Dhulabhai v. State of Madhya Pradesh
Supreme Court of India · 5 April 1968 · 5 judges · 1969 AIR 78; 1968 SCR (3) 662
A civil suit lay to recover sales tax collected under notifications void under Article 301, despite the bar in Section 17 of the Madhya Bharat Sales Tax Act; the Court stated seven principles on exclusion of civil court jurisdiction.
Facts
The appellants, tobacco dealers at Ujjain, paid sales tax levied under notifications issued under Section 5 of the Madhya Bharat Sales Tax Act, 1950, which taxed tobacco at the point of import without taxing similar local goods. In Bhailal's case the notifications were held to offend Article 301 and not to be saved by Article 304(a). The appellants did not seek writs but filed suits for refund. The State pleaded the bar in Section 17 of the Act, which provided that no assessment or order under the Act shall be called in question in any court. The District Judge decreed the suits; the Madhya Pradesh High Court reversed and dismissed them. Because earlier rulings of the Supreme Court differed, the appeals were referred to a Constitution Bench.
Questions before the Court
- Was a civil suit to recover tax collected under notifications void under Article 301 barred by Section 17 of the Madhya Bharat Sales Tax Act, 1950, expressly or by implication?
- When is the jurisdiction of civil courts excluded by a statute that sets up its own authorities and remedies?
What the Court held
- The jurisdiction of civil courts under Section 9 CPC is all embracing except where excluded by an express provision of law or by clear intendment arising from such law, and exclusion is not readily to be inferred.
- Where a statute gives finality to the orders of special tribunals, civil court jurisdiction is excluded if there is an adequate remedy to do what a civil court would do in a suit, but not where the Act has not been complied with or the tribunal has not acted in conformity with fundamental principles of judicial procedure.
- The vires of the Act cannot be challenged before tribunals constituted under it. When a provision is already declared unconstitutional, or its constitutionality is challenged, a suit is open; a writ with a direction for refund is not a compulsory substitute. Where the Act has no machinery for refund of tax collected in excess of constitutional limits, a suit lies.
- Questions of the correctness of an assessment, apart from its constitutionality, are for the authorities, and a suit does not lie if their orders are made final or there is an express bar.
- Here the notifications were void, so the tax was levied without a complete charging provision and the authorities lacked jurisdiction to assess. Following Venkataraman's case, the suits were maintainable; the appeals were allowed and the suits decreed.
Why it matters
On exclusion of civil court jurisdiction under Section 9 CPC, after reviewing the Privy Council decisions in Mask and Raleigh Investment and the conflicting rulings of the Supreme Court, it sets out seven propositions distinguishing an express bar from exclusion by implication, and holds that challenges to the constitutionality of a taxing provision, and claims for refund of tax collected under a void law, can be brought by a civil suit.
In the Court's words
Copied from the official judgment; each passage links to its page.
“At the very start we may observe that the jurisdiction of the Civil Courts is all embracing except to the extent it is excluded by an express. provision of law or by clear intendment arising from such law.”
“(1) Where the statute gives a finality to the orders of the special tribunals the Civil Courts' jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.”
“(4) When a provision is already declared unconstitutional. or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit.”
“(6) Questions of the correctness of the assessment apart from its constitutionality are for. the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry. (7) An exclusion of the jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply.”
Provisions interpreted
- Section 9, Code of Civil Procedure, 1908
- Section 17, Madhya Bharat Sales Tax Act, 1950
- Article 301, Constitution
- Article 304(a), Constitution
Case and bench
- Parties
- Dhulabhai v. The State of Madhya Pradesh
- Case
- Civil Appeals Nos. 260 to 263 of 1967
- Decided
- 5 April 1968
- Bench
- Hidayatullah, M. (CJ), Bachawat, R.S., Vaidyialingam, C.A., Hegde, K.S., Grover, A.N.
- Opinions
- Unanimous. The judgment of the Court was delivered by M. Hidayatullah, CJ.
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