1963 (3) TMI 2 - SC - Income Tax

Civil court lacks jurisdiction over terminal tax refund suit under Punjab Municipal Act, 1911. Specific remedies available.

The court held that the civil court lacked jurisdiction to entertain a suit for the refund of terminal tax collected by the municipality under the Punjab ... Whether a suit would lie in a civil court claiming refund of the terminal tax collected by a municipality under the provisions of the Punjab Municipal Act, 1911 (Punjab Act III of 1911)? Held that:- In the present case the mistake, if any, committed in imposing the terminal tax can only be corrected in the manner prescribed by the Act. The appellants have misconceived their remedy in filing the suit in the civil court. The conclusion arrived at by the High Court is correct. In the result, the appeal fails and is dismissed with costs. Issues Involved:1. Jurisdiction of civil courts to entertain a suit for refund of terminal tax collected by a municipality.2. Classification of Sambhar salt under the relevant items of the Schedule for terminal tax.3. Availability and adequacy of statutory remedies under the Punjab Municipal Act, 1911.Issue-wise Detailed Analysis:1. Jurisdiction of Civil Courts:The primary issue is whether a civil court has the jurisdiction to entertain a suit for the refund of terminal tax collected by a municipality under the Punjab Municipal Act, 1911. The appellant argued that the civil court had jurisdiction because the tax was imposed contrary to the provisions of the Act. Conversely, the respondent contended that the civil court had no jurisdiction as the Act provided a specific remedy for such grievances.The court examined the relevant provisions of the Act, particularly sections 61(2), 78, 84, and 86. Section 61(2) empowers the Municipal Committee to impose taxes with the State Government's sanction. Section 84 provides a right of appeal against any levy or refusal to refund any tax collected under the Act. Section 86 explicitly states that the liability to be taxed cannot be questioned by any authority other than that provided in the Act.The court referred to established legal principles, noting that when a statute creates a liability and provides a specific remedy, the aggrieved party must pursue the remedy provided by the statute and cannot seek recourse in a civil court. This principle was supported by precedents such as Wolverhampton New Waterworks Co. v. Hawkesford and Secretary of State v. Mask and Co.The court concluded that the Punjab Municipal Act, 1911, constituted a self-contained code that conferred a right, imposed liability, and prescribed a remedy for an aggrieved party. Therefore, the civil court's jurisdiction was barred in respect of tax levied or assessed under the Act.2. Classification of Sambhar Salt:The appellant contended that Sambhar salt should be classified as 'salt common' under item 68 of the Schedule, attracting a lower tax rate of three pies per maund. The Municipal Committee, however, classified it under item 69 as 'salt of all kinds other than common salt,' attracting a higher tax rate of annas ten per maund.The court found that the dispute over the classification of Sambhar salt was essentially a matter of fact that needed to be resolved within the framework of the Act. The ascertainment of the character of the salt was a necessary step for fixing the rate of tax, and any mistake in this regard could only be corrected through the statutory remedies provided by the Act.3. Availability and Adequacy of Statutory Remedies:The appellant argued that the statutory remedy was inadequate because the appellate authority had the discretion to refuse to refer a question to the High Court. The court dismissed this argument, stating that the question was not whether a particular officer might abuse his power but whether a remedy was available under the Act. The court emphasized that the Act provided a comprehensive mechanism for challenging the levy or seeking a refund, including an appeal to the Deputy Commissioner and a reference to the High Court.The court also noted that if the municipal committee acted outside the Act or abused its powers, a civil court could entertain a suit. However, in this case, the committee had acted within its powers under the Act, and any error in the classification of the salt was a matter of detail to be resolved through the statutory remedies.Conclusion:The court held that the appellant's remedy lay within the provisions of the Punjab Municipal Act, 1911, and not in a civil court. The appeal was dismissed with costs, affirming the High Court's decision that the civil court had no jurisdiction to entertain the suit for the refund of terminal tax collected by the municipality.