Case: Supdt. of Taxes, Dhubri &amp; Others Vs. Onkarmal Nathmal Trust &amp; Others

2. The Assam Taxation (on goods carried by road or Inland Waterways) Act, 1954 hereinafter referred to as the Old Act was passed by the Assam Legislature in 1954. On 26th September, 1960 this Court declared the Old Act to be ultra vires the Constitution on the ground that prior sanction of the President was not taken. On 6th April, 1961 the New Act was passed by the Assam Legislature. The New Act was published in the Gazette on 15th April, 1961. The New Act was to remain in force with retrospective effect from 24th April, 1954 up to 1st March, 1962.3. On 28th July, 1961 the New Act was challenged by about 485 assessees in the Assam High Court. The High Court passed an order staying all proceeding. The order staying proceedings continued till the New Act was held ultra vires the Constitution by the High Court. On 1st August, 1963, the High Court held that New Act to be ultra vires. On 1s August, 1963 the High Court granted certificates of fitness to appeal to this Court.4. On 13th December, 1963 on a writ application filed by Khyerbari Tea Co. Ltd. this Court held the New Act to be valid. The decision of this Court is reported in (1964 5 S.C.R. 975) Kyerbari Tea Co. Ltd. & Anr. vs. The State of Assam.5. On 4th March, 1964 the State of Assam on the strength of the certificate granted by the High Court filed an appeal in this Court against the judgment of the High Court dt. 1st August, 1963. On 28th October, 1964 this Court granted interim stay of the operation of the judgment of the High Court dt. 1st August, 1963. On 29th January, 1965 the interim stay granted by this Court was made absolute subject to the condition that the assessment proceedings in respect of 485 respondents would continue but no levy would be made, and the respondents could initiate assessment proceedings in respect of those assessees. On 1st April, 1968 this Court accepted the appeals filed by the State Government.6. It is only after the State obtained interim order from this Court on 29th January, 1965 that notices under s. 7(2) of the New Act were issued. These appeals challenged the validity of those notices. In Civil Appeals No. 140-143 of 1973 notice under s. 7(2) of the New Act was issued on 4th March, 1965 for the return of the quarter 1st January to 31st March, 1962. In Civil Appeal No. 687 of 1973 notice under s. 7(2) of the New Act was issued on 4th march, 1965 for the return of the quarter 1 January to 31st March, 1962. In Civil Appeals No. 262-275 of 1973 notice under s. 7(2) of the New Act was issued on 2nd August, 1965 for the return of the quarter 1st October, 1961 to 31st December, 1961. In Civil Appeals No. 176-1762 of 1973 notice under s. 7(2) of the New Act was issued on 30th February, 1965 for the return of the quarter 1 October, 1961 to 31st December, 1961, respondent-assessees challenged these demand notices in the High Court on the ground that the notices were illegal and beyond the jurisdiction of the State. The broad contention of the assessees was that the State could issue notices within two years from the expiry of the return period and none of the notices was within the time mentioned in the New Act, and, therefore, the State had no jurisdiction is issue the notices. The State, on the other hand, contended that from 10th August, 1961 to 1st August, 1963 there was an order of the High Court staying all proceedings, and therefor, it was not possible to issue any notice until the State was permitted by orders of the Court to commence proceedings.7. The High Court accepted the contention of the assessees. The High Court held that the notices were barred by limitation in terms of the provisions contained in s. 7(2) of the New Act. Each of the challenged notices was much beyond the date of expiry of two years from the date when return should have been filed. The High Court held that the provisions contained in the Limitation Act do not apply to legislation of the type of the New Act.

Court's reasoning:
The maxim lex non cogit ad impossibilia means that the law does not compel a man to do that which he cannot possibly perform. In the present appeals, the applications were moved in the High Court for stay of proceedings. The respondents challenged the validity of Act, and, therefore, asked for an injunction restraining the State from taking proceedings under the Act. At no stage, did the State ask for variation or modification of the order of injunction. It is well known that if it is brought to the notice of a Court that proceedings are likely to be barred by time by reason of any order of injunction or stay the Court passes such suitable or appropriate orders as will protect the interest of the parties and will not prejudice either party. Even when certificate to appeal to this Court was granted on 1st August, 1963, the State did not ask for any order for stay of operation of the judgment. That is quite often done. For the first time, on 10th August, 1964 the State field an application for stay of operation of the judgment of the High Court. The State did not take steps at the appropriate time. This Court on 28th October, 1964 granted an interim order staying the operation of the High Court judgment. The interim order was made absolute on 28th January, 1965 with certain conditions. The State cannot take advantage of its own wrong and lack of diligence. The State cannot contend that it was impossible to issue any notice within the period mentioned in s. 7(2) of the New Act. The State did not endeavour to obtain appropriate orders to surmount the difficulties by reason of the injunction against taking steps within the time contemplated in s. 7(2) of the New Act. The State is guilty of default. The State had remedies open to take steps by asking for modification of the order. The State had to assert the right that the State was entitled to demand taxes and the respondent was liable to pay the same. The State followed the policy of inactivity. Inactivity is not impossibility. The order of injunction is not to be equated with an act of God or an action of the enemy of the State or a Generalthat financial year was over and no return was made in response to general notice under s. 19(1) of the Act and no individual notice was served under s. 19(2) of the Act there could arise a case of escaped assessment. The only way to bring escaped assessment income to tax was to initiate proceedings where notice in accordance with s. 30 was served within three years of the end of that financial year. No such proceedings were initiated in that Assam case (supra), and, therefore, the assessment orders were quashed. The Assam case is an authority for the proposition that if no notice is served in accordance with the provisions of the Act there cannot be any initiation of assessment proceedings and there would be no jurisdiction tois either a form of estoppel or an election. The doctrine of estoppel by conduct means that where one by words or conduct wilfully causes another to believe in the existence of certain sate of things, and induces him to act on that belief, or to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at that time. The fundamental requirement as to estoppel by conduct is that the estoppel must concern an existing state of facts. There is no common law estoppel funded on a statement of future intention. The doctrine of promissory estoppel is applied to cases where a promiser has been estopped from acting inconsistently with a promise not to enforce an existing legal obligation. This doctrine differs from estoppel properly so called in that the presentation relied upon need not be one of present fact. The second requirement of an estoppel by conduct is that it should be unambiguous. Finally, an estoppel cannot be relief on if the result of giving effect to it would be something that is prohibited by law. Estoppel is only a rule of evidence. One cannot found an action upon estoppel. Estoppel is important as a step towards relief on the hypothesis that the defendant is estopped from denying the truth of something which he has said.A distinction arises between the provisions which confer jurisdiction and provisions which regulate procedure. Jurisdiction can neither be waived nor created by consent. A procedural provision may be waived by conduct or agreement. In the case of Kammins Ballrooms Co. (supra) it was said that waiver arises in a situation where a person is entitled to alternative rights inconsistent with one another. If he has knowledge of the facts which give rise to law to these alternative rights and acts in a manner which is inconsistent only with his having chosen to rely on one of them, the law holds him to his choice even though he was unaware that this would be legal consequence of what he did. He is sometimes said to have "waived" the alternative right, as for instance a right to forfeit a lease or to rescind a contract of sale for wrongful repudiation or breach of condition. This is also sometimes described as "election" rather than "wavier". Another type of waiver debars a person from raising a particular defence to a claim against him. It arises when he either agrees with the claimant not to raise that particular defence or so conduct himself as to be estopped from raising it.28. In the present case, the respondent cannot be said to have waived the provisions of the statute. There cannot be any waiver of a statutory requirement or provision which goes to the jurisdiction of assessment. The origin of the assessment is either an assessee filing a return as contemplated in the Act or an assessee being called upon to file a return as contemplated in the Act. The respondents challenged the Act. The order of injunction does not amount to a waiver of the statutory provision. The issue of a notice under the provisions of the Act relates to the exercise of jurisdiction under the Act in all cases. Revenue statutes are based on public policy. Revenue statutes protect the public on the one hand and confer power on the State on the other.29. The decision in William Shepard vs. O. E. D. Barron (194 U.S. 553-48 L. Ed. 1115) on which the Solicitor General relied for the proposition that the constitutionality of a rule of assessment can be waived does not have any application in the present case. In the American decision (supra) an objection against the frontage rule of assessment for a public improvement, prescribed by the State laws, was not allowed to be urged to defeat the collection of the assessments. The reason was that the abutting owners who petitioned for the improvement under the Act, actively participated in carrying out the work, recognized the justice of the assessments from time to time during its progress, and signed a statement for the purpose of inducing the issuance and purchase of country improvement bonds to the effect that the work had been properly done. In the American decision (supra) the work was done at the instance and request of the owners. The Court found an implied contract arising from facts that the party at whose request and for whose benefit the work had been done would pay for it in the manner provided for by the Act under which the work was done.30. It is against principle to suggest that the appellants did any thing wrong or they are taking advantage of anything wrong. Jessel, M.R. in Re. Halletts Esate Knatchbull vs. Halleett 13 Ch. D. 696 said "Now, first upon principle, nothing can be better settled, either in our own law, or, I suppose, the law of all civilised countries, than this, that where a man does an act which may be rightfully performed, he cannot say that act was intentionally and in fact done wrongly". The respondents were entitled to impeach the statute under which they were made liable. The respondents have done no wrong. The respondents are not taking any advantage of any at of theirs. The State was entitled to resist the respondents. The State did so by contending that the Act was valid, but the State took no steps during the pendency of the litigation to take directions from the Court to serve notices of demand upon the appellants to keep alive the right of the respondents.