K. S. Venkataraman & Co. Vs. State of Madras [1965] INSC 217 (18 October 1965)
1965 Latest Caselaw 217 SC

K. S. Venkataraman & Co. Vs. State of Madras [1965] INSC 217 (18 October 1965)

18/10/1965 SUBBARAO, K.

SUBBARAO, K.

WANCHOO, K.N.

SHAH, J.C.

SIKRI, S.M.

RAMASWAMI, V.

CITATION: 1966 AIR 1089 1966 SCR (2) 229

CITATOR INFO:

RF 1966 SC1113 (13) R 1966 SC1412 (8) R 1966 SC1738 (4) F 1968 SC 271 (12) RF 1968 SC 579 (8) RF 1968 SC1286 (6,7) RF 1969 SC 78 (18) RF 1969 SC 453 (2) R 1973 SC2117 (5) RF 1975 SC2238 (16,22) D 1983 SC 603 (7) RF 1986 SC1556 (25) RF 1988 SC 752 (9)

ACT:

Madras General Sales Tax Act (9 of 1939), s. 18A-Tax levied under ultra vires part of section-Suit for refundMaintainability-Limitation.

HEADNOTE:

The appellant-company was carrying on the business of building contractors. During the years 1948-49 to, 1952-53, the appellant was assessed to sales-tax on the basis that the contracts executed by them were "works contracts". On 5th April 1954, the High Court held that the relevant provision of the Madras General Sales Tax Act, 1939, empowering the State to assess indivisible building contracts was ultra vires the powers of the State Legislature. On 23rd March 1955, the appellant filed a suit for the recovery of the amount of taxes illegally levied and collected from it. The trial court and the High Court following the decision in Raleigh Investment Co. Ltd. v. The Governor General in Council, [1947] L.R. 74 I.A. 50, held that the suit was not maintainable because of s. 18A of the Act, and that the remedy of the appellant was only to pursue the machinery provided under the Act.

In appeal to this Court, it was contended by the appellants that : (i) The provisions of the Act and Rules relevant to, indivisible works contracts were held by this Court also to be without legislative competence and void, and therefore, s. 18A did not bar a suit for the recovery of tax assessed under ultra vires provisions; and (ii) the suit was within time.

HELD: (i) (per Subba Rao, Wanchoo and Sikri, JJ.) The assessments in the present case were made in respect of indivisible works contracts. This Court in the appeal from the judgment of the High Court agreed with the High Court and held that the provisions which enabled the levy of sales-tax in respect of such contracts were ultra vires the powers of the Provincial Legislature, in the State of Madras v. Gannon Dunkerley,[1959] S.C.R.379. Therefore, the salestax authorities have. acted outside the Actand not under it in making an assessment on the basis of the relevant part of the charging section which was declared to, be ultra vires by this Court, and hence s. 18A was not a bar to the maintainability of the suit. [237 F-G; 252 D-E; 253A] If a statute imposes a liability and creates an effective machinery for deciding questions of law or fact arising in regard to that liability, it may, by necessary implication, bar the maintainability of a civil suit in respect of the said liability. A statute may also, confer exclusive jurisdiction on the authorities constituting the said machinery to, decide finally a jurisdictional fact thereby excluding by necessary implication the jurisdiction of a civil court in that regard. But an authority created by a statute cannot question the vires of that statute: or any of the provisions thereof, where under it functions. It must act under the Act and not outside it. If it acts on the basis of a provision of that statute which is ultra vires, to that extent it would beating outside the Act. In that event, a suit to question the validity of such an order made outside the Act would certainly lie in a civil court, The foundation laid by the Judicial Committee in 230 Raleigh Investment Co. case for construing the expression "under the Act" has no legal basis. The entire reasoning of the Judicial Committee was based upon the assumption that the question of ultra vires can be canvassed and finally decided through the 'machinery provided under the Income-tax Act. But the Income-tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal are all. creatures of that Act and whether the provisions of the Act are good or bad is not their concern. As the Tribunal is a creature of the statute it can only decide the dispute between the assessee and the Commissioner in terms of the: provisions 'of the Act and the question of ultra vires is foreign to the scope of its jurisdiction. If an assessee raises such a question, the Tribunal can only reject it on the ground that it has no jurisdiction to entertain the objection or decide on it. As no such question can be raised or can arise on the Tribunal's order, the High Court cannot possibly give any decision on the question of ultra vires, because its jurisdiction under s. 66 is a special advisory jurisdiction and its scope is strictly limited. It can, only decide questions of law that arise out of the order of the Tribunal and those that are referred to it. 'Me appeal to this Court under s. 66A(2) does not enlarge the scope of the jurisdiction, for this Court can only do what the High Court can. Any assessment made on the basis of a provision which is ultra vires cannot be a decision under the provisions of the Act. If the charging section is ultra vires the assessment made thereunder is really one outside the Act.

[240H; 247H; 248 B, D-H; 252 B-D, G-H] There is no justification for confining the expression "under the Act" in s. 18A, only to the power of the Officer to make an assessment and the procedure to be adopted by him and not to the content of the assessment. The expression refers both to the procedural and substantive provisions of the Act, and the procedural machinery under the Act can be utilized only to decide disputes that arise under the substantive provisions of the Act, which are not ultra vires. [252 F, H] Case law reviewed.

Per Shah, and Ramaswami, JJ (dissenting) : The suit was barred by the scheme of the Act and by s. 18A which was later incorporated by Act 6 of 1951. [278 D] In substance this Court held in the Gannon Dankerley case that the definition of "sale" in s. 2(h) must be read in the light of and restricted by the legislative power of the Provinces as contained in Entry 48 in List 11, Schedule VII of the Government of India Act, 1935; and on that view, if a works contract is one, entire and indivisible., there will be no sale of goods and no part of the consideration received for executing such a contract could be included in the turnover. This Court declared that the taxing authority may not, in computing the turnover of a dealer, include any part of the receipts under a works contract which is one, entire and indivisible, because the State Legislature had no power to levy tax on transactions which are not transactions of sale of goods. But this Court did not declare the clause ultra vires: the Court merely directed that the power to levy tax in respect of a works, contract is not wholly denied to the Provinces or States; in each case it has to be considered whether the transaction involves sale of goods strictly so called, or if it is a transaction which is a works contract "one, entire and indivisible." If it is the latter, it would not be taxable, because there is no element of sale of goods within that transaction, if it is the former, the clement of sale of goods would be taxable. The approach conforms to a recognised rule. of interpretation that it is always presumed that the legislature did not intend to,-transgress restrictions upon its legislative powers, and it would be legitimate to read words used in a statute assubject to the 231 restrictions imposed by the Constitution upon legislative power, so that the statute may harmonise with the constitutional restrictions. This rule applies unless the restricted meaning of words makes the, legislation incomplete, unintelligible or unmeaning. Apparently wide words of the definition clause and the charging section will not, on account of such restrictions, be rendered ultra vires or invalid ; the words will be construed so as to confer power upon the taxing authorities to assess tax only within limited field. [259 F-G; 260 E-G-H; 261 A-C 263 G] Re : the Hindu Women's Rights to Property Act, 1937, [1941] F.C.R. 12, applied.

Ordinarily a taxing authority has power to ascertain whether the transaction before him is taxable, and for that purpose he may determine facts which have a bearing on the taxability of the transaction. He has also power to interpret the provisions of the taxing Statute as well as of any other statute which has a bearing on the question.

Within his jurisdiction is included power to decide finally whether the transaction submitted to his scrutiny is taxable. His decision is open to challenge by appropriate proceedings in the hierarchy of tribunals set up for that purpose, but not outside the Act. [263 H; 264 B] Kamala Mills Ltd. v. State of Bombay, [1966] 1 S.C.R. 64 followed.

The Madras General Sales Tax Act is a complete code setting up machinery for the levy, assessment, collection and refund of tax : by the clearest implication it excludes the jurisdiction of the civil courts to modify or set aside assessments under the Act by authorities invested with power in that behalf. By enacting s. 18A the legislature did no more than enact what was clearly implicit in the scheme of the Act. Absence of the section from the statute book for the first two years of assessment is therefore of no materiality. [268 G-H; 269 A] Even on the assumption that the portion added by Act 25 of 1947 into the definition of 'sale' was subsequently declared ultra vires by this Court in the Gannon Dunkerley case, the suit to set aside or modify an assessment on the assumption that the definition was wholly invalid, was not maintainable. The. taxing officer in exercising his power may err; but he has authority to err in exercise of. his jurisdiction. It matters little that the error he commits is in the interpretation of a Constitutional prohibition, and not a statutory prohibition applying to the transaction submitted to his scrutiny. There is nothing in the Act which prohibits the taxing authority from entertaining the plea that a transaction is not taxable because it is in respect of an exempted commodity or is an exempted sale, or because it is not a transaction of ale, and there are ample indications of an implication to, the contrary. If by an erroneous decision, he, can clothe himself with jurisdiction, which on a true view of the facts or law he does not possess, it is difficult to appreciate the ground on which it can be asserted that he must decline to adjudicate when the vires of a part of the statute which he has to administer fall to be determined. In a large number of cases in which proceedings relating to taxation havereached the High Court by way of reference, appeal or revision and this Court in appeal from the High Court, the question of the vires of the statute under which the authority functioned was raised, entertained and decided.

[269 B-C, G-H; 270 B, D-E; 271 C-D] Raleigh Investment Co. Ltd. case, applied.

Under the Act, therefore, the Deputy Commercial Tax Officer had jurisdiction to determine whether the appellant's transactions were assessable under the. Act. He may have committed a mistake, even a grevious 232 mistak. but he had jurisdiction to decide the question.

Exercise of that jurisdiction was not conditioned by the correctness of his conclusion. [265 B-C] (ii) (By Full Court) : The suit was governed by art. 96 of the Limitation Act, 1908, and that article prescribes a period of limitation of three years for relief, on the ground of mistake, from the date when the mistake becomes known to the plaintiff. Since the appellants came to know of their mistake when the High Court gave its decision on 5th April 1954, the suit filed on 23rd March 1955 was well within time. [253 F-H; 255D] State of Kerala v. Aluminium Industries Ltd. C.A. No. 720 of 1963. Decided on April 21, 1965 (unreported) followed.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 618 of 1963.

Appeal from the judgment and order dated October 10, 1960 of the Madras High Court in C.C.C.A. No. 90 of 1957.

S. T. Desai, K. R. Venkatram and S. Venkatakrishnan, for the appellant.

A. Ranganadham Chetty and A. V. Ramgam, for the respondent.

The Judgment Of SUBBA RAO, WANCHOO and SIKRI, JJ. was delivered by SUBBA RAO J. The dissenting opinion of SHAH and RAMASWAMI, JJ. was delivered by SHAH, J.

Subba Rao, J. This appeal by certificate raises 'the question whether a suit for the, refund of sales-tax assessed under a provision of the Madras General Sales Tax Act, 1939 (Act IX of 1939) declared to be ultra vires the powers of the State Legislature would lie.

The appellants are a private company incorporated under the Indian Companies Act. They carry on the business of building contractors. During the years 1948-49 to 1952-53 they were assessed to sales-tax by, the State of Madras on the basis that the contracts executed by them were 'works contracts". On April 5, 1954, the High Court of Judicature at Madras held in Gannon Dunkerley & Co. v. The State of Madras(1) that the relevant provision of the Madras General Sales Tax Act empowering the State of Madras to. assess indivisible building contracts to sales tax was ultra vires the powers of the State Legislature. On July 5, 1954, the appellants issued a notice to the State of Madras under S. 80 of the Code of Civil Procedure claiming the refund of the amounts collected from them. As the demand was not complied with, on March 23, 1955, they filed O.S. No. 2272 of 1955 (1) 5 S.T.C. 216.

233 in the City Civil Court, Madras, for the recovery of a sum of Rs. 36,320-1-11, being the total amount of taxes illegally levied and collected from them for the years 194849 to 1952-53 and for incidental relief. The main basis of the claim was that the relevant provisions of the Madras General Sales-tax Act empowering the sales-tax authorities to impose, sales-tax on indivisible building contracts were unconstitutional and void, that the sales-tax authorities had no jurisdiction to assess the said tax in respect of the said transactions and that the appellants, having paid the amounts under a mistake of law, would be entitled to have a refund of the same. The State of Madras raised various defenses. It pleaded, inter alia, that S. 18-A of the Sales-tax Act was a bar to the maintainability of the suit, that the suit was barred by limitation and that a suit to recover money on the ground of mistake of law was not maintainable. The learned City Civil Judge held, following the principle laid down by the Judicial Committee in Raleigh Investment Co., Ltd. v. The Governor-General in Council(1), that the suit was not maintainable under s. 18-A of the Madras General Sales-tax Act. The learned City Civil Judge further held that a suit for a refund of money paid under a mistake of law was not maintainable and that it was also barred by limitation. On appeal, a Division Bench of the High Court of Madras held that a suit for a refund on the basis of mistake of law would lie but dismissed the r, appeal on the ground that the said decision of the Judicial Committee directly covered the point raised; that is to say, it held that the remedy of the appellants was only to pursue the machinery provided under the Act and that the suit was not maintainable in view of s. 18-A of the said Act. It did not express any opinion on the question of limitation.

Hence the appeal.

Mr. Desai, learned counsel for the appellants, raises before us the following points : (1) The provisions of s. 2(h) and 2(i) Explanation (1) (i) of the Madras General Sales Tax Act, 1939, hereinafter called the Act,,read with r. 4(3) of the Turnover and Assessment Rules, so far relevant to indivisible works contracts, were held by this Court to be without legislative competence and, therefore, wholly void;

that s. 18-A of the Act does not bar a suit for the recovery of tax assessed under the said ultra vires provisions. (2) Section 18-A of the Act was introduced by the Amending Act of 1951 (Mad. Act 6 of 1951) which came into force on April 20, 1951 and, therefore, in any event the suit would He be maintainable in respect of refund of amounts paid towards sales-tax for a period before the said date. And (3) the suit is not (1) (1947) L.R. 74 I.A. 50.

234 barred by limitation, as art. 96 of the Limitation Act governs the said suit and in terms of the said article the appellants had filed the suit within three years from the date they had knowledge of the mistake where under they paid the amounts.

The arguments of Mr. A. Ranganadham Chetty, learned counsel for the respondent, may be briefly put thus: On a fair reading of the provisions of s. 18-A of the Act it should be held that a suit to set aside or modify an assessment made under the machinery of the Act is not maintainable. The expression "assessment" has three elements, namely, (i) power to make the assessment; (ii) the process of assessment; and (iii) its content. The section emphasizes the making of assessment i.e., its two component parts, power and process, under the Act and not its con-tent. If it be held that it refers to the content, it will lead to anomalies, for in making an assessment the assessing authority has to consider the principles of different laws and it cannot obviously be held that his decision based upon laws other than Sales-tax law is a decision made under the provisions of the Act. Any provision of the Act relating to the content of assessment cannot have a higher sanctity than a provision of law other than the Sales-tax law relating to the content of assessment. So, the argument proceeds, the expression "under the Act" can be correlated only to the expression "make", with the result the bar against the maintainability of the suit is attached to the making of an assessment under the machinery of the Act. In short, his argument is that the principle laid down in the Raleigh Investment Co.'s case(1) directly applies to a similar case arising under the Act. His further contention is that this Court had not declared the relevant provisions of the Act ultra vires and even if it had, there is no evidence that the contracts in question were indivisible works contracts.

At the outset it will be convenient to consider the question whether the contracts in respect whereof the sales-tax was assessed were indivisible works contracts not involving any element of sale of material, for if they were not such contracts, the entire G argument of the learned counsel for the appellants would fall to the ground.

The appellants in paragraph 3 of the plaint averred thus "As such building contractors the plaintiffs had executed construction of buildings, bridges, drains H roads, on lump-sum basis or on the basis of tender (1) L.R. 74 I.A. 50.

23 5 accepted by the other contracting parties.

During the years 1948-49 to 1953-54 the plaintiffs were assessed to sales-tax on various sums mentioned in the particulars herein on the basis that the contracts were works contracts and therefore liable to be taxed under section 3(1) read with Rule 4(3) of the Madras General Sales-tax (Turnover and Assessment) Rules, 1939." In paragraph 4 of the plaint they stated that the said assessments were illegal, unconstitutional and were without any jurisdiction, as the plaintiffs were not dealers as defined in the Act. In paragraph 9 thereof they referred to the decision of the Madras High Court in Gannon Dunkerley & Co. v. The State of Madras(1) and stated that they came to know of their mistake on April 5, 1954, when the Madras High Court delivered the judgment in that case. It is, therefore, clear from the, plaint that the appellants stated that they entered into building contracts with the state on a lump-sum basis and that the assessments made in respect of those contracts were unconstitutional and without jurisdiction, in view of the decision of the Madras High Court in Gannon Dunkerley & Co.'s case(1). There were clear averments in the plaint that the contracts were indivisible building contracts. In the written-statement, the State did not deny that they were indivisible building contracts;

indeed, it assumed that the said contracts were covered by the decision of the Madras High Court in Gannon Dunkerley & Co.'s case(1), but stated that the said decision required reconsideration and that the matter was pending in appeal before this Court. Issue (1) framed by the City Civil -Judge reads :

"Has sales-tax for the years 1948-53 been validly levied and as such the suit claim is untenable?" On that issue the learned City Civil Court Judge, on a consideration of the entire material placed before him, held that the, plaintiffs entered into works contracts only and there was no element of sale of the materials used in the buildings separately in the said contracts. He observed "It is clear from the assessment files produced by the defendants that the plaintiffs were assessed only on the basis that they entered into "works contracts" and not on the basis that they sold building materials." In the High Court no attempt was made to canvass the correctness of that finding. Indeed, the High Court proceeded on the basis (1) 5 S.T.C. 216.

236 that the appellants' turnover from the works contracts was computed in accordance with the rules framed under the Act and that the decision in the Gannon Dunkerley & Co.'s case(1) directly applied to the said assessments. In the statement of case filed by the respondent in this Court, there is no allegation that the assessments did not relate to indivisible works contracts. The entire statement of case was based on the assumption that they were such contracts. In the circumstances we must hold that the assessments in question were made in respect of indivisible works contracts.

We shall now read the relevant provisions of the Act and the effect of the decision of this Court in Gannon Dunkerley and Co.'s case(1) on the said section.

Section 2(i-i) "Works contract" means any agreement for carrying out for cash or for deferred payment or other valuable consideration, the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property or the fitting out, improvement or repair of any movable property.

Section 2. (h) "Sale" with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration and includes also a transfer of property in goods involved in the execution of a works contract but does not include a mortgage, hypothecation, charge or pledge.

Section 2. (i) "Turnover" means the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover.

Explanation (1) : Subject to, such conditions and restrictions, if any, as may be prescribed in this behalf :

(i) the amount for which goods are sold shall, in relation to a works contract, be deemed to be the amount payable to the dealer for carrying out such contract, less such portion as may be pres(1) 5 S.T.C. 216.

(2) [1959] S.C.R. 379.

237 cribed of such amount, representing the usual proportion of the cost of labour to the cost of materials used in carrying out such contract.

Rule 4(3) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, reads:

"For the purpose of sub-rule (1), the amount for which goods are sold by a dealer shall, in relation to a works contract, be deemed to be the amount payable to the dealer for carrying out such contract less a sum not exceeding such percentage of the amount payable as may be fixed by the Board of Revenue, from time to time for different areas, representing the usual proportion in such areas of the cost of labour to the cost of materials used in carrying out such contract, subject to the following maximum percentages It will be seen from the said provisions that an indivisible works contract is deemed to be a sale and the person entering into such a contract, a dealer. The turnover of the dealer in respect of such contracts is arrived at by deducting from the amount payable to the dealer the cost of labour arrived at in the manner prescribed thereunder. The provisions are wide enough to take indivisible works contracts where, under the terms of the contracts, the value of the materials supplied by a contractor and the charges he made for the labour arc separately specified. As we have pointed out earlier, the assessments in the present case were made under the said provisions on the basis that the appellants entered into indivisible works contracts. This Court in Gannon Dunkerley and Co.'s case(1) had to consider the validity of the, said provisions. The Court, speaking through Venkatarama Aiyar, J., held, agreeing with the High Court, that the said provisions introduced by the Madras General Sales Tax (Amendment) Act, 1947, were ultra vires the powers of the Provincial Legislature. Mr. Ranganadham Chetty, learned counsel for the State, contended that this Court did not hold the said provisions; to be ultra vires, but in effect and substance construed them so as to limit their operation only to works contracts involving an element of sale of materials. We have gone through the judgment and it discloses an elaborate consideration of the only question raised before it, namely, whether the definition of "sale", which included building contracts, was within the constitutional competence of the State Legislature. After considering the relevant (1) [1959] S.C.R. 379.

238 constitutional provisions and the relevant authorities, this Court ,came to the definite conclusion that the State Legislature had no competence to impose a tax on indivisible building contracts. It is true that in the last paragraph of the judgment, to avoid misconception, this Court explained that its conclusion was applicable ,only to works contracts which are entire and indivisible. We have no doubt that this Court held in clear terms that the said provisions would be unconstitutional in so far as they dealt with indivisible building contracts. If there was any ambiguity, that was made ,clear by this Court in Pandit Banarsi Das Bhanot v. The State of Madhya Pradesh(1), which was decided on April 3, 1958, wherein in the context of similar provisions in the Central Provinces and Berar Sales Tax Act, 1947, it held that in a building contract there was no sale of materials as such and that, therefore, it was ultra vires the powers of the Provincial Legislature to impose tax on the supply of materials. We, therefore, hold that this Court in Gannon Dunkerley & Co.'s case(1) held that the said provisions of the, Madras General Sales Tax Act, 1939, in so far as they enabled the imposition of tax on the turnover of indivisible building contracts, were ultra vires the powers of the State Legislature and, therefore, void.

If the said provisions to the extent indicated are ultra vires the State Legislature, the next question is whether a suit for the refund ,of the amounts paid in respect of assessments made under the said ultra vires provisions is maintainable. The sheet-anchor of the arguments of the learned counsel for the respondent is the decision of the Judicial Committee in Raleigh investment Co.'s case(3).

Before we consider the scope of the said derision, it will be convenient to notice some of the propositions of law settled in the context of the ouster of jurisdiction of a civil court, Under s. 9 of the Code of Civil Procedure , "The Courts shah subject to; the provisions herein contained, have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred." A suit is expressly barred if a legislation in express terms says so. It is impliedly barred if a statute creates a new offence or a new right and prescribes a particular penalty or special remedy. In that event, no other remedy can, in the absence, of evidence of contrary intention, be resorted to : see Wolverines in New Water-works v. Hawkesford(1). The general rule is that statutes affecting jurisdiction ,of courts are to be construed, so far as possible, to avoid the (1) [1959] S.C.R. 427 (2) (1959] S.C.R. 379 (3) L.R. 74 I.A. 50 (4) 1859 6 C.B.

(N. S.) 336 239 effect of transferring the de-termination of rights and liabilities from the ordinary courts to executive officers :

see Winter v. Attorney-General(1). It has been held that a suit in a civil court will always lie to question the order of a tribunal created by a statute, even if its order is, expressly or by necessary implication, made final, if the said tribunal abuses its power or does not act under the Act but in violation of its provisions : see Firm Radha Kishan v. Ludhiana Municipality ( 2 ). It is also equally well established that civil courts have power to entertain a suit in which the question is whether the executive authority has acted ultra vires its powers : see King-Emperor v. Sibnath Banerji (3 ) and Mohammad Din v. Imam Din (4 ). So far there is, or can be, no doubt. But the further question that falls to be decided in this case is whether an assessment made under an ultra vires provision of a statute can only be questioned through the machinery provided by that Act or whether a suit in a civil court is maintainable in This brings us to the consideration of the decision of the Judicial Committee in Raleigh Investment Co.'s case(5). As the arguments at the Bar mainly turned upon the correctness of this decision it is necessary to scrutinize it in some detail. The facts of that case were as follows : The appellant, a joint stock company incorporated in, the. Isle of Man, with its registered office there and, its main office in England, held shares in nine companies carrying on business in British India. Some of those companies were incorporated in England and the others in the Isle of Man, and while their businesses in India were managed by local bodies, the ultimate control lay with the London Boards, All the dividends received by the appellant company from the nine companies were declared, paid and received in England :

no part of them was ever remitted to British India. The appellant was assessed in respect of income-tax and supertax for the relevant years as a nonresident on an income which included the dividends received from the nine companies. The appellant paid the tax under protest and instituted a suit in the High Court at Calcutta in its ordinary original civil jurisdiction claiming a declaration that in so far as explanation 3 and the other provisions of s. 4 of the Indian Income-tax Act, 1922, as amended to 1939, purported to authorize the assessment and charging to tax of a non-resident in respect of dividends declare or paid outside British India, but not brought into British India.

those provisions were ultra vires the legislature, (1) (1875) L.R. P.C. 380. (2) A.I.R. 1963 S.C. 1547.

(3) (1945) L.R. 72 I. A. 241.(4) (1947) L.R. 74 1. A. 322.

(5) (1947) L.R. 74 I. A. 50.

Sup. C.I.166-2 240 and that the assessment was illegal and wrongful. The Judicial Committee held that s. 67 of the Act was a bar to the maintainability of the suit. The argument on behalf of the assessee in that case was that an assessment was not an assessment "made under the Act" if the assessment gave effect to a provision which was ultra vires the Indian Legislature; that in law such a provision, being a nullity, was non-existent; and that an assessment justifiable in whole or in part by reference to, or by such a provision was more aptly described as an assessment not made under the Act than as an assessment made under the Act. This was an argument similar to that now advanced by Mr. Desai on behalf of the assessee. The argument was negatived by the Judicial Committee for the following reason, at pp. 63-64:

"Effective and appropriate machinery is therefore provided by the Act itself for the review on grounds of law of any assessment............. The obvious meaning, and in their Lordships' opinion, the correct meaning, of the phrase "assessment made under this Act" is an assessment finding its origin in an activity of the assessing officer acting as such. The circumstance that the assessing officer has taken into account an ultra vires provision of the act is in this view immaterial in determining whether the assessment is "made under this Act"." The main reason that persuaded the Judicial Committee to, accept the construction they placed on s. 67 of the IncometaxAct may be stated in their own words thus :

"The absence of such machinery would greatly assist the appellant on the question of construction and' indeed, it may be added that, if there were no such machinery, and if the section affected to preclude the High Court in its ordinary civil jurisdiction from considering 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."' Indeed, in view of the said machinery, the Judicial Committee even doubted whether the enactment of s. 67 was necessary to exclude jurisdiction. In its opinion it was superfluous. The entire reasoning of the Judicial Committee was, therefore, based upon the assumption that the question of ultra vires can be canvassed and finally decided through the machinery provided' under the con241 cerned statute. The interpretation of s. 67 of the Income tax Act was also based on the comprehensive scope given by the Judicial Committee to the said machinery provided under the said Act. Is this assumption correct ? If not, as the Judicial Committee itself realised, the construction put upon s. 67 of the Income-tax Act would not also be correct.

Before we scrutinize the correctness of the reasons given by the Judicial Committee, we shall briefly notice the decisions of the Privy Council and of this Court wherein the said decision was considered, as Mr. Ranganadham Chetty contended that the entire reasoning of the Privy Council was either expressly or impliedly accepted by the said decisions.

The Judicial Committee in Commissioner of I.T., Punjab, North-West Frontier and Delhi Provinces, Lahore v. Tribune, Trust, Lahore(1) had to deal with a case where an assessment was made by the income-tax authority in regard to an income which was exempt on the ground that it was derived from property held under trust wholly for charitable purposes.

It held that the assessments of the income-tax officer, who had jurisdiction to decide whether the said income was exempt from the relevant provision and who had held that the said income was not exempt and on that basis made the assessments, were not a nullity. In coming to that conclusion the Judicial Committee found strong support in the decision in Raleigh Investment Company's case (2). This is not a case where the income-tax officer made an assessment under a provision which was ultra vires.

In Raja Bahadur Kamakshya Narain Singh of Ramgarh v. Commissioner of Income-tax, Bihar(3), the Federal Court was concerned with a case where the appellate tribunal relying upon the Bihar Regulations 1 of 1941 and IV of 1942 held that the assessment made by the Income-tax Officer before the said Regulations were passed was good. Before the tribunal it was contended that the said Regulations were ultra vires, but that contention was rejected. After giving long extracts from the judgment in Raleigh's case(1), Kania, J., as he then was, observed :

"These observations clearly show that the right of appeal and the machinery provided in the Income-tax Act to take a question of law for the opinion of the High Court are important provisions which have a bearing on the question whether a certain piece of legislation is ultra vires or not." (1) (1947) L.R. 74 I.A. 306.

(2) (1947) L.R. 74 I.A. 50.

(3) (1947) F.C.R. 130,138-139.

242 These observations ex facie do not support the contention that the question of ultra vires of a statutory provision could be canvassed through the machinery provided under the statute. That apart, in that case the tribunal acted under the provisions of the Act, and the Federal Court was also bound by the decision of the Privy Council.

The first occasion when a serious inroad was made on the ,correctness of the decision in Raleigh's case(1) is in The State of Tripura v. The Province of East Bengal(1). The facts there were : the Income-tax Officer, Dacca, acting under the Bengal Agricultural Income-tax Act, 1944, sent by registered post a notice to the Manager of an Estate belonging to the Tripura State but situated in Bengal, calling upon the latter to furnish a return of the agricultural income derived from the Estate during the previous year. The State, by its then Ruler, instituted a suit in June 1946 against the Province of Bengal and the Income'-tax Officer, in the court of the Subordinate Judge of Dacca for a declaration that the said Act in so far as it purported to impose a liability to pay agricultural income tax on the plaintiff was ultra vires and void, and for a perpetual injunction to restrain the defendants from taking any steps to assess the plaintiff. It was contended that s.

65 of the Bengal Agricultural Income-tax Act, 1944, was a bar to the maintainability of the suit. That section read "No suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any officer of the Crown for anything in good faith done or intended to be done under this Act." Relying upon the decision in Raleigh Investment Company's case(1) it was contended that the said section was a bar against the maintainability of the suit. The authority of the said decision, as Fazl Ali, J., pointed out, was not questioned before this Court. But the Court by majority held that the suit was maintainable and distinguished Raleigh's case on the ground that the suit was not to set aside or modify the assessment. The proposition laid down by the Judicial Committee in Raleigh's case, namely, that the machinery provided by the Act should be followed even when the contention of the assessee was that the impugned Act or any provision thereof was ultra vires, would equally apply whether the suit was instituted before tile assessment was made or thereafter.

(1) (1947) L.R. 74 I.A. 50.

(2) [1951] S.C.R. 1.

243 To the extent this Court held that such a suit would lie before the assessment was made for an injunction restraining the authority from proceeding with the assessment on the ground of ultra vires, it detracts from the correctness of the decision in Raleigh's case(1).

This Court in Firm and Illuri Subbayya Chetty & Sons v. The State of Andhra Pradesh ( 2 ) had to consider the scope of the bar of a suit under s. 18-A of the Madras General Sales Tax Act, 1939. There, the, appellants were carrying on commission agency and other businesses at Kurnool and as such they were purchasing and selling groundnuts. The sales-tax authorities during the relevant period, on the basis of the returns made by the assessees, assessed the total turnover of the dealers and collected the tax thereon.

Having paid the tax, the assessees claimed to recover part of the tax collected from them on the ground that the said tax was wrongly collected on the turnover representing the groundnut sales. This Court held that the expression "any assessment made under this Act" was wide enough to cover all assessments made by the appropriate authorities under the Act, whether the said assessments were correct or not. The following principle was accepted:

"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. 18-A. The fact that the order passed by the assessing authority may in fact be incorrect or wrong does not affect the position that in law, the said order has been passed by an appropriate authority and the assessment made by it must be treated as made under this Act." But this Court, after considering the decision in Raleigh's case(1) expressly left open the question whether s. 18-A of the Act would apply to a case where a particular provision of the Sales-tax Act bearing on the assessment made was ultra vires. Adverting to that question, it observed thus :

"It is true that the judgment shows that the Privy Council took the view that even the constitutional validity of the taxing provision can be challenged by adopting the -procedure prescribed by the Income-tax Act;

and this assumption presumably proceeded on the basis that (1) (1947) L.R. 74 I.A. 50.

(2) [1963] 1 S.C.R. 752, 760, 764.

244 if an assessee wants to challenge the vires of the taxing provision on which an assessment is purported to be made against him, it would be open to him to raise that point before the taxing authority and take it for a decision before the High Court under S. 66(1) of the Act. It is not necessary for us to consider whether this assumption is well founded or not." The correctness of the said assumption falls to be considered in the present case. In this case this Court applied the decision in Raleigh's case(1) only to a situation where the sales-tax authority was said to have included in the turn-over certain transaction which he should not have included therein.

In Kalwa Devadattam v. The Union of India(2) sons of one Nagappa, whose joint family had been assessed to income-tax, filed a suit for a declaration that the assessment orders were unenforceable against the property attached and that the sale of the property by the revenue authorities was without jurisdiction for the reason that the said item did not belong to the joint family but was their separate property. This Court held that s. 67 of the Income-tax Act barred a suit in so far as it sought to set aside the assessment. This was also a case where the plaintiffs sought to set aside the order of assessment on the ground that it was vitiated by an error.

This Court again considered the scope of the decision in Raleigh's case(1) in Bharat Kala Bhander Ltd. v. Municipal Committee, Dhamangaon (3 ) . There the question raised was whether the suit filed by the appellant against the Municipal Committee, Dhwnangaon, for refund of the excels tax paid on ginned cotton was barred under s. 48 of the Central Provinces Municipalities Act, 1922. The cause of action alleged was that the said excess tax collected from the appellant was in derogation of the constitutional prohibition under Art. 276 of the Constitution of India.

Under S. 48 of the said Act, no suit shall be instituted against any committee for anything done or purporting to be done under the Act until the prescribed notice was given within the prescribed time and manner and every such suit should be dismissed if it was not instituted within six months from the date of the accrual of the alleged cause of action. For the Municipal Committee reliance was placed, inter alia, on Raleigh's case(1) and it was contended that, as the said Act prescribed a machinery for canvassing the correctness of the assessment and enacted a bar (1) (1947) L.R. 74 I.A. 50. (2) [1964] 3 S.C.R. 191.

(3) [1965] 3 S.C.R. 499.

245 against the maintainability of a suit, the appellant should have raised the plea of constitutional invalidity before the tribunals ,constituted under the Act and that the suit was not maintainable. This Court, on a comparison of the provisions of the said Act :and the Income-tax Act, distinguished Raleigh's case(1) on the ,ground that the machinery provided under the said Act was neither exhaustive nor effective. That apart, the majority considered the decision in Raleigh's case(1) and made the following observations :

"But, with respect, we find it difficult to appreciate how taking into account an ultra vires provision which in law must be regarded as not being a part of the Act at all, will make the assessment as one "under the Act".

No doubt the power to make an assessment was conferred by the Act and, therefore, making an assessment would be within the jurisdiction of the assessing authority. But the jurisdiction can be exercised only according, as well as with reference, to, the valid provisions of the Act. When, however, the authority travels beyond the valid provisions it must be regarded as acting in excess of its jurisdiction. To give too wide a construction to the expression "under the Act" may lead to the serious consequence of attributing to the legislature, which owes its existence itself to the Constitution, the intention of affording protection to unconstitutional activities by limiting challenge to them only by resort to the special machinery provided by it in place of the normal remedies availa ble under the Code of Civil Procedure , that is, to a machinery which cannot be as efficacious as the one provided by the general law. Such a construction might necessitate the consideration of the very constitutionality of the provision which contains this expression.

This aspect of the matter does not appear to have been considered in Raleigh Investment Co.'s case(1)." These observations by this Court clearly question the correctness of the decision in Raleigh's case(1) in so far as it held that s. 67 of the Income-tax Act was a bar to the maintainability of a suit, even if an assessment was made on the basis of a provision which was ultra vires the Constitution. Though in a sense it may be said that the said observations are in the nature of obiter, they are the considered views of this Court.

(1) (1947) L.R. 74 I.A. 50.

246 The decision in Raleigh's case (1) was again considered by a Bench of this Court in M/s. Kamala Mills Ltd. v. The State of Bombay (2) . There the Sales-tax Authority held on the material placed before him that certain transactions were inside sales and on that basis assessed the appellant to sales-tax. The appellant filed a suit on the original side of the Bombay High Court to recover the amount from the respondent on the ground that the Sales-tax Officer had no jurisdiction to, assess the outside sales in view of the judgment of this Court in The Bengal Immunity Co., Ltd. v.

The State of Bihar(1). It was contested by the respondent, inter alia, on the ground that S. 20 of the Bombay Sales Tax Act, 1946, (No. V of 1946), was a bar to the maintainability of the suit. This Court accepted the said contention and held that s. 20 of the said Act was a bar to the maintainability of the suit. Under s. 20 of the said Act no assessment made' and no order passed under that Act or the rules made there under by the Commissioner or any person appointed under s. 3 to assist him shall be called in question in any Civil Court. This Court, after considering the relevant provisions of that Act and the decisions on the subject, including that in Raleigh's case(1), held that S.

20 of that Act was a bar to the suit. This Court held that the Sales tax Officer had jurisdiction to decide whether a sale was an inside sale or an outside sale; and, as the said officer held the sale to be an inside sale, it was subject to sales tax and if that finding was wrong, the Act provided an effective machinery for correcting the said mistake. On that reasoning this Court held that the assessment was made under the Act within the meaning of S. 20 of that Act and, therefore, the suit was not maintainable. This judgment followed the decision in Firm and Illuri Subbayya Chettey & Sons v. The State of Andhra Pradesh(1). This decision does not touch the question whether a suit would lie in a case where the assessment was made on the basis of a provision which was ultra vires the Constitution. Presumably, for that reason this Court observed :

"We would also like to make it clear that we do not think it is necessary in the present case to consider whether the majority opinion in the case of Bharat Kala Bhandar Ltd. (1965)2 S.C.R. 499] was justified in casting a doubt on certain observations made by the Privy Council in Raleigh Investment Co.'s case C.L.R.

(1) (1947) L.R. 74 I.A. 50.

(3) [1955] 2 S.C.R, 603.

(2) [1966] 1 S.C.R. 64.

(4) [1963] 1 S.C.R. 752 247 741A. 50], or on the validity or the propriety of the conclusion in respect of the effect of s. 67 of the Income-tax Act." We have considered these decisions in some detail as it was contended that the present question was finally decided by some of the decisions of this Court. But a perusal of the judgment& discloses that the said question, namely, whether a suit would lie when an assessment was made on the basis of a provision which was ultra vires the Constitution, was left open and indeed in one of the decisions clear observations were made questioning the correctness of the decision of the Privy Council in so far as it held that a suit would not be maintainable even in such a case. The question left open directly calls for a decision in this appeal.

Let us now scrutinize the said machinery to ascertain its scope and ambit. Section 3 of the Income-tax Act is the charging section; it imposes a tax upon a person in respect of his income. As. a learned author pithily puts it, "Section 3 charges total income; s. 4 defines its range; s.

6 qualifies it; and ss. 7 to 12B quantify it." Section 23 empowers the Income-tax Officer to assess the said total income in the manner prescribed thereunder. His jurisdiction is confined to the ascertainment of the total income. of a person in accordance with the provisions of the Act. His duty is to-assess the income of a person under the provisions of the Act and certainly not to ignore any of them for any reason whatsoever. Against the said assessment an appeal his to the Appellate Assistant Commissioner, who also functions under the Act. Section 30 confers a right of appeal on an assessee in respect of specified orders of the Income-tax Officers. He can, by an appeal, object, inter alia, to the amount of income assessed, to the amount of tax determined and to his liability to be assessed' under the Act. Section 31 provides the procedure to be followed and the powers to be exercised by the Assistant Appellate Commissioner in disposing of the appeal. Indeed, the appeal being in substance the continuation of the assessment proceedings in regard to the specified subject matter, he cannot out step the jurisdiction conferred on the Income-tax Officer. An assessee, objecting to an order passed by the Appellate Assistant Commissioner may appeal to the Appellate Tribunal; under s. 33 of the Act the Appellate Tribunal can canvass the correctness of the order of the Assistant Appellate Commissioner and pass a suitable order, as it thinks fit.

Up to this stage all the three authorities are the creatures of' the Act and they function thereunder. They cannot ignore any 248 sources of income on the ground that the relevant provisions offend the fundamental rights or are bad for want of legislative ,competence. The Act does not confer any such right on them. Their jurisdiction is confined to the assessment of the income :.,and the tax under the provisions of the Act. Whether the provisions are good or bad is not their concern. But, it is said that s. 66 of the Act makes all the difference. Section 66 is in two parts. Under s.

66(1), within the prescribed time, on an application made by an assessee or the Commissioner, the Appellate Tribunal shall refer to the High Court any question of law arising out of such order; if the Appellate Tribunal refuses to state a case, on an application filed by either of them, the High Court may require the Appellate Tribunal to state the case and to refer the same to it accordingly. On a reference made by the Appellate Tribunal to the High Court, the High Court shall decide the questions of law raised thereby and pass its judgment thereon and thereafter the Appellate Tribunal may pass such orders as are necessary to dispose of the case conformably to such judgment. It has been held by this Court that the jurisdiction conferred upon the High Court by s. 66 of the Income-tax Act is a special advisory jurisdiction and its scope is strictly limited by the section conferring the jurisdiction. It can only decide questions of law that arise out of the order of the Tribunal and that are referred to it. Can it be said that a question whether a provision of the Act is ultra vires of the Legislature arises cut of the Tribunal's order ? As the Tribunal is a creature of the statute, it can only decide the dispute between the assessee and the Commissioner in terms of the provisions of the Act. The question of ultra vires is foreign to the scope of its jurisdiction. If an assessee raises such a question, the Tribunal can only reject it on the ground that it has no jurisdiction to entertain the said objection or decide on it. As no such question can be raised or can arise on the Tribunal's order, the High Court cannot possibly give any decision on the question of the ultra vires of a provision. At the most the only question that it may be called upon to decide is whether the Tribunal has jurisdiction to decide the said question. On the express provisions of the Act it can only hold that it has no such jurisdiction. The appeal under s.

66A(2) to the Supreme Court does not enlarge the scope of the said jurisdiction. This Court can only do what the High Court can.

The said machinery provisions cannot be construed in vacuum : they must be collated with the charging sections; that is to say, the Act provided for a machinery for deciding disputes 249 that arise under the substantive provisions of the Act. To illustrate : suppose there is provision in the Act to the effect that the said Act does not apply to indivisible building contracts. Can the officer decide that the Act applies to such building contracts ? Such a decision, if given, will not be under but outside the Act. Take another illustration : suppose this Court has held that a provision authorising the taxing of an indivisible building contract is ultra vires the power of the State Legislature and, therefore, void; in that event, how can an authority functioning under the Act tax such a contract on the basis of a provision declared to be ultra vires and, therefore, non-existent ? If it does, it will be assessing not under the Act but outside it. The same legal position will flow though there is no such previous declaration by a competent court, but a charging provision is in fact and in law ultra vires the Legislature. Any assessment made on the basis of such a void provision cannot be a decision under the provisions of the Act. Briefly stated, the procedural machinery under the Act can be utilized only to decide disputes that arise under the substantive provisions of the Act which are not ultra vires.

The proposition that an authority constituted under the Act cannot, unless expressly so authorised, question the validity of the Act or any provision-, thereof, is sound and is also supported by authority.

Derbyshire, C.J., who was one of the Judges who took part in Raleigh Investment Co.'s case(1) in the Calcutta High Court, referring to the jurisdiction of the Appellate Assistant Commissioner, observed thus "He was employed to administer the Act and he had to take the Act as he found it." Mitter, J., in the same decision, adverting to the scope of the questions that can be raised by an assessee under S. 30 of the Income-tax Act, clearly stated the legal position thus :

"He can object to the amount of his income as determined by the Income-tax Officer or to the amount of loss computed under s. 24 or the amount of the tax, etc. He can also deny his liability to be assessed under the Act. That phrase, to my mind, means that he can only urge before that tribunal that provisions as they stand in the Act do not make him liable, i.e., exempt his income or a part of his income from (1) [1944]1 Cal. 34,56,83.

250 assessment. He cannot urge there that, though a provision of the Act makes his income or part thereof liable to be assessed, that provision is illegal, being ultra vires the Indian Legislature. The Appellate Assistant Commissioner also would not be competent to entertain or decide that question. On the principle that the scope of an appeal cannot be enlarged but must be limited to points which were open for adjudication by the Court or tribunal of first instance, the Appellate Tribunal functioning under the Act, to which an appeal is taken under S. 33, would have no power to entertain the said question and deal with it in its order. This Court on a reference being made to it under s. 66 cannot also deal with such a question, as the reference must be limited to points arising out of the order passed by the Appellate Tribunal." The Judicial Committee did not take any serious notice of the legal position so clearly explained by Mitter, J.

Chagla, C.J., in the Bombay High Court in United Motors (India) Ltd. v. The State of Bombay(1) distinguishing the decision in Raleigh Investment Co.'s case(2) observed "They have come before us before any assessment could be made, contending that the authorities under the Act have no right to assess them because the Act is ultra vires of the Legislature. Therefore the petitioners are challenging the very authorities who are supposed to decide the assessment made against them, and it is difficult to understand how under the machinery provided under the Act it would be open to the various authorities to decide whether the very statute of which they are the creatures is a valid statute or not." It is true that decision was given in a proceeding that was taken before the assessment was made, but the learned Chief ,Justice accepted the principle that an authority which is a creature of a statute cannot decide whether the very statute of which he is a creature is a valid statute or not. In the Bengal Immunity Company Limited v. The State of Bihar(,') Venkatarama Ayar, J., in the context of the maintainability of a writ of prohibition, observed thus at p. 765 :

(1) (1952) 55 B.L.R. 246,254. (2) (1947) L.R.

74 I.A.50.

(3) [1955] 2 S.C.R. 603.

251 "Indeed, the contention that the Act is ultra vires is not one which the Tribunals constituted under the Act, whether original, appellate, or revisional, could entertain, their duty being merely to administer the Act." A division Bench of the Madras High Court has, in M. S. M.

M. Meyappa Chettiar v. Income-tax Officer, Karaikudi(1), elaborately considered the correctness of the decision in Raleigh InvestMent Co.'S CaSe(2). Adverting to the question of machinery so much emphasized upon by the Judicial Committee in Raleigh's case(1), the Division Bench observed "It is needless to point out that the jurisdiction under the provision is limited to answering the questions referred. Only the question that arises out of the order of the Tribunal can come within the scope of section

66. The assessee cannot, of course, raise the question, before the department or the Tribunal, of the vires of any of the provisions of the Indian Income-tax Act, either on the ground that the legislature was not competent to enact the measure or on the ground that it offended the fundamental rights guaranteed under the Constitution. The reason is simple, because neither the department nor the Tribunal can give relief to the assessee holding that the impugned provision is in any way bad in law. If such a contention were to be raised, it has necessarily to be ignored by the department and the Tribunal, though sometimes the Tribunal does refer to the question, if raised, and gives the only answer which it can, namely, that is not a matter within its competence to d ecide.

We wish to make it very clear that it is not the province of the department or even the statutory Tribunal, which is really the creation of the statute, to entertain any objection to a piece of legislation as being ultra vires or unconstitutional, and that it would be beyond the jurisdiction of this court, functioning under section 66 of the Act, which, as stated already, is narrow in its scope and reach, to consider and determine a question not properly within its sphere." We agree with the said observation. There is, therefore, weighty authority for the proposition that a tribunal, which is a creature (1) (1964) 54 I.T.R. 151,156-157.

(2) (1947) L.R. 74 I.A. 50 252 of a statute, cannot question the vires of the provisions under which it functions.

The legal position that emerges from the discussion may be summarized thus : If a statute imposes a liability and creates an effective machinery for deciding questions of law or fact arising in regard to that liability, it may, by necessary implication, bar the maintainability of a civil suit in respect of the said liability. A statute may also confer exclusive jurisdiction on the authorities constituting the said machinery to decide finally a jurisdictional fact thereby excluding by necessary implication the jurisdiction of a civil court in that regard. But an authority created by a statute cannot question the vires of that statute or any of the provisions thereof whereunder it functions. It must act under the Act and not outside it. If it acts on the basis of a provision of the statute, which is ultra vires, to that extent it would be acting outside the Act. In that event, a suit to question the validity of such an order made outside the Act would certainly lie in a civil court.

On the said legal basis it follows that in the instant case the sales-tax authorities have acted outside the Act and not under it in making an assessment on the basis of the relevant part of the charging section which was declared to be ultra vires by this Court.

The next question is whether s. 18-A of the Act would be a bar to the maintainability of the suit. Under s. 18-A of the Act, "No suit or other proceeding shall, except as expressly provided in this Act, be instituted in any Court to set aside or modify any assessment made under this Act." We do not see any justification for the contention of the learned counsel for the respondent that the expression "