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Issues: (i) Whether a suit to recover tax collected in excess of the constitutional ceiling was barred by Section 48 of the Central Provinces and Berar Municipalities Act, 1922. (ii) Whether the suit was barred by Section 84(3) of the Central Provinces and Berar Municipalities Act, 1922, in view of the statutory remedy under Sections 83 and 85.
Issue (i): Whether a suit to recover tax collected in excess of the constitutional ceiling was barred by Section 48 of the Central Provinces and Berar Municipalities Act, 1922.
Analysis: The majority held that collection beyond the constitutional ceiling was not merely an irregular exercise of a lawful power but an act in excess of jurisdiction. Where a local authority is prohibited by constitutional law from recovering tax beyond the prescribed limit, the recovery of the excess amount is not protected as an act done or purported to be done under the Act. The suit was therefore not hit by the notice and limitation requirements of Section 48.
Conclusion: The issue was decided in favour of the assessee.
Issue (ii): Whether the suit was barred by Section 84(3) of the Central Provinces and Berar Municipalities Act, 1922, in view of the statutory remedy under Sections 83 and 85.
Analysis: The majority held that the appeal, revision, and refund machinery under the Act did not furnish an effective or exclusive remedy for recovering tax exacted in violation of the constitutional ceiling. In the absence of a clear and efficacious statutory bar, and given the constitutional mandate that tax can be levied or collected only by authority of valid law, the civil court's jurisdiction was not excluded for recovery of the excess amount. Section 84(3) was construed as not covering such unconstitutional exactions.
Conclusion: The issue was decided in favour of the assessee.
Final Conclusion: A civil suit lay to recover the amount collected in excess of the constitutional limit, and the statutory provisions relied upon did not bar the claim.
Ratio Decidendi: A recovery of tax beyond a constitutionally imposed ceiling is without jurisdiction and is not protected as an act done under the taxing statute; a statutory bar on civil suits will not extend to such unconstitutional exactions unless the exclusion of civil jurisdiction is clear and effective.
Dissenting Opinion: Raghubar Dayal J. held that the assessment and collection of the tax, though excessive, were acts done under the Act, that the assessee ought to have pursued the statutory appeal and refund machinery, and that the suit was barred by Sections 48 and 84(3).
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