal and BP Singh for the respondents
The Judgment of the Court was delivered by Ramaswami J
These appeals are brought by certificate from the judgment of the High Court of Assam and Nagaland dated April 4 1963 in Civil Rule No 90 of 1960 and Civil Rule No 382 of 1961 whereby the High Court dismissed the petitions under articles 226 and 227 of the Constitution filed by the appellant
Messrs Hardeo Das Jagan Nath hereinafter called the appellant  is a partnership firm carrying on business at Mawk 263 har Shillong in the District of United Khasi and Jaintia Hills
By a notification issued under Rule 6 of the Assam Sales Tax Rules 1947 the Commissioner of Taxes Assam fixed May 20 1948 as the date by which the dealers of Shillong administered area had to make applications for registration under the Assam Sales Tax Act 1947  17 of 1947  hereinafter called the Act 
By notification dated April 15 1948 the Government of India had extended the provisions of the Act with slight modifications to the administered area in Shillong under section 4 of the Extra Provincial Jurisdiction Act 1947
The appellant got itself registered under the Act
Upto the half yearly return periods ending September 30 1957 the appellant was assessed to sales tax and the tax was realised by the Sales Tax Authorities
On March 6 1959 the Superintendent of Taxes Shillong respondent No 4 raided the business premises of the appellant and seized the account books etc
The appellant filed a petition under article 226 of the Constitution in the High Court
By its order dated June 3 1960 the High Court directed the Deputy Commissioner of Taxes Assam to return the seized books and documents within three weeks of the date of the order to
the appellant
As directed by the High Court the documents were returned to the appellant but on the basis of the information received from the account books the Superintendent of Taxes issued notices dated April 4 1959 under section 19A of the Act for reassessment of the appellant in respect of the half yearly return periods ending on September 30 1956 March 31 1957 and September 30 1957
Thereafter ex parte reassessment was made for the return period ending September 30 1956 by an order dated July 8 1959 and for return periods ending March 31 1957 and September 30 1957 by orders dated July 24 1959 and tax amounting to Rs 122933 was levied for these three periods
A further sum of Rs 4750470 was levied in respect of the return period ending March 31 1958 by an ex parte assessment order dated March 23 1959
For the other return period ending September 30 1958 a sum of Rs 4942790 was levied by an ex parte assessment order dated April 8 1959
For these two return periods a penalty of Rs 1000 in respect of each return was also levied by two separate orders dated June 27 1959
Thus the total amount of salestax and penalty amounting to Rs 21986560 in respect of the five return periods was levied
The appellant paid Rs 2007468 at the time of original assessments in respect of the periods ending on September 30 1956 March 31 1957 and September 30 1957
The appellant thereafter filed appeals against all the seven ex parte orders before the Assistant Commissioner of Taxes Assam
Along with the memoranda of appeals for the periods ending March 31 1958 and September 30 1958 two separate applications were made by the appellant alleging that it was not 264 necessary to pay the assessed tax since the provisions of section 30 of the Act as amended did not apply to the case and it was prayed that appeals should be admitted without payment of the assessed tax
The contention of the appellant was rejected by the Assistant Commissioner though he reduced the amount of deposit for the periods ending March 31 1958 and September 30 1958
The appellant moved the Commissioner of Taxes in revision but the order of the Assistant Commissioner was affirmed by the Commissioner of Taxes though he reduced the amount further
On the application of the appellant the matter was referred to the High Court which held that the amended section 30 of the Act was intravires
In the meantime the appellant also applied in respect of the appeals relating to the periods ending September 30 1956 March 31 1957 and September 30 1957 as well as the penalty appeals of periods ending on March 31 1958 and September 30 1958 and prayed for admission of these appeals without payment of the assessed tax
In this case also the amount was reduced by the Assistant Commissioner of Taxes but the matter was kept pending till the disposal of the reference by the High Court
On May 21 1960 the appellant filed separate petitions before the Assistant Commissioner praying that as the financial condition of the appellant was not good the appellant may be allowed to furnish reasonable security in lieu of cash and the appeals may be admitted on such security
By his order dated May 23 1960 the Assistant Commissioner of Taxes fixed June 8 1960 f or payment of the amount required for admission of the appeals failing which the appeals were ordered to be dismissed
The appellant then moved the Commissioner praying that in view of his financial difficulty he should be allowed to furnish reasonable security in lieu of cash to be paid
The application was rejected by the Commissioner on June 21 1960
Thereafter all the five appeals were rejected by a common order dated June 22 1960 and the two appeals against the imposition of penalty were also summarily rejected by an order dated June 22 1960
The appellant was further asked to show cause why penalty should not have been imposed in respect of the periods ending September 30 1956 March 31 1957 and September 30 1957
The appellant filed a petition to the High Court under article 226 of the Constitution being Civil Rule No 90 of 1960 praying for a writ to quash the order of the Commissioner dismissing the appeals in respect of the five periods and for further reliefs
The appellant also filed another petition under article 226 being Civil Rule No 382 of 1961 asking for similar reliefs with regard to the periods ending March 31 1959 September 30 1959 March 31 1960 September 30 1960 and March 31 1961
The writ petitions were dismissed by the High Court by a common judgment dated April 4 1963
The first question to be considered in these appeals is whether the provisions of the Act were validly extended to the Shillong 265 Administered Areas
By a notification dated April 15 1948 the Central Government extended the provisions of the Act to the Shillong Administered Areas including Bara Bazar in exercise of powers conferred by section 4 of the Extra Provincial Jurisdiction Act 1947
It was argued on behalf of the appellant that on April 15 1948 when the notification was issued the Extra Provincial Jurisdiction Act 1947 Act XLVII of 1947 was not applicable to the Shillong Administered Areas as the instrument of accession by which the administration of the State of Mylliem was transferred to the Central Government was accepted by the GovernorGeneral of India on August 17 1948
The preamble to the Extra Provincial Jurisdiction Act 1947 hereinafter called the Act of 1947 provides Whereas by treaty agreement grant usage sufferance and other lawful means the Central Government has and may hereafter acquire jurisdiction in and in relation to areas outside the Provinces of India It is hereby enacted as follows   The expression extra provincial jurisdiction has been defined under section 2 of the Act of 1947 as meaning any jurisdiction which by treaty agreement grant usage sufferance or other lawful means the Central Government has for the time being in or in relation to any area outside the Provinces
Section 3 states 3
1 It shall be lawful for the Central Government to exercise extra provincial jurisdiction in such manner as it thinks fit
2 The Central Government may delegate any such jurisdiction as aforesaid to any officer or authority in such manner and to such extent as it thinks fit
 Section 4 provides as follows 4
1 The Central Government may by notification in the official Gazette make such orders as may seem to it expedient for the effective exercise of any extra provincial jurisdiction of the Central Government
2 Without prejudice to the generality of the powers conferred by sub section 1  any order made under that sub section may provide a for determining the law and procedure to be observed whether by applying with or without modifications all or any of the provisions of any enactment in force in any Province or otherwise b for determining the persons who are to exercise jurisdiction either generally or in particular 2 Sup
C169 18 266 cases or classes of cases and the powers to be exercised by them c for determining the courts judges magistrates and authorities by whom and for regulating the manner in which any jurisdiction auxiliary or incidental to or consequential on the jurisdiction exercised under this Act is to be exercised within any Province and d for regulating the amount collection and application of fees
 Section 5 is to the following effect Every act and thing done whether before or after the commencement of this Act in pursuance of any extra provincial jurisdiction of the Central Government in an area outside the Provinces shall be as valid as if it had been done according to the local law then in force in that area
 The argument was stressed on behalf of the appellant that the extra provincial jurisdiction could only be exercised by the Central Government if by treaty agreement grant usage sufferance or other lawful means the Central Government has for the time being in or in relation to any area outside
the provinces exercised such jurisdiction
It was contended that after the declaration independence on August 15 1947 the paramountcy lapsed and the State of Mylliem became an independent State and the Central Government could not exercise any extra provincial jurisdiction till the instrument of accession was signed by the GovernorGeneral
It was pointed out that the notification by which the Act was applied to Shillong Administered Areas was issued after the lapse of paramountcy and before the instrument of accession was signed by the Governor General
It was therefore argued that the notification dated April 15 1948 was not validly issued and the provisions of the Act were not operative in the Shillong Administered Areas
It was said that before the State of Mylliem became an independent State on August 15 1947 there was no treaty grant usage or arrangement whereby the British Crown enjoyed any rights to levy taxes on the sale of goods within the Mylliem State or any right to extend to that area any such Act without the express consent or approval of the ruler of that State
The opposite view point was put forward on behalf of the respondents
It was said that before August 15 1947 the relations of the Crown Representative with Khasi Hills States were conducted through the Governor of Assam
In practice the administration of the Hill States was in great measure assimilated to that of the Province of Assam partly by the application of the British Indian Laws under the Indian Foreign Jurisdiction Order in Council 267 and partly by administrative measures
It was argued that by virtue of the instrument of accession all previous existing arrangements between Khasi Hills States and the Government of India in the Assam Province were continued and the Central Government could therefore exercise extra provincial jurisdiction by usage
To put it differently the argument of the respondents was that though the instrument of accession was accepted by the Governor General on August 17 1948 it recognised the fact that there was a certain existing arrangement regulating relations between the Government of India and the Chiefs of the Khasi Hills States
The Central Government therefore exercised extra provincial jurisdiction by agreement or usage and it cannot therefore be said that the notification of the Central Government dated April 15 1948 was invalid
When the appeals were originally heard we considered that the material on the record was not sufficient to enable us to determine the disputed question namely whether the Dominion of India was entitled to exercise extra provincial jurisdiction over the Shillong Administered Areas on April 15 1948 which was the material date
The question at issue is not purely a question of fact but a question relating to a fact of State which is peculiarly within the cognizance of the Central Government For expression Fact of State see Halsbury Laws of England 3rd edn
Vol 7 p 285
In view of the insufficiency of material we thought it proper to avail ourselves of the procedure indicated by section 6 of the Act of 1947 which enacts 6
1 If in any proceeding civil or criminal in a Court established in India or by the authority of the Central Government outside India any question arises as to the existence or extent of any foreign Jurisdiction of the Central Government the Secretary to the Government of India in the appropriate department shall on the application of the Court send to the Court the decision of the Central Government on the question and  that decision shall for the purposes of the proceeding be final
2 The Court shall send to the said Secretary in a document under the seal of the Court or signed by a judge of the Court questions framed so as properly to raise the question and sufficient answers to those questions shall be returned to the Court by the Secretary and those answers shall on production thereof be conclusive evidence of the matters therein contained
 By an order of this Court dated September 21 1967 the following two questions were forwarded to the Union of India under the seal of this Court for submission of their answers 268 1 Whether the Dominion of India exercised extra provincial jurisdiction over the Shillong Administered Area including Bara Bazar which also included Mawkhar a part of the erstwhile Mylliem State on April 15 1948 2 Whether the Dominion of India had extra provincial jurisdiction on April 15 1948 to extend the Assam Sales Tax Act 1947 Act 17 of 1947 to the Shillong Administered Area including Bara Bazar under section 4 of Extra Provincial Jurisdiction Act Act 47 of 1947 
 In compliance of that order the Union of India have submitted their answers on January 12 1968 in the following terms Ministry of Home Affairs
Replies to the questions mentioned in the order dated September 211967 passed by the Supreme Court of India in Civil AppeaLs Nos 2403 and 24041966
1 The British Government in India had by treaty grant
usage sufferance and other means acquired jurisdiction over certain territories of the erstwhile State of Mylliem
The jurisdiction was exercised under the Indian Foreign Jurisdiction Order in Council 1902 as amended by the Indian Foreign jurisdiction
Order in Council 1937
Mawkhar was a part of the territories of Mylliem jurisdiction over which had been agreed to be given by the Siem of Mylliem to the British Government
It was included in those parts of Shillong which came in course of time to be called the Shillong Administered Area
It has been reported that on actual survey the small area known as Bara Bazar area comes partly under Mawkhar proper and partly under South East Mawk har and Garikhana
Bara Bazar area was thus a part of the area belonging to the erstwhile Mylliem State in which the British Government in India exercised jurisdiction under the Indian Foreign jurisdiction Order in Council
On the withdrawal of British Rule the jurisdiction over the territories of the erstwhile Mylliem State which had been included in the Shillong Administered Area continued to be exercised with the consent of the Siem and the jurisdiction which was until then exercised in those areas by the British Government in India was assumed by the Dominion of India and it was retained thereafter by virtue of the instrument of accession signed by the Siem of Mylliem 269 and the agreement annexed thereto
The Dominion of India exercised extra provincial jurisdiction over the Shillong Administered Area including the Barra Bazar which also included Mawkhar a part of the Mylliem State on April 15 1948
2 The jurisdiction exercised by the British Government in India over the Shillong Administered Area was quite extensive
In exercise of that jurisdiction that Government had extended with appropriate reservations a number of Acts Central as well as Provincial to the Shillong Administered Area eg the Indian Income Tax Act and the Assam Municipal Act with the consent of the Siem of Mylliem where necessary
On the withdrawal of British rule the Dominion of India acquired the same jurisdiction over the Shillong Administered Area by virtue of the instrument of accession signed by the Siem of Mylliem and the agreement annexed thereto
The Dominion of India therefore had on April 15 1948 extra provincial jurisdiction in terms of the Extra Provincial Jurisdiction Act 1947 Act 47 of 1947 to extend the Assam Sales Tax Act 1947 Act 17 of 1947 to the Shillong Administered Area including Barra Bazar
The Assam Sales Tax Act was actually extended to the Shillong Administered Area including Barra Bazar after obtaining the consent of the Siem of Mylliem in the Ministry
of States Notification No 186 IB dated the 15th April1948
LP SINGH Secretary to the Govt
of India
New Delhi January 12 1968
 It is clear from the letter of the Union Government that it was entitled to exercise extra provincial jurisdiction over Shillong Administered Area on April 15 1948
The reason is that prior to that date the British Government had exercised that jurisdiction under the Indian Foreign Jurisdiction Order in Council 1902 as amended by the Indian Foreign Jurisdiction Order in Council 1937
On the withdrawal of British rule the jurisdiction over the territory of Mylliem State continued to be exercised with the consent of the ruler by the Dominion of India and the jurisdiction was retained thereafter by virtue of the instrument of accession signed by the Siem of Mylliem and the agreement annexed thereto
It is also manifest that the jurisdiction exercised by the British Government over the Shillong Administered Area was quite exten 270 sive and in exercise of that jurisdiction a number of Acts Central  Provincial were extended to the Shillong Administered Area for example the Indian Income Tax Act and the Assam Municipal Act with the consent of the Siem of Mylliem where necessary
On the withdrawal of the British rule the Dominion of India acquired the same jurisdiction which included the extension of the Act to the Shillong Administered Area
Under section 62 of the Act of 1947 the answers of the Central Government to the questions forwarded by this Court shall be treated as conclusive evidence of the matter therein contained
We accordingly hold that the argument of the appellant on this aspect of the case should be rejected
It was then contended on behalf of the appellant that section 30 of the Act after the amendment was not applicable and the Assistant Commissioner of Taxes had no authority to ask the appellant to deposit the amount of tax assessed before hearing the appeal
Section 30 of the Act as it originally stood was to the following effect 30
1 Any dealer objecting to an order of assessment or penalty passed under this Act may within thirty days from the date of the service of such order appeal to the prescribed authority against such assess ment or penalty Provided that no appeal shall be entertained by the said authority unless he is satisfied that such amount of tax as the appellant may admit to be due from him has been paid Provided further that the authority before whom the appeal is filed may admit it after the expiration of thirty days if such authority is satisfied that for reasons beyond the control of the appellant or for any other sufficient cause it could not be filed within time       After the amending Act of 1958 the section reads as follows 30
1 Any dealer objecting to an order of assessment or penalty passed under this Act may within thirty days from the date of the service of such order appeal to the prescribed authority against such assessment or penalty  Provided that no appeal shall be entertained by the said authority unless he is satisfied that the amount of tax assessed or the penalty levied if not otherwise directed by him has been paid 271 Provided further that the authority before whom the appeal is filed may admit it after the expiration of thirty days if such authority is satisfied that for reasons beyond the control of the appellant or for any other sufficient cause it could not be filed within time
        It was contended that the amendment came into force with effect from April 1 1958 and it cannot be given retrospective effect so as to apply to assessment periods ending on September 30 1956 March 31 1957 and September 30 1957
We are unable to accept this argument as correct because the assessments for these three periods were completed after the amending Act came into force ie after April 1 1958
The appeals against the assessments were also filed after the amendment
It is therefore not correct to say that the amending Act has been given a retrospective effect and the Assistant Commissioner of Taxes was therefore right in asking the appellant to comply with the provisions of the amended section 30 of the Act before dealing with the appeals
It was lastly contended on behalf of the appellant that the Sales Tax Authorities were not right in holding that there was no provision under the Act by which security can be accepted in lieu of cash payment
Reliance was placed upon the phrase otherwise directed in the amended section 30 of the Act
In our opinion there is no substance in this argument
The expression otherwise directed only means that the appellate authority can ask the assessee to deposit a portion of the amount and not the whole but the section gives no power to the appellate authority to permit the assessee to
furnish security in lieu of cash amount of tax
We accordingly reject the argument of the appellant on this point
For the reasons expressed we hold that the High Court was right in dismissing the writ petitions and these appeals must be dismissed with costs there will be one set of hearing fees
VPS Appeals dismissed


Summary:
By a notification dated April 15 1948 the
Government of India extended the Assam Sales Tax Act 1947 to the Administered Area in Shillong under section 4 of the Extra Provincial Jurisdiction
Act 1947
The instrument of accession by which the administration of the Indian Princely State of Mylliem in the Shillong Administered Area was transferred to the Central Government was accepted by the Governor General of India on August 17 1948
Under section 30 of the Assam Sales Tax Act as amended by Act 6 of 1958 a dealer may appeal against an order of assessment or penalty but the appeal shall not be entertained by the appellate authority unless he was satisfied that the amount of tax assessed or penalty levied if not otherwise directed by him had been paid
The sales tax authorities assessed the appellant to sales tax and imposed penalties for Various periods
Though some of the assessment periods were before April 1 1958 when the Amending Act 6 of 1958 came into force all the orders of assessment and penalty were passed after April 1 1958
The appellant did not pay the tax assessed or the penalty but filed petitions along with its appeals praying that it may be allowed to furnish security in lieu of payment of cash on account of its financial condition
The petitions were rejected and the appeals were consequently dismissed
Writ petitions flied by the appellant in the High Court to quash the orders of dismissal of the appeals were also dismissed
In appeal to this Court it was contended that 1 After August 15 1947 the State of Mylliem became an independent State and since the Central Government could exercise extra provincial jurisdiction under the Extra Provincial Jurisdiction Act only if the Central Government exercised  such jurisdiction under a treaty agreement or by other lawful means the Central Government in the present case could not exercise such jurisdiction till August 17 1948 when the instrument of accession was acCepted and therefore the notification dated April 15 1948 was not validly issued and hence the Assam sales Tax Act was not operative in the Shillong Administered Area 2 As the Amending Act of 1958 came into force on April 1 1958 it could not be given retrospective effect so as to apply to assessment periods anterior to that date and 3 The authorities were not right in holding that there was no provision in the Act empowering them to accept security in lieu of cash payment
262 As the material on the record was not sufficient to enable the Court to determine the question whether the Dominion of India was entitled to exercise extra provincial jurisdiction over the Shillong Administered Area on April 15 1948 this Court under section 6 of the Extra Provincial Jurisdiction Act forwarded to the Union Government the questions a whether the Dominion of India exercised such jurisdiction on April 15 1948 and b whether the Dominion of India had such jurisdiction to extend the Assam Sales Tax Act to the Area After receiving the answers HELD 1 The answers submitted by the Union Government showed that prior to April 15 1948 the British Government had exercised jurisdiction over the Area under the Indian Foreign Jurisdiction Order in Council 1902 as amended by the Order in Council of 1937 that on the withdrawal of British rule the jurisdiction continued to be exercised with the consent of the Siem ruler of Mylliem State by the Dominion of India that the Jurisdiction was retained thereafter by the instrument of accession signed by the Siem and that the exercise of the jurisdiction by the British Government and the Dominion of India several Acts were extended to the Shillong Administered Area
Since under section 62 of the Extra Provincial Jurisdiction Act the answer of the Central Government is conclusive evidence of the matter therein the Union Government was entitled to exercise such jurisdiction over the Shillong Administered Area on April 15 1948 and therefore the Assam Sales Tax Act was properly extended to the Area
269 F H 270 B C 2 The assessments for periods anterior to April 1 1958 were completed after the Amending Act came into force and the appeals were also filed thereafter
Therefore the Amending Act of 1958 was applicable to the appeals before the appellate authority and was not given retrospective effect
271 C D 3 The expression otherwise directed  only means that the appellate authority can ask the assessee to deposit a portion of the amount and not the whole but the section gives no power to the appellate authority to permit the assessed to furnish security in lieu of the cash amount of tax
271 D E