ivil Appeal No 3235 of 1991
From the Judgment and Order dated 1481990 of the Karnataka High Court in Writ Petition No 3436 of 1980
Harish Salve KP Kumar Ravinder Narain PK Ram and Ms Amrita Mitra for the Appellant
RN Narasimhamurthy KH Nobin Singh and M Veerappa for the Respondents
The following Order of the Court was delivered By this petition Messrs Mangalore Chemicals  Fertilis ers Limited a registered dealer under the Karnataka Sales Tax Act 1957 Act seeks special leave to appeal to this court from the judgment and order dated 14th August 1990 of the High Court of Karnataka in WP No 3436 of 1980
We have heard Shri Harish Salve learned counsel for the petitioner and Shri RN Narasimhamurthy learned Senior Counsel for the respondent Revenue
Special leave granted
On 30th June 1969 State Government issued a noti fication in exercise of powers referable to sec
8A of the Act providing certain incentives to enterpreneurs starting new industries in the State pursuant to State s policy for rapid industrialisation
The notification contains a package of reliefs and incentives including one concerning relief from payment of sales tax with which this appeal is concerned
The clause in the said notification of 1969 relevant for the present purpose reads 340 1
Sales tax A cash refund will be allowed on all sales tax paid by a new industry on raw materials purchased by it for the first five 5 years from the date of the industry goes into production eligibility to the conces sions being determined on the basis of a certificate to be issued by the Department of Industries and Commerce
 This was followed by a further notification dated 11th August 1975 envisaging certain modified procedures for effectuating the reliefs contemplated by the earlier exemp tion notification of 30th June 1969
The relevant portions of the Preamble and the body of the notification say Preamble  
The Commissioner of Commercial Taxes has suggested that New Indus tries covered by the above scheme might be permitted to adjust the refunds to which they would be eligible against the sales tax pay able by them
Order In partial modification of the Gov ernment order cited 2 above Government are pleased to prescribe the following procedure for claiming refund of sales tax by new indus tries
The new industries intending to take advantage of the system of adjustment shall apply to the Deputy Commissioner of Commercial Taxes Administration of the Division concerned through the assessing authority
The application must contain the following particulars
i Name and address of the new industry ii Date of commencement of the industry iii Reference number of the certificate issued by the Director of Industries  Com merce Bangalore iv Year for which the permission to withhold tax amount is related v The description of finished products in which the materials are used
341 3
The Deputy Commissioner of Com mercial Taxes Administration of the con cerned Division after scrutinising the appli cation filed by the new industry and after satisfying himself that the industry is cov ered by the scheme sanctioned in GO No 0I 58 FMI 69 dated 3061969 will permit the industry to withhold the amount of tax payable on raw materials purchased and used in the manufacture of goods
Omitted as unnecessary 5
The new industry may apply for permission at any time during the year subject to its renewal every subsequent year
Until permission of renewal is granted by the Deputy Commissioner of Commercial Taxes the new industry should not be allowed to adjust the refunds
At the end of the assessment year particulars should be formulated in the annual return of the total amount adjusted during the entire year
Along with the return details prescribed in Government Order No FD 428 CSL 70 dated 12
1971 should be furnished
6   7  Omitted as unnecessary
  8   3
Appellant it is not in dispute had the necessary eligibility under the original exemption notification of 1969
The controversy is confined only to the question of the manner of effectuating the refund of sales tax that appellant admittedly was entitled to
Some particulars as to the application made by the appellant for grant of permission might perhaps be neces sary here
For the assessment year 1976 77 the appellant made such an application to Deputy Commissioner of Sales tax Administration on 10th November 1976 for adjustment of the refunds against sales tax due
This permission was granted with retrospective effect from 1st May 1976 vali dating the adjustments which the appellant had made during the interregnum
However for the three subsequent years viz 1977 78 1978 79 342 and 1979 80 similar applications which were made on 29th March 1977 20th March 1978 and 8th March 1979 respec tively remained undisposed of
In the meanwhile in antici pation of the permission appellant adjusted the refund against tax payable for these years and filed its montly returns setting out adjustments so effected
There is as set out earlier no dispute that the appellant was entitled to the benefit of the notification dated 30th June 1969
There is also no dispute that the refunds were eligible to be adjusted against sales tax payable for respective years
The only controversy is wheth er the appellant not having actually secured the prior permission would be entitled to adjustment having regard to the words of the notification of 11th August 1975 that until permission of renewal is granted by the Deputy Com missioner of Commercial Taxes the new industry should not be allowed to adjust the refunds
The contention virtually means this No doubt you were eligible and entitled to make the adjustments
There was also no impediment in law to grant you such permission
But see language of clause 5
Since we did not give you the permission you cannot be permitted to adjust
 Is this the effect of the law The sales tax already paid by the appellant on the raw materials procured by it is the subject matter of the re funds
The sales tax against which the refund is sought to be adjusted is the sales tax payable by appellant on the sales of goods manufactured by it
If the contention of the Revenue is correct the position is that while the appellant is entitled to the refund it cannot however adjust the same against current dues of the particular year but should pay the tax working out its refunds separately
The situa tion may well have been such but the snag comes here
If the adjustments made by the appellant in its monthly statements are disallowed the sales tax payable would be deemed to be in default and would attract a penalty ranging from 1 12 to 212 per month from the date it fell due
That penalty in the facts of this case would be very much more than the amounts of refund
What emerges from the undisputed facts is that appel lant was entitled to the benefit of these adjustments in the respective years
It had done and carried out all that was necessary for it to do and carry out in that behalf
The grant of permission remained pending on account of certain outstanding inter departmental issues as to which of the departments the Department of Sales tax or the Department of Industries should
absorb the financial impact of these concessions
343 Correspondence indicates that on account of these questions internal to administration the request for permission to adjust was not processed
On 27th March 1979 the Deputy Commissioner of Commercial Taxes wrote to the appellant to say that the orders on appellant s application for permis sion would be passed only on receipt of the clarification from the Government on these matters
While the matter stood thus on 9th January 1980 the Commercial Tax Officer of the concerned jurisdiction issued three demand notices demanding payment of the sales tax
He said prior permission to adjust had not been con sidered by the Deputy Commissioner of Managlore Division Mangalore and therefore the Commercial Tax Officer was obliged to proceed to recover the taxes Steps for recovery of the penalities were also initiated
Thereafter in Febru ary 1980 the appellant moved the High Court for issue of writ of mandamus to quash the demand notices and the pro ceedings initiated for recovery of penalty under sec
13 of the Act
The contention in the High Court were somewhat different from those urged before us
Before the High Court the Revenue asserted that the very conditions of eligibility for entitlement to these concessions stood modified under a subsequent notification of 12th January 1977 and that appellant did not satisfy the altered conditions of eligi bility
The question therefore was whether enterpreneurs who had commenced their ventures prior to 12th January 1977 could be held to be governed by the terms of the later notification of 12th January 1977
This question in princi ple had been settled by a decision of this Court in Assist ant Commissioner of Commercial Taxes Asst Dharwar  Ors
vs Dharmendra Trading Co  Ors   The question that arose there pertained to another condition stipulated in the same notification of 12th January 1977
This Court held that industries established prior to that date were not governed by those altered conditions
Though in the present case the altered condition set up against appellant was a different one on the principle decided in Dharmendra Trading Company s case the altered condition would not be attracted
But the High Court took a different view of the matter
It held in our opinion quite erroneous ly that the principle of the earlier decision of this Court was not applicable because it was rendered in the context of another condition in the 1977 notification
What fell for decision was not whether a particular condition was or was not applicable but the very basic question whether a subse quent notification could undo the eligibility for the con cession stipulated and conferred under the 1969 notifica tion
344 Shri Narasimhamurthy with his usual fairness said that he found it difficult to support the approach of the High Court to the question
The main point on which the case turned is thus settled in favour of the appellant
But a subsidiary question arose whether the grant of permission for adjustment could at all be made after the period to which such adjustment related had itself expired
On this the High Court said   
But under Ext
B the 1975 noti fication a clear procedure was provided in order to claim the benefit of refund on the sales tax paid on raw materials purchased by the industrialists
The industrialists claim ing the benefit had to secure the prior per mission of the assessing authority to withhold the tax subject to the Government s permis sion
In other words prior permission was a condition precedent
In the instant case Mr Kumar was not able to satisfy us permission had indeed been granted
On the other hand he fairly conceded that though an application was made no permission was actually granted to withhold the payment
Therefore in view of the 1975 notification prescribing the proce dure for claiming the benefit under 1969 notification as at exhibit A there has been no compliance and as such the petitioner will not be entitled to withhold the tax
With the result the demand at Annexure RS and T would be justifiable and legal Emphasis supplied This is the only ground on which the appellant s right to adjustment is contested by the Revenue
Shri Harish Salve urged that indisputably the permis sion for the three years had been sought well before the commencement of the respective years but had been withheld for reasons which were demonstrably extraneous
Learned counsel emphasised that the basic eligibility was condi tioned by the notification of 30th June 1969 which re quired a certificate from the Department of Industries and Commerce
Both the eligibility and the fact that there was such certification from the Department of Industries were not disputed
Indeed the requirement of the annual permis sion for adjustment envisaged by the notification of 11th August 1975 was says counsel merely procedural as clause 3 of the notification stipulated that if the conditions were satisfied there was no dispute they were the Deputy Com missioner 345 will permit the adjustment
Counsel says that if in these circumstances the Deputy Commissioner withheld the permis sion law treats that as done which ought to have been done
Shri Narasimha Murthy however sought to contend that the requirement of the prior permission was held and rightly by the High Court to be a condition precedent  and that non satisfaction of that condition precedent whatever be the reason for the non satisfaction automatically en tailed the logical consequences
Learned counsel further submitted that it was not as if the right to the refund was denied or defeated by the inaction of the Deputy Commission er but only one mode of the refund by adjustment became unavailable
Learned counsel urged that the benefit envis aged by the notification of 11th August 1975 was in the nature of a concession and that the appellant in order to avail itself of its benefit had to show strict compliance with condition subject to which it was available
Learned counsel placed reliance on Kedarnath Jute Munufacturing Co vs Commercial Tax Officer Calcutta  Ors  and Collector of Central Excise Bombay and Anr
vs Messrs Parle Exports P Ltd  to support his contention that where exemptions were concerned the condi tions thereof ought to be strictly construed and strict compliance with them exacted before a person could can lay claim to the benefit of the exemptions
Learned counsel submitted that the point was not whether there was any justification for delaying the permission but more importantly whether appellant at the relevant point of time had such prior permission or not and that if in the meanwhile the period itself expired no relief was possible as quite obviously the requirements of prior permission  became impossible of compliance
Shri Narasimha Murthy relied on the following observa tions of this court in Kedarnath Jute Manufacturing Co s case to support this contention   
But the said exemption is made subject to a proviso
Under that proviso in the case of such sales a declaration form duly filled up and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars on a prescribed form obtainable from the prescribed authority has to be furnished in the prescribed manner by the dealer who sells the goods   346    
The provision pre scribing the exemption shall therefore be strictly construed    
To accept the argument of the learned counsel for the appellant is to ignore the proviso altogether for if his contention be correct it will lead to the position that if the declaration form is furnished well and good but if not fur nished other evidence can be produced
That is to rewrite the clause and to omit the proviso
That will defeat the express inten tion of the Legislature    11
We have given our careful consideration to these submissions
We are afraid the stand of the Revenue suffers from certain basic fallacies besides being wholly techni cal
In Kedarnath s case the question for consideration was whether the requirement of the declaration under the proviso to Sec
52aii of the Bengal Finance Sales tax Act 1941 could be established by evidence aliunde
The court said that the intention of the Legislature was to grant exemption only upon the satisfaction of the substantive condition of the provision and the condition in the proviso was held to be of substance embodying considerations of policy
Shri Narasimha Murthy would say the position in the present case was no different
He says that the notification of 1 1th August 1975 was statutory in character and the condition as to prior permission  for adjustment stipulated therein must also be held to be statutory
Such a condition must says counsel be equated with the requirement of production of the declaration form in Kedarnath s case and thus understood the same consequences should ensue for the non compliance
Shri Narasimhamurthy says that there was no way out of this situation and no adjustment was permissible whatever be the other remedies of the appellant
There is a fallacy in the emphasis of this argument
The consequence which Shri Narasimha Murthy suggests should flow from the non compliance would indeed be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption
Its stringency and mandatory nature must be justified by the purpose intended to be served
The mere fact that it is statutory does not matter one way or the other
There are conditions and conditions
Some may be substantive mandatory and based on considera tions of policy and some others may merely belong to the area of procedure
It will be erroneous to attach equal importance to the non observance of all conditions irrespec tive of the purposes they were intended to serve
In Kedarnath s case itself this Court pointed out that the string 347 ency of the provisions and the mandatory character imparted to them were matters of important policy
The Court ob served   
The object of section 52aii of the Act and the rules made thereunder is self evident
While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods it seeks also to prevent fraud and collusion in an attempt to evade tax
In the nature of things in view of innumerable transactions that may be entered into between dealers it will wellnigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section
Therefore presumably to achieve the two fold object namely prevention of fraud and facilitating administrative effi ciency the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section
The liberal construction suggested will facilitate the commision of fraud and introduce adminis trative inconveniences both of which the provisions of the said clause seek to avoid
 Emphasis Supplied See  at 630 Such is not the scope or intendment of the provisions concerned here
The main exemption is under the 1969 notifi cation
The subsequent notification which contain condition of prior permission clearly envisages a procedure to give effect to the exemption
A distinction between the provi sions of statute which are of substantive character and were built in with certain specific objectives of policy on the one hand and those which are merely procedural and technical in their nature on the other must be kept clearly distin guished
What we have here is a pure technicality
Clause 3 of the notification leaves no discretion to the Deputy Commissioner to refuse the permission if the conditions are satisfied
The words are that he will grant
There is no dispute that appellant had satisfied these conditions
Yet the permission was withheld not for any valid and substan tial reason but owing to certain extraneous things concern ing some inter departmental issues
Appellant had nothing to do with those issues
Appel ant is now told we are sorry
We should have given you the permission
But now that the period is over nothing can be done
The answer to this is in the words of Lord Denning Now I know that a 348 public authority can not be estopped from doing its public duty but I do think it can be estopped from relying on a technicality and this is a technicality See Wells vs Minister of Housing and Local Government at 1007
Francis Bennion in his Statutory Interpretation 1984 edition says at page 683 Unnecessary technicality Modern courts seek to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation
Shri Narasimhamurthy again relied on certain obser vations in Collector of Central Excise Bombay 1  Anr
vs Ms Parle Exports P Ltd  in support of strict construction of a provision concerning exemptions
There is support of judicial opinion to the view that exemp tions from taxation have a tendency to increase the burden on the other unexempted class of tax payers and should be construed against the subject in case of ambiguity
It is an equally well known principle that a person who claims an exemption has to establish his case
Indeed in the very case of Ms Parle Exports P Ltd relied upon by Sri Narasimhamurthy it was observed While interpreting an exemption clause liberal interpretation should be imparted to the language thereof provided no violence is done to the language employed
It must howev er be borne in mind that absurd results of construction should be avoided
 The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the Legislature manifest on the statutory language
Indeed the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statute
If the words are plain and clear and directly convey the meaning there is no need for any interpretation
It appears to us the true rule of construction of a provi sion as to exemption is the one stated by this Court in Union of India  Ors
vs Ms Wood Papers Ltd  Ors 1991JT1 151at 155
Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it
When the question is whether a 349 subject jails in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction   Emphasis supplied 13
It appears to us that the view taken of the matter by the High Court does not acknowledge the essential dis tinction between what was a matter of form and what was one of substance
There was no other disentitling circumstance which would justify the refusal of the permission
Appellant did not have prior permission because it was withheld by the Revenue without any justification
The High Court took the view that after the period to which the adjustment related had expired no permission could at all be granted
A permis sion of this nature was a technical requirement and could be issued making it operative from the time it was applied for
We therefore allow the appeal set aside the judgment of the High Court under appeal and direct the Deputy Commissioner of Sales Tax Admn to grant the per mission for the said three years operative from the dates of the application
The permission shall entitle the appellant to the adjustment of the refunds against the taxes due for the respective years
We issue these directions in view of the admitted position that apart from the technical objec tion that periods to which the applications related had since expired there was no other impediment for the grant of permission
It also follows that the demand notices which proceed on the premise that adjustment of refunds against taxes due was unavailable can not also stand
They are quashed
There will be no order as to costs
VPR Appeal allowed


Summary:
The appellant in both the appeals carried on the busi ness of a carrier and transported goods on hire
It had its principal office at Bombay and branch offices at various other places
The respondent in the first appeal a dealer in cardamom entrusted a consignment of cardamom to the appellant at its branch office at Bodinayakanur in Tamilnadu to be delivered at Delhi
After the goods had been transported by the appel lant and kept in a godown at Delhi the same got destroyed and damaged in a fire as a result whereof the consignee refused to take delivery
The respondent instituted a suit in the sub court within whose territorial jurisdiction the branch office of the appellant was situated for damages alleging that the fire was due to the negligence and care lessness on the part of the staff of the appellant
Respondent No 4 in the second appeal entrusted certain packets of pesticides insured with the second respondent Insurance Company to the appellant at its branch office at Madras for being carried to Delhi
The respondent alleged that the goods were delivered at New Delhi in a damaged condition resulting in loss and a suit was instituted for recovery of the loss in the City Civil Court at Madras
In both the aforesaid civil suits the appellant pleaded in defence that in the contract entered into between them the parties had agreed that jurisdiction to decide any dispute between them would be only with the courts at Bom bay and consequently the courts in Madras  where the two suits had been instituted had no jurisdiction
This plea was repelled by the Trial Court in each of the suits
The aforesaid orders were challenged by the appellant in the High 392 Court under Section 115 CPC and having failed the appel lant appealed to this Court
In the appeal it was contended on behalf of the appel lant that since the courts at two places namely Madras and Bombay had jurisdiction in the matter the jurisdiction of the courts in Madras was ousted by the clause in the con tract whereunder the parties had agreed that jurisdiction to decide any dispute under the contract would be only in the courts at Bombay
On the question whether in view of the relevant clause in the contract between the parties the courts at Bombay alone had jurisdiction and the jurisdiction of the courts at Madras where the two suits were instituted was barred
Dismissing the appeals this Court HELD 1
The courts at Bombay in these two cases did not at all have jurisdiction and consequently the agreement between the parties conferring exclusive jurisdiction on courts at Bombay is of no avail
401D 2
Clauses a and b of Section 20 refer to a court within the local limits of whose jurisdiction the defendant carries on business
Clause c on the other hand refers to a court within the local limits of whose jurisdiction the cause of action wholly or in part arises
397H 398A 3
Section 20 of the Code before its amendment by the Code of Civil Procedure Amendment Act 1976 had two Expla nations being Explanation I and II
By the Amendment Act Explanation I was omitted and Explanation II was renumbered as the present Explanation
398G 4
The Explanation is in two parts one before the word or occurring between the wOrds office in India and the words in respect of and the other thereafter
The Explana tion applies to a defendant which is a corporation which term would include even a company such as the appellant in the instant case
The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place
In that event the courts within whose jurisdiction the sole or principal office of the defendant is situate will also have jurisdiction inas much as even if the defendant may not be actually carrying on business at that place it will be deemed to carry on business at that place because of the fiction created by the Explanation
398C F 393 5
The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place
The words at such place occurring at the end of the Explanation and the word or referred to above which is disjunctive clearly suggest that if the case fails within the latter part of the Explanation it is not the court within whose jurisdiction the principal office of the defendant is situate but the court within whose juris diction it has a subordinate office which alone shall have jurisdiction in respect of any cause of action arising at any place where it has also a subordinate office
398E F 6
The Explanation is really an explanation to clause a
It is in the nature of a clarification on the scope of clause a viz as to where the corporation can be said to carry on business
This it is clarified will be the place where the principal office is situated whether or not any business actually is carried on there or the place where a business is carried on giving rise to a cause of action even though the principal office of the corporation is not located there so long as there is a subordinate office of the corporation situated at such place
The linking together of the place where the cause of action arises with the place where a subordinate office is located clearly shows that the intention of the legislature was that in the case of a corporation for the purposes of clause a the location of the subordinate office within the local limits of which a cause of action arises is to be the relevant place for the filing of a suit and not the principal place of business
399G 400B 7
If the intention was that the location of the sole or principal office as well as the location of the subordinate office within the limits of which a cause of action arises are to be deemed to be places where the corporation is deemed to be carrying or business the disjunctive or will not he there
Instead the second part of the explanation would have read and in respect of any cause of action arising at any place where it has a subordinate office also at such place  
400C 8
The clear intendment of the Explanation however is that where the corporation has a subordinate office in the place where the cause of action arises it cannot be heard to say that it cannot be sued there because it does not carry on business at that place
It would be a great hard ship if in spite of the corporation having a subordinate office at the place where the cause of action arises with which in all probability the plaintiff has had dealings such plaintiff is to be compelled to travel to the place where the corporation has its principal place
That place should be convenient to the plaintiff and since the corpo ration 394 has an office at such place it will also be under no disad vantage
Thus the Explanation provides an alternative locus for the corporation s place of business not an additional one
400F G 9
In the instant two cases since clause c is not attract ed to confer jurisdiction on courts at Bombay and the appel lant has admittedly its subordinate offices at the respec tive places where the goods in these two cases were deliv ered to it for purposes of transport the courts at Bombay had no jurisdiction at all to entertain the suits filed by the respondents and the parties could not confer jurisdic tion on the courts at Bombay by an agreement
Accordingly no exception can be taken to the findings in this behalf recorded by the trial court and the High Court
401C D Hakam Singh vs Ms Gammon India Ltd 1971 3 SCR page 314 referred to