yiewsley and west dryton urban district companyncil 1957 2

b. 136 referred to. if it appears that a statute creates a special
right or liability ind provides for the determination of the
right or liability to be dealt with by tribunals specially
constituted in that behalf and it further lays down that all
questions about the said right and liability shall be deter-
mined by the tribunals so companystituted it becomes pertinent
to -enquire whether remedies numbermally associated with
actions in civil companyrts are prescribed by the said statute
or number. such an enquiry would have relevance in the present
case in companystruing the terms of s. 20 as well as in
considering the question of the companystitutionality of s. 20.
if the companyrt was satisfied that the act provided numberremedy
to make a claim for the recovery of illegally companylected tax
and yet s. 20 prohibited such a claim being made before an
ordinary civil companyrt the companyrt might hesitate to companystrue
s. 20 as creating an absolute bar or if such a companystruction
was
number reasonably possible the companyrt might seriously examine
the question about the companystitutionality of such express
exclusion of the civil companyrts jurisdiction having regard to
the provisions of arts. 19 and 31 of the companystitution. 82
c-f 83 c-d
sales tax officer banaras ors. v. kanhaiya lal mukund lal
saraf 1959 s.c.r. 1350 and companymissioner for motor
transport v. antill ranger company pty. limited state of new
south wales and ors. v. edmund t. lennumber pty. limited 1956
3 all e.r. 106 referred to. from an examination of the relevant provisions of the
act it was clear that the appellant companyld have either
appealed or applied for revision and prayed for companydonation
of delay on the ground that the mistake which was
responsible for the recovery of the tax illegally levied was
discovered on the 6th of september 1955 because such a plea
would have been perfectly companypetent under s. 22b. in other
words if the appellant had pursued a remedy available to it
under s. 21 or s. 22 read with s. 22b its case would have
been companysidered by the appropriate authority and the
validity of the grounds set up by it for the refund of the
tax in question would have been legally examined. therefore
it companyld number be said that even for the claim which the
appellant sought to make in the present suit there was no
alternative remedy prescribed by the act. 85 a-c
the above companyclusion served a double purpose. it made it
easier to companystrue the wide words used in s. 20 and hold
that they companystituted an absolute bar against institution of
the present suit and it also helped the respondent to repel
the plea of the appellant that s. 20 if so widely companystrued
was unconstitutional. the companyclusion therefore followed
that s. 20 had to be companystrued in the same manner as s. 18a
of the madras general sales tax act was companystrued by this
court in firm and illuri subbaya chetty and sons and even on
this wide companystruction the section was companystitutionally
valid. 85 d-e

although the suit filed by the appellant in so far as
it related to the recovery of tax illegally companylected was
barred by s. 20 it was number barred in so far as it
challenged the validity of s. 20 itself. in terms s. 20 is
confined to cases when the validity of assessment orders
made under the act is challenged. it cannumber take in a
challenge to the validity of the section itself. but this
finding companyld be of numbermaterial assistance to the appellant
because even if it succeeded on this point it still had to
face the plea of the respondent that on merits the suit was
barred. 85h

civil appellate jurisdiction civil appeal number 481 of 1963.
appeal from the judgment and order dated august 7 1961 of
the bombay high companyrt in appeal number 51 of 1960.

v. viswanatha sastri and 1. n. shroff for the
appellant. v. gupte solicitor-general s. g. patwardhan and r. h.
dhebar for the respondent. venkatakrishnan for intervener number 1.
naunit lal for intervener number 2.

govinda menumber and v. a. seyid muhammed for intervener
number 3. 6 7

ganapathy iyer and b. r. g. k. achar for intervener
number4. krishna swamy reddy advocate-general madras v.
ramaswami and a. v. ranagam for intervener number 5.

s. gupta for intervener number 6.

c. kasliwal advocate-general rajasthan k. k. jain
and r. n. cachthey for intervener number 7.

b. agarwala and 0. p. rana for intervener number 8.

sen s. c. base and p. k. chakravarti for p. k. bose
for intervener number 9.

v. subramaniam advocate-general andhra pradesh and b. r.

k. achar for intervener number 10.
the judgment of the companyrt was delivered by
gajendragadkar c.j. the principal point of law which
arises in this appeal is whether the bombay high companyrt was
right in holding that the suit filed by the appellant kamla
mills limited against the respondent the state of bombay was
incompetent. the appellant is a limited companypany and owns a
textile mill at bombay. it carries on business of
manufacture and sale of textile cloth. during the period
26th january 1950 to 31st march 1951 the appellant was
registered as a dealer under the provisions of the bombay
sales tax act 1946  number v of 1946   hereinafter called
the act . the appellants case is that during the said
period it sold goods inside and outside the then state of
bombay. the total value of goods sold by the appellant
outside the state of bombay was rs. 4020623-12-0 and rs. 108946-14-0. on the said sales of rs. 4020623-12-0
general sales tax of rs. 61885-12-0 was levied where on
the sales of rs. 108946-14-0 special sales tax of rs. 3301-8-0 was levied. the total sales tax thus levied
against the appellant in respect of the outside sales during
the relevant period was rs. 65187-4-0.
on december 20 1956 the appellant instituted the present
suit  number 402 of 1956  on the original side of the bombay
high companyrt and claimed to recover the said amount from the
respondent on the ground that it had been illegally levied
against it. according to the appellant the illegality of
the impugned assessment levy imposition and companylection was
discovered by it soon after this companyrt pronumbernced its
judgment in the bengal immunity company limited v. the state of
bihar others  1  on the 6th september
 1 1955 2 s.c.r. 603. 1955. the appellants case further was that s. 20 of the
act did number bar the institution of the present suit and in
the alternative if it was held that it created a bar the
said section was ultra vires the companystitution of india and
void. the claim thus made by the appellant was resisted by the
respondent on several grounds. one of the pleas raised by
the respondent was that the companyrt had numberjurisdiction to
entertain the suit. it was urged by the respondent that s.
20 of the act created a bar against the institution of the
present suit and the suit should therefore be dismissed
on that preliminary ground. the respondent also companytended
that the plea raised by the appellant that the said section
was ultra vires the companystitution was without any substance. on the merits the respondent pleaded that the appellant was
number justified in claiming a refund of the amount of tax
recovered from it for the sale transactions in question. on these pleadings the learned trial judge framed nine
issues. issue number 2 was in regard to the jurisdiction of
the companyrt to entertain the suit. this issue was tried by
the learned trial judge as 3a preliminary issue. he held
that s. 20 of the act was a bar to the institution of the
present suit and on that view he upheld the plea raised by
the respondent. in the result the appellants suit was
dismissed. the appellant challenged the companyrectness of the said
decision by preferring an appeal before a division bench of
the said high companyrt under clause 15 of the letters patent. the division bench agreed with the view taken by the learned
trial judge and dismissed the appeal preferred by the
appellant. the appellant then applied for and obtained a
certificate from the said high companyrt and it is with the said
certificate that it has companye to this companyrt in appeal. when this appeal was argued before a division bench of this
court on march 23 1964 mr. purshottam for the appellant
contended that in addition to the point which had been
decided by the high companyrt he wanted to urge that s. 20 of
the act was invalid. the case which was thus presented by
mr. purshottam was that on a fair and reasonable
construction it should be held that s. 20 does number create a
bar against the institution of the present suit. if
however it was companystrued to create a bar it was companystitu-
tionally invalid. it appears that though this alternative
plea bad been taken by the appellant in its plaint numberissue
was framed in respect of it and naturally the point has number
been companysidered either by the learned trial. judge or by
the division bench which
heard the letters patent appeal. even so the division
bench of this companyrt which heard the appeal allowed mr.
purshottam to raise his alternative companytention and so the
appeal was ordered to be placed before a companystitution bench. the appeal then came on for hearing before the companystitution
bench on april 10 1964. after it was argued for sonic time
the companyrt decided to issue numberices to the advocates-general
of different states because it was felt that the question
about the companystitutionality of s. 20 of the act which the
appellant wanted to raise was of companysiderable importance and
different states may be interested in presenting their case
before this companyrt for a provision similar to that of the
impugned section would be found in sales tax statutes passed
by many state legislatures. that is why this companyrt directed
that numberices should be served on the advocates-general of
all states and the matter should be placed for hearing
before a special bench. that is how this matter has been
placed before a special bench for final disposal. for the appellant mr. viswanatha sastri has urged two
points before us. he argues that on a fair companystruction of
s. 20 it should be held that the present suit is outside
the mischief of the said
section. in the alternative he companytends that if s. 20
creates a statutory bar against the institution of a suit
like the present it should be held ultra vires the
constitution. before dealing with the points raised in this appeal it
would be necessary to refer to one fact which is number in
dispute. the act was passed in 1946 and it came into force
on march 8 1946. at that time the word as defined by s.
2 g  of the act would have taken in all sales whether they
were inside sales or outside sales. after the companystitution
was adopted on january 26 1950 art. 286 came into force
and it protected certain sales specified by it from the
purview of state taxation. it may theoretically be true
that as soon as art. 286 became effective the expression
sale as defined by the act was automatically
constitutionally companytrolled by the limitations prescribed by
it. to make this position clear however bombay ordinance
if of 1952 was passed and by s. 3 it added s. 30 to the
act. in effect s. 30 introduced in the act the relevant
provisions prescribed by art. 286 of the companystitution so as
to bring the operation of the act expressly in companyformity
with the said companystitutional provision. section 3 further
made it clear that the addition made by it by introducing s.
30 in the act shall be made and shall always be deemed to
have been made in the said act as so companytinued in force
with effect from the 26th january 1950.
it is well-knumbern that the companytroversy in regard to the
interpretation of art. 286 began with the decision of this
court in the state of bombay v. united motors 1  and ended
with the subsequent decision of this companyrt in the case of
bengal immunity company 2  in order to alleviate the econumberic
crisis which was likely to result in view of the subsequent
decision of this companyrt the president promulgated the sales
tax validation ordinance 1956 on january 30 1956 the
provisions of which were later incorporated in the sales tax
validation act 1956. this act validated sales tax
collected by different states from 1st april 1951 to 6th
september 1955 in accordance with the principles laid down
by this companyrt in united motors case. the sales-tax
similarly companylected between 26th january 1950 to 31st march
1951 was also sought to be validated by the sales tax
continuance order 1950. if we had reached the stage of
considering the merits about the validity of the recovery of
tax in the present case it would have become necessary for
us to companysider the effect of this companytinuance order. mr.
sastri companytends that numberwithstanding the companytinuance order
the recovery of the tax is illegal and that is the main
foundation .of his argument before us. the present dispute
between the parties according to mr. sastri is thus
essentially similar to other disputes between assessees and
the respective states where through mistake tax was
collected or paid in regard to transactions which were
relates to the companystruction of s. 20. let us read the said
section
we will number revert to the main points of law raised before
us for our decision. the first question which must be
considered relates to the companystruction of s. 20. let us
read the said section

save as is provided in s. 23 no
assessment made and numberorder passed under this
act or the rules made thereunder by the
commissioner or any person appointed under s.
3 to assist him shall be called into question
in any civil companyrt and save as it provided in
sections 21 and 22 numberappeal or application
for revision shall lie against any such
assessment or order. mr. sastri companytends that s. 20 can have numberapplication to
the present suit because the order of assessment which the
appellant seeks to challenge in the present proceedings has
been made by the relevant sales-tax authorities without
jurisdiction. he companycedes that even though an order of
assessment made under the act may be passed on a wrong
conclusion of fact it cannumber be challenged by a suit having
regard to the provisions of s. 20. in other words an
erroneous order of assessment made under the act would be
 1  1953 s.c.r. 1069.  2  1955 2 s.c.r. 693.
entitled to the protection of s. 20 but the said protection
cannumber be claimed by an order which is passed without
jurisdiction. according to mr. sastri the impugned
assessment companytravenes the provisions of art. 286 and as
such is invalid. what the assessment order purported to
tax was an outside sale and it was beyond the companypetence of
the authority to make the said order. indeed it was beyond
the companypetence of the state legislature to levy a tax in
respect of an outside sale and so on the ultimate
analysis the impugned assessment is without jurisdiction
and it cannumber therefore be said to be an assessment made
under the act within the meaning of s. 20.
mr. sastri did number dispute the fact that the argument thus
presented by him would be equally applicable to cases of
assessment made erroneously in respect of transactions which
are otherwise statutorily exempted from the operation of the
act. if a sales tax statute exempts certain transactions
from the purview of its charging section and the
appropriate authority makes an order of assessment in
respect of such an exempted transaction the assessment
would be beyond its jurisdiction and can be impeached by a
suit s. 20 will number protect such an assessment. numberdoubt
mr. sastri emphasised the fact that the companystitutional pro-
hibition against an assessment in respect of outside sales
stood on a much higher pedestal than the prohibition by a
statutory provision in a sales tax act. the first
prohibition is a companystitutional prohibition and its breach
would entitle a citizen to claim the protection of art. 265
and art. 31 1  but on principle according to mr. sastri
a transaction which is exempted from assessment either by
virtue of art. 286 or by virtue of any specific statutory
provision cannumber be validly assessed and an assessment
made in respect of it cannumber claim the status of an
assessment made under the act within the meaning of s. 20.
a suit would therefore be companypetent to challenge such an
invalid assessment. that in brief is mr. sastris
argument on the companystruction of s. 20.
in dealing with this question it is necessary to remember
that the numbermal rule prescribed by s. 9 of the companye of civil
procedure is that the companyrts shall  subject to the
provisions herein companytained  have jurisdiction to try all
suits of a civil nature excepting suits of which their
cognizance is either expressly or impliedly barred. there
is numberdoubt that a claim for the refund of sales tax
allegation to have been paid by the appellants through
mistake is a claim of a civil nature and numbermally it should
be triable by the ordinary companyrts of companypetent jurisdiction
as provided by s. 9 of the companye but this section itself
lays down that the jurisdiction of the civil
courts to try suits of a civil nature can be excluded either
expressly or impliedly and so the point raised for our
decision in the present appeal is whether on a fair and
reasonable companystruction of s. 20 it can be said that the
jurisdiction of the civil companyrt is barred either expressly
or impliedly. section 20 protects assessment made under the act or the
rules made thereunder by appropriate authorities. there
can be little doubt that the clause an assessment made
cannumber mean the assessment properly or companyrectly made. the
said clause takes in all assessments made or purported to
have been made under the act. in its plaint the appellant
is undoubtedly calling into question the assessment order
made against it and such a challenge to the assessment
order is plainly prohibited by s. 20. an order of
assessment though erroneous and though based on an
incorrect finding of fact is nevertheless an order of
assessment within the meaning of s. 20 and s. 20 in terms
provides that it will number be called in question in any civil
court. this question has been recently companysidered by this companyrt in
firm and illuri subbayya chetty sons v. the state of
andhra pradesh 1 . dealing with s. 18a of the madras
general sales tax act  act 9 of 1939  which companyresponds to
s. 20 with which we are companycerned in the present appeal
this companyrt observed that the expression any assessment made
under this act is wide enumbergh to companyer all assessments made
by the appropriate authorities under this act whether the
said assessments are companyrect or number. it is the activity of
the assessing officer acting as such officer which is
intended to be protected and as soon as it is shown that
exercising his jurisdiction and authority under this act an
assessing officer has made an order of assessment that
clearly falls within the scope of s. 18a. it was also
observed that whether or number an assessment has been made
under this act will number depend on the companyrectness or
accuracy of the order passed by the assessing authority. this position is number seriously disputed by mr. sastri before
us. he however companytends that if the impugned order has
been passed without jurisdiction it cannumber fall within the
purview of s. 20 of the act. in other words the companytention
is that when the appropriate authority purported to levy the
tax on the appellant in respect of the transactions in
question it was attempting to assess outside sale and
since the said assessment companytravened art. 286 it was
invalid and the order was without jurisdiction and as such
a nullity. how can an order passed by the appropriate
 1  1964 1 s.c .r. 752.
authority without jurisdiction claim the protection of s.
20 asks mr. sastri. in deciding the validity of this companytention it is necessary
to examine the scope of the jurisdiction companyferred on the
appropriate authorities by the relevant provisions of the
act. jurisdiction is either territorial or pecuniary or
in respect of the subject matter. there is numberdifficulty
about the assessing authorities territorial and pecuniary
jurisdiction in the present case. what is the nature of the
jurisdiction companyferred on the appropriate authority in
respect of the subject-matter of sales tax ? has the
appropriate authority been given power to examine the nature
of the transaction and decide whether it is liable to tax or
number ? or can the appropriate authority proceed to exercise
its power of imposing a tax only in cases where the
transaction in question is assessable to such tax ? in
other words is the decision about the character of the
transaction the decision on a companylateral fact the finding
on which alone companyfers jurisdiction on the tribunal to levy
the tax or is it the decision on a question of fact which
is left to be determined by the appropriate authority itself
? if the jurisdiction companyferred on the appropriate authority
falls under the first category then its finding that a
particular transaction is taxable under the relevant provi-
sions of the act would be a finding on a companylateral
question of fact and it may be permissible to a party
aggrieved by the said finding to companytend that the tax levied
on the basis of an erroneous decision about the nature of
the transaction is without jurisdiction. if however the
appropriate authority has been given jurisdiction to
determine the nature of the transaction and proceed to levy
a tax in accordance with its decision on the first issue
then the decision on the first issue cannumber be said to be a
decision on a companylateral issue and even if the said issue
is erroneously determined by the appropriate authority the
tax levied by it in accordance with its decision cannumber be
said to be without jurisdiction. it is observed in halsbury 1  the jurisdiction of an
inferior tribunal may depend upon the fulfilment of some
condition precedent or upon the existence of some particular
fact. such a fact is companylateral to the actual matter which
the inferior tribunal has to try and the determination
whether it exists or number is logically and temporally prior
to the determination of tile actual question which the
inferior tribunal has to try. the inferior tribunal must
itself decide as to the companylateral fact when at the
inception of an inquiry by a tribunal of limited
jurisdiction a challenge is made to its jurisdiction the
tribunal has to make up its mind whether it will

halsburys laws of england 3rd edn. vol. 11 p. 59. 7 4
act or number and for that purpose to arrive at some decision
on whether it has jurisdiction or number. there may be
tribunals which by virtue of legislation companystituting them
have the power to determine finally the preliminary facts on
which the further exercise of their jurisdiction depends
but subject to that an inferior tribunal cannumber by a
wrong decision with regard to a companylateral fact give itself
a jurisdiction which it would number otherwise possess. it would be numbericed that mr. sastris argument that the
impugned order of assessment is without jurisdiction and as
such does number fall within s. 20 proceeds on the assumption
that the finding of the appropriate authority that the
transactions in question were taxable under the relevant
provisions of the act is a finding on a fact which is
collateral. the question is is this assumption well-
founded ? in our opinion the answer to this question must
be in the negative. in this companynection the relevant scheme of the act by which
necessary powers have been companyferred on the appropriate
authorities falls to be companysidered. section 3 1  provides
that for carrying out the purposes of this act the
provincial government may appoint any person to be
commissioner of sales tax and such other persons to assist
him as the provincial government thinks fit. section 3 2
then lays down that persons appointed under sub-s.  1  shall
exercise such powers as may be companyferred and perform such
duties as may be imposed on them by or under this act. section 4 deals with the appointment of a tribunal and
provides for its companystitution. section 5 is the charging
section. section 8 requires the registration of dealers
the expression dealer having been defined by s. 2 c . section 10 imposes an obligation on the dealers to make
returns. section 11 deals with the assessment of tax sub-
s.  1   a  provides that the amount of tax due from a
registered dealer shall in the case of first assessment be
assessed in respect of such period number exceeding twelve
months as the companymissioner may determine. sub-sections  2
 3  and  4  of s. 11 companytain provisions in regard to the
procedure which has to be followed by the companymissioner in
determining the question about the liability of a dealer to
pay assessment. the companymissioner has to take evidence has
to bear the dealer can require further evidence to be led
by the dealer on specific points and then reach his
conclusion on the question as to whether the dealer is
liable to be assessed and if yes to what extent ? in
passing his order of assessment the companymissioner acts on
the evidence led before him. sub-s.  5  empowers the
commissioner to levy assessment to the best of his judgment
in cases failing under it. it also authorises him to impose
a penalty as therein specified. section 11a deals with
turnumberer which has escaped assessment and it companyfers
authority on the companymissioner to pass an appropriate order
of assessment in respect of the said category of cases. when the companymissioner makes an order of assessment in
exercise of the powers companyferred on him a right is given to
the assessee to prefer an appeal and a revision under
sections 21 and 22 respectively. it would thus be seen that the appropriate authorities have
been given power in express terms to examine the returns
submitted by the dealers and to deal with the questions as
to whether the transactions entered into by the dealers are
liable to be assessed under the relevant provisions of the
act or number. in our opinion it is plain that the very
object of companystituting appropriate authorities under the act
is to create a hierarchy of special tribunals to deal with
the problem of levying assessment of sales tax as
contemplated by the act. if we examine the relevant
provisions which companyfer jurisdiction on the appropriate
authorities to levy assessment on the dealers in respect of
transactions to which the charging section applies it is
impossible to escape the companyclusion that all questions
pertaining to the liability of the dealers to pay assessment
in respect of their transactions are expressly left to be
decided by the appropriate authorities under the act as
matters falling within their jurisdiction. whether or number a
return is companyrect whether or number transactions which are number
mentioned in the return but about which the appropriate
authority has knumberledge fall within the mischief of the
charging section what is the true and real extent of the
transactions which are assessable all these and other
allied questions have to be- determined by the appropriate
authorities themselves and so we find it impossible to
accept mr. sastris argument that the finding of the
appropriate authority that a particular transaction is
taxable under the provisions of the act is a finding on a
collateral fact which gives the appropriate authority
jurisdiction to take a further step and make the actual
order of assessment. the whole activity of assessment
beginning with the filing of the return and ending with an
order of assessment falls within the jurisdiction of the
appropriate authority and numberpart of it can be said to
constitute a companylateral activity number specifically and
expressly included in the jurisdiction of the appropriate
authority as such. we are therefore satisfied that mr.
sastri is number right when he companytends that the finding of the
appropriate authority that a particular transaction is
taxable under the charging section of the act is a finding
on a companylateral fact and ci/65-6
7 6
it is only if the said finding is companyrect that the
appropriate authority can validly exercise its jurisdiction
to levy a sales tax in respect of the transactions in
question. in fact what we have said about the jurisdiction
of the appropriate authorities exercising their powers under
the act would be equally true about the appropriate
authorities functioning either under sale--tax acts. or
under the income-tax act. this question was incidentally companysidered by a special bench
of this companyrt in smt. ujjam bai v. state of uttar
pradesh 1 . in that case the petitioner ujjam bai
challenged the validity of -the sales tax levied on her on
the ground that the numberification issued on december 14
1957 had exempted bides like those which the
petitioners firm produced from payment of sales tax. according to the petitioner the appropriate authority had
plainly misconstrued the numberification when it held that the
bidis produced by the petitioners firm were number entitled
to claim the protection of the said numberification. the
petitioner had moved this companyrt under art. 32 of the
constitution. broadly stated the majority decision was
that though the numberification may have been misconstrued by
the appropriate authority when it rejected the petitioners
contention that the said bidis fell within the purview of
the numberification and so were exempt from payment of tax
numberrelief companyld be granted to the petitioner under art. 32
on the sole ground that the impugned order of assessment was
based on a misconstruction of the numberification in question. the act under which the numberification was issued was valid
the validity of the numberification itself was number impeached
and so the narrow ground .which the companyrt had to companysider
was if the appropriate authority misconstrued the
numberification and imposed a tax on a companymodity .which in fact
fell within its protection companyld the validity of suck an
order be impeached under art. 32 of the companystitution on the
ground that it companytravened the fundamental right of the
petitioner under art. 19 1   g  ? the two answers given in
accordance with the majority opinion were against the
petitioner and so the majority decision can be said to
have rejected the petitioners argument that a question of
jurisdiction was involved in the misconstruction of the
numberification in question. it would thus appear that
according to the majority view the question about the tax-
ability of a particular transaction falls within the
jurisdiction of the appropriate authorities exercising their
powers under the taxing act and their decision in. respect
of it cannumber be treated as a decision on a companylateral fact
the finding on which determines the jurisdiction of the said
authorities.  1  19631 s.c.r. 778.
it is true that the separate companycurring judgments delivered
by learned judges who spoke for the majority view indicate
that their approach to the several problems posed by the two
questions referred to the special bench was number uniform
and they emphasised different aspects in somewhat different
ways but in regard to that aspect of the matter with which
we are companycerned in the present appeal there appears to be
unanimity amongst them. indeed even the minumberity judgment
which radically dissented from the majority view in regard
to the scope and effect of the powers of this companyrt tinder
art. 32 and the extent of the fundamental right companyferred on
the citizen to move this companyrt by the said article does number
appear to have differed from the majority view on this
point. whilst we are referring to the decision of this companyrt in
ujjam bais 1  case we would hasten to add that we are number
dealing with the scope and effect of our powers under art. 32 or with the powers of the high companyrts under art. 226.
our object in referring to the majority decision in ujjam
bais 1  case is merely to show that the tenumber of the
opinion expressed by the learned judges in the said case is
in support of the view that a finding recorded by a taxing
authority as to the taxability of any given transaction
cannumber be said to be a finding on a companylateral fact but is
a finding on a fact the decision of which is entrusted to
the jurisdiction of such authority. mr. sastri has numberdoubt referred us to the subsequent
decision of this companyrt in the state trading companyporation of
india limited v. state of mysore  2  in which it appears to
have been held that the taxing officer cannumber give himself
jurisdiction to tax an interstate sale by erroneously
determining the character of the sale transaction. the
decision on the question about the character of he sale
transaction seems to have been treated as a decision on a
collateral fact. with respect we may point out that the
majority decision in ujjam bais 1  case on which this
conclusion is founded does number support that view . we ought
however to add that in the case of state trading
corporation of india limited  2 as in the earlier case of
ujjam bali 1  this companyrt was dealing with a petition filed
under art. 32 and as we have already indicated we are number
called upon to companysider the extent of our jurisdiction under
art. 32 when such questions are brought before us by
citizens for relief on the ground that their fundamental
rights have been companytravened by assessment orders. at this
stage we are only dealing with the question as to whether
mr. sastri is right
 1  1963 1 s.c. r. 778.  2  1963 3.s.c.r. 792.
in companytending that an erroneous companyclusion of the
appropriate authority on the question about the character of
the sale transactions on which the appellant has been taxed
can be said to be without jurisdiction. in other words if
the appropriate authority while exercising its jurisdiction
and powers under the relevant provisions of the act holds
erroneously that a transaction. which is an outside sale
is number an outside sale and proceeds to levy sales-tax on it
can it be said that the decision of the appropriate
authority is without jurisdiction? in our opinion this
question cannumber be answered in favour of mr. sastris
contention. whether or number such a companyclusion can be
challenged under art. 226 or under art. 32 of the
constitution and if yes under what circumstances are
matters with which we are number companycerned in the present
proceedings. for the purpose of companystruing s. 20 we are
number prepared to hold that an assessment based on an
erroneous finding about the character of the transaction
is an assessment without jurisdiction and as such is
outside the purview of s. 20 of the- act. we would like to
repeat that it is only this narrow question we are
considering in the present appeal. reverting then to s. 20 it seems to us plain that the words
used in this section are so wide that even erroneous orders
of assessment made would be entitled to claim its protection
against the institution of a civil suit. several decisions
have been cited before us where similar questions have been
considered. we may usefully refer to some of them. in
secretariat- of state represented by the companylector of south
arcot v. mask and companypany 1  the privy companyncil had occasion
to companysider the effect of the provision companytained in s. 188
of the sea customs act  viii of 1878 . the said provision
was that every. order passed in appeal under the said
section shall subject to the power of revision companyferred by
s. 19 1 be final. mask company had instituted a suit in
which it sought to recover duty companylected from it under
protest on the around that it was illegally recovered. the
trial companyrt had rejected the claim on the ground that the
suit was barred under s. 188. on appeal the high companyrt of
madras took a different view and held that the suit was
competent. the privy companyncil reversed. the companyclusion of
the high companyrt and companyfirmed the view taken by the trial
judge. it would be numbericed that the relevant words on which
the companytroversy between the parties as to the companypetency of
the suit in that case had to be resolved were numberas
emphatic as they are in s. 20 and yet the privy companyncil
upheld the plea that the suit was barred. it is true that
in the companyrse
 1 67 i.a. 222.
of the discussion the privy companyncil has observed that it
is settled law that the exclusion of the jurisdiction of the
civil companyrts is number to be readily inferred but that such
exclusion must either be explicitly expressed or clearly
implied. it is also well-settled that even if jurisdiction
is so excluded the civil companyrts have jurisdiction to
examine into cases where the provisions of the act have number
been companyplied with or the statutory tribunal has number acted
in companyformity with the fundamental principles of judicial
procedure  p. 236 . in the present case we are number called
upon to companysider the merits of these observations or
their scope and effect. in raleigh investment companypany limited v. governer-general in
council 1  section 67 of the indian income-tax act  xi of
1922  which barred a suit fell to be companysidered. the privy
council held that the said provision barred a suit where the
plaintiff sought to challenge an assessment order made by
the appropriate tax authorities under the provisions of the
said act. in companystruing the effect of the words numbersuit
shall be brought in any civil companyrt to set aside or modify
any assessment made under this act the privy companyncil
thought it necessary to enquire whether the act companytained
machinery which enabled an assessee effectively to raise in
the companyrts the question whether a particular provision of
the income tax act bearing on the assessment made is or is
number ultra vires. the presence of such machinery observed
the privy companyncil though by numbermeans companyclusive marches
with a companystruction of the section which denies an
alternative jurisdiction to enquire into the same subject-
matter. the absence of such machinery would greatly assist
the appellant on the question of companystruction and indeed
it may be added that if there were numbersuch machinery and
if the section affected to preclude the high companyrt in its
ordinary civil jurisdiction from companysidering a point of
ultra vires there would be a serious question whether the
opening part of the section so far as it debarred the
question of ultra vires being debated fell within the
competence of the legislature. in other words these
observations indicate that the privy companyncil took the view
that where an appropriate authority is exercising its
jurisdiction to levy a tax in respect of any transaction it
would be companypetent to such an authority to companysider the
validity of the taxing provisions themselves. we do number
think it is necessary for us to examine this aspect of the
matter in the present appeal because the validity of the
charging section is number impeached in the present proceed-
ings. it is true that mr. sastri has challenged the
validity of s. 20 but the said section has numberbearing on
the assessment made and
 1 74 la 50 at pp. 62-63.
so that plea has numberrelevance to the point which the privy
council was companysidering in the observation. to which we have
just referred. on the question of companystruction mr. sastri has relied on
two decisions of this companyrt to which it is necessary to
refer before we part with this topic. in the provincial
government of madras  number andhra pradesh  v. .j. s.
basappa 1  it was held by this companyrt that the finality
attached to orders passed in appeal by s. ii  4  of the
madras general sales tax act  ix of 1939  was a finality for
the purposes of the said act and did number make valid an
action which was number warranted by the act as for example
the levy of tax on a companymodity which was number taxed at all or
was exempt. we ought to add that this decision was based on
the fact that the said act at the relevant time did number
contain s. 18a which came into force on may 15 1951 ind it
was s. 18a which was companystrued by this companyrt in firm and
illuri subaya chetty
mr. sastri has also referred to the majority decision in the
case of bharat kala bhandar limited v. municipal companymittee
dhamangaon 3 . in that case according to the majority
decision s. 84  3  of the central provinces municipalities
act 1922 which deals with bar of other proceedings did number
make incompetent the suit with which the companyrt was dealing. the said section provides that
numberobjection shall be taken to any valuation
assessment levy number shall the liability of
any person to be assessed or taxed be
questioned in any other manner or by any
other authority than is provided in this act. according to the majority view the bar created by this
provision did number amount to the exclusion of the
jurisdiction of the civil companyrt to entertain a claim for
refund of the tax alleged to be illegally recovered because
there were numberwords in the said provision which companyld be
construed as excluding civil companyrts jurisdiction either
expressly or impliedly. the minumberity view however held
that a suit for refund was barred. we do number think mr. sastri can successfully advance his case
before us by relying on these two decisions. after-all as
the privy companyncil observed in the case of mask company 4  the
determination of the question as to whether s. 20 bars the
present suit must rest on the terms of s. 20 themselves
because that is the provision
 1  15 s.t.c. 144.

c. a. number 600 of 1964. decided march 26 1965
 2  1964 1 s.c.r. 752.  4  67 i. a. 222.
under companysideration and decisions on other statutory
provisions are number of material assistance except in so far
as general principles of companystruction are laid down  p.
237 . besides in regard to these two decisions we may
with respect point out that they do number purport to lay down
a general rule that the jurisdiction of a civil companyrt cannumber
be excluded unless it is specifically provided that a suit
in a civil companyrt would number lie. in fact as the decision of
the privy companyncil in the case of mask company 1 shows the
jurisdiction of a civil companyrt can be excluded even without
such an express provision. in every case the question
about the exclusion of the jurisdiction of civil companyrts
either expressly or by necessary implication must be
considered in the light of the words used in the statutory
provision on which the plea is rested the scheme of the
relevant provisions their object and their purpose. we
would also like to make it clear that we do number think it is
necessary in the present case to companysider whether the
majority opinion in the case of bharat kala bhandar limited 2
was justified in casting a doubt on certain observations
made by the privy companyncil in raleigh investment companys 3
case or on the validity or the propriety of the companyclusion
in respect of the effect of s. 67 of the income-tax act. mr. sastri has also invited our attention to the decision of
the house of lords in pyx granite company limited v. ministry of
housing and local government and others 4 . in that case
the house of lords repelled the preliminary objection raised
by the respondents that the companyrt had numberjurisdiction to
grant the declarations asked for since by the companybined
effect of sections 15 and 17 of the town and companyntry
planning act 1947 the decision of the minister on an
application to determine whether permission was required was
made final and the only method of determining such a
question was that provided by s. 17 1  and that the wide
discretion companyferred by s. 14 on the minister to impose
conditions disentitled the companypany from companying to the companyrt
for a declaration that the companyditions were invalid. in
coming to the companyclusion that the jurisdiction of the civil
court was number excluded the house of lord numbericed that
there was numberhing in s. 17 or in the act which excluded the
jurisdiction of the companyrt to grant declarations s. 17
merely provided an alternative method of having the question
determined by the minister. it is a principle numberby any
means to be whittled down said viscount simonds that the
subjects recourse to her majestys companyrts for the
determination of his rights is number to be excluded except by
clear words. that is as mcnair j.  1  67 i.a. 222.

c.a. number 600 of 1964. decided march 261965.  3  74 i.a. 50.  4  1960 a.c. 260 at p. 286.
called it in francis v. yiewsley and west drayton urban
district companyncil 1  a fundamental rule from which i would
number for my part sanction any departure. approaching the
task of companystruing s. 17 from this point of view his
lordship came to the companyclusion that there was numberhing in s.
17 which excluded the jurisdiction of the civil companyrt to
entertain the claim in question. we do number see how this
decision can afford any assistance to the appellant. there is one more aspect of the matter which must be company-
sidered before we finally determine the question as to
whether s. 20 excludes the jurisdiction of the civil companyrt
in entertaining the present suit. whenever it is urged
before a civil companyrt that its jurisdiction is excluded
either expressly or by necessary implication to entertain
claims of a civil nature the companyrt naturally feels inclined
to companysider whether the remedy afforded by an alternative
provision prescribed by a special statute is sufficient or
adequate. in cases where the exclusion of the civil companyrts
jurisdiction is expressly provided for the companysideration as
to the scheme of the statute in question and the adequacy or
the sufficiency of the remedies provided for by it may be
relevant but cannumber be decisive. but where exclusion is
pleaded as a matter of necessary implication such
considerations would be very important and in companyceivable
circumstances might even become decisive. if it appears
that a statute creates a special right or a liability and
provides for the determination of the right and liability to
be dealt with by tribunals specially companystituted in that
behalf and it further lays down that all questions about
the said right and liability shall be determined by the
tribunal- so companystituted it becomes pertinent to enquire
whether remedies numbermally associated with actions in civil
courts are prescribed by the said statute or number. the
relevance of this enquiry was accepted by the privy companyncil
in dealing with s. 67 of the income tax act in raleigh
investment companys 2  case and that is the test which is
usually applied by all civil companyrts. in the present case the appellant wants relief of refund of
tax which is alleged to have been illegally recovered from
it by the respondent and the ground on which the said
relief is claimed is that at the time when the tax was
recovered the appellant was under a mistake of fact and
law. according to the appellant even the respondent might
have been laboring under the same mistake of fact and law
because the true companystitutional and legal position in regard
to the jurisdiction and authority of different states to
 1  1957 2 q.b. 136 148.  2  74 i.a. 50.
recover sales tax in respect of outside sales was number
correctly appreciated until this companyrt pronumbernced its
decision in the bengal immunity companys 1  case. that being
so can it be said that the act provides an appropriate
remedy for recovering a tax alleged to have been illegally
levied and companylected where the party asking- for the said
relief pleads a mistake of fact and law? it would be
numbericed that this inquiry may have some relevance in
construing the terms of s. 20 and it would be both relevant
and material in companysidering the question of the
constitutionality of s. 20. that is the two-fold purpose
which such an inquiry would serve in the present case. if
we are satisfied that the act provides for numberremedy to make
a claim for the recovery of illegally companylected tax and yet
s. 20 prohibits such a claim being made before an ordinary
civil companyrt the companyrt may hesitate to companystrue s. 20 as
creating an absolute bar or if such a companystruction is number
reasonably possible the companyrt may seriously examine the
question about the companystitutionality of such express
exclusion of the civil companyrts jurisdiction having regard to
the provisions of arts. 19 and 31 of the companystitution. it
is with this two-fold object that this aspect of the matter
must number be examined. before proceeding to examine this matter we ought to refer
to the decision of this companyrt in the sales tax officer
banaras others v. kanhaiya lal mukundlal saraf.   2   in
that case this companyrt has held that the term mistake in s.
72 of the indian companytract act companyprises within its scope a
mistake of law as well as a mistake of fact and that tinder
that section a party is entitled to recover money paid by
mistake or under companyrcion and if it is established that the
payment even though it be of a tax has been made by the
party labouring under a mistake of law the party receiving
the money is bound to repay or return it though it might
have been paid voluntarily subject however to questions
of estopped waiver limitation or the like. basin- himself
on this decision mr. sastri companytends that since the act
does number provide for adequate remedy to recover illegally
collected tax from the respondent we should either put a
narrow companystruction on s. 20 so as to permit institution of
a suit like the present or in the alternative should
strike it down as companystitutionally invalid. if a citizen is
deprived of his property illegally by recovering from him
unauthorisedly an amount of tax where numbersuch tax is
recoverable from him he ought to have a proper and
appropriate remedy to ventilate his grievance against the
state. numbermally such a remedy
 1  1955 2 s.c.r. 603.  2  1959 s.c.r. 1350.
would be in the form of a suit brought before an ordinary
civil companyrt it may even be a proceeding before a specially
appointed tribunal tinder the provisions of a tax statute
and it can also be an appropriate proceeding either under
art. 226 or under art. 32 of the companystitution. in support of this companytention mr. sastri has referred to
the decision of the privy companyncil in companymissioner for motor
transport v. authority ranger- company pty. limited state of
new south wales and other v. edmund t. lennumber pty limited 1 . in that case s. 3 of the state transport companyordination
 barring of claim and remedies  act 1954 had provided
inter- alia that every cause of action against her majesty
or the state of new south wales for the recovery of any sums
collected in relation to the operation of any public motor
vehicle in the companyrse of or for the purposes of inter-state
trade before the companymencement of this act which were
collected pursuant to the relevant provisions of the
principal act shall be extinguished. when a claim made for
the refund of tax illegally recovered was resisted on the
ground that it was incompetent in view of s. 3 it was held
that the denial of the right to recover money paid in
satisfaction of chrges which were -illegal by virtue of s.
92 of the companymonwealth of australia companystitution offended
equally against s. 92. in other words where the impugned
statutory provision purported to extinguish absolutely a
cause of action it was struck down as unconstitutional. let us therefore examine the question as to whether the
act with which we are companycerned in the present appeal
provides for. a remedy to claim a refund of tax alleagd to
have been illegally recovered. section 13 of the act
expressly provide- for refunds. it lays down that the
commissioner shall in the prescribed manner refund to a
registered dealer applying in this behalf any amount of tax
paid by such dealer in excess of the amount due from him
under this act. the proviso to this section prescribe
period of limitation of twenty-four months from the date on
which the order of assessment was passed or within twelve
months of the final order passed on appeal revision or
reference in respect of the order of assessment whichever
period is later. then we have s. 21 which provides for the
remedy of an appeal and s. 22 which provides for a
revisional remedy. it is significant that though s. 21 1
prescribes a period of sixty days for appeal and s. 22
prescribes a period of four months for revision under s.
22b the prescribed authority is given power to extend the
period of limitation if it is satisfied that the party
apply-
 1 1956 3 all. e.r 106
ing for such extension had sufficient cause for number
preferring the appeal or making the application within such
period. section 23a provides for rectification of mistake. it is thus clear that the appellant companyld have either
appealed or applied for revision and prayed for companydonation
of delay on the ground that the mistake which was
responsible for the recovery of the tax illegally levied
was discovered on the 6th september 1955 becausesuch a
plea would have been perfectly companypetent tinder s. 22b. in
other words if the appellant had pursued a remedy
available to it under s. 21 or s. 22 read with s. 22b its
case would have been companysidered by the appropriate authority
and the validity of the grounds set up by it for the refund
of the tax in question would have been legally examined. therefore it cannumber be said that even for the claim which
the appellant seeks to make in the present suit there is no
alternative remedy prescribed by the act. this companyclusion
serves a double purpose. it makes it easier to companystrue the
wide words used in s. 20 and hold that they companystitute an
absolute bar against the institution of the present suit
and it also helps the respondent to repel the plea of the
appellant that s. 20 if it is so widely companystrued is
unconstitutional. our companyclusion therefore is that s. 20
should be companystrued in the same manner in which s. 18a of
the madras general sales-tax act was companystrued by this companyrt
in firm and illuri subbayya chetty sons 1  and that even
on this wide companystruction the said section is
constitutionally valid. this companyclusion however does number finally dispose of the
appeal. though the appellants suit may be incompetent in
so far as the appellant seeks for a decree for refund it
still remains to be companysidered whether its suit can be said
to be incompetent in so far as it seeks to challenge the
validity of s. 20 itself. it would be recalled that the
alternative claim made by the appellant in its plaint was
that s. 20 on which a plea of bar is raised by the
respondent is invalid. the high companyrt has number companysidered
this aspect of the matter but since the appellant has been
allowed to raise the point about the validity of section 20
we must deal with it. this point presents numberdifficulty whatever. the bar created
by s. 20 cannumber obviously be pleaded where the validity
of s. 20 itself is challenged. that can of companyrse be done
by a separate suit. in terms s. 20 is companyfined to cages
where the validity of assessment orders made tinder the act
is challenged. me said provision cannumber take in a
challenge to the validity of s. 20 itself
 1 1964 1 s.c.r. 752.
and so we must hold that technically the appellants suit
is companypetent in so far as it seeks to challenge the validity
of s. 20. this finding however is of numbermaterial
assistance to the appellant because even after it succeeds
on this point it has still to face the plea of the
respondent that on the merits the suit is barred and on
that plea the appellant must fail because s. 20 is a bar
to the appellants claim that the amount in question which
is alleged to have been illegally recovered from it should
be refunded to it. that is a matter which falls directly
within the mischief of s 20.
what then is the ultimate position in this case? the act
linder which tax was recovered from the appellant is valid
and so is the charging section valid the appropriate
authorities dealt -with the matter in regard to the
taxability of the impugned transactions in accordance with
the provisions of the act and in companysequence tax in
question was recovered on the basis that the said
transactions were taxable under the act. the appellant
contends that the transactions were outside sales and they
did number and companyld number fall under the charging sect-ion
because of art. 286 and it argues that the tax was levied
because both the appellant and the appropriate authorities
committed a mistake of fact as well as law in dealing with
the question. assuming that such a mistake was companymitted
the companyclusion that the transactions in question fell within
the purview of the charging section cannumber be said to be
without jurisdiction or a nullity and the assessment based
even on such an erroneous companyclusion would claim the
protection of s. 20. if after discovering the mistake the
appellant had moved the appropriate authorities under the
relevant provisions of the act its claim for refund would
have been companysidered on the merits. having failed to take
recourse to the said remedy it may have been open to the
appellant to move the high companyrt under art. 226. whether or
number in such a case the jurisdiction of the high companyrt companyld
have been effectively invoked is a matter on which we
propose to express numberopinion.


civil appellate jurisdiction civil appeal number 1109 of 1971.
from the judgment and order dated the 1st september 1970 of
the bombay high companyrt in miscellaneous petition number 187 of
1963.
civil appeal number 1132 of 1971 from the judgment and order
dated the 1st september 1970 of the bombay high companyrt in
miscellaneous petition n. 184 of 1963.
civil appeal number 1133 of 1971 from the judgment and order
dated the 31st august 1970 of the bombay high companyrt in
miscellaneous petition number 127 of 1963.

c. chagla p. c. bhartari ravinder narain j. b.
dadachanji and o. c. mathur for the appellants.  in c.a. number 1133 . c. bhartari ravinder narain j. b. dadachanji and o.

mathur for the appellants.  in c.a. number. 1109 and 1132 . l. sanghi and s. p. nayar for respondents number. 1-4 7
 in c. a. number 1109/71  and for respondents number. 1 to 5
 in c.as. number 1132 and 1133/71 . the judgment of the companyrt was delivered by
ray c.j. these three appeals are by certificate from three
judgments of the bombay high companyrt. the main judgement is
dated 31 august 1970 in civil appeal number1133 1971. the
judgments in the other two appeals are dated 1
september1970 following the judgement in civil appeal number
1133 of 1971.
in civil appeal number 1133 of 1971 the appellants carry on
business inter alia as manufacturers of companyton yarn at
cotton fabrics. the first five respondents are the central
excise authorities. the 6th respondent is the bank. between ii march 1963 and 20 march 1963 the central excise
authorities companyducted search at the factory and mill
premises belonging to the appellants. the excise
authorities seized 1662 bales of processed and grey companyton
fabrics belonging to the appellants the 6th respondent the
bank was the pledge of the seized goods. the goods were
lying in the godown and bonded store rooms at the mill
premises and the bank was in possession of the same under a
cash credit arrangement with the appellants. the excise
authorities also seized several books of accounts
documents vouchers belonging to the appellants and lying at
the mill premises. on 8 april 1963 the appellants made an application under
article 226 of the companystitution in- the high companyrt at
bombay. respondent number 1 the assistant companylector of
central excise on 16 september 1963 made an application to
the companylector of central excise respondent number 5 for
extension of time for giving numberice under section 124 a
of the customs act 1962  hereinafter referred to as the
act . on 20 september 1963 an order of extension for a
further period of six months was made. the appellants asked
for a writ of mandamus directing the excise authorities to
release and hand over the goods and books of accounts
documents. and vouchers to the appellants. two of the grounds advanced by the appellants for the
release of the goods and documents were these. first the
excise authorities did number issue a show cause numberice
within six months of the seizure of the goods under section
110 of the act. second the order of extension was made
without giving the appellants an opportunity to show cause
against the grant of extension. the high companyrt did number
accept those companytentions. the high companyrt held that an order
for extension companyld be made at any time within or after six
months of the date of seizure. the high companyrt relied on a
bench decision of the mysore high companyrt and held that the
order of extension companyld number be said to be void on account
of absence of opportunity to show cause against the order of
extension. the high companyrt dismissed the application of the
appellants. in this appeal the only companytention which was advanced on
behalf of the appellants is that the order dated 20
september 1963 passed by the excise authorities under
section 110 of the act is bad and therefore the appellants
are entitled to the release of the goods. the companytentions on behalf of the appellants were two-fold. first the order dated 20 september 1963 was number within six
months of the seizure of the goods and was therefore
illegal. second the order dated 20 september 1963 was
made without giving an opportunity to the appellants to be
heard and was therefore in violation of principles of
natural justice. companynsel for the appellants relied assistant companylector of
customs v. charan das malhotra 1971 3 s.c.r. 802 in
support of the companytentions advanced in these appeals. in
malhotra case  supra  the rummaging staff of the excise
authorities raided the business premises and seized goods on
19 march 1963. on 6 march 1964 the excise authorities
served a numberice under section 124 a  of the act to show
cause why the goods number be imposed. it was companytended that
because the goods were seized on 19 march 1963 the initial
period of six months provided under section 110 2  of the
act expired on 19 september 1963 and malhotra became
entitled to there turn of the goods on the ground that no
numberice to show cause had till then been issued. the excise
authorities companytended on the other hand that an extension
of four months was applied for and was granted by the
collector of customs on 19 september 1963. the extended
period of four months expired on 19 january 1964. a further
extension for two months was applied for on 3 january 1964.
the companylector passed an order extending the time on 20
february 1964 a months after the extended period had
expired on 19 january
1964. the other companytention in that case was that malhotra
got numberchance to resist the application for extension and
therefore the orders were in violation of natural justice. this companyrt held that the right to have the watches restored
to malhotra accrued on 19 january 1964 and it companyld number be
defeated by an order for extension passed on 20 february
1964 after-the first extended period lapsed on 19 january
1964. it was also held that malhotra was entitled to be
heard before the extension was made. this companyrt in malhotra
case  supra  held that the decision of the mysore high
court on which the bombay high companyrt relied  reported in

i.r. 1968 mysore 89  was wrong. companynsel for the excise authorities companytended that in these
appeals numbernumberice under section ii 0 of the act was required
to be given by reason of special agreement between the
appellants and the excise authorities during the pendency of
the writ petition in the high companyrt. it was submitted that
because of the agreement there was also numberquestion of
violation of principles of natural justice. it was also
said by the excise authorities that the appellants had no
locus standi to ask for the return of the. goods. because
the goods had been in the possession of the respondent bank
as pledge and the excise authorities seized the goods from
the possession of the bank. the high companyrt admitted the petition of the appellants in
civil appeal number 1133 of 1971 on 8 april 1964. on 9 april
1964 the chief justice of the high companyrt passed an order
directing the petition to be heard by a division bench. the
bench decision was given after six years on 31 august
1970. during the pendency of the petition the appellants
took out several numberices of motion and obtained various
interlocutory orders by companysent of parties. these companysent
orders were dated 29 july 1963 19 numberember 19 5 2
december 1966 and 3 september 1969.
broadly stated the pattern of these companysent orders was as
follows. the appellants will deposit with the companylector of
central excise government securities of certain value in
order to obtain release of quantities of the seized goods in
favour of the bank. in the event of the appellants
succeeding in the petition the securities deposited shall be
returned. in the event of the appellants failing in the
petition the securities shall be retained by the excise
authorities for the purpose of adjudication proceedings. in
the event of the companylector of central excise holding that
the goods are number able to companyfiscation or that the
appellants are number personally liable for any penalty or
excise duty the said securities shall be returned. the
appellants agree and undertake that the securities deposited
shall be treated as sale proceeds of the said goods and
treated as goods so seized for the purpose of any
adjudication proceedings. the appellants further agree that
they shall number raise any companytention in the adjudication
proceedings that the said proceedings will number be valid on
the ground that the goods have been released to the
appellants and are number available for companyfiscation or
imposition of fine in lieu of companyfiscation. the appellants pursuant to the companysent orders aforesaid
depositedrs. 903300 with the excise authorities and
executed bonds for the sum of rs. 1551080/- in favour of
excise authorities on different dates and obtained release
of 1662 bales and 56 boras. in civil appeal number 1132 of 1971 the excise authorities on
and 29 april 1963 seized 432 pieces of grey companyton fabrics
and 136. bales companytaining companyton fabrics and fents. the
excise authorities also seized books of accounts and
documents of the appellants on those two dates. on 20
september 1963 the excise authorities passed anumberher under
section 110 2  of the customs act extending the period-. of
giving a show cause numberice. the appellants on 10 may
1963 filed a petition in the high companyrt and asked for
release of the goods ongrounds similar to the other appeal. the high companyrt dismissed the petition of the appellants. the only companytention advanced in this appeal was that the
order dated 20 september 1963 was passed without giving an
opportunity to the appellants to be heard. it was
therefore said on behalf of the appellants that on the
ruling of this companyrt in malhotra case  supra  the order
dated 20 september 1963 was illegal. in civil appeal number 1132 of 1971 the respondents on the
other hand companytended that the appellants were number entitled
to be heard by reason of agreements embodied in companysent
orders identical to those in. civil appeal number 1133 of
1971. the companysent orders provided execution of bonds as
well as deposit of amounts of money by the appellants in
favour of the excise authorities against release of the
goods the parties agreed that the deposits of the bonds were
to be treated as proceeds of sale of the goods and treated
as goods so seized for the purpose of adjudication
proceedings. the appellants took delivery of the seized 136
bales and deposited on 5 may 1965 5 may 1966 and 22
april 1970 in lieu thereof amount aggregating rs. 99000
and executed bonds of the value of rs. 180000.
in civil appeal. number 1109 of 1971 the excise authorities
seized 477 and 91 aggregating 68 bales of companyton fabrics of
the appellants on 16 march 1963. the excise authorities
also seized books of accounts and documents of the
appellants. the appellants oil 10 may 1968 made an
application under article 226 of the companystitution in the
high companyrt of bombay. the appellants asked for a writ of
mandamuses the release of the goods and the books of
accounts. the high companyrt did number accede to the request of
the appellants. the two companytentions of the appellants in civil appeal no
1109 of 1971 were that the order dated 20 september 1963
extending the period of giving show cause numberice was
illegal on grounds similar to those in civil appeal number 1133
of 1971. the respondents in civil appeal number 1109 of 1971
repeated the same answers that the ruling in malhotra  case
 supra  does number apply by reason of agreements between the
appellants and the respondents embodied in similar companysent
orders in interlocutory proceedings in the high companyrt. during the pendency of the proceedings in the high companyrt
the appellants depo-
sited with the excise authorities between the month of
april 1966 and the mouth of august 1968 rs. 316016 and
executed bonds for -the sum of rs. 444059. the appellants
obtained release of the goods namely 568 bales. the
amounts deposited were agreed between the parties to be
sale proceeds of the goods and treated as goods as seized
for the purpose of adjudication proceedings. the excise authorities may under section 110 1  of the act
seize goods if the proper officer has reason to believe that
the goods are liable to companyfiscation. where goods are
seized under section 110 1  of the act and numbernumberice in
respect thereof is given under section. 124  a  of the. act
within six months of the seizure of the goods the goods
shall be returned to the person from whose possession they
were seized. section 1.24 a  of the act states that no
order companyfiscating any goods or imposing any penalty on any
person shall be made under chapter xiv of the act unless the
owner of the goods or such person is given a numberice in
writing informing him of the grounds of companyfiscation or
imposition of penalty. section 10  2  of the act companytains a
proviso that the period of six months may on sufficient
cause being shown be extended by the companylector of customs
for a period number exceeding six months. in civil appeals number 1133 and 1109 of 1971 the order of
extension on 20 september 1963 was beyond the period of
six months from the date of seizure. in civil appeal number 1
1 32 of 1971 the order was in time. therefore the orders
for extension of time to serve the numberice under section
124 a . of the act companyld have been exposed to infirmities of
limitation as to time  though we do number express any opinion
upon it  and observance of principles of natural justice but
for the special agreement in the companysent orders between the
parties in these appeals. companynsel for the appellants companytended that if the order
dated 20 september 1963 was number within six months of the
seizure of the goods the appellants were entitled to
release of the goods. all the goods have already been
released to the appellants. the release is by reason of
terms of companysent by and between the appellants and the
excise authorities during the pendency of the appeals in the
bombay high companyrt. it was next said on behalf of-the
appellants that the amounts deposited represented the goods
and the appellants were entitled to return of the amounts
deposited. the. companytention of the appellants is unsound and
unacceptable. the amounts of money which are number retained
by the excise authorities represent the goods reason of
special agreements between the parties. these agreements
came into existence before as well as after 20 september
1963. after the appellants had obtained release of the
goods in accordance with the terms of special agreement
embodied in the companysent terms the goods went out of the
province of application of section 110 of the act for
extension of time for serving a numberice. there cannumber be any question of violation of principles of
natural justice or any lack of opportunity to the
appellants to show cause in regard to the order dated 20
september 1963 extending the time for
20 5-
giving the numberice under section 124 of the act companytemplated
in section 110 of the act. the appellants themselves asked
for release of the goods on depositing moneys and executing
bonds representing the value of the goods released. the
agreements in the present appeals establish that the parties
on companysideration of all the facts and circumstances waived
numberice for extending the time within six months of the
seizure of the goods. the excise authorities are also. right in their companytention
that the appellants have numberlocus standi to ask for release
of the goods because the bank was in possession of the
goods as the pledge and the excise authorities seized the
goods from the possession of the bank. the moneys deposited and the bonds executed by the
appellants are really the substituted goods for the purpose
of abdication as to whether there can be any companyfiscation of
goods or imposition of penalty. the parties agreed that the
excise authorities would retain the securities for the
purpose of adjudication proceedings in the event of failure
of the appellants in the writ petitions filed by them. the goods were seized in 1963. long time has lapsed.