Case: Bata Shoe Co Vs. City Of Jabalpur Corporation

2. Plaintiffs are a limited company having their registered office at Calcutta. At the relevant time they had their factories at Batanagar in West Bengal, Batapur in West Punjab, Palsia-Digha in Bihar and Faridabad near Delhi. The sales organisation of the plaintiffs is situated at Calcutta, and that organisation sells manufactured articles through the Companys retail shops situated in different parts of India and Pakistan. Three such retail shops were situated at Jabalpur.3. In respect of the articles which were imported by the retail shops at Jabalpur within the limits of the then Jabalpur Municipal Committee between April 1, 1943 and March 31, 1945, the plaintiffs had paid to the Municipal Committee a sum of Rs. 16, 526 odd as octroi duty. This duty was assessed by the Municipal Committee on an amount which was 40% less than the retail price of the goods which were brought within the municipal limits. In the year 1946-47 the Municipal Committee decided to reopen and revise the assessment by charging the octroi duty on an amount which was only 6 1/4% less than the retail price of the goods. The Municipal Committee further decided to levy double the duty by way of penalty for the aforesaid period on the ground that the plaintiffs had intentionally evaded the payment of the duty payable on the goods. Plaintiffs preferred an appeal against the decision of the Municipal Committee to the Sub-Divisional Officer, Jabalpur who by an order dated July 14, 1948 modified the decision of the Municipal Committee by permitting them to charge the octroi duty on an amount which was less by 12 1/2% than the retail price of the goods. The Sub-Divisional Officer however upheld the assessment of double duty. The revision application preferred by the plaintiffs to the Board of Revenue was rejected on October 4, 1948, on the ground that it was not maintainable.4. In conformity with the appellate order, but under protest, plaintiffs paid to the Municipal Committee a sum of Rs. 21, 071-1-3 on August 6, 1948. Defendants demanded a further sum of Rs. 10, 604-2-6 alleging that they had overlooked asking for it through mistake. Plaintiffs paid that amount too on September 22, 1948 under protest. On June 20, 1949 they filed a suit against the Municipal Committee for recovery of the total amount of Rs. 31, 677-3-9 with interest at 6% per annum on the ground that the defendants were not entitled to recover the amount by way of octroi duty and penalty. During the pendency of the suit the Municipal Committee was succeeded by the Corporation for the City of Jabalpur who were substituted as defendants to the suit.5. The trial Court decreed the suit to the extent of Rs. 32, 629-7-0 calculating the interest at 4% holding that the defendants could not charge octroi duty on an amount arrived at by anything less than 40% from the retail sale price, that the recovery of octroi duty by deducting a sum of 12 1/2% only from the retail price was illegal and that the defendants were not justified in recovering double duty by way of penalty since the plaintiffs had not intentionally evaded the payment of proper duty. Defendants had raised contentions both as regards the jurisdiction of the Civil Court to entertain the suit and as regards limitation but the trial Court rejected those contentions and held that it had jurisdiction to entertain the suit and that it was not barred by limitation.6. In appeal the High Court held that the defendants were entitled to revise the reopen the assessment and that the reassessment of octroi duty which was ultimately fixed in appeal by the Sub-Divisional Officer could not be questioned by the plaintiffs in the Civil Court. On the question of limitation the High Court held that applying the special period of limitation provided in Section 48 of the Central Provinces and Berar Municipalities Act, 1922 the suit was within limitation as regards the payment made by the plaintiffs on September 22, 1948 but that it was barred by limitation as regards the payment made on August 6, 1948. The suit in regard to the amount paid to the Municipal Committee in September, 1948, was held to be within limitation on account of the intervening summer vacation during which the courts were closed. According to the High Court the exaction of the double duty being beyond the powers of the defendants, the special period of limitation was not attracted and the plaintiffs were therefore entitled to recover the sum paid by way of double duty. In the result the High Court passed a decree in the sum of Rs. 24, 103-12-3 which according to it, represented the double duty wrongly recovered by the defendants from the plaintiffs. The High Court has granted to both the parties a certificate to file an appeal to this Court under Article 133(1) of the Constitution and both parties being partly aggrieved by the decree of the High Court have filed cross appeals.

Reasoning:
20. These provisions show in the fist place that the defendants indubitably possess the right and the power to assess and recover octroi duty and double duty on goods which are brought within the municipal limits for sale, consumption or use therein. The circumstance that the defendants might have acted in excess of or irregularly in the exercise of that power cannot support the conclusion that the assessment or recovery of the tax is without jurisdiction. Applying the test in Kamla Mills if the appropriate authority while exercising its jurisdiction and powers under the relevant provisions of the Act, holds erroneously that an assessment already made can be corrected or that an assessee is liable to pay double duty when Rule 14(b), in fact, does not justify such an imposition, it cannot be said that the decision of the authority is without jurisdiction. Questions of the correctness of the assessment apart from its constitutionality are, as held in Dhulabhai, for the decision of the authorities set up by the Act and a civil suit cannot lie of the orders of those authorities are given finality. There is no constitutional prohibition to the assessment which is impeached in the instant case as there was in Bharat Kala Bhandar, B. M. Lakhani, and Dhulabhai. The tax imposed in those cases being unconstitutional, its levy, as said by Mudholkar, J. who spoke for the majority in Bharat Kala Bhandar, was "without a vestige or semblance of authority or even a shadow of right".21. That is in regard to the power of the authority concerned to re-assess and to levy double duty. Secondly, both the Act and the Rules contain provisions which we have noticed above, enabling the aggrieved party effectively to challenge an illegal assessment or levy of double duty. By reason of the existence and availability of those special remedies, the ordinary remedy by way of a suit would be excluded on a true interpretation of Section 84(3) of the Act.22. The argument that double duty was levied on the plaintiffs though not justified by the terms of Rule 14(b) goes to the correctness of the levy, not to the jurisdiction of the assessing authority. That rule authorizes the imposition of double duty if dutiable articles are imported (a) without paying the duty or (b) without giving declaration to the Octroi Moharrir. It may be that neither of these two eventualities occurred and therefore there was no justification for imposing double duty. But the error could be corrected only in the manner provided in the Act and by the authority prescribed therein. The remedy by way of a suit is barred.23.Plaintiffs sought support to their contention as regards the maintainability of the suit for refund of double duty and revised duty, from certain observations contained in Firm Seth Radha Kishan v. Administrator, Municipal Committee, Ludhiana ([1964] 2 SCR 273  , 284 : AIR 1963 SC 1547   : [1963] 50 ITR 187  ) to the effect that "a suit in a civil court will always lie to question the order of a tribunal created by a statute, even if its order is, expressly or by necessary implication, made final, if the said tribunal abuses its power or does not act under the Act but in violation of its provisions".In the first place, the assessment in the instant case was made by the authority duly empowered to do so and secondly, the authority was acting under the Act while revising the assessment and imposing double duty. It had the power to assess and levy double duty. If it exceeded that power it acted wrongly, not without jurisdiction. In Firm Seth Radha Kishan, the Municipal Committee being entitled to impose a certain rate of tax on common salt and higher rate in respect of salt of other kinds, imposed tax at the higher rate on "sambhar salt" which was a variety of common salt. Section 86 of the Punjab Municipal Act, 1911, provided that the liability of any person to be taxed cannot be questioned in any manner or by any authority other than that provided in the Act. That provision is identical with Section 84(3) of the C. P. Municipalities Act, 1922, with which we are concerned in the instant case. Section 86(2) of the Punjab Act provided that no refund of any tax shall be claimed by any person otherwise than in accordance with the provisions of the Act and the Rules thereunder. It was held by this Court that the liability to pay terminal tax was created by the Act and since a remedy was given to the party aggrieved in the enforcement of that liability, the suit for refund was not maintainable by reason of Section 86. The observations on which plaintiffs rely cannot, in the context, be taken to mean that the Act protects correct assessments only and that every incorrect or wrong order of assessment can be challenged by a suit though the statute gives it finality and provides full and effective remedies to challenge it. Except in matters of constitutionality and the like, a self-contained Code must have priority over the common means of vindicating rights. We would like to add that if the observations on which plaintiffs rely are to be understood literally, they are contrary to the decision in Kamla Mills case where, speaking for a seven-Judge Bench, Gajendragadkar, C. J., observed that if the appropriate authority while exercising its jurisdiction and powers under the relevant provisions of the Act comes to an erroneous conclusion, it cannot be said that the decision is without jurisdiction (p. 78).The instant case does not fall under the 1st proposition because Section 84(3) of the Act does not merely give finality to the orders passed by the special tribunals. It provides, expressly, that such orders shall not be questioned in any other manner or by any other authority than is provided in the Act. The 2nd proposition deals in its first paragraph with cases where there is an express bar to the civil courts jurisdiction. The second paragraph of that proposition deals with cases where there is no express exclusion. The instant case falls under either one or the other paragraph of this proposition, which rendered it necessary to examine whether the Act creates special rights and liabilities, provides for their determination by laying down that such rights and liabilities shall be determined by the special tribunals constituted under it and whether remedies normally associated with actions in civil courts are prescribed by the Act. Upon that examination we concluded that the suit is barred from the cognizance of the civil court.25. Not only that the Act of 1922 provides an effective remedy to an aggrieved party to challenge the assessment of octroi duty and to claim refund of duty illegally paid or recovered, but the plaintiffs in fact availed themselves of those remedies. In 1946-47 when the Municipal Committee re-opened and revised the past assessments by charging octroi duty on an amount which was only 6 1/4% less than the retail price of the goods and when it levied double duty by way of penalty, plaintiffs preferred an appeal against the decision of the Municipal Committee to the Sub-Divisional Officer, Jabalpur, who by an order dated July 14, 1948 modified the decision of the Committee by asking them to charge octroi duty on an amount which was less by 12 1/2% instead of 6 1/4% than the retail price of the goods. Plaintiffs succeeded to an extent though the Sub-Divisional Officer upheld the assessment of double duty. Having exhausted their remedies under the Act and having been benefited by the appellate decision, though partly, plaintiffs turned to the civil court to claim the refund. That is impermissible in view of the provision contained in Section 84(3) of the Act.