TaxTMI 
TaxTMI 
1962 (9) TMI 51
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....ndia from November 1, 1954. Before that Pondicherry was under the administration of the Government of France and was a free port. Import into Pondicherry was thus not subject to any restriction, except with regard to certain goods with which we are not concerned in the present petitions. Any merchant desiring to carry on business in the territory of Pondicherry had however to obtain a `patent' before he could do so. These `patents' were of five kinds one of which was a `patent' authorising the trader to carry on the business of import of goods other than those which were under restriction. Though the importers were entitled by virtue of the `patent' to import goods subject to certain restrictions, this right could only be exercised by securing foreign exchange which was subject to certain limitations and was controlled by the Department of Economic Affairs at Pondicherry. There were two ways in which foreign exchange could be acquired, namely, (i) at the official rate through the Department of Economic Affairs, or (ii) in the open market at such rate as might be available; and both these ways were considered valid before November 1, 1954. Further there used to be authorisations for....
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....wo S.R.Os. a press communique was issued by the Government of India on November 1, 1954, explaining the effect of these notifications, in which it was stated that imports into and exports from the French Establishments would be regulated in accordance with the provisions of the Imports and Exports (Control) Act, 1947. It was further stated that as regards orders placed outside the Establishments and finalised through grant of a licence by competent French authorities in accordance with the laws and regulations in force prior to November 1, 1954, licence-holders were advised to apply to the Controller of Imports and Exports for validation of licences held by them. Licence-holders were further advised not to arrange for shipment of goods until the licences laid by them had been validated by the Controller of Imports and Exports. In view of this press communique the petitioners tried to stop shipment until the authorisations held by them were validated by the Chief Controller of Imports and Exports, Pondicherry. But their suppliers told them that this could not be done, as the goods were in the course of shipment and it was too late to stop the shipment. The petitioners then applied f....
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.... [see Universal Imports Agency v. Chief Controller of Imports and Exports, (1961) 1 SCR 305]. Those petitions were decided on August 23, 1960 and this Court held that in view of para 6 of S.R.O. 3315, already referred to, which saved the effect of all laws in force in the French Establishments immediately before the commencement of the Order, even though those laws were repealed by the order, with respect to things done or omitted to be done before such commencement, the authorisation granted by the French authorities before November 1, 1954 for import were sufficient to protect the goods imported on the basis of those authorisations whether the exchange was secured officially or from the open market, from the operation of the Imports and Exports (Control) Act, 1947, and other provisions to the same effect. This view was taken on the ground that para 6 saved "things done" before November 1, 1954 and as firm contracts had been entered into and authorisations granted before November 1, 1954, the subsequent arrival of goods in Pondicherry after November 1, 1954, as the consequence of the contracts and the authorisations was a "thing done" under para 6 of S.R.O. 3315. It was held that ....
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.... The Union's case is that the talks for the de facto transfer of the French-Indian Establishments to the Government of India were resumed in August 1954, and that as a result of these talks, an agreement dated October 20, 1954 between the Government of India and the Government of France for the settlement of the question of the future of the French Establishments in India was arrived at. Pursuant to this agreement, the administration of the French Establishments (including Pondicherry) was transferred to the Government of India from November 1, 1954. In consequence, the Government of India promulgated two orders, namely, S.R.Os. 3314 and 3315 of October 30, 1954, to come into force from November 1, 1954. The first of these orders was known as the French Establishments (Administration) Order while the second order was known as the French Establishments (Applications of Laws) Order, 1954, by which the Sea Customs Act, 1878 and the Imports and Exports (Control) Act, 1947 and certain other Acts were made applicable to the said settlements. Some persons, including the petitioners, who had no business in Pondicherry from before mala fide with intent to defeat the laws in force in th....
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.... only start functioning in Pondicherry from the month of September in which month they had obtained patent for conducting business there legally. The Collector also pointed out that in the ordinary course of business, commitments were not made without entering into correspondence with the suppliers regarding the prices, terms of payment etc., but in these cases, the petitioners produced no such correspondence. it was also found that the petitioners had not done any business of this kind even in the Indian Union before this. The Collector therefore held that it had not been proved that the goods had in fact been ordered before August 15, 1954 and therefore ordered their confiscation and imposed penalty in lieu thereof. The appeals of the petitioners to the Central Board of Revenue failed except to the extent that the penalty was reduced. The Board's order was silent on the point whether the goods had in fact been ordered before August 15, 1954. But the Board held that as the goods were imported without licence at a time when a licence was required for their imports, the appeal must fail. The petitioners then went in revision to the Government of India but failed there also. 8.&em....
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....stantially related to one matter, namely, "Is the validity of an order made with jurisdiction under an Act which is intra vires and good law in all respects, or a notification properly issued thereunder, liable to be questioned in a petition under Article 32 of the Constitution on the sole ground that the provisions of the Act or the terms of the notification issued thereunder, have been misconstrued?" It was not disputed in that case that where the statute or a provision thereof is ultra vires, any action taken under such ultra vires provision by a quasi-judicial authority which violates or threatens to violate a fundamental right does give rise to a question of enforcement of that right and a petition under Article 32 of the Constitution will lie. Further, it was not disputed that when the assessing authority sought to tax a transaction the taxation of which came within the constitutional prohibition the violation of fundamental right must be taken to have been established and such cases were treated as on a par with those cases where the provision itself was ultra vires. It was also not disputed that where the statute was intra vires but the action taken under it was witho....
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....order is an infringement of fundamental rights under Article 19(1)(f) and (g) and can be challenged under Article 32. The latter is not unconstitutional and has the protection of law being under the authority of a valid law and therefore it does not infringe any fundamental right and cannot be impugned under Article 32." Sarkar J. agreed with Das and Kapur JJ. Hidayatullah J. held as follows :- "But where the law is made validly and in conformity with the fundamental rights and the officer enforcing it acts with jurisdiction, other considerations arise. If, in the course of his duties, he has to construe provisions of law and miscarries, it gives a right of appeal and revision, where such lie and in other appropriate cases, resort can be had to the provisions of Articles 226 and 227 of the Constitution, and the matter brought before this Court by further appeal. This is because every erroneous decision does not give rise to a breach of fundamental rights. Every right of appeal or revision cannot be said to merge in the enforcement of fundamental rights. Such errors can only be corrected by the processes of appeals and revisions. Article 32 does not, as already stated, conf....
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....oper construction, the law under which the decision was given did not authorise such a levy." Mudholkar J. therefore agreed with Das J. and was of the view that the two questions must be answered in the negative. 11. The other two learned Judges, Subba Rao and Ayyangar took the contrary view. They were of the view that there could be no valid distinction between an order passed by an authority without jurisdiction, in the sense that the authority is not duly constituted under the Act or that it has inherent want of jurisdiction, and a wrong order passed by the authority on a misconstruction of the relevant provisions of the Act; in either case if the order affects a fundamental right it will be open to challenge by petition under Article 32 on the ground that by a wrong construction, a fundamental right under Article 19(1)(f) or under Article 19(1)(g) is violated. 12. It will be seen from the above summary of the views of the learned Judges who constituted the majority that, though the reasons given for coming to their conclusion were slightly different they were all agreed that where an order of assessment is made by an authority with jurisdiction under a taxing....
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....ticle 32 to quasi-judicial determinations was not raised in that case. With respect, it may be pointed out that as the question of the applicability of Article 32 to quasi-judicial determinations was not raised at all in the case of Universal Imports Agency, (1961) 1 SCR 305, the Court had no occasion to consider the question whether the authority in that case had inherent jurisdiction to decide the matter. The majority judgment on which the petitioners rely has nowhere considered the question whether the authority in that case suffered from inherent lack of jurisdiction when it decided to confiscate the goods imported and levy penalties in the alternative. All that the learned counsel for the petitioners could draw our attention to was a sentence in the majority judgment to the following effect : "We would, therefore, hold that paragraph 6 of the Order saves the transactions entered into by the petitioners and that the respondents had no right to confiscate their goods on the ground that they were imported without licence." It is urged that when the majority said that the authorities had no right to confiscate the goods, it was meant that they had no inherent jurisdiction to....
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.... SCR 305, it would not be accurate or correct to hold that the decision turned on the absence of jurisdiction of the appropriate authority. It is well known that after the decision of the Court in the case of Kailash Nath v. State of U.P., AIR 1957 SC 790, some writ petitions were entertained on the ground that the jurisdiction of the Court under Article 32 could be invoked even if a tribunal exercising quasi-judicial authority had misconstrued the law under which it purported to act. Having regard to the decision of the Special Bench in the case of Ujjambai, (AIR 1962 SC 1621) these precedents have now lost their validity. 16. Then we come to the question whether this is a case of a misconstruction of a provision of the law which is intra vires by an authority acting under a taxing statute. It is contended on behalf of the petitioners that the taxing statute in this case was the Sea Customs Act and the misconstruction, if any, would be of para 6 of S.R.O. 3315. This in our opinion is not correct. The Sea Customs Act was applied to Pondicherry by S.R.O. 3315. This S.R.O. has six paragraphs. The first paragraph gives the name of the S.R.O. and the date from which it will com....
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....is order and on the subsequent orders passed in appeal and revision is that they misconstrue the provision of para 6 of the S.R.O. 17. Finally, it is urged that there was in fact no misconstruction of the provisions of para 6 of S.R.O. 3315 in these cases and Ujjambai's case (AIR 1962 SC 1621) will not apply to these petitions. Literally speaking, it may be correct to say that there was no actual misconstruction of para 6 of S.R.O. 3315 in these cases by the Collector of Customs. What had happened was as we have already indicated, that the petitioners tried to bring their case before him within the terms of the press communique of January 5, 1955 by which certain concessions were extended to genuine importers. They therefore tried to prove that they had placed firm orders before August 15, 1954 and had also provided for foreign exchange to the extent necessary after receiving authorisations and that three of the consignments had been shipped before the 1st of November while the other twenty-six could not be shipped before that date for reasons beyond their control. The petitioners thus wanted to take advantage of the concessions in the press communique. They do not seem to ....
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....is not maintainable when a provision of law is misconstrued, it could be much less maintainable when there is a mistake of fact though as we have indicated already, it cannot be said in this case that the Collector was wrong in his conclusion on the facts. 20. The petitioner's case, as put forward in this Court, is that even if firm orders were not placed before August 15, 1954, they were entitled to take advantage of the judgment of this Court in Universal Imports Agency's case - (1961) 1 SCR 305, if they had placed orders after obtaining the patents in September and had received authorisations and had arranged for foreign exchange to the extent necessary before November 1, 1954. if this is the case of the petitioners, now, and they want to succeed on it, it must be held that the Board by implication negatived it in appeal. This could only be done by a misconstruction of para 6 of S.R.O. 3315, for if that paragraph had been rightly construed, as held by this court in Universal Imports Agency's case, (1961) 1 SCR 305 the goods would not have been confiscated. 21. Therefore, the position is this. If the petitioners only raise the claim based on the press communique t....
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....style, Messrs Eastern Overseas (Pondicherry), seeks relief against the orders by which the Collector of Customs purporting to act under Section 167(8) of the Sea Customs Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947 directed confiscation of goods which he had imported into Pondicherry, at the same time giving him option to pay in lieu of confiscation, fines aggregating in all the sixteen cases to Rs. 96,400. The appeals against these orders to the Central Board of Revenue were unsuccessful except that the penalty of fine payable was reduced to a total sum of Rs. 60,235. The petitioners then moved to the Government of India for revision of these orders but the revision applications were rejected. 23. Shortly stated, the petitioner's case is that in all the sixteen cases he had concluded, before November 1, 1954 firm contracts with foreign suppliers for supply of these goods by shipment to Pondicherry and it was on these contracts that the goods in question were imported by him. By the date the goods reached Pondicherry, the Sea Customs Act had become applicable to Pondicherry, as a result of an order made by the Government of India on October, 30,....
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....;In resisting the preliminary objection Mr. N.C. Chatterjee has argued on behalf of the petitioner that all these 16 cases are cases of a quasi-judicial authority acting without jurisdiction and so, the decision in Ujjambai's case (AIR 1962 SC 1621) (Supra), far from creating any difficulty in the way of the issue of a writ, definitely helps the petitioner. It is not disputed that in deciding the preliminary objection the Court has to proceed on the basis that the petitioner's allegations about the importations having been made on the basis of contracts concluded before November 1, 1954 are correct. The necessary consequence of this fact, it is argued, is that the Sea Customs Act would not apply to these cases of importations and consequently the Collector of Customs, an officer, who derives his jurisdiction from the Sea Customs Act, would have no jurisdiction to make any order in respect of them. in my opinion, there is considerable force in the argument and the preliminary objection raised on behalf of the respondent should fail. 27. The majority decision in Ujjambai's case (AIR 1962 SC 1621) (Supra) is clear authority for the proposition, that an order of confiscation or....
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....nk the decision in Ujjambai's case (AIR 1962 SC 1621) is not applicable to the present case and the petitions are fully competent." It is hardly necessary to cite any further authority for the proposition that an inferior tribunal cannot give to itself jurisdiction by deciding a collateral fact wrongly. I shall only refer to the decision in Rex v. Shoreditch Assessment Committee, (1910) 2 KB 859 at p. 880, where the matter was discussed in picturesque language thus : "No tribunal of inferior jurisdiction can by its own decision finally decide on the question of the existence or extent of such jurisdiction;......................................a Court with jurisdiction confined to the city of London cannot extend such jurisdiction by finding as a fact that Piccadilly Circus is in the ward of Chepe.' 28. What has happened in the cases now before us is that the Collector who has jurisdiction only in cases coming under the Sea Customs Act has assumed jurisdiction, on a wrong finding that the Sea Customs Act applies to these cases, even though in law it does not. 29. There is no escape from the conclusion that on the authority of this Court's decision in (1961) 1 SCR ....
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....e Collector or the Central Board of Revenue would have no jurisdiction to make any order of confiscation or penalty. Where an authority whether judicial or quasi-judicial, has in law no jurisdiction to make an order the omission by a party to raise before the authority the relevant facts for deciding that question cannot clothe it with jurisdiction. 32. The substance of the matter is that the Collector assumed jurisdiction on the view that the Sea Customs Act applied to these cases : if the importations were on the basis of contracts concluded before November 1, 1954-as we have assumed-the Sea Customs Act does not however apply to these cases. Therefore, the Collector acted without jurisdiction and the fact that the assumption of jurisdiction was based on the Collector's wrong decision, does not change that position. The writ petitions would therefore be maintainable, if the petitioner can satisfy the Court that the importations were made on the basis of contracts concluded before November 1, 1954. I would therefore reject the preliminary objection. 33. When the Universal Imports Agency case, (1961) 1 SCR 305 was decided by this Court, no objection to the maintainab....