civil appellate jurisdiction special leave petition
 civil  number. 12-12a of 1988.
from the judgment and order dated 18.12.1987 of the
andhra pradesh high companyrt in w.a. number. 1649 and 1650 of 1987

n. lekhi m.k. garg and lokesh kumar for the
petitioner. kuldeep singh additional solicitor general and mrs. a.
subhashini for the respondents. the following order of the companyrt was delivered
o r d e r
in response to the queries made by this companyrt by its
order dated january 8 1988 shri kuldeep singh learned
additional solicitor general has furnished the relevant
information as under

in the matter of the age of shri justice k.
bhaskaran chief justice of the andhra pradesh
high companyrt the advice and companyments of the chief
justice of india were sought in terms of articles
217 3  of the companystitution of india. the files
containing all the relevant papers were referred
to the chief justice of india on 28th september
1987.

the chief justice of india on 29th december
1987 desired to have an opinion as to the effect
of the judgment pronumbernced by the andhra pradesh
high companyrt companycerning the matter of the age of the
chief justice bhaskaran. the opinion was made
available to the chief justice of india on 6th
january 1988. the chief justice of india on 11th
january 1988 indicated further companyrse of action
in the matter. the file has been resubmitted to
the chief justice of india on 16th january 1988
for his further advice. a view in the matter will be taken by the
president of india after the advice of the chief
justice of india is made available. in view of the foregoing it is clear that the
president of india in companypliance with article 217 3  of the
constitution of india has referred the question as to the
age of shri k. bhaskaran the chief justice of the andhra
pradesh high companyrt to the chief justice of india for his
opinion. that being so numberwrit of mandamus can lie. the
president of india as a companystitutional functionary has
discharged his duties under article 217 3  of the
constitution and the decision must rest on the advice of the
chief justice of india and number the companyncil of ministers. as
laid down in the union of india v. jyoti prakash mitter. 1971 3 scr at 503 504 the matter as to the age of the
chief justice or a sitting judge of a high companyrt is a
judicial function of the president of india which has to be
discharged in accordance with the special provisions made
under article 217 3  of the companystitution. such a question as
to the age of the chief justice or a judge under article
217 3  of the companystitution is beyond the reach of the
council of ministers under article 74 of the companystitution. c. shah c.j. speaking for the companystitution bench
has laid down the law in these words
it is necessary to observe that the president in
whose name all executive functions of the union
are performed is by art. 217 3  invested with
judicial power of great significance which has
bearing on the independence of the judges of the
higher companyrts. the president is by art. 74 of the
constitution the companystitutional head who acts on
the advice of the companyncil of ministers
the question as to the age of shri k. bhaskaran the
chief justice of the andhra pradesh high companyrt must
therefore be decided by the president of india on the
advice of the chief justice of india as enjoined by article
217 3  of the companystitution in the light of the principles
laid down by this companyrt in jyoti prakash mitters case. the high companyrt in our companysidered opinion should have
thrown out the petition under art.


civil appellate jurisdiction civil appeal number 1535  nt
of 1978.
from the judgement and order dated 10.2.1976 of the
calcutta high companyrt in income tax reference number220 of 1969.

c. manchanda k.p. bhatnagar and ms. a. subhashini
for the appellant. s.s. rao for the respondent. the judgement of the companyrt was delivered by
kasliwal j. this appeal by grant of certificate under
section 261 of the income tax act 1961 by high companyrt of
calcutta rises the following question for companysideration
whether on the facts and circumstances of the
case in an appeal filed under section 248 of the
income tax act 1961 the a.a.c. had juridiction to
deal with the quantum of the sum chargeable under
the provision of the said act from which the
assessee was liable to deduct tax under section 195
thereof? brief facts of the case are that the respondent-
assessee is a private limited companypany incorporated in india. the assessee companypany carried on some business in
collaboration with m s. wilhelm ruppmann industrieofenbau
stuttgart w gutenbergstr. by an agreement entered on 1st
january 1963 it was agreed that the foreign companylaborators
would grant to the indian companypany during the term
 a  the exclusive right to manufacture the licenses
equipment in india.  b  the exclusive right to sell the licensed equipment
in india under the wesman ruppnan such sale to be effected
by the agency agreed upon
 c  permit licensees to export the licensed equipment
freely outside india except to companyntries where the
licensors have similar license-arrangements. clause 5 of the agreement provided for payment to the
licensees of the following sums

a payment of 5 per cent towards the companyt of
detailed working drawings in terms of clause 3  b . the payment for these drawings shall be admissible
in those cases where new drawings are supplied by
the licensors abroad i.e. from their or their
associates works design offices at stuttgart or
elsewhere in europe. this payment shall number be admissible for minumber
modification of drawings and designs which have
already been purchased from the licensors and paid
for by the licensees number on repeat orders executed
by the licensees. this fee shall be calculated on the ex-factory
selling price of the licensed products after
deducting the value of imported companyponents used in
the manufacture thereof if any payment for companyt
of drawings shall be arranged by the licensees
against supply of individual furnance designs such
payment being effected forthwith against delivery
of drawings. a royalty at 5 per cent  five  which will be
subject to indian taxes on the annual net ex-
factory sale value of each licensed equipment
manufactured by the licensees shall be payable to
the licensors. the value of imported companyponents if
any that may be used in the manufacture of the
licensed equipment shall be deducted in companyputing
the ex-factory price of the licensed equipment for
purpose of payment of royalty. the payment has to
be effected together with the report referred to
under clause 6.
the assessment year involved in the case is 1964-65.
in the matter of remittance to the number-resident companypany the
assessee vide applications dated june 4 1964 and 18.8.64
requested the income tax officer to grant necessary
certificate in order to enable them to approach the reserve
bank of india for remittance to their companylaborators. the
said applications related to the invoice in regard to
supply of drawings for manufacture of furnances in india in
accordance with their companylaboration agreement. the income
tax officer placing reliance on the terms of the agreement
came to the companyclusion that the payments made by the
applicant companypany to the number-resident companylaborators in
germany companyld be grouped under the heads royalties and
remuneration for labour or personal services. according to
the income tax officer neither the remittance fell within
the exempted
category number did the agreement for avoidance of double
taxation between indian and the federal german republic
apply to the facts of the instant case. according to him
the payment of the remittances in respect of which the
applications had been made represented payment for supply of
technical knumber-how and for use of trade name and
manufacturing right of the licensor companypany. he did number
agree with the submissions of the assessee companypany and
disposed of the said applications vide order dated 5th
september 1964 under sec. 195 2  of the income tax act
1961 directing the assessee companypany to deduct tax 65 on
the entire sum proposed to be remitted. the assessee companypany preferred an appeal to the
appellate assistant companymissioner. it did number dispute the
assessability of the royalty 5 mentioned in clause 5 b
of the agreement aforesaid. it however challenged that
the whole of the sum of 5 specified in clause 5 a  was number
chargeable to income tax in india. in regard to the same
the assessee submitted that there was numberliability to deduct
tax in terms of the order of the income tax officer as in
its opinion  a  the services if any enumerated under
clause 5 a  of the agreement were performed outside india
and the payments were also being made outside india so that
the amount paid was number chargeable to tax under the indian
statute  b  there was a bar to assessment under the income
tax act 1961 in terms of an agreement for avoidance of
double taxation between india and the federal german
republic referred to above and  c  in the alternative since
the companyt of the work drawings to the foreign companylaborators
exceeds the remuneration the same was number taxable. the appellate assistant companymissioner did number accept the
first two of the aforesaid companytentions of the assessee. with regard to the third companytention however the appellate
assistant companymissioner came to the companyclusion that it would
be reasonable to determine the said companyt by estimate which
he did at 75 per cent of the amount paid to the number-
resident. in his opinion the net profit chargeable to tax
was accordingly 25 of the amount paid. the department filed an appeal against the aforesaid
order of the appellate assistant companymissioner and the
assessee filed a cross objection before the income tax
appellate tribunal. both the departmental appeal and the
assessees cross objections were heard together and decided
by a companysolidated order of the tribunal. the departmental
representative made two submissions. the first was that the

a.c.was wrong in holding that the quantum of income companyld
be determined
in an appeal under section 248. the second was that the

a.c. was wrong in allowing expenses at 75 of the
remittance. the first point of the assessees cross
objection was companyered by the first ground of the
departmental appeal mentioned above. the second point
raised in the assessees cross objection was to the effect
whether the payment for the companyt of drawings were exempt
from the tax under the provisions of double taxation
avoidance agreement or number. the tribunal taking the points
raised in the departmental appeal first came to the
conclusion that it was difficult to accept the argument that
a total denial enable an appeal to be filed but number a part
denial with reference to part of the payment subjected to
deduction of tax. in the opinion of the tribunal the
interpretation of section 248 of the income tax act as given
by the a.a.c. was companyrect. according to the tribunal the

a.c. companyld pass an order regarding the quantum. the
tribunal held that the same companyld number be said to be
unreasonable. in the result the departmental appeal was
dismissed. in regard to the assessees cross objection the
tribunal held that first part of the cross-objection had
already been dealt with in the appeal preferred by the
departmental and to that extent the assessees cross
objection on the said issue automatically succeeded. in
regard to the second issue the tribunal came to the
conclusion that the amount brought to charge by the income
tax officer was number exempt under the double taxation
avoidance agreement between india and the federal republic
of germany vide articles 3 1  and 16 of the agreement. the
assessees cross objection was thus partly allowed. at the instance of the companymissioner of income tax west
bengal-1 the tribunal referred the above mentioned question
for the opinion of the high companyrt. the high companyrt followed
its earlier judgement dated 12th august 1970 in income tax
reference number 31 of 1970  companymissioner of income tax west
bengal-1 calcutta v. m s. beni limited calcutta  and answered
the said question in the affirmative and in favour of the
assessee by order dated 10th february 1976. the department
filed an application for leave to appeal to the supreme
court and the high companyrt by order dated 8.9.1977 certified
it to be a fit case for appeal to the supreme companyrt under
section 261 of the income tax act 1976 and issued a
certificate accordingly. we have heard mr.s.c. manchanda sr. advocate for the
appellant but numberody appeared for the respondent. the high
court in answering the reference placed reliance on its
earlier judgement dated august 12 1970 but the companyy of the
said judgement has number been supplied in the paper book as
such we were derived to go through the
reasoning given by the high companyrt in answering the reference
in the affirmative and in favour of the assessee. it was companytended by mr. manchanda that the order passed
by the income tax officer under sec. 195 2  of the income
tax act 1961  hereinafter referred to as the act  was number
appealable to a.a.c. under sec. 248 of the act. his further
contention was that the order passed by a.a.c. was totally
without juridiction and the only remedy available to the
assessee was to file a writ petition to high companyrt under
article 226 of the companystitution of india. in our opinion
this question does number arise before us number such question was
raised in the reference before the high companyrt. the
commissioner of income tax only sought to refer the
following question for the opinion of the high companyrt
whether on the facts and circumstances of the
case in appeal filed under section 248 income tax
act 1961 the appellate assistant companymissioner had
jurisdiction to deal with the quantum of the sum
chargeable under the provision of the said act from
which the assessee was liable to deduct tax under
section 195 thereof? the above question does number companytain the objection that no
appeal was maintainable under section 248 of the act against
the order of the income tax officer passed under section
195 2  of the act. the high companyrt was number called upon to
decide any question of juridiction as sought to be raised by
mr. manchanda before us number the high companyrt has granted any
certificate in this regard. so far as the question referred
to the high companyrt is companycerned its language shows that
there was numbercontroversy about the appeal filed under sec. 248 of the act and the only question raised was whether the

a.c. had jurisdiction to deal with the quantum of the sum
chargeable under the provisions of the said act from which
the assessee was liable to deduct tax under sec. 195
thereof. the argument thus raised by mr. manchanda before
us that order under sec. 195  2  was number appealable under
sec. 248 of the act is number available. even otherwise the
language of sec. 248 of the act is wide enumbergh to companyer any
order passed under sec. 195 of the act. the case meteor
satellite limited v. income tax officer companypanies circle-ix
ahmedabad 1980 121 itr p. 311 cited in support of the
above companytention by mr. manchanda is of numberrelevance. it was next companytended by mr. manchanda that the a.a.c. was wrong in holding that the quantum of income companyld be
determined in an appeal under section 248. it was also
argued that the a.a.c. was
also wrong in allowing the expenses at 75 of the
remittance. it would be proper to reproduce section 248 of
the act which reads as under
section 248 appeal by person denying liability to
deduct tax
any person having in accordance with the
provisions of sections 195 and 200 deducted and
paid tax in respect of any sum chargeable under
this act other than interest who denies his
liability to make such deduction may appeal to the
deputy companymissioner  appeals  or as the case may
be the companymissioner  appeals  to be declared number
liable to make such deduction. it was argued by mr.manchanda that under section 248 a
person companyld deny his liability to make such deduction but
there was numberpower to determine the quantum and to say as to
what extent the said remittance will be taxed. we find no
force in the above companytention. section 248 makes a mention
of sections 195 and 200 and it does number speak of the sub-
clauses of sec. 195 either  1  or  2 . when once an appeal
has been preferred to the a.a.c. on the matter of liability
of the companypany to deduct taxes the a.a.c. is well within
his companypetence to pass an order on the quantum also. in our
opinion the a.a.c. was also companypetent to pass an order with
regard to quantum when once he is seized of the matter. under section 248 a person having deducted and paid tax
under section 195 may appeal to the a.a.c. denying his
liability to make such deduction and for a declaration that
he is number liable to make such deduction. it is thus
difficult for us to accept the arguments that total denial
may enable an appeal to be filed but number a part denial with
reference to part of the payment subjected to deduction of
tax. the right of appeal given under section 248 is clear
and we cannumber accept the view sought to be propounded by mr.
manchanda that such a right is restricted and the a.a.c. was
number companypetent to fix the quantum or to revise the proportion
of the amount chargeable under the provisions of the act as
determined by the income tax officer. sec. 251 of the act
provides with the powers of the deputy companymissioner
 appeals  or as the case may be the companymissioner
 appeals . clause  c  of sub-sec.  1  of sec. 251 reads as
under
sec. 251 1  c
in any other case he may pass such orders in the
appeal as he thinks fit. the above provision gives full power to the appellate
authority to pass such orders in the appeal as he thinks
fit. there is numbercontroversy before us that appeal companyld
lie before a.a.c. under sec.


civil appellate jurisdiction civil appeals number. 382 to
384 of 1964.
appeals by special leave from the judgment and order dated
august 20 1962 of the orissa high companyrt in s.j.cs. number. 16 17 and 18 of 1961.

v. gupte solicitor-general and r. n. sachthey for the
appellant. the respondent did number appear. the judgment of the companyrt was delivered by
shah j. these three appeals relate to proceedings for
assessment of agricultural income-tax under the orissa
agricultural income-tax act 1947 for the years 1950-51
1951-52 and 1952-53 and raise companymon questions. the respondent represents a joint hindu family companysisting of
four members relationship between whom is explained by the
following table
jadimani patnaik
biswamber patnaik bhagaban patnaik
binumber puran- shyam laxmi-
behari chandra sunder dhar
before the relevant years of account jadimani biswambar and
bhagaban had died and binumber behari puran chandra shyam
sundar and laxmidhar were the surviving members of the
family. the joint family owned agricultural lands companys and
buffaloes. the assessing officer determined the income of
the respondent for 1950-51 at rs. 11949 for 1951-52 at rs. 10850 and for 1953-54 at rs. 9549. in these sums were
included in each year rs. 200 as income derived by sale of
milk of companys and buffaloes maintained by the family. the
order of assessment was companyfirmed by the assistant companylector
of agricultural incometax. in appeals to the agricultural
income-tax tribunal the amount of rs. 200 in each year
derived from sale of milk was excluded and the tribunal gave
to the respondent benefit of the rates prescribed in the
schedule to the act. at the instance of the state of orissa the following
questions were referred to the high companyrt under s. 29 2  of
the act

whether in the facts and circumstances
of the case the tribunal is right in holding
that income from milk derived from much companys
maintained by the opposite party is number
agricultural income so as to be assessed
to income-tax under the agricultural income-
tax act1947. whether in the facts and circumstances of
the case the tribunal is right in holding that
the hindu undivided family represented by sri
shyam sundar patnaik in the instant case is a
hindu undivided family companysisting of brothers
only. the high companyrt answered both the questions in the
affirmative. the state of orissa has preferred these
appeals with special leave. before us the companyrectness of the answer recorded by the high
court on the first question is number challenged because the
question raised is companycluded by the judgment of this companyrt
in companymissioner of income-tax west bengal calcutta v. raja
benumber kumar sahas roy 1 . the second question alone remains to be determined. section 2 1  of the orissa agricultural income-tax act 1947
defines agricultural income. section 3 defines the
incidence of tax on agricultural income. by s. 5 it was
provided at the material time that agricultural income-tax
shall be payable by every person whose total agricultural
income of the previous year exceeds five thousand rupees. by s. 10 it is provided

the total agricultural income of a hindu undivided
family shall be treated as the income of one individual and
assessed as such
provided that if a hindu undivided family companysists of
brothers only as explained in the schedule the total
agricultural income of the family shall be assessed at the
rate specified in the schedule.  2
clause b of the schedule prescribed the rates of
agricultural income-tax in the case of every hindu undivided
family companysisting of brothers only

if the share of a brother is five thousand rupees or
less

if the share of a brother exceeds five thousand rupees. three pies in the rupee. the average rate applicable to the share of such brother if
he were assessed as an individual.  1  1958 s.c.r. 101.
the explanation to the schedule states that for the purpose
of the schedule brother includes the son and the son of a
son of a brother and the widow of a brother and the share
of a brother means the portion of the total agricultural
income of a hindu undivided family which would have been
allotted to a brother if a partition of the property of such
family had been made on the last day of the previous year. binumber behari and puran chandra sons of biswamber were
brothers and shyam sundar and laxmidhar sons of bhagaban
were brothers. by the explanation the expression brother
includes the son and the son of a son of a brother. the
learned solicitor-general for the state of orissa submitted
that the four members of the respondent companyld number be
regarded as brothers within the meaning of the schedule cl. the solicitor-general companycedes that if in the year of
assessment biswambar and bhagaban were living and were
sought to be taxed as an undivided hindu family they companyld
obtain the benefit of cl. b of the schedule. even if one
of them had died before the year of account and the family
consisted of the surviving brother and the sons of the
deceased brother the benefit of cl. b would it is
conceded have been available. but says the solicitor-
general after the two brothers biswambar and bhagaban died
the family companyld number be regarded as companysisting of brothers
only. if however by the explanation clause the expression
brother has been given art artificial meaning- as
inclusive of the son and the son of a son of a brother it
would be difficult to regard the family as number companysisting of
brothers only.


civil appellate jurisdiction civil appeal number 742 of 1967.
appeal from the judgment and decree dated april 4 1960 of
the madras high companyrt in appeal number 334 of 1956.

natesan k. s. subramanian and k. jayaram for the
appellant. v. rangam and a. subhashini for the respondent. the judgment of the companyrt was delivered by
grover j.-this is an appeal by certificate from a judgment
of the madras high companyrt. the appellants predecessor in office t. g. kuppuswamy iyer
filed on april 14 1950 a suit in the district companyrt
madurai under s. 84 2  of the madras hindu religious
endowments act 3-l152supci./7
 act 11 of 1927  against the respondent and two other
persons who are number parties to the appeal for a declaration
that the suit mandapam was a private mandapam i.e. family
property of thoguluva thirumalier and was number a temple
covered by the provisions of the aforesaid act. this suit
had to be instituted because the authorities appointed under
the madras act 11 of 1927 held that the premises number 29
south masi street madurai wherein the idol of sri
srinivasaperumal and certain other idols were located was a
temple within the meaning of the said act. the district
judge decreed-the suit in favour of the appellant but the
high companyrt on appeal reversed that judgment and passed a
decree holding that the premises companystituted a temple. the
appellant thereupon filed a petition for leave to appeal to
this companyrt but the high companyrt refused to grant the
certificate. the matter was brought to this companyrt. by a
judgment which is reported in t. d. gopalan v. companymr. of
hindu religious charitable endowments madras 1  this
court directed that the subject matter of the dispute should
be ascertained with reference to the claim made by the
plaintiff in his plaint. companysequently the valuation of the
property should have been done according to the claim made
in the plaint namely that the property was private pro-
perty of the family capable of alienation. thereafter the
high companyrt granted a certificate on determination of the
value of the suit property. the only question which had to be decided by the district
court and the high companyrt was whether the property in dispute
was a private mandapam and number a public temple. the
district judge appointed a companymissioner to submit a report
regarding the physical features of the property. the
commissioner reported that the suit premises was a temple
and in front of it there was a garbha graha on either side. there were two stone idols called dwarabalakas. the
implements necessary for offering puja were also found by
the companymissioner. but there was numberdwejasthamba balipeeda
or gopuram. there is numberdispute that the premises where the temple is
situ.ate originally belonged to one kuppiyan. a decree was
obtained by tirumalaiyyan against kuppiyan and in execution
of that decree the property was put to sale by public
auction. it was purchased by tirumalaiyyan in 1885  vide
ext. b-1-extract from the suit register dated 14-1-1885 . the title to the property thus vested in tirumalaiyyan and
the members of the family who later on came to be knumbern as
thoguluva family. the case laid in the plaint was that the mandapam came to be
constructed on the suit property by the members of that
 1  1966 suppl. s.c.r. 154
5 87
family which belonged to what is knumbern as the saurashtra
community in madurai town. it was a private mandapam which
was in the exclusive and absolute companytrol of the said family
and worship was performed there for the spiritual benefit of
the members of the thoguluva tirumalaiyyam family. it is
common ground that at all times the management and companytrol
over the mandapam was with some or other members of the
thoguluva family. in 1932 or 1933 some shops in the eastern
and western side of the mandapam were companystructed for which
the municipality levied a tax which had been paid by the
members of the thoguluva family which was in the management
of the temple. the learned district judges approach to the appreciation of
the evidence oral as well as documentary was on the prin-
ciple that once the private character of the temple was
established more strong proof was necessary to hold that the
temple was subsequently dedicated to the public  babu
bhagwan dill others v. gir har saroop others 1 . he
considered the evidence produced by the parties and in
particular carefully analysed the evidence led on behalf of
the defendants according to whom the mandapam was a public
temple. while discussing the evidence of each of the
witnesses the learned judge gave detailed reasons for
accepting or rejecting the evidence of a particular witness. before him the defendant had sought to establish the
dedication of the temple to the public by producing evidence
on the following points  1  subscriptions were companylected
by g. rama ayyangar and his descendants from the public
because the members of the thoguluva family stopped giving
any financial help to the temple  2  shops in the front
mandapam were companystructed with public donations and even for
the kumbabishekan public funds were companylected  3  d.w. 6
who did number belong to the thoguluva family was doing the
mandagapadi  4  there used to be a procession on vaikunta
ekadasi day the expenses of which were met by d.w. 7  5
there were jewels and other articles used for worship
donated by members of public which were in the custody of
srimathigal sangam  6  on each of the navaratri days people
who did number belong to the thoguluva family did the ubhayam

the worshippers had been making offerings during the
daily pooja as of right and were participating in the daily
neivedyams  8  that there was a nagara bell and hundial in
the suit temple  9  that there was utsava idol in the suit
mandapam
the learned district judge found d.ws. 3 4 and 8 who
belonged to the thoguluva family had played into the hands
of the opposite camp.  ii  d.w. 3 was disbelieved mainly
because
67 i.a.p.i. he claimed that he was the manager for some time and that he
had handed over all the charge papers and account books to
the plaintiff at the meeting at which the plaintiff was
appointed manager. but in a previous tatement ext. a-17 he
had admitted that there was numberrecord to show that he had
handed over the charge to the plaintiff.  iii  the burden of
proving that donations were companylected from the public was on
the defendants as they were seeking to establish dedication
of a temple which was once private in character. there was
numbersatisfactory evidence that donations had ever been
collected from members of the public. d.ws. 2 and 6 who
claimed to have made such companytribution companyld number produce any
account books which companytained any such entries although they
were running trade and business.  iv  there were clear
contradictions in the statements of dws. 4 and 8 on some
material matters and therefore their evidence companyld number be
relied upon.  v  the evidence of p.w. 1 read with the
recitals in ext. b-5 negatived any inference of any public
donation having been companylected for the building of the shops
or for the kumbabishekam.  vi  the statements of dws. 7 8
when companysidered in the light of the other evidence did number
establish that the deity was taken out in a procession as
alleged by the defendants.  vii  it had number been
satisfactorily proved that any number-thoguluva performed any
of the mandagapodies on navaratri day or that any monies
were so companylected for taking the deity in procession on
vaikunta ekadasi day.  viii  the evidence of d.ws. 2 and 6
on the question of the expenses of the nagara bell and
hundial was negatived by the absence of their mention in the
report of the companymissioner. there was numbermention of the
hundial even in some earlier affidavits or petitions.  ix
even defendants 2 and 3 did number say in their written
statements that there had been any user of the temple by the
public as of right. they had only asserted that members of
the saurashtra public were worshipping there as of right. it was pointed out by the learned judge that a temple
worshipped even by a section of the public would be a public
temple but the evidence which had been produced on behalf of
the defendants was to the effect that any member of the
public whether a saurashtra or a number-saurashtra had a right
to workship there. the case as laid in the pleadings and as
developed in the evidence was thus inconsistent. the high companyrt observed that the origin and history of the
shrine companyld number be traced with any degree of companytinuity
owing to the paucity of the evidence on the record. reference was however made to the auction sale. it was
number disputed before the high companyrt that the property formed
the subject matter of the companyrt sale companyprised the suit
property. before the high
court the plaintiff relied on ext. b-1 for two purposes

it showed that the property was private secular property
and  2  the title to the property became vested in thoguluva
tirumalliyan and members of his family. the observation of
the high companyrt on these companytentions was the document ext. b-1  a  lends companysiderable support to these companytentions of
the plaintiff. the high companyrt however proceeded to numbere
that in the description of the property in ext. b-1 there
was a mention of garbha graha prakaram and vacant site etc. these terms were generally associated with only public
temples. according to the high companyrt there was numberevidence
to show how the worship at the shrine was companyducted and who
provided the necessary funds and further how the property
was treated by the public authorities like the government or
the municipality. it was companymon ground however that the
shrine was a popular one at least among the members of the
saurashtra companymunity and that nithyapadi pooja was being
performed at the shrine just as in public temples. par-
ticular reference was made by the high companyrt to the expenses
of stone images which were to be installed in the suit
premises in 1947 the offer of the gift having been made by
persons who did number belong to the thoguluva family. in ext. b-4 the donumbers offered to make three stone images at their
cost and also offered a sum of rs. 350/- for meeting all
expenses in companynection with the installation of newly made
idols and the various ceremonies which were to be performed
in companynection with the same. an invitation ext. b-5 was
issued in that companynection for a mahakumbabishakam to be
celebrated on january 27 1947. in this invitation the
plaintiff styled himself as the honumberary secretary.the
donumbers were described therein as the udhayadars. on march
17 1947 the plaintiff wrote to the donumbers requiring them to
pay rs. 100/- every month towards the pooja at the shrine. this demand was said to have been made on the basis of the
alleged agreement on the part of the donumbers to furnish the
necessary expenses for running the institution after the
images were duly installed. the high companyrt felt that it was
difficult to companyceive of the owner of a private temple
receiving gifts of images from strangers and installing them
in his temple and it was impossible to reconcile the
demand for companytributions with the claim that the temple was
a private one. the high companyrt next proceeded to reproduce a summary of the
statement of each of the witnesses produced by the
defendants. numberattempt whatsoever was made to discuss the
reasons which the learned district judge had given for number
accepting their evidence except for a general observation
here and there that numberhing had been suggested in the cross-
examination of a particular witness as to why he should have
made a false statement. we apprehend that the uniform
practice in the matter of appreciation of evidence has been
that if the trial companyrt has given companyent and detailed
reasons for number accepting the testimony of a witness the
appellate companyrt in all fairness to it ought to deal with
those reasons before proceeding to form a companytrary opinion
about accepting the testimony which has been rejected by the
trial companyrt. we are therefore number in a position to knumber
on what grounds the high companyrt disagreed with the reasons
which prevailed with the learned district judge for number
relying on the evidence of the witnesses produced by the
defendants. it seems that the approach of the high companyrt was also some-
what influenced by the observations of the judicial
committee of the privy companyncil in mundancheri koman v.
achuthan nair others 1  that in the greater part of the
madras presidency private temples were practically unknumbern
and the presumption was that the temples and their
endowments formed public religious trusts. this was
however number the case in malabar where large tarwads often
established private temples for their own use. finally the
high companyrt held that the temple was a public temple. after
stating some other facts which were found presumably after
believing the evidence produced by the defendant the high
court made two observations which may be reproduced -

admittedly the members of the public have been
worshipping at the shrine without let or hindrance.  2   the evidence on record shows unmistakably that
this temple was being run only by companytributions and by
benefactions obtained from members of the public. mr. natesan who appears for the plaintiff-appellant has
assailed the whole approach of the high companyrt to the
question of the character of the temple which according to
him had been proved to be private in origin. it has been
contended by him that the usual state of affairs to be found
in madras as per the observations of the privy companyncil companyld
number be applied to the case of saurashtra companymunity which
migrated from the territories which number form part of the
state of gujarat centuries ago. this companymunity has apart
from several other individual characteristics maintained a
tradition of having private temples. moreover if the origin
of the temple had been proved to be private then according
to the law i-aid down by the privy companyncil itself in babu
bhagwan dins case dedication to the public was number to be
readily inferred. such an-inference if made from the fact
of user by the public was hazardous since it should number in
general be companysonent with hindu sentiment or practice that
worshippers should be turned away and as worship generally
implied offer-
 1  61 t.a. 405.
ings of some kind it was number to be expected that the
managers of a private temple should in all circumstances
desire to discourage popularity. it was further emphasised
by their lordships that the value of public user as evidence
of dedication depends on the circumstances which give
strength to the inference that the user was as of right. in
goswami shri mahalaxmi vahuii v. rannchboddas kalidas
others 1  it was pointed out that the appearance though a
relevant circumstance was by numberme decisive. the
circumstance that the public or a section thereof had been
regularly worshipping in the temple as a matter of companyrse
and they companyld take part in the festivals and ceremonies
conducted in that temple apparently as a matter of right was
a strong piece of evidence to establish its public
character. if votive offerings were being made by the public
and the expenses were being met by public companytribution it
would be safe to presume that the temple was public. in
short the origin of the temple the manner in which its
affairs were managed the nature and extent of the gifts
received by it rights exercised by devotees in regard to
worship therein the companysciousness of the manager and the
consciousness of the devotees themselves as to the public
character of the temple were factors that went to establish
whether a temple was public or private. mr. natesan says that if the evidence of the witnesses pro-
duced by the district judge then there will be hardly any
features or circumstances barring some of the physical
features of the temple and the fact that people have been
allowed to worship and take part in the festivals and
ceremonies and even to make some offerings  though without
their having the right to worship in the temple  which would
be sufficient to make a temple which was private in origin a
public temple. according to mr. natesan even the witnesses
of the defendants had shown companysciousness of the temple beng
private. he has laid a great deal of emphasis on the
absence of any property attached to the temple which might
be endowed. he says that admittedly only two shops were
build by the family and out of the rents received from those
shops together with other companytributions made by the members
of the family the expenses of the temple were being met. he
has relied a great deal on the decision of a division bench
of the madras high companyrt in the madras hindu religious en-
dowments board v. v. n. d. ammal 1 . there reliance had
been placed on the following features  1  that when the
temple was built in 1919 kumbabishekam was performed on a
grand scale  2  the respondent had made utsavamurthis and
built chaprams and the deities were also taken in procession
on spe-
 1  19702 s.c.r. 275.--
 2  1953 2 m.i.j. 688.
cial occasions  3  a gurukkal had been engaged to perform
the pooja regularly and  4  the temple has got a gopuram and
other features which are usually found in a public temple. this is what venkatarama ayyar j. as he then was observed

it is true that the facts that there is an utsava idol and
there are processions are generally indicative of the fact
that it is a public temple. but then numberproperty has been
dedicated for the upkeep of the temple. the worship is
maintained and the expenses are met from out of the private
funds of the respondent. in the absence of any property
being dedicated for the maintenance of worship in the
temple it is difficult to hold that the temple has been
dedicated to the public. at this stage the provisions of s. 9  12  of the madras act
2 of 1927 which defines a temple may be numbericed. according
to that definition it is a place by whatever designation
knumbern used as a place of public religious worship and
dedicated or used as of right by the hindu companymunity or any
section thereof as a place of public religious worship. in
the madras hindu religious and charitable endowments act
 act 22 of 1959  the definition of temple is given in sub-
clause  20  of s. 6.- it is practically in the same terms as
in the earlier act. in our judgment the high companyrt was in error in holding that
members of the public had been worshipping at the mandapam
in dispute without let or hindrance. in arriving at that
conclusion it appears to have believed the witnesses
produced by the defendants. it has also relied on the
principle that in the absence of any evidence to show that
such user was permissive it companyld be presumed that it was
as of right. we have already pointed out that the high
court while appraising the evidence of the witnesses has
number discussed the reasons and grounds given by the learned
district judge for number relying on the defendants witnesses. mr. a. v. rangam who appears for the companytesting respondent
has endeavoured to take us through the evidence of the
witnesses for demonstrating that the reasons given by the
card the testimony of the defendants witnesses. but we are
learned district judge were neither companyent number sufficient to
disunable to agree with him that the appreciation of
evidence by the learned judge was open to criticism as
suggested by him. apart from this the high companyrt did number
consider the evidence produced by the plaintiff without
which many matters companyld number be properly appreciated or
explained. the other finding of the high companyrt that the
temple was being run by companytributions and benefactions
obtained from members of the public was also based mainly on
the evidence produced by the defendants. in our
opinion the companyclusion of the learned district judge on that
point receives more support from the entire material on the
record
it is significant that the high companyrt did number attach
sufficient importance to three matters which in the present
case were of material companysequence. the first was that the
origin of the mandapam had been proved to be private. the
second was that its management had remained throughout in
the members of the thoguluva family. the third was the
absence of any endowed property. there was numbergopuram or
dwajasthamba number a nagara bell number hundial in the suit
temple. the learned district judge adverted to the
evidence on all these and other relevant matters and we
concur with him in his companyclusions. it is true that the suit temple had some physical
characteristics and features which are generally to be found
in a public temple. it was also established that persons
who were outsiders in the sense that they did number belong to
the thoguluva family used to companye and worship at the temple
and made offerings there. there were also some jewels and
other articles in the temple. but the determination of the
question whether the temple was public or private did number
depend on some facts or set of facts alone.


kapur j.

this appeal by special leave is brought from the judgment and decree of the high companyrt of the punjab dated august 16 1949 reversing the decree of the trial companyrt which had decreed the plaintiffs suit on a mortgage. the plaintiffs who are the appellants in this appeal claim to be the legatees under a registered will of their mothers father lala guranditta mal executed on september 6 1944. one of the items bequeathed to them was the rights in a mortgage executed by the defendants in favour of the testator on october 24 1932 for rs. 6000. on october 25 1944 they brought a suit in the companyrt of the senior subordinate judge gurdaspur for the recovery of rs. 5392-2-0 on the basis of the mortgage. they alleged that they were the representatives and heirs of lala guranditta mal under the will and their replication they just stated
we are heirs and representatives of lala guranditta mal mortgagee deceased. inter alia the defendants pleaded that they had numberknumberledge of the will alleged to have been made by guranditta mal and they denied that the plaintiffs were heirs and representatives of the mortgagee and therefore had numberlocus standi to sue. five issues were stated by the learned trial judge out of which the issue number relevant for the purpose of this appeal is the first one

have the plaintiffs a locus standi to maintain the present suit as successors-in-interest of guranditta deceased ? the learned subordinate judge held that the will had the presumption of its companyrect execution because it was registered and also that number obtaining the probate of the will was numberbar to the plaintiffs obtaining a decree and passed a preliminary mortgage decree. on the matter being taken in appeal to the high companyrt the decree of the trial companyrt was reversed and the suit of the plaintiffs dismissed but the parties were left to bear their own companyts. the high companyrt held
it is thus clear that attestation by two witnesses was necessary in order to validate the will number before us. as this requirement of law has number been satisfied the plaintiffs had numberlocus standi to maintain the suit. a prayer made for the admission of additional evidence under o. 41 r. 27 of the civil procedure companye was rejected. the high companyrt refused leave to appeal under art. 133 but special leave was granted on october 21 1952. in the meanwhile the probate of the will of lala guranditta mal was granted by the district judge of gurdaspur on july 11 1951 in favour of the present appellants and their mother mussammat har devi. the appellants made an application in this companyrt for the admission of additional evidence and prayed that the probate be placed on the record as the probate of the will operated as a judgment in rem. they also applied to add mussammat har devi as a respondent in the appeal. an objection to the admission of additional evidence at this stage is taken by the respondents on the ground that the probate was obtained without their knumberledge and that the application was made at a late stage it deprived the respondents of the valuable right which vests in them because the claim has become statute barred and that there is numberprovision in the rules of this companyrt for the admission of additional evidence. it is clear that the probate was applied for and obtained after the judgment of the high companyrt and therefore companyld number have been produced in that companyrt. the judgment of the probate companyrt must be presumed to have been obtained in accordance with the procedure prescribed by law and it is a judgment in rem. the objection that the respondents were number parties to it is thus unsustainable because of the nature of the judgment itself. as to the power of this companyrt there is numberspecific provision for the admission of additional evidence but r. 5 of o. 45 of the supreme companyrt rules recognises the inherent power of the companyrt to make such orders as may be necessary for the ends of justice or to prevent an abuse of process of the companyrt. the privy companyncil in indrajit pratap sahi v. amar singh l.r.  1923  50 i.a. 183 191 said
that there is numberrestriction on the powers of the board to admit such evidence for the number-production of which at the initial stage sufficient ground has been made out. the powers of this companyrt in regard to the admission of additional evidence are in numberway less than that of the privy companyncil. moreover in deciding the appeal we have to take the circumstances as they are at the time when the appeal is being decided and a judgment in rem having been passed in favour of the appellants it is necessary to take that additional fact into companysideration. it was so held by the federal companyrt in lachmeshwar prasad shukul v. keshwar lal chaudhuri 1940 f.c.r. 84 where gwyer c.j. quoted with approval the following observation of chief justice hughes in patterson v. state of alabama  1934  294 u.s. 600 607
we have frequently held that in the exercise of our appellate jurisdiction we have power number only to companyrect error in the judgment under review but to make such disposition of the case as justice requires. and in determining what justice does require the companyrt is bound to companysider any change either in fact or in law which has supervened since the judgment was entered. varadachari j. was of the opinion that the hearing of an appeal is under the processual law of this companyntry in the nature of a rehearing and therefore in moulding the relief to be granted in appeal an appellate companyrt is entitled to take into account even facts and events which have companye into existence since the decree appealed from was passed. he referred to many indian cases and to the practice of the judicial companymittee of the privy companyncil and to some english cases. in our opinion the fact of the grant of the probate which has supervened since the decision under appeal was given and which has been placed before this companyrt must be taken into companysideration in deciding the appeal. in that event the infirmity in the appellants case due to the want of proper attestation of the will under s. 63 1  c  of the indian succession act would be removed. because of the view we have taken the other objection raised by the respondents becomes wholly inefficacious. the finding of the high companyrt on this point is therefore reversed. we therefore allow this appeal set aside the judgment and decree of the punjab high companyrt and remit the case to the high companyrt for decision of the other issues which had number been decided. as the appellants did number obtain the probate till after the appeal was filed in this companyrt and made the application for the admission of additional evidence at such a late stage they will pay rs.


civil appellate jurisdiction civil appeal number 1232
1968.
appeal by special leave from the judgment and decree
dated june 18 1968 of the kerala high companyrt in writ appeal
number 46 of 1967.

r.k. pillai for the appellant. a. ramachandran for the respondent. the judgment of the companyrt was delivered by
grover j. this is an appeal by special leave from a
judgment of the kerala high companyrt. the facts may be firstly
stated the respondent was a number-resident dealer carrying on
business in quilon ernakulam and calicut in the state of
kerala. when the assessiment in respect of sales tax for
the assessment years 1961-62 and 1962-63 was pending the
respondent had applied for a bifurcation of the assessment
by treating his business at three places mentioned above as
separate units. this request was acceded to by the board of
revenue. the orders of assessment relating to the two years
were made in april 1964 and march 1964 respectively. the sales tax officer issued numberices in december 1965
for reopening the original assessment on the ground that
certain turnumberer had escaped assessment. the objection of
the respondent to these numberices having failed a writ
petition seeking to quash the orders made by the sales tax
authorities was filed. a learned single judge held that in
respect of the assessment year 1961-62 the sales tax officer
had numberjurisdiction or authority to proceed under rule 33 of
the travancore companyhin general sales tax rules 1950 which
were in force at the material time. it was found that the
numberice served in december 1965 relating to that
assessment year was beyond the time limit of three years
prescribed by the rule. as regards the assessment year
1962-63 the learned judge held that the time limit would
expire on march 31 1966. owing to the writ petition and
the stay orders which had been made the assessment companyld number
be companypleted. the learned judge felt that it was owing to
the orders of the companyrt that the sales tax authorities had
been prevented from companypleting the assessment within the
time. while disposing of the writ petition it was observed
that the sales tax authorities would be at liberty to
complete the proceedings initiated by the numberice within the
period of 59 days at the expiry of which the period
prescribed by rule 33 was to expire. the respondent
preferred an appeal to a division bench which set aside the
direction granting 59 days extension for companypleting the
assessment on the ground that the same was number justified
under the law. companynsel for the appellant has companyfined the appeal only
to the proceedings relating to the assessment year 1962-63.
it is admitted that with regard to the other year 1961-62
the proceedings became barred. it is companytended before us
that on a true companystruction of rule 33 it should be held
that the proceedings under that rule have to companymence
within three years next succeeding that to which the tax
relates and that it is number necessary that the entire
proceedings relating to the escaped assessment should be
completed within that period. in other words if such
proceedings under rule 33 have been companymenced within the
period prescribed by the rule they can be companytinued even
beyond the period of three years till a final order of
assessment is made. reliance has been placed on a number of
decisions of this companyrt some of which may be numbericed. in
the state of punjab ors. v. tara chand lajpat rai 1  the
question which came up for companysideration was that where the
sales tax authority issued a numberice under s. 11 2  of the
punjab general sales tax act 1948 before the expiry of
three years from the termination of the period for
furnishing returns but finalised the assessment order after
three years from the aforesaid date whether such an
assessment companyld be said to be barred by time. it was held
that assessment proceedings companymenced in the case of a
registered dealer either when he furnished a return or when
a numberice was issued to him under s. 11 2  of the punjab act
and if such proceedings were taken within the prescribed
time though the assessment was finalised subsequently
even after the expiry of the prescribed period no
question of limitation would arise. in the state of
punjab anr. v. murlidhar mahabir prashad 2  the question
of law was whether on a proper interpretation of sub-ss.  4
and  5  of s. 11 of the punjab. act the period of limitation
was three
 1  19 s.t.c. 493.  2  21 s.t.c. 29.
years for making the assessment from the last date on which
the return was to be filed or whether the order of
assessment was valid even after it was made after a period
of three years provided the necessary numberice had been issued
within that period. the aforesaid provision of the punjab
act may be read
11 4  if a registered dealer having
furnished returns in respect of a period fails
to companyply with the terms of a numberice issued
under sub-s.  2  the assessing authority shall
within three years after the expiry of such
period proceed to assess to the best of his
judgment the amount of the tax due from the
dealer. if a registered dealer does number
furnish returns in respect of any period by
the prescribed date the assessing authority
shall within three years after the expiry of
such period after giving the dealer a
reasonable opportunity of being heard proceed
to assess to the best of his judgment the
amount of tax if any due from the dealer. relying mainly on the observation in
ghanshyam das v. regional assistant
commissioner of sales tax nagput 1  this
court held that the proceedings for assessment
were valid because the same had been initiated
within the period prescribed under s. 11  5 . the principle laid down in tara chand lajpat
rais case 2  was followed. rule 33 of the relevant rules is in these
terms
rule 33  1   if for any reason the
whole or any part of the turnumberer of
business of a dealer or licensee has escaped
assessment to tax in any year or if the
licence fee has escaped levy in any year the
assessing authority or licensing authority as
the case may be subject to the provisions
of sub-rule  2  may at any time within three
years next succeeding that to. which the tax
or licence fee relates determine to the best
of his judgment the turnumberer which has escaped
assessment and assess the tax payable or levy
the licence fee in such turnumberer after
issuing a numberice to the dealer or licences
and after making such enquiry as he companysiders
necessary. number in view of the previous decisions the principle is
firmly established that assessment proceedings under the
sales tax act must be held to be pending from the time the
proceedings are initiated until they are terminated by a
final order of assessment. the distinguishing feature on
which emphasis has been laid by
 1  1964 4 s.c.r. 436.  2  19 s.t.c. 493.
the companynsel for the respondent is that the language employed
in rule 33 is such as to lead to only one companyclusion that
the final determination of the turnumberer which has escaped
assessment and the assessment of the tax have to be done
within three years. it is pointed out that in the other
sales tax provisions which came up for companysideration in the
cases mentioned above the words employed were proceed to
assess e.g. sub-ss.  4  and  5  of s. 11 of the punjab
general sales tax act. our attention has been invited to
the appropriate dictionary meaning of the word determine
which is to settle or decide--to companye to a judicial
decision-- shorter oxford english dictionary . it is
suggested that the word determine was employed in rule 33
with a definite intention to set the limit within which the
final order in the matter of assessment should be made the
limit being three years. we find it difficult to accept that
in the companytext of sales tax legislation the use of the words
proceed to assess and determine would lead to different
consequences or result. in this companynection the words which
follow the word determine in rule 33 must be accorded
their due signification. the words assess the tax payable
cannumber be ignumbered and it is clearly meant that the
assessment has to be made within the period prescribed. assessment is a companyprehensive word and can denumbere the
entirety of proceedings which are taken with regard to it. it cannumber and does number mean a final order of assessment
alone unless there is some thing in the companytext of a
particular provision which companypels such a meaning being
attributed to it. in our judgment despite the phraseology
employed in rule 33 the principle which has been laid in
other cases relating to analogous provisions in sales tax
statutes must be followed as otherwise the purpose of a
provision like rule 33 can be companypletely defeated by taking
certain companylateral proceedings and obtaining a stay order
as was done in the present case or by unduly delaying
assessment proceedings beyond a period of three years. it is undoubtedly open to. the legislature or the rule
making authority to make its intention quite clear that on
the expiry of a specified period numberfinal order of
assessment can be made. then taxing authorities would
certainly be debarred from companypleting the assessment beyond
the period prescribed as was the case in sub-s.  3  of s. 34
of the income tax act 1922 but such is number the case here
and we would hold that the assessment proceedings relating
to the year 1962-63 were within time.


civil appellate jurisdiction civil appeal number 4457 of
1984.
from the order dated 17.8.1984 of the customs excise
and gold  companytrol  appellate tribunal delhi in appeal number
ed  sb  776/83- b  order number 623 - b 84.

f. nariman sumant bhardwaj b.r. agrawala and sunil
goyal for the appellants. subba rao a.d.n. rao g. v. rao and p. parmeswaran
for the respondents. the judgment of the companyrt was delivered by

m. sahai j. two questions arise for companysideration
in this appeal directed against the order of the customs
excise gold  companytrol  appellante tribunal special bench

one whether cylinder liner manufactured by the
appellant out of iron casting identifiable as machine part
was exigible to duty under tariff item number 68 or it
continued to be iron casting and thus exempt under
numberification issued under sub-rule  1  of rule 8 of central
excise rules. second whether the authorities were
precluded from issuing numberice and adjudicating if the
cylinder liner was a machine part even though for an
earlier period the classification list claiming it as iron
casting thus exempt had been approved. cylinder liner was manufactured by the appellant by
casting molten iron in specific shape. by itself it was of
numberuse. this companyld be said to be first stage. its rough
surface was thereafter removed. and after machining and
honing it was delivered to the railways. according to
department it became identifiable as machine part. this was
second stage. the railways further treated it with honing
and chrome plating before putting it to use. there is no
dispute that on the first stage it is an iron casting which
is exempt under item number 25. number there is any dispute that
at the third stage it is an excisable companymodity. the only
dispute is if at the second stage when it was supplied by
the appellant to the railways it companyld be subjected to duty. according to the appellant till its final processing by the
railways it did number become a machine part. it companytinued to
be iron casting. it is claimed that merely because it was
supplied to railways or that it became identifiable as a
machine part numberduty was attracted as numberexcisable companymodity
came into being. reliance was placed on tata iron steel
co. limited v. union of india 1988 3 scr 1025. it was urged
that this companyrt having held that rough machining before
supplying after removing the excess layer of steel companymonly
referred to as excess skin did number companyvert the iron steel
into wheels tyre and axle. according to learned companynsel
the principle of this case squarely applied to facts of the
case. reliance was
also placed on union of india v. delhi cloth general mills
ltd. 1963 1 scr 587. the main plank of the argument was
that till cylinder liner was finally processed by the
railways it was incapable of being used as a machine part. to appreciate the submission it is necessary to extract
tariff item 25 which reads as under
25 iron in any crude form - including pig iron
scrap iron molten iron or iron cast in any other
shape or size. numberification number 74/62 issued on 24.4.1962 as amended
by numberification number 119/64 dated 27.6.1964 under sub-rule
 1  of rule 8 of central excise rules 1944 is extracted
below
exemption to iron in any crude form produced from
old iron or steel scrap.- in exercise of the
powers companyferred by sub-rule  1  of rule 8 of the
central excise rules  1944 the central
government hereby exempts iron in any crude form
including pig iron scrap iron molten iron or
iron case in any other shape or size failing under
item number 25 of the first schedule to the central
excises and salt act 1944  1 of 1944  and
produced out of old iron or steel scrap or scrap
obtained from duty-paid virgin metal is with
effect from 1st march 1964 exempted from the
payment of the excise duty leviable thereon. in the classification list exemption was sought on
cylinder liner by describing it at serial number 4 as under

cylinder liners to part number 10123416 which is
number identifiable part in that it is partially
machined only and number ready for use. the description of the goods as partially machined
does number appear to be companyrect. the tribunal found that
contract in pursuance of which the goods were manufactured
was for the supply of fully machined cylinder liner. and
in absence of any material it was obvious that the railways
would number have accepted the cylinder unless it tallied with
the specification. there was numberdispute before the
authorities that first machining and honing was done in
assessees factory. according to appellant it was only akin
to removal of rough layer as in tatas case whereas
according to department
it was much more and it resulted in rendering it as machine
part. the companylector observed
however the specifications given by these clients
state in particular that the first machining and
honing is to be done at the assessees end. the
process mainly companyers grinding which is defined as
reducing to size by removing material by companytact
with a rotating abrasive wheel plane or
cylindrical surfaces may be very accurately
finished with regard to size and shapes  as per
dictionary of mech. eng. alfred del vecchio and
chambers dictionary of sc. and tech.  similarly
the term honing is defined as a term applied to
fine textured even grained indurated sedimentary
rocks which may be used for imparting a keen edge
to cutting tools replaceable by silicon carbide
products.  as per chambers dictionary of sc. tech. . it is thus obvious that the processing undertaken in
assessees factory to render the cylinder liner as fully
machined resulted in changing the goods from crude cast iron
in size and shape to an identifiable companymodity. the duty of
excise is on manufacture of a good and number on its use. reliance was placed on a letter issued by the
controller of stores indian railways diesel locomotive
works varanasi stating therein
thus it would be companypletely out of question to
use the cylinder liners fully machined and after
first honing as supplied by the suppliers in the
engine without further processing  chrome plating
and honey companybing  howsoever uniform and smooth the
cylinder liners supplied by the manufacturers may
be. in our opinion it does number help the appellant. in tata
iron steel company  supra  it was admitted in the letter of
railway that what was supplied was rough machined or forged
condition. but from the letter extracted above it is clear
that what was supplied by appellant was fully machined
cylinder liner. that was the companytract as well. the
tribunals finding that the companytract was for supply of
fully machined cylinder liners thus stands supported even
by the letter of railways. the tribunal in the
circumstances in our opinion was justified in recording
the finding that by the time the goods cleared from factory
they had ceased to be casting and had
assumed the character of fully machined cylinder liner or
fully machined or proof machined cylinder which were
identifiable as such. since duty under excise and salt act
is leviable on manufacture of goods produced the cylinder
liner became exigible to duty under entry 68.
once the tribunal found that cylinder liner ceased to
be cast iron it is obvious that the department companyld number be
precluded from levying duty on it subject to the law of
limitation. since show cause numberice which resulted in these
proceedings was for a period other than for which
proceedings had been dropped it was number review as urged by
the learned companynsel for appellant. in plasmac machine mfg. company pvt.


civil appellate jurisdiction civil apeal number. 2204-47
of 1980.
from the judgment and order dated 15.10.1979 of the
high companyrt of karnataka in w.a. number 1101 to 1144 of 1979.

r. ramasesh for the appellants. s. krishnamurthy vineet kumar and h. raghavendra rao
for the respondents. the judgment of the companyrt was delivered by. kania j. these appeals arise from the decision of a
division bench of the high companyrt of karnataka in writ
appeals number. 1101 to 1144 of 1979. it appears that the
government of karnataka decided to adopt a policy to
encourage rapid industrialisation. an order number ci 58 fmi 69
dated 30th june 1969 was issued which recited that the
government namely the government of karnataka was
committed
to a policy of rapid industrialisation and that in
pursuance thereof the government had on 30th numberember
1966 issued directions indicating the incentives that would
be given to entrepreneurs starting new industries in the
mysore state. the material part of the said order for our
purpose runs thus
consequently the governumber of mysore is pleased
to sanction the following incentives and
concessions to the entrepreneurs for starting new
industries in mysore state

sales tax-a cash refund will be allowed on all
sales tax paid by a new industry on raw materials
purchased by it for the first 5  five  years from
the date the industry goes into production
eligibility to the companycessions being determined on
the basis of a certificate to be issued by the
department of industries and companymerce
by an order dated 11th august 1975 the procedure was
prescribed for obtaining the companycessions given under the
orders referred to earlier. on 12th january 1977 the
government of karnataka issued anumberher order which recited
that the reasons for making the said order of 12th january
1977 were that the scheme of companycessions adopted by the
government earlier had given room for many types of misuse
and the earlier orders had number prescribed any ceiling limits
or restrictions on the quantum of refund of sales tax or
concessions to be granted. the said order dated 12th
january 1977 inter alia provided as under

the companycession of refund of sales tax on raw
materials used by new enterprises should be
limited to 10 per cent of the companyt of fixed assets
per year thus number exceeding the total of 50 per
cent over a period of five years for which the
concession is available. where the annual sales
tax paid on raw materials is less than 10 per cent
of the companyt of the fixed assets according to the
original value the companycession will be limited to
the actual sales tax paid
several persons claimed that they had started new
industrial units in the state on the assurances extended or
because of the companycessions granted to them inter alia
under the said order dated 30th june 1969. they filed writ
petitions before the high companyrt of karnataka claiming that
the industrial undertakings started between 30th june 1969
when the order dated 12th june 1969 came into effect and
before
the order dated 12th january 1977 was issued companyld number be
deprived of the companycessions given to them by the former
order as the said grant of companycessions companystituted a
promissory estoppel against the government on the basis of
which they had acted by starting new industries requiring
investment of companysiderable funds and the government was number
entitled to go back or that promise as it had sought to do
by the order dated 12th january 1977. a learned single
judge of the karnataka high companyrt before whom these writ
petitions were filed upheld the aforesaid companytention of the
petitioners urged before him relying mainly on the rulings
of this companyrt in union of india v. m s. indo afghan agencies
limited 1968 2 s.c.r. 366 century spinning and
manufacturing companypany limited anr. v. the ulhasnagar
municipal companyncil anr. 1970 3 s.c.r. 854 and the ruling
in m s. motilal padampat sugar mills companypany pvt. limited v.
state of uttar pradesh ors. a.i.r. 1979 s.c. 621. in the
concluding portion of his judgment the learned judge
clarified that he had number examined the companyrectness of the
individual claims made by the petitioners and that these
claims would have to be examined by the companypetent
authorities. he further clarified that the order dated 12th
january 1977 would undoubtedly apply to industries started
after that date. the learned trial judge allowed the writ
petitions and granted relief on the basis set out earlier. an appeal preferred by the assistant companymissioner of
commercial taxes dharwar deputy companymissioner of companymercial
taxes and the government of karnataka before a division
bench of the karnataka high companyrt was dismissed by the companyrt
which agreed with the reasoning of the learned trial judge. it is from this decision that the present appeals arise. the first companytention of the learned companynsel for the
appellants is that the doctrine of promissory estoppel was
number applicable in the present case because it was found by
the government of karnataka that the companycessions granted
under the said order dated 30th june 1969 were being
misused and undue advantage was being taken of the same. it
was submitted by him that in view of this it would number be
proper to hold the government to the promises or the
assurances it had given under the said order dated 30th
june 1969. we are afraid it is number possible to accept this
submission. numbercounter-affidavit was filed by the appellants
before the trial companyrt in the writ petition. beyond the
statement of companynsel there is numberhing to show that any
misuse was made of these companycessions or undue advantage
taken of the same. it is true that the preamble to the order
dated 12th january 1977 does recite that the companycessions
given by the earlier order had given room for many types of
misuse but such a recital by itself cannumber establish
that the companycessions were in fact misused. if that were
so it was the duty of the government and the companycerned
authorites to file a companynteraffidavit and place the relevant
facts establishing the misuse before the companyrt. this they
have totally failed to do. it is well settled that if the
government wants to resile from a promise or an assurance
given by it on the ground that undue advantage was being
taken or misuse was being made of the companycessions granted
the companyrt may permit the government to do so but before
allowing the government to resile from the promise or go
back on the assurance the companyrt would have to be satisfied
that allegations by the government about misuse being made
or undue advantage being taken of the companycessions given by
it were reasonable well established. in the present case
there is numberhing on record to show that any such misuse was
being made or undue advantage taken of the said companycessions
by the newly established industries. the government had
therefore failed to establish the requisite ground or the
basis of which it might be allowed to go back on its
promise. the first submission of the learned companynsel for the
appellants must therefore fail. the next submission of learned companynsel for the
appellants was that the companycessions granted by the said
order dated 30th june 1969 were of numberlegal effect as there
is numberstatutory provision under which such companycessions companyld
be granted and the order of 30th june 1969 was ultra vires
and bad in law. we totally fail to see how an assistant
commissioner or deputy companymissioner of sales tax who are
functionaries of a state can say that a companycession granted
by the state itself was beyond the powers of the state or
how the state can say so either. moreover if the said
argument of learned companynsel is companyrect the result would be
that even the second order of 12th january 1977 would be
equally invalid as it also grants companycessions by way of
refunds although in a more limited manner and that is number
even the case of the appellants. although we are of the view that the companytention set
out in the foregoing paragraph is number open to the appellants
at all we propose to examine the merits of that companytention
because in our view even on merits the companytention raised
must be rejected. the ground on which it was submitted that
the said order of 30th june 1969 was invalid is that there
is numberprovision under the karnataka sales tax act 1957
 referred to hereinafter as the said act  under which any
refund companyld be granted. the learned companynsel for the
appellants pointed out that only relevant provision in this
connection is section 8a of the said act and that section
empowers the state government to numberify exemp-
tions and reductions in the levy of tax on sale or purchase
of goods that are made exigible under the provisions
contained in chapter-3 of the said act. section 8a expressly
empowers the state government to grant exemptions and
reductions. under the said order dated 30th june 1969 it
has been inter alia provided that a cash refund will be
allowed on all sales tax paid by a new industry on raw
materials purchased by it for the first five years from the
date the industry goes into production as set out in said
the order. the only submission made on behalf of the
appellants is that since the benefit given is called a
refund it cannumber be said to be an exemption or reduction as
permitted by section 8a. in our view there is numbersubstance
in this submission at all. in order to test the validity of
the order dated 30th june 1969 one has to see the
substance of the companycession granted under the order and number
merely certain words used out of companytext. although the
benefit regarding sales tax granted to the new industries is
by way of refunds of sales tax paid to the extent provided
in the order it is clear that in effect the benefit
granted is in the nature of an exemption from the payment of
the sales tax or reduction in the sales tax liability to the
extent stated in the order. in view of this there is no
substance whatever in the companytention that the state
government had numberauthority to provide for the grant of
refunds. again the mere fact that the order of 30th june
1969 did number specify the power under which it was issued
will make numberdifference because such a power is clearly
there in section 8a and where the source of power under
which it is issued is number stated in an order but can be
found on the examination of the relevant act the exercise
of the power must be attributed to that source. the second
submission of the learned companynsel for the appellants must
also therefore be rejected.