Case: The State Of West Bengal Vs. The Indian Iron &amp; Steel Co. Ltd

as amended in Bihar - which amendments are not material for the decision of this case, - where activities other than mere winning the ore are carried on by an assessee with a view to convert the ore into a finished product and there is a transaction of sale of the ultimate product, the profit derived from the working of the mine is imbedded in the final realisation, and the profit which accrues to the assessee from the mining operation can be disintegrated from the total profit and ascertained and cess levied thereon. Mr. Chagla, learned Counsel for the assessee tried to distinguish that decision on the ground that in Tata Iron and Steel case, the iron ore won became imbedded in the steel produced but that is not the position in the present case as no part of the coal raised got imbedded in the ultimate product namely the steel. This difference in fact has no bearing on the ratio of the decision. The rule laid down in Tata Iron and Steel case is that, where the profit derived from the working of a mine is imbedded in the profits earned by the sale of the ultimate product, it is open for the assessing authority to disintegrate that profit and to find out the profits earned by the mine. The fact that in the one case the winning was that of the iron and in the order it is coal makes no difference in principle. In that case this Court ruled that the winning of the ore and converting it into a finished product could not be construed as two transactions conducted by them but it should be viewed as a single integrated undertaking for the production of steel and steel products. Similar is the position in the present case. Hence we hold that it was open to the assessing authority to take into consideration the value of the coal supplied to the factories and workshops referred to earlier in computing the profits of the colliery.9. Mr. Chagla next assailed the cesses imposed on another ground. He contended that in view of the decision of this Court in Tata Iron and Steel Companys case it was not open to the assessing authority to value the coal supplied to the factories and workshops at the controlled rate; he should have as suggested in that decision disintegrated the ultimate profits earned and found out the profit earned by the mine. We are of the opinion that it is impermissible for us to go into that question in these proceedings. The liability to pay tax is one thing and mode of computation of the net profit is another. The mode of computation is a matter for the assessing authorities except where the computation is done in violation of any provision of law. If there was any mistake in the computation, that mistake should have been got rectified by following the procedure prescribed in the Act. If the respondent company was aggrieved by the mode of computation adopted by the assessing authority, it should have agitated that question firstly before that authority and thereafter before the appellate authority. Having not done so, the company cannot be permitted to raise that question in the present suit; otherwise the finality contemplated by Section 102 of the Act would become illusory. It is true, as observed by Lord Thankerton in Secy. of State v. Mask and Co., 67 Ind App 222 = (AIR 1940 PC 105 ) that it is settled law that the exclusion of jurisdiction of a civil court is not to be readily inferred but that such exclusion must either be explicitly expressed or clearly implied. It is also well settled as observed by his Lordship that even if the 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. In the present case what is contended is not that any provision in the Act had been ignored by the assessing authority but that Section 72 thereof has not been properly interpreted by that authority. If the provisions of the Act form a precise, self-contained code, as we hold them to be, the assessee cannot be permitted to challenge the levy on the ground that the levy imposed on him is excessive. It must be remembered that the levy under the Act is imposed by a special law which law also provides its own remedies for correcting the errors that may be committed by the assessing authority. Where a liability not existing previously is created by a statute which statute at the same time provides a special or particular remedy for correcting any mistake that may occur in its enforcement the aggrieved party must adopt the form of remedy given by the statute and no other. In Dhulabhai v. State of Madhya Pradesh , (1968) 3 SCR 662 = (AIR 1969 SC 78 ) our present Chief Justice speaking for the Court has formulated the circumstances under which the jurisdiction of the civil court can be invoked in the matter of a levy of tax. Therein this Court has laid down that 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 court would normally do in a suit. It is further laid down in that case that question of the correctness of the assessment apart from their constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authority are declared final or there is an express prohibition under the particular Act. We do not think that the civil courts have jurisdiction to examine the correctness of the computation of the net profits made by the authorities under the Act.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]This contention has to be rejected in view of the decision of this Court in Tata Iron and Steel Co. Ltd. v. State of Bihar, (1963) Supp 1 SCR 199 = (AIR 1963 SC 577  ). The ratio of that decision directly bears on the point under consideration. It may be noted that the appellant therein as well as the respondent in this appeal are both Tata concerns. In that case the appellant company was the owner of certain mines in Bihar from where it extracted iron ore which it utilised in its factory at Jamshedpur for making iron and steel. Under Sections 5 and 6 of the Act as amended in Bihar all immovable property situate in any part of the State of Bihar was liable to the payment of local cess which in the case of mines was to be assessed on the annual profit earned by them. For the assessment years 1954-56, the company was assessed by the Cess Deputy Collector on the basis that it had made profits of Rs. 4/7/- per ton of iron ore extracted. Tata Iron and Steel Co. Ltd. claimed that it was not liable to the payment of cess as it did not sell any ore as such and could not therefore be treated as having made any profit from the mines within the meaning of Section 6 of the Act. The question in that case was whether the appellant company could in law be said to have derived "profits" from the mines when the ore extracted was not sold by it as such but was utilised by it for the purpose of manufacturing finished products which it sold. This Court ruled in that appeal that on a true construction of Sections 6 and 72 of the Act as amended in Bihar - which amendments are not material for the decision of this case, - where activities other than mere winning the ore are carried on by an assessee with a view to convert the ore into a finished product and there is a transaction of sale of the ultimate product, the profit derived from the working of the mine is imbedded in the final realisation, and the profit which accrues to the assessee from the mining operation can be disintegrated from the total profit and ascertained and cess levieddifference in fact has no bearing on the ratio of the decision. The rule laid down in Tata Iron and Steel case is that, where the profit derived from the working of a mine is imbedded in the profits earned by the sale of the ultimate product, it is open for the assessing authority to disintegrate that profit and to find out the profits earned by the mine. The fact that in the one case the winning was that of the iron and in the order it is coal makes no difference in principle. In that case this Court ruled that the winning of the ore and converting it into a finished product could not be construed as two transactions conducted by them but it should be viewed as a single integrated undertaking for the production of steel and steel products. Similar is the position in the present case. Hence we hold that it was open to the assessing authority to take into consideration the value of the coal supplied to the factories and workshops referred to earlier in computing the profits of theare of the opinion that it is impermissible for us to go into that question in these proceedings. The liability to pay tax is one thing and mode of computation of the net profit is another. The mode of computation is a matter for the assessing authorities except where the computation is done in violation of any provision of law. If there was any mistake in the computation, that mistake should have been got rectified by following the procedure prescribed in the Act. If the respondent company was aggrieved by the mode of computation adopted by the assessing authority, it should have agitated that question firstly before that authority and thereafter before the appellate authority. Having not done so, the company cannot be permitted to raise that question in the present suit; otherwise the finality contemplated by Section 102 of the Act would become illusory.