Case: M/s. Hind Tobacco &amp; Cigarette Company Limited Vs. Union of India &amp; Others

December 11, 1954 (Ex. B-4), the first offer to supply cigarettes and contended that this was the only contract in which in the column of Price, sales-tax was mentioned and reference was made in the "Remarks" Column to Schedule B for excluding the sales-tax. In the subsequent contracts, according to the respondents counsel, there was no such mention. He drew our attention to the subsequent offers to support his submission. The learned counsel also relied on the Tata Iron and Steel Co. Ltd. v. State of Bihar, 1958 SCR 1355 = (AIR 1959 SC 452) for the contention that the buyer is under no liability to pay sales-tax in addition to the agreed sales price : there could, therefore, be no question of any agreement on the part of the defendant to reimburse the plaintiff, argued the counsel. Finally it was submitted that the High Court had certified the case to be fit for appeal only because of its high valuation and because of the judgment of the High Court being one of reversal : the grant of certificate by the High Court does not in the circumstances mean that the case involves any important question of law. This Court is, therefore, not obliged to interfere with the decision of the High Court, even if it is considered to be erroneous contended Shri Sanghi.9. Dealing with the last argument first, Article 133 (1) confers a right of appeal on an aggrieved party when the case satisfies the requirement of Clause (a) and the judgment of the High Court is one of reversal. In such a case it is not necessary that, a substantial or important question of law should also be involved.This Court, therefore, cannot justifiably decline to go into the merits of the appeal on the ground that no substantial question of law is involved. But this apart, it cannot be said that this appeal does not involve any substantial question of law.10. Turning to the merits it is clear and indeed it is not disputed that Clause 7 in Schedule B governs the various contracts of sale between the parties. This clause expressly provides that the price quoted is exclusive of sales-tax.But sales-tax was expressly agreed to be paid at the rates prescribed by the State Government concerned. This liability appears to us to be the real core of one of the fundamental terms of the obligation undertaken by the purchaser. The term that the sales-tax, if payable, should be shown as a separate item is merely a matter of procedure and the condition that if the sales-tax intended to be claimed is not distinctly shown then no such claim would be admitted at a later stage is more akin to exemption from this liability. In the case in hand in the very first tender, as already noticed, the plaintiff had actually separately shown in distinct terms that the price per unit stated in column No. 4 was subject to sales-tax at the rate of 1 anna per rupee. In the Remarks Column it was again expressly mentioned that no sales-tax was leviable as per Schedule B. This tender fully complies with Clause 7 both in letter and in spirit even though in our opinion in view of the Note to Clause 7 this mention was scarcely necessary, the sales-tax not being leviable according to the defendants representation. In subsequent tenders, if there is no mention of sales-tax or of the fact that it was not leviable as per Schedule this was due to the fact that it was considered redundant. This, as already noticed, was also admitted by the defendant in the written statement. The separate mention of sales-tax which, in our opinion, does not relate to the fundamental term or core of the contract, cannot be considered to deprive the plaintiff of its right to realise the sales-tax actually held by the sales-tax department to be leviable and which the defendant had in express terms undertaken to pay. The express and unqualified representation by the defendant in the Note to Clause 7 in Schedule B that sales-tax was not leviable on these sales was, in our opinion, sufficient to justify the omission on the part of the plaintiff to distinctly show it with the price quoted to be intended to be claimed. This omission could by no means deprive the plaintiff company of the right under the contract to claim from the defendant sales tax at the prescribed rate actually paid.11. A faint contention was raised on behalf of the defendant-respondent that there was no agreement by the defendant to pay sales-tax because the cigarettes supplied by the plaintiff were of an inferior quality and therefore, the company must be deemed to have agreed not to charge sales-tax from the purchaser as is the normal practice in the market. In support of this submission reference was made to Ex. B-1, a letter dated July 6, 1954, written by the Deputy Director of Purchase, Government of India, Ministry of Food and Agriculture to the plaintiff company. All that this letter suggests is that since none of the plaintiffs "Brands" had been approved, the plaintiff was requested to get its Brands approved from the Director of Supplies and Transport so as to enable the company to quote against the Ministrys future tender enquiries. This letter does not support the counsels submission. Apparently after July, 1954 the plaintiff must have got their Brands approved which enabled them to quote against the Ministrys future tender enquiries. It is not and was never the defendants case that the Brand of cigarettes for which the tenders were actually accepted were of an inferior quality. This contention is an afterthought and is unacceptable. It is somewhat surprising that the State Government should have advanced this plea. Indeed even the main plea which was plainly contrary to the clear and explicit representation of the State Government does not reflect the expected fairness on the part of the defendant in their dealings with the citizens.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]9. Dealing with the last argument first, Article 133 (1) confers a right of appeal on an aggrieved party when the case satisfies the requirement of Clause (a) and the judgment of the High Court is one of reversal. In such a case it is not necessary that, a substantial or important question of law should also be involved.This Court, therefore, cannot justifiably decline to go into the merits of the appeal on the ground that no substantial question of law is involved. But this apart, it cannot be said that this appeal does not involve any substantial question of law.10. Turning to the merits it is clear and indeed it is not disputed that Clause 7 in Schedule B governs the various contracts of sale between the parties. This clause expressly provides that the price quoted is exclusive ofx was expressly agreed to be paid at the rates prescribed by the State Government concerned. This liability appears to us to be the real core of one of the fundamental terms of the obligation undertaken by the purchaser. The term that theif payable, should be shown as a separate item is merely a matter of procedure and the condition that if theintended to be claimed is not distinctly shown then no such claim would be admitted at a later stage is more akin to exemption from this liability. In the case in hand in the very first tender, as already noticed, the plaintiff had actually separately shown in distinct terms that the price per unit stated in column No. 4 was subject toat the rate of 1 anna per rupee. In the Remarks Column it was again expressly mentioned that nowas leviable as per Schedule B. This tender fully complies with Clause 7 both in letter and in spirit even though in our opinion in view of the Note to Clause 7 this mention was scarcely necessary, thenot being leviable according to the defendants representation. In subsequent tenders, if there is no mention ofor of the fact that it was not leviable as per Schedule this was due to the fact that it was considered redundant. This, as already noticed, was also admitted by the defendant in the written statement. The separate mention ofwhich, in our opinion, does not relate to the fundamental term or core of the contract, cannot be considered to deprive the plaintiff of its right to realise theactually held by thedepartment to be leviable and which the defendant had in express terms undertaken to pay. The express and unqualified representation by the defendant in the Note to Clause 7 in Schedule B thatwas not leviable on these sales was, in our opinion, sufficient to justify the omission on the part of the plaintiff to distinctly show it with the price quoted to be intended to be claimed. This omission could by no means deprive the plaintiff company of the right under the contract to claim from the defendant sales tax at the prescribed rate actually paid.11.A faint contention was raised on behalf of thet there was no agreement by the defendant to paye the cigarettes supplied by the plaintiff were of an inferior quality and therefore, the company must be deemed to have agreed not to chargefrom the purchaser as is the normal practice in the market. In support of this submission reference was made to Ex.a letter dated July 6, 1954, written by the Deputy Director of Purchase, Government of India, Ministry of Food and Agriculture to the plaintiff company.All that this letter suggests is that since none of the plaintiffs "Brands" had been approved, the plaintiff was requested to get its Brands approved from the Director of Supplies and Transport so as to enable the company to quote against the Ministrys future tender enquiries. This letter does not support the counsels submission. Apparently after July, 1954 the plaintiff must have got their Brands approved which enabled them to quote against the Ministrys future tender enquiries. It is not and was never the defendants case that the Brand of cigarettes for which the tenders were actually accepted were of an inferior quality. This contention is an afterthought and is unacceptable. It is somewhat surprising that the State Government should have advanced this plea. Indeed even the main plea which was plainly contrary to the clear and explicit representation of the State Government does not reflect the expected fairness on the part of the defendant in their dealings with the citizens.