Case: Firm Seth Radha Kishan (Deceased)Represented By Hari Kisha Vs. The Administrator, Municipalcommittee, Ludhiana

This appeal raises the question whether a suit would lie in a civil Court claiming refund of the terminal tax collected by a municipality under the provisions of the Punjab Municipal Act, 1911 (Punjab Act III of 1911), hereinafter called theappellant is alleged to be a firm registered under the Indian Partnership Act. It carries on business within the limits of the Ludhiana Municipality. It imported Sambhar salt into the octroi limits of the Ludhiana Municipality. The Municipal Committee, Ludhiana, imposed terminal tax on the said salt and the appellant paid a sum of Rs. 5, 893/7/0 towards the said tax between October 24, 1947 and December 8, 1947. Under the Punjab Government Notification No. 26463, dated July 21, 1932, terminal tax was payable under item 68 of the Schedule attached to the said Notification at the rate of 3 pies per maund in respect of salt common, and under item 69 at the rate of As./10/-per maund in respect of salt of all kinds other than common salt. The Municipal Committee, Ludhiana, collected terminal tax on the Sambhar salt at the higher rate under item 69 of the Schedule on the ground that it did not fall under item 68 of the Schedule. The appellant filed a suit against the respondent in the Civil Court, Ludhiana, claiming refund of the said amount with interest. The respondent, inter alia, contended that Sambhar salt was not common salt and the Civil Court had no jurisdiction to entertain the suit. The Senior Subordinate judge, Ludhiana, held that Sambhar salt was common salt within the meaning of item 68 of the Schedule, that the imposition of tax on it by the respondent under item 69 of the Schedule was illegal and that, therefore, the Court had jurisdiction to entertain the suit. On appeal, the High Court of Punjab proceeded on the assumption that Sambhar salt was salt common, but held that, even so, the Civil Court had no jurisdiction to entertain the suit as the Act provided for a remedy by way of appeal against the wrong orders of the authorities thereunder. It further held that, in any view, the suit was premature as the appellant should have pursued his remedies under the Act before coming to the Civil Court. In the result, the decree of the Subordinate judge was set aside and the suit was dismissed. The present appeal has been preferred by the appellant by way of certificate issued by the High Court.

Court's reasoning:
The liability to pay terminal tax is created by the Act and remedy is given to a party aggrieved in the enforcement of that liability. As has been already indicated, against the order of the municipal committee levying terminal tax an appeal lies to the Deputy Commis- sioner and a reference to the High Court. Applying one of the principles stated supra, the party aggrieved can only pursue the remedy provided by the Act and he cannnot file a suit in a civil Court in that regard. Provisions of ss. 84 and 86 of the Act exclude the jurisdiction of the civil Court in respect of the tax levied or the assessment made under the Act.But the learned counsel for the Appellants contends that the impugned levy was not made under the Act but in derogation of the provisions thereof. There is no force in this contention. Section 61 (2) of the Act specifically empowers the Municipal Committee to levy any tax other than those specified therein with the previous sanction of the State Government. The levy of terminal tax was sanctioned by the Punjab Government by Notification No. 26463 dated July 21, 1932, at the rates shown in column 3 of the Schedule to the said Notification. Under the said Notification, read with s. 61 of the Act, the Municipal Committee is empowered to levy terminal tax on salt whether it is common salt or not. The Committee has, therefore, ample power under the Act and the Notification issued by the State Government to impose the said tax. The only dispute was as regards the rate of tax payable in respect of the salt brought by the appellant into the limits of the Municipal Committee. The rate depended upon the character of the salt. The ascertainment of the said fact is a necessary step for fixing the rate and it is not possible to say that in ascertaining the said fact the authorities concerned travelled outside the provisions of the Act. The learned counsel contends that if a municipal committee levies terminal tax on an article not liable to tax under the Act, a suit would lie and, therefore, the same legal position should apply even to a case where the municipal committee levies the tax in respect of an article under an entry not applicable to if. We do not see any analogy between these two illustrations : in the former, the municipal committee does not act under the Act, but in the latter it only commits a mistake or an error in fixing the rate of tax payable in respect of a particular commodity ; one is outside the Act and the other is under the Act ; one raises the question of jurisdiction and the other raises an objection to a Matter of detail. We, therefore, hold that in the present case the mistake, if any, committed in imposing the terminal tax can only be corrected in the manner prescribed by the Act. The appellants have misconceived their remedy in filing the suit in the civil Court. The conclusion arrived at by the High Court is correct.