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1977 (4) TMI 184
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....utiable for the first time under Tariff Item 18-E which was added on March 16, 1972 in the Central Excises and Salt Act, 1,944 (hereinafter referred to as 'the Act'). It is the case of the petitioners that blended yarn was coated with sizing materials to impart strength to the yarn in the weaving process in all these composite mills and in that process the weight of the blended yarn increased by some 12 to 14 per cent. It is the case of the petitioners, that blended yarn remained blended yarn even after the sizing process. The excise duty was paid on the sizing materials. In all these mills the duty was charged by the excise authorities under Tariff Item 18-E on weight basis per kilogram of unsized yarn, that is to say, at the spindle point. However, by the Trade Notice issued by the Deputy Collector of Central Excise, No. 195/76, dated August 9, 1976, a change of basis had been made. The said Trade Notice had been communicated by the Mill owners' Association to these petitioner mills on August 14, 1976 by Annexure 'A' as under: "A question has arisen whether Central excise duty on yarn, all sorts (N. E. S.) falling under Tariff Item No. 18-E of the Cen....
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.... manufacture of this polyester blended textiles, the petitioners had been consistently assessed to excise duty on yarn at spindle point and they maintained personal ledger account as provided by the Act and the Rules under the relevant self-assessment procedure. This Trade Notice is challenged as totally null and void and of no legal effect in these petitions where a further relief is claimed restraining the respondents-authorities from collecting or' debiting any excise duty from the petitioners or in their personal ledger account on the basis of the weight of yarn manufactured by the petitioners after sizing instead of at the spindle point, or from enforcing the letter at Annexure 'F' dated October 19, 1976. 3. The relevant Tariff Item 18-E runs as under: "18-E. Yarn, All Sorts. N. E S. Yarn, all sorts, not elsewhere specified, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. Per Kg. of yarn. (1) ...... ...... (2) Yarn containing partly synthetic staple fibre of non-cellulosic origin, other than acrylic fibre, and partly any other fibre or fibres (excluding wool) i....
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....e which sought to change the entire basis of assessment was challenged as illegal and without jurisdiction as it ran counter to, the Tariff Item 18-E and to the fundamental principles of levy of excise on manufacture of excisable goods only. Though in the petitions it was stated that only such change of basis was made in these mills falling under the Baroda Collect orate and at Calcutta. at other places the old system continued, at the time of hearing Mr. Vakharia had stated that throughout the country the authorities were insisting on this changed basis for levy of excise on this blended yarn. The petitioners had also urged that the impugned Trade Notice and the action of the authorities was without authority of law and, therefore, violated Art. 31(1) of the Constitution. The petitioners had through their Association and the federation gone up to the Central Board without any result and, therefore, this petition had been filed. 4. In the affidavit-in-reply this levy was sought to be supported as being on the true interpretation of Tariff Item 18-E. It was the plea of the authorities that the yam manufactured at the spindle stage was not completely manufactured unless it was wou....
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....e (2) of Art. 32."while assessing, the assessing authority may follow the guidelines given in the Trade Notice. Therefore, the Trade Notice did not give any cause of action but only the assessment would give the cause of action. It was contended, therefore, that assuming that the letter Annexure 'F' dated October 19. 1976 did not contain any decision, the petition was premature and the petitioners must exhaust the remedy available to, them before the, assessing authority. It was, therefore, contended that the petitioner having not exhausted the remedies available under the Act, there was a bar to entertain and decide this petition under Art. 226(3) Trade and, therefore, the petition abated under these. 58 (2) of the Constitution (Forty duty second Amendment) Act, 1976. It is in no view of this objection that this reference has come up to this larger Bench. 6. At the outset we would set out the provision of Art. 226 as it stood before the amendment -and after the present amendment so far as these relevant clauses are concerned-- 226 (l). Notwithstanding anything in Art. 32 but subject to the provisions of Art. 131A and Art. 226A, every High Court shall have power throu....
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.... appointed day, that is, 1st February 1977,must abate. Therefore, the abatement question can be decided only by considering the short question whether under the amended Art. 226 the present petitions could have been admitted by this Court. 7. Mr. Sorabji vehemently argued that the present group of petitions could have been admitted even under the amended Art. 226 for two reasons (1) Because the petitions were for enforcement of the fundamental rights conferred on these mill companies under Art. 31(1) and to such petitions for enforcement of fundamental rights there would be no. bar of Art. 226(3) attracted by consideration of existence of any other alternative remedy; and (2) That the, Trade Notice in question being ultra vires the Act, there was no , appeal provided under S. 35 of the Act against the decision and the action of the authorities changing the entire basis of levy of excise under Tariff Item 18-E and, therefore, when such a tax was sought to be levied without any authority of law in violation of Art. 265 and in plain violation of the provisions of the Act resulting in such substantial injuries to the tune of lakhs of rupees every month by such an u....
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....other side and after giving the other side an opportunity to be heard. An exception is made in cases where the loss or damage to the petitioner cannot be compensated in money. Notwithstanding this exception, the High Courts shall have no power to grant an interim order in any case where the effect of such order is to delay any inquiry into a matter of public importance or any investigation or inquiry into an offence punishable with imprisonment or any action for the execution of any work/project of public utility, etc. Provision is also being made in Clause 58 to cover petitions pending in the High Courts." The jurisdiction under Art. 226(1) before the amendment was very wide as this writ jurisdiction could be exercised not only for enforcement of fundamental rights but for 'other purposes' and even where there was existence of other remedies it was only as a matter of self restraint that this extraordinary jurisdiction was not exercised when adequate alternative relief existed by recourse to ordinary remedies created by the law. In Rohtas Industries v. Its Union (1976)ILLJ274SC it was in terms held "The expansive and extraordinary power of the High Cou....
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....refore, the use of Art. 227 as a substitute for Art. 226 for seeking a direction in the nature of a writ for quashing the orders of these subordinate tribunals was not approved and it was in terms held that for seeking relief by way of writs or directions in the nature of writs Art. 226 was expressly and in precise language designed. The grounds of exercise of supervisory writ jurisdiction were to keep the authorities and tribunals including the Government within their mandated area or the limited bounds or for correcting patent errors of law on the record. (Syed Yakoob v. Radhakrishnan [1964]5SCR64 . 10. Now after the aforesaid amendment, Art. 226(1) has been restricted by the three sub-clauses under Art. 226(1). Clause (a) provides for this writ jurisdiction for enforcement of fundamental rights and the original writ jurisdiction is kept intact without any fetter on the existence of another remedy under Article 226(3). Clauses (b) and (c) restrict the wide scope of the jurisdiction for other purposes to the specified purpose for redress of any injury, by reason of the contravention of any other provision of the Constitution or any provision of any enactment or Ordinance or by ....
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....substantial failure of justice. In this context it must be borne in mind that Article 227 is also amended by deleting tribunals from its scope of superintendence so that over tribunals there would be proper writ jurisdiction only under Article 226 as envisaged in the aforesaid Calico, Mill's decision (1972)IILLJ165SC . We need not mention at this stage that Art. 227 has not been amended with re- prospective effect so as to apply to pending proceedings while Art. 226 has been amended with retrospective effect so as to apply even to the pending proceedings which would have to be considered when the question arises in the context of this writ jurisdiction being exercised against the orders of the tribunal&. Besides, not only the scope of the writ jurisdiction is restricted by the specified purpose which is substituted in the place of 'other purposes' in Cla. (b) and (c), but a further fetter is added under Article 226(3) that no such petition for redress of injury referred to in sub-cls. (b) ,and (c) of Clause (1) shall be entertained if any other remedy for such redress is provided for by or under any other law for the time being in force. It is this relevant fetter in Ar....
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....attack and which would be available in every case for ultra vires orders unless it is specifically excluded. The amplitude Of this fetter is made dependent on the existence of the other effective alternative remedy which is in terms provided whether by the specific law or under the subordinate legislation of such law. One thing is certain that such alternative remedy must be specifically provided for Therefore, the amplitude of the fetter would depend on the amplitude of such alternative remedy which is provided ford direct attack by or under the other law in question and not on any general remedy of a civil suit by way of a collateral attack. 12. Mr. Vakharia vehemently argued that the distinction between a real and a purported order could not exist in the context of this amendment under Article 226(3) because the fetter is all comprehensive once -any kind of remedy is shown to exist whether by way of the statutory appeal, revision etc., directly or even by a collateral attack in a civil Court. We cannot agree to that contention for the simple reason that although the writ jurisdiction has been restricted by specifying the particular purpose in Cls. (b) and (c) for which now th....
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.... 213 and 214 of the Report stated as follows: 'It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the word 'jurisdiction' has been used in a very wide sense, and 1 have come to the conclusion that it is better not to use the term except 'in the narrow and original sense of the tribunal being entitled to enter on the enquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the enquiry, it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity it may have given its decision in had faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decisio....
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....e exceptions laid down in Mask & Co.'s case,. It was pointed out that the order of the Collector of Customs was not one in respect of which the Collector was invested with jurisdiction and to such orders the bar excluding the jurisdiction of civil Courts was not applicable. The order being a nullity, even Art. 14 of the Limitation Act could not be applied to hold the suit time-barred. 14. At this stage it would be proper to consider why this distinction was always kept in mind by the Courts even when a self-limitation was evolved not to entertain writ petitions when alternate- remedy existed. In Bhopal Sugar Industries v. Sales Tax Officer, Bhopal AIR 1967 SC 549, it was held that the High Court did not exercise the writ jurisdiction under Art. 226 by entertaining petitions against the order of taxing authorities. when the statute under which tax is sought to be levied provides a remedy by way of an appeal or other proceeding to a party aggrieved and thereby bypass the statutory machinery. That was not to say that the High Court would never entertain a petition against the order of the taxing officer. The High Court had undoubtedly jurisdiction to decide whether a statute un....
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.... errors, Irregularities or illegalities touching jurisdiction or procedure committed by an inferior Court or tribunal of first instance which are so patent and loudly obtrusive that they leave on the decision on indelible stamp of infirmity or vice which could not be obliterated or cured on appeal or revision. If an inferior Court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court's sense of fairplay, the superior Court would quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the Court or tribunal of first instance, even if an appeal to another inferior Court or tribunal was available and recourse was not had to it or if recourse was had to it, it confirmed what ex facie was a nullity for reasons aforementioned. That approach was all the more appropriate in case of departmental tribunals where the remedy against such glaring lapse or lack of power was almost futile. 17. That is why right from th....
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.... the Act or the Rules in ewe of goods which were not excisable under the Act and, therefore, not within the scope and ambit of the Act and the Rules. It was held that the finality given by Ss. 35 and 36 was only for the purposes of the Act and it did not make valid an action unwarranted by the Act. At page 277 it was further held that if there was no provision in the Act or the Rules empowering the Excise Officers to determine except in a proceeding for adjudication of penalty and confiscation under R . 210, that a manufacturer was liable to obtain licence for carrying on the business of manufacturing the goods, such a decision or order being not under the Act or the Rules so as to be appealable under S. 35, it would not create any bar to the entertainment of a civil suit. 20. Mathew J., as he then was in Ponkunnam Traders v. Additional Income Tax Officer [1972]83ITR508(Ker) , took the same view that where a decision is null and void by reason of want of jurisdiction, it could not be cured by any appellate proceedings and, therefore, failure to take advantage of that somewhat futile remedy did not affect the nullity inherent in the challenged decision. The party affected may app....
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.... authorities and tribunals acting under those provisions, it would be a poor consolation to a citizen to be told in cases of such purported orders to avail of such remedy which he is not bound to exhaust and which would not be efficacious at all but a futile remedy in case the order is confirmed as it would still remain a nullity. 24. Mr. Vakharia, however, pointed out that the term 'jurisdiction' for the purpose of judicial review is given such a wide meaning in the Anisminic case (1969 1 All ER 208) (supra) an public policy grounds to reach cases of injustice by making a distinction of such purported orders when there was lack of power, but that distinction could not now be pressed in service when Art. 226(1) creates a distinction between Clause (a) where only invasions of fundamental rights are contemplated which are outside the scope of this fetter in Art. 226(3), and when the fetter is laid down in all other cases falling under Cls. (b) and (c) when the writ jurisdiction is exercised for the specified purpose of redress of injuries only. Even there the amplitude of the constitutional fetter is co-extensive with providing the direct remedy of challenge. Therefore, in....
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....ating even the question of ordinary residence for the purpose of entering -a person's name in the electoral roll as a decision on a jurisdictional fact within the exclusive jurisdiction of the registering officers and the appellate authorities so that there would be no question of any judicial review by any collateral attack either in a civil Court or even before an election tribunal. in that decision the distinction was noted of cases even in election matters as in Baidyanath Panjiar v. Sita Ram Mahto [1970]1SCR839 which took the view that violation of S. 23 (3) of 1950 Act in entering or deleting the names of persons in the electoral rolls after the last date for deleting the name relates to lack of power. Such exceptional cases where the Act is made a complete Code so that the authority is conferred a wide jurisdiction by making all activities as falling within its jurisdiction and not as collateral, even such purported orders would not be nullities and they would be subject to direct challenge under the normal remedy under the Act and that is why there would be no scope of challenge by collateral attack in a civil Court or in writ jurisdiction without exhausting the wide ob....
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....se as complete nullities which could be ignored as creating no rights and obligations whatever. The amplitude of the appeal provision would be a relevant consideration in cases of purported orders without 'jurisdiction', as interpreted in the wider sense as explained in the Anisminic decision [(1969) 1 All ER 208] as aforesaid. These are only illustrative cases which we have considered to bring out the true scope and ambit of this fetter created under Art. 226(3) for considering this question of abatement of such writ petitions and, therefore, these illustrations are not intended to be exhaustive. 29. Finally, the last question which remains is as to cases of enforcement of fundamental rights falling within Article 226(1), Clause (a) where there is no fetter of this alternative remedy for entertaining such a petition under Art. 226(3). That question is no longer res integra because on the identical provision in Art. 32, the question is concluded by the decision in Coffee Board, Bangalore v. Joint Commercial Tax Officer [1970]3SCR147 where their Lordships laid down the ratio as under: "In Smt. Ujjam Bai's case AIR 1962 SC 1621, the question was whether assess....
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....ogating a jurisdiction to themselves to change the settled basis of excise levy for this blended yarn for all these years by acting on the aforesaid Trade Notice issued by the Deputy Collector in breach of the principles of natural justice. At this stage we have to see only the prima facie case as per the demurrer being clearly made out of want of jurisdiction or breach of the principles of natural justice to entitle the petitioner to the assistance of this Court because of the actual threat to their fundamental rights of holding the property under Art. 31(1). Without even waiting for the final process of adjudication, the authorities are insisting on the compliance with the Trade Notice by changing the settled basis of the present excise levy. In any event the petitioners must succeed even on the second question because this would be a tax without contravene Art. 265, the other provision in the Constitution and the challenge is on the ground of this action being ex facie without jurisdiction and in breach of the principles of natural justice by seeking to implement such executive instructions. 31. Mr. Vakharia vehemently argued that the question is really of disputed facts whic....
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....idered as ultra vires Section 35 of the Act." Mr. Vakharia is right that the assessing authority would have to reach its decision without the constraint of any such Trade Notice as even under IL 233 what could be issued would be administrative instructions and not such a direction to change the basis of assessment. The question at this stage is that a prima facie case does exist when such an outsider like the Deputy Collector who was not an original assessing authority has issued such -a direction in the form of a Trade Notice to all units stating that on this question it was decided that the accounting of the yarn in R. G. 1 Register shall be made at the spindle point but for E. B. 4 Register or assessment of duty the weight on the yarn, at the stage of cone, bobbins and beams etc should be taken into account. The Superintendent, who is the assessing authority, even in the letter at Annexure 'B' dated August 28, 1976 has invited the attention of the mills to this Trade Notice and as per the direction in paragraph 2 of the said Trade Notice has directed accounting of the yarn in R. G. 1 Register adding that for E. B. 4 Register or assessment of duty, the weight on the ya....
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....t as both the parties are agreed that yarn remains yarn and the dispute is as to whether yarn should be assessed at the spindle point or after its weight has increased in sizing. The eloquent contrast of Entry 18--A and its artificial definition of 'manufacture' has 'been relied upon and the fact has been that all these years, right from 1972 when this Entry came in existence for the first time the authorities themselves have adopted the basis of taxing this commodity only at the spindle point. Therefore, a prima facie case is made out both of Invasion of fundamental rights and the order of the authorities being ex facie without jurisdiction or a purported order when even without hearing the petitioners; as per the essential principles of natural justice, the additional excise duty is sought to be recovered from them Therefore, on both the grounds urged by Mr. Sorabji, the petitioners were entitled to approach this Court at this stage and the fetter created under Art. 226(3) does not come in the way of the, petitioners so far as the present group is concerned. We are clarifying that our observation& are only to determine the prima facie case and they should not be const....