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B. Kanniah Prasad v. The Deputy Commercial Tax Officer, Peddunalckenpet, Madras And Another
Structured Summary of the Opinion
Factual and Procedural Background
This appeal was instituted by the assessee under the Madras Sales Tax Act from the judgment of Ramachandra Iyer J. (as he then was) in W.P. No. 737 of 1959, in which the learned Judge declined to exercise jurisdiction under Article 226 and dismissed the petition for a writ of prohibition.
The petitioner is a merchant dealing in bamboos and also engaged in certain works contracts. On 9-3-1954 he was assessed on a total turnover of Rs. 2,89,023-13-3. Of this, turnover attributable to works contracts amounted to Rs. 1,12,840-6-0; the remainder related to the bamboo trade and was not in dispute.
The total tax assessed was Rs. 4,560-0-9. Of that sum Rs. 2,277 was not disputed (being the tax on the admittedly taxable part of the turnover). The balance of Rs. 2,238-6-0 related to tax on works contracts. The opinion notes that, on the principle of the Supreme Court decision in State of Madras v. Gannon Dunkerley & Co., (Madras) Ltd., that part of the assessment should be unsustainable in law.
The core procedural issue is that the petitioner did not pursue statutory appeal remedies in time under Section 12-A of the Madras General Sales Tax Act, and did not approach the High Court under Article 226 until 1958 (W.P. No. 737 of 1958) — a delay of approximately four years after the delivery of the relevant authority by this Court on 5-4-1954. The learned Judge declined to exercise discretionary writ jurisdiction because of the delay and laches.
Legal Issues Presented
- Whether the learned Judge was justified in dismissing the writ petition and declining to exercise jurisdiction under Article 226 on the grounds of unjustified delay and laches by the petitioner.
- Whether a petitioner who has not exhausted statutory remedies (or who has delayed in approaching the High Court) can nonetheless obtain relief under Article 226 when the assessment is alleged to be without jurisdiction (for example, as to turnover from works contracts held to be unsustainable by Gannon Dunkerley).
Arguments of the Parties
Appellant's Arguments (as set out in the opinion)
- The appellant relied on correspondence between the assessee and the department in subsequent periods of assessment, which led him to believe that the Supreme Court's decision might govern the matter (an explanation for delay in seeking court relief).
- The Government had not taken coercive steps to collect the disputed tax until recently; since the tax remained uncollected, the appellant argued that a writ of prohibition could properly be issued (as distinct from a writ of mandamus seeking a refund of collected tax).
Respondent / State (as reflected in the opinion)
- The learned Judge and the Additional Government Pleader contended that the court could not concern itself with particulars of correspondence about later assessments; as to the present assessment the appellant had a statutory right of appeal under Section 12-A which he should have availed himself of.
- The fact that the Government did not immediately initiate coercive collection does not justify the petitioner’s delay; no limitation is prescribed for taking coercive steps by Government, so delay in collection efforts does not aid the appellant.
- The State drew attention to a Bench decision (Rayalaseema Construction v. Dy. C.T. Officer) which supports restraining illegal usurpation of jurisdiction in certain circumstances; but the State also noted that an appeal from that Bench decision to the Supreme Court was pending and might affect the position.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. (this Court: 1955-1 Mad LJ 87; AIR 1954 Mad 1130) | Principle that tax charged on turnover attributable to works contracts (as in this case) is unsustainable in law. | The opinion states that, by the principle of that decision, the portion of the assessment relating to works contracts (Rs. 2,238-6-0) should be clearly unsustainable in law; that decision put the assessee on notice when delivered on 5-4-1954. |
| Rayalaseema Construction v. Dy. C.T. Officer (Bench decision, Madras) | Where an assessment is without jurisdiction, failure to pursue statutory remedies does not render the assessment legal; a court may restrain a usurpation of jurisdiction by appropriate writ. | The Bench decision was noted by the Court as relevant; the Court observed that an appeal from that Bench decision to the Supreme Court was pending and might appreciably affect the legal position, but it did not rely on it to overturn the finding of laches in the present case. |
| Raleigh Investment Co. v. Governor General in Council (1947-2 Mad LJ 16; AIR 1947 PC 78) | Authority for the proposition that a suit would not lie to set aside or modify an assessment made under the Indian Income Tax Act. | The Bench decision Rayalaseema reviewed and distinguished Raleigh Investment on the basis that Raleigh related to the Income Tax Act; the present Court noted that Raleigh was distinguishable on its facts. |
| Venkataraman and Co. v. State of Madras | Relates to maintainability of a suit in civil court under Section 18-A of the Sales Tax Act, 1939. | The Court observed this decision concerned maintainability under Section 18-A and hence was not of direct significance to the present issue about writ jurisdiction and laches. |
| Himatlal v. State of M.P. | Proposition that where a levy is made without authority of law and impairs fundamental rights, relief by way of mandamus could be appropriate. | The Court noted the citation but observed that Himatlal did not directly address the principal issue here of delay and laches. |
| Veeraswami J., W.P. Nos. 291, 458, 459 etc. of 1961 (unreported single-judge decisions) | Consideration of delay and laches in the context of Article 226; view that relief should not be denied merely because petitioners came somewhat belatedly. | The Court acknowledged this unreported decision as favourable to the appellant to the extent it did not deny relief solely for belatedness. |
| Srinivasan J., W.P. Nos. 972 to 974 of 1960 (unreported) | Similar factual situation regarding works-contract turnover and alleged illegal levy; emphasis that petitioner failed to take obvious steps and was guilty of considerable delay. | The Court noted this decision as against the appellant; Srinivasan J. declined to exercise Article 226 jurisdiction owing to delay and laches. |
| Veeraswami J., W.P. No. 966 of 1960 (unreported) | Similar facts; conclusion that considerable delay and laches disentitle petitioner to discretionary relief. | The Court recorded this decision as another authority against the appellant on the question of laches. |
Court's Reasoning and Analysis
The Court's analysis focuses primarily on the discretionary nature of writ jurisdiction under Article 226 and the well-settled requirement that a petitioner must exhibit due diligence and must not be guilty of unconscionable delay or laches. The opinion proceeds through the following steps:
- Identification of the key factual timeline: the material judgment of this Court (Gannon Dunkerley) was delivered on 5-4-1954 and put the assessee on notice as to the untenable part of the assessment. The statutory time for appeal had effectively expired about two days when that judgment was delivered; the appellant nevertheless did not pursue statutory or other judicial remedies until 1958 (a delay of roughly four years).
- Examination of the appellant's explanations for the delay: (a) correspondence with the department in respect of subsequent assessments and an expectation that the Supreme Court's decision might govern; (b) absence of coercive collection steps by Government until recently, with the related submission that a writ of prohibition would be appropriate while tax remained uncollected.
- Rejection of those explanations: the Court (and the learned Judge below) held that correspondence about subsequent assessments was not relevant to the appellant's duty to act promptly in respect of the present assessment; the availability of statutory appeal remedies meant the appellant should have first exhausted those remedies or at least approached the High Court with reasonable diligence after the Gannon Dunkerley judgment; the absence of coercive collection did not excuse delay because there is no prescribed limitation on the Government's initiation of coercive steps.
- Consideration of authority and comparative decisions: the Court reviewed an on-going debate in the case law — the Bench decision Rayalaseema suggests that a totally void or jurisdictionally defective assessment would not be saved by the assessee's failure to pursue statutory remedies; however, that Bench decision was under appeal to the Supreme Court and therefore not controlling of the present outcome. The Court also noted both single-judge decisions favourable and unfavourable to petitioners on delay, but found that the weight of facts here supported a conclusion of laches.
- Application of settled doctrine: the Court reaffirmed the long-standing principle (supported by numerous precedents, in the Court's words) that discretionary relief under Article 226 can be refused where the petitioner has been guilty of unconscionable delay or laches, even if on strict legal grounds the petitioner may have a good case. The Court emphasized that a petitioner does not have a vested right to the exercise of writ jurisdiction regardless of his conduct.
- Standard of appellate review: the Court noted that an appellate court will not lightly disturb a single Judge's discretionary exercise of writ jurisdiction where that Judge, after scrutiny of facts, has concluded that laches disentitle the petitioner — reversal on appeal would require facts that abundantly justify the delay or the necessity for condonation.
Holding and Implications
Holding: The Court concurred with the learned Judge (Ramachandra Iyer J.) and dismissed the writ appeal. The opinion therefore affirms the refusal to exercise discretionary jurisdiction under Article 226 in favour of the appellant on grounds of delay and laches.
DISPOSITION: The writ appeal is dismissed. There will be no order as to costs.
Implications
- Direct effect: The appellant is not granted relief by way of a writ of prohibition or other writ in respect of the challenged portion of the assessment; the High Court declined to exercise its discretionary writ jurisdiction because of the appellant's delay and laches.
- On broader law: The Court reiterated the established proposition that laches and lack of due diligence can disentitle a petitioner to discretionary relief under Article 226, even where a legal objection to an assessment may exist. The opinion does not purport to lay down a new precedent altering that doctrine.
- Matters left open: The Court expressly declined to express any conclusive view on the wider consequences that might follow if the Bench decision (Rayalaseema) were reversed or modified on appeal to the Supreme Court; similarly the Court did not decide on potential res judicata effects or future refund claims if coercive collection were to occur. No new rule supplanting existing principles of discretion and laches was announced.
This summary is strictly confined to information contained in the provided opinion and does not add or infer facts beyond the text of that opinion.
1. This appeal is instituted by the assesses under the Madras Sales tax Act, from the judgment 'of Ramachandra Iyer J. (as he then was) in W. P. No. 737 of 1959, in which the learned Judge declined to exercise jurisdiction under Article 226 and dismissed the petition for the issue of a writ of prohibition. The broad facts are really not in dispute before us, and the crux of the matter is whether the learned Judge was justified in dismissing the writ petition on the grounds of unjustified delay and laches on the part of the petitioner.
2. The petitioner (appellant) is a merchant conducting trade in bamboos, as well as certain types of works contracts. On 9-3-1954 he was assessed upon a turnover of Rs. 2,89,023-13-3. Of this total turn-over, a part related to certain works contracts and amounted to Rs. 1,12,840-6-0. The rest related to turnover upon transactions of the bamboo trade, in. the usual course, and that is not. in dispute before us. Out of the total sum of Rs. 4560-0-9 payable as tax in respect of the assessment, a sum of Rs. 2277 is, again, not in dispute, being the assessment upon the admittedly taxable part of the turnover. The balance of Rs. 2238-6-0 relates to the tax upon works contracts undertaken by the petitioner (appellant) and, upon the principle of the decision of the Supreme Court in State Of Madras v. Gannon Dunkerley & Co., (Madras) Ltd. , this part of the law should be clearly unsustainable in law.
3. As we indicated earlier, the real point is whether the petitioner approached the court with due diligence, or whether he sought redress only after such unjustified delay and such laches on his part, as would entitle the court to decline to exercise the discretion vested in this court under Article 226 in his favour, by the issue of a writ of prohibition or other appropriate writ. The learned Judge (Ramachandra Iyer J. ) has pointed out that the assessee (appellant) was obviously content with the order of assessment, at any rate during the early stages of this matter as he did not avail himself of the opportunity of filing a statutory appeal Under Section 12-A of the Madras General Sales Tax Act. This court delivered the judgment in Gannon Dunkerley and Co., Madras Ltd. v. State of Madras, 1955-1 Mad LJ 87 : (AIR 1954 Mac! 1130) on 5-4-1954. Admittedly, that put the assessed on notice concerning the untenable part of the turnover and assessment, and, normally, he should have sought redress under Article 226 with reasonable diligence after the delivery of this judgment. It is noteworthy that the time for the statutory appeal had expired only by about two days, when the aforesaid judgment in 1955-1 Mad L J. 87 : (AIR 1954 Mad 1130) was delivered by this court, But the appellant did not act. On the contrary, he failed to act and took no steps to obtain redress till the year 1958, when he instituted W. D. No. 737 of 1958 before the learned Judge. It is this delay of practically four years which has led the Judge to decline to exercise his jurisdiction in favour of the appellant.
4. On behalf of the appellant, his learned counsel (Sri K. Parasaran) has again urged the same grounds in extenuation or explanation of the delay, which were urged before the learned Judge himself. The first was that with regard to subsequent periods of assessment, upon more or less the same basis, there was correspondence between the assessee and the department, and their appellant was led to believe that the decision of the Supreme Court might govern the matter. The second ground is that the Government have not taken coarcive steps for the collection, or even initiated such steps, till vary recently, and that since the tax is not collected, a writ of prohibition could appropriately issue, which is different from a writ of mandamus directing a refund of collected tax. But, as the learned Judge (Ramachandra Iyer J.) has rightly pointed out, if we may say so with respect, this court cannot be concerned with the particulars of this correspondence between the assessee and the Government for remitting a part of the tax, or for staying the hands of the collecting agency with regard to the tax for subsequent periods. As far as the present assessment is concerned, the appellant had a statutory right of appeal and should have first exhausted it. Even if this were to be condoned he should hare approached this court with due diligence for - relief under Article 226 after the delivery of the judgment by this court on 5th April 1954 in 1955-1 Mad Li 87 : (AIR 1954 Mad 1130). Since no limitation is prescribed for the taking of coercive, steps by Government, the delay in initiating such steps will not help the appellant in any manner. In other words, upon the bare and patent, facts of the matter, it is impossible to rebut the inference that the appellant has been guilty both of considerable delay and laches on his part.
5. But there is a further argument based upon the Bench decision of this court in Rayalaseema Construction v. Dy. C. T. Officer, Madras, , Rajagopalan and Balakrishna Aiyar JJ. That was also a case of an alleged illegal assessment, and the Bench observed that no degree of failure on the part of the assessee to pursue his statutory remedies under the taxing statute would render the assessment legal, if it was otherwise without jurisdiction. Hence, such an assessment will not become final under the taxing statute itself and when there is thus, a total want of jurisdiction a mere attempt to usurp jurisdiction could be restrained by the issue of an appropriate writ. We may also point out that the Bench reviewed the prior case law, including Raleigh Investment Co. v. Governor General in Council, 1947-2-Mad LJ 16 : (AIR 1947 PC 78) and distinguished that case on the ground that it was an authority only for the proposition that a suit would not' lie to set aside or modify art assessment made under the Indian Income tax Act, The learned Additional Government Pleader brings it to our notice that am appeal has been filed from this Bench decision by the State before the Supreme Court, which is pending disposal. The result of that appeal might appreciably affect, the position whether, under such circumstances, of illegal levy, a court could exercise jurisdiction under Article 226 of the Constitution by the issue of an appropriate writ, even though the affected party has not pursued his statutory remedies, the assessment itself has become final, and the affected party has, further, been guilty of laches, and delay in approaching this court for redress. The learned Additional Government Pleader has also referred to Venkataraman and Co. v. State of Madras, , but that really relates to the maintainability of a suit in the civil court Under Section 18-A of the Sales tax Act, 1939 when the turnover of works contracts could have been decided under the, provisions of the Act itself by the High Court to proceedings under Section 12-B; the decision therefore may not be of any direct significance or relevance. Learned counsel for the appellant has cited Himatlal v. State of M. P., in support of his proposition that where a levy is made without the authority of law, and in impairment of fundamental rights, relief by way of a writ of mandamus could be granted as the appropriate relief. But it has to be pointed out that this does not really touch the question of ladies and or delay, which is the main issue now before us.
5a. Our attention has also been drawn to three unreported decisions of learned single Judges of this Court all of them having some relevance in this context. Of these, we might first refer to the judgment of Veeraswami J. in W. P. Nos. 291, 458, 459 etc. of 1961 (Mad), before the learned Judge, a large batch of proceedings dealt with by means of a common judgment In these cases, the question did arise with regard to delay and laches, and the extent to which a party would be thereby disentitled to relief under Article 226 of the Constitution. The learned Judge thought that, upon the facts of that particular case, the delay was not so material. He observed that Section 18-A of the Madras General Sales Tax Act, 1939 barred a suit, and that the State could not, with propriety, claim that a suit did not lie, and at the same time plead that the remedy of the assesses roust be held to have been barred by limitation. The learned Judge added
"I am not prepared to deny relief to the petitioners merely on the ground that they have come to this court somewhat belatedly".
To the extent to which it goes, this judgment is in favour of the petitioner (appellant).
6. The other two unreported decisions are definitely against the appellant. In W. P. Nos. 972 to 974 of 1960 (Mad), Srinivasan J. had occasion to deal with a very similar case relating to turnover upon works contract, and the right to claim a refund upon an alleged illegal levy. The learned Judge cited and set forth a passage from the judgment of Ramachandra Iyer, J. now under appeal before us, and also referred to another petition for the issue of a writ of mandamus. Finally, the learned Judge thought, that the petitioner
"failed to take the obvious steps open to him and he has been guilty of considerable delay in resorting to this court."
The learned Judge declined to exercise jurisdiction under Article 226 of the Constitution in favour of the petitioner. In W. P. No. 966 of I960 (Mad) Veeraswami J. had again occasion to consider a very similar situation for the issue of a writ of mandamus directing a refund, and the same judgment now under appeal has been referred to, and the passage therefrom cited and set forth. Finally, the learned Judge concluded that the facts were almost ad idem with the present case, and that the considerable delay and laches disentitled the petitioner to the exercise of discretion in his favour.
7. We have very carefully considered this matter, and, in particular, the arguments of learned counsel for the appellant (Sri K. Parasaran) attempting to extenate the delay and laches upon special grounds. These arguments are not convincing and we have to reject them for the very same reasons as those furnished by the learned Judge (Ramachandra Iyer, J.), It is a well settled proposition of law, laid down in precedents too numerous for citation and analysis, here that a party seeking; the exercise of jurisdiction under Article 226 in his favour,. must exhibit due diligence, must not delay in any unconscionable manner, and must not be, guilty of laches. If he is so guilty, this court may decline to exercise the jurisdiction in his favour, though it may be that, from] the strictly legal point of view, a good case existed for the exercise of such jurisdiction, had the party been dillgent. The situation in our view is not really affected.; by the question whether the party did or did not exhaust his departmental remedies, as provided for under the Madras General Sales Tax Act. Quite apart from the failure to prefer a statutory appeal, the delay in this case has been considerable!, and not extenuated by any factor that! could be pleaded in favour of the appellant. Again, we are not now really concerned with the propriety of the dicta laid down in the Bench decision in , said to be pending in appeal before the Supreme Court. It is not necessary for us to discuss the principles laid down therein, relating to the levy an initio illegal, and the extent to which it could or could not be affected by the assessment becoming final as far as the taxing statute was concerned, or the failure of the aggrieved party to pursue a departmental remedy. . All this apart, no party has a right to approach this court; and to demand the exercise of jurisdiction under Article 226 in his favour, whatever the merits of his case, unless he has exhibited due diligence, or, if there has been undue delay, he is able to explain or account for it in a convincing manner. We do not think it necessary to make any comment upon what would happen even if the decision in ,. foe reversed or modified in appeal; it may or may not be that, by virtue of such result, the; appellant might or might not be in a position to claim a refund in our course, if the tax be collected by coercive process or otherwise. The question of the situation them being affected by res judicator, by virtues of our present decision, is obviously on upon which we can express no immediate view, nor is any such view called for. Finally, we may point out that when a learned Judge of this court has been convinced, after a scrutiny of the particular facts, that a petitioner who seeks to obtain relief under Article 226 of the Constitution at the hands of this court has done so in such belated manner, and being guilty of such laches, as would disentitle him to that relief, a different view would be taken in appeal only where the facts; rely and abundantly establish the justification for the delay, or the necessity for condo nation of the laches; that is for the simple reason that the exercise of writ jurisdiction is a discretionary power; and a petitioner does not approach the court as a matter of a vested right, irrespective of his own conduct. With these observations,. we entirely concur in the view of the learned judge (Ramachandra Iyer J.) and dismiss the writ appeal There will be no order as to costs.
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