Kotkapura Bus Service Private Ltd. vs The Excise and Taxation Officer and Others

I.D. Dua, J.—These three writ petitions (Civil Writ Nos. 1159, 1160 and 1161 of 1963) have been heard together and as a matter of fact, arguments have been, addressed only in C.W. No. 1159 of 1063, it being concord that the others would stand or fall with it.

M/s. Kotkapura Bus Service Private) Ltd., a company registered in 1950 under the Indian Companies Act, carries on passenger transport business with its head office at Kotkapura. It had five stage carriage permits granted to it from time to time by the Regional Transport Authority, Patiala, and in the matter of operation of the passenger services, control is exercised, over the company by the Regional Transport Authority, the State Transport Authority and the State Government under the powers conferred by the Indian Motor Vehicles Act. It is pointed out that the Petitioner''s permits were liable to be cancelled for breach of any of the conditions specified in those permits as also by those Laid down in the Motor Vehicles Act. One of such conditions, it is emphasised, is that the Petitioner company will not charge higher fares than fixed by notification u/s 43 of the above Act.

The Petitioner-company is also stated to hold a registration certificate u/s 9 of the Punjab Passengers and Goods Taxation Act 1952 (hereinafter called the Act). The tax imposed under this Act is realized by two methods which are contained in Rule 9 of the Punjab Passengers and Goods Taxation Rules, 1952 (hereinafter called the Rules). The Petitioner has, according to the averments in the petition, been paying tax heretofore in the shape of adhesive stamps ''purchased in advance from the local treasury as provided in Rule 9(i). The State Government has by virtue of notification issued u/s 43, Motor Vehicles Act, fixed the maximum and minimum fares chargeable* from passengers and it is again emphasised that one of the conditions of the permit is that the Petitioner cannot charge more than the fare fixed. For the assessment period, 1959-60, the Petitioner-company paid a sum of Rs. 48,795.65 P. as passenger tax by affixing adhesive stamps on the tickets issued to the passengers, such stamps having been purchased by paying the amount in advance. The Petitioner, it is asserted, maintained regular accounts. The Petitioner''s principal grievance in this petition is expressed in paragraph 5 of the petition which is in these words:

That a notice in form P.T.T. 10 of the Rules was issued by the Assessing Authority, Jullundur Division, and served on the Accountant of the Petitioner-company though issue of such a notice was illegal and mala fide. One Shri Behari Lal, a driver of the Petitioner-company had been dismissed and he manoeuvred in the office of the Assessing Authority to get such a notice issued. The issue of this notice and re-opening of the assessment is not warranted by a provision of the Act or the Rules made thereunder. The Assessing Authority not only issued notice fox the period 1959-60 but also for the periods 1960-61 and 1961-63 though passenger tax for all these periods had been regularly paid in the form of the adhesive stamps. Rule 21 of the Rules is not intended for cases where the tax is paid in advance by way of adhesive stamps, and nor is any action by way of a notice in form P.T.T. 10 attracted in such cases.

The Assessing Authority, the grievance proceeds, has acted arbitrarily, vindictively and mala tide in imposing an additional tax to the tune of Rs. 27,700/- which assessment has been described to be "more in the nature of a penalty"; the findings of the Assessing Authority have also been described to be based on no "objective data of material on the record". It is this assessment which is being assailed in the present writ proceedings, and the ground of challenge appears to be concentrated on the challenges to the vires of the Act generally, though the merits of the assessment have also been criticised and assailed in the writ petition. In paragraph 13 of the petition, the company is stated to have preferred an appeal to the prescribed appellate authority before whom, a prayer for stay of recovery of the amount was made but the same was rejected and the Petitioner was directed to deposit the amount by instalments tailing which the appeal was to stand dismissed. A further revision against this order to the Excise and. Taxation Commissioner was also rejected on 26-6-1963. For these reasons, the Petitioner-company ii stated, to have no other equally efficacious, beneficial and conveniently available alternative remedy. On this ground, it is prayed that a writ in. �he ''nature of certiorari be issued quashing the impugned assessment order and a further prayer for a writ in the nature of prohibition is made for restraining the Respondents from realizing the amount claimed for the period 1959-60. The other fwd similar writ petitions, relate to the other two years.

The petition is resisted on behalf of the Respondents on various grounds and it has been emphasised that the Assessing, Authority was competent to issue a notice in Form P.T.T. 10 and that frame assessment as required, u/s 6(4) of the Act read with Rule 29 of the Rules. It is further pleaded that Rule 21 is inapplicable to the case in hand. The Petitioner, according to the reply, was afforded full opportunity to represent his point of view. The statement given by the Accountant of the Petitioner-company, according to the return, is a clear proof of such opportunity and it has been asserted that no proper accounts were maintained by the company in respect of special permits obtained on account of marriage contracts undertaken and otherwise, and that the Petitioner had in this manner evaded tax by omitting to issue tickets and affixing adhesive stamps thereon. The personal diary maintained by the Director of the company, as discussed in the assessment order, is also relied upon as clear evidence of evasion of tax by the Petitioner-company. Reference has in this connection also been made to a decision given by this Court in C.W. No. 993 of 1961 (Punj) in justification of the impugned order.

The Petitioner''s learned Counsel has addressed elaborate arguments trying to re-open the merits of the assessment. He has in addition strongly urged that the Petitioner has been depositing the tax payable in accordance with the provisions of Rule 9(i) and that Rule 29 is inapplicable to such a case. The impugned order has on the basis of this submission been described to be wholly unauthorised and without jurisdiction and, therefore, liable to be quashed. The constitutional validity of Section 6(4) of the Act has also been challenged on the ground that it fixes no time-limit within which the power to proceed to levy the amount of tax due thereunder can be exercised; being too widely worded, the section, according to the submission, confers power of reopening or revising assessments unlimited in point of time and, therefore, liable to be struck down as invalid and unconstitutional.

Shri Doabia has on behalf of the Respondents raised a preliminary objection on the ground that the statute having provided adequate remedies by way of appeals and revisions, the petitions should be directed to seek redress, from the departmental hierarchy in accordance with the statutory machinery and should not be permitted to by pass them. The fact that the appellate authority has not granted exemption from the payment of tax, is according to the counsel, no ground lot permitting the Petitioner to invoke the extraordinary writ jurisdiction; the appellate Tribunal has acted fully in accordance with law in declining exemption, after considering the Petitioner''s prayer on the merits. Reliance has in this connection been placed on a Bench decision of this Court in. Jiwan Singh and Sons v. The Excise and Taxation Officer 62 Pun L.R. 562. It has further been urged that the order of the appellate.-authority in declining to hear the appeal without payment of tax but giving relief to pay the tax by instalments is within its competence and jurisdiction and that mere assertion by the Petitioner that he is unable to pay even these instalments would not justify this Court in going into the merits of that order, for, there is no error of law apparent on the face of the record which can be said to have resulted in manifest injustice. The statutory scheme providing machinery for redress of grievances of the Assesses must, according to the learned Counsel, be kept in view and the aggrieved Assessees should ordinarily be directed to adopt the course Laid down by the statute for seeking redress.

The Respondents counsel has also submitted, that the question of jurisdiction of the Assessing Authority was not raised before the department and, therefore, should not be permitted to be raised in these proceedings.

Our attention has on the merits been drawn to the language of Rule 29 which is urged to be wide enough to include the case of a party paying tax according to the mode prescribed by Rule 9(i). Stress has been laid on the omission of the challenge to the validity of Section 6(4) from the writ petition. Finally reliance has been placed on a Bench decision of this Court in Associated Traders and Engineers v. State of Punjab 57 Pun LR 304, where the challenge to the vires of the impugned Act was repelled excepting Section 10. Reference at the bar hail also been made to Sainik Motors, Jodhpur and Others Vs. The State of Rajasthan, , where the Rajasthan Passengers and Goods Taxation Act-has been held to be intra vires.

After considering the arguments addressed at the bar, in my opinion, the present is not a fit case in which this Court should go into the controversy on the merits on the writ side. The appeal under the statute is an equally adequate and efficacious alternative remedy which must be pursued by the Petitioner. The question of alternative remedy has been dealt with by the* Supreme Court more than once. In K.S. Rashid and Son Vs. The Income Tax Investigation Commission etc., a Bench of five Judges observed that the remedy provided for in Article 226 is a discretionary remedy and the High Court has always the discretion to refuse to grant a writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. In that-case the Petitioners had already availed themselves of the remedy provided for in Section 8(5) of the Taxation of Income (Investigation Commission) Act and a reference made to the-High Court in terms of that provision was awaiting decision; the Supreme Court, in view of this circumstance, considered it proper not to allow the Petitioners to invoke (lie discretionary jurisdiction under Article 226. In Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District, I and Another, a Bench of live judges had again to consider this question and the majority view was expressed in these words:

Mr. Sastri mentioned more than once Hie fact that tire company would have sufficient opportunity to raise this question, viz., whether the Income Tax Officer had reason to believe that under-assessment had resulted from non-disclosure of material facts, before the Income Tax Officer himself in the assessment proceedings and if unsuccessful there before the appellate officer or the appellate tribunal or in the High Court u/s 66(2) of that Indian Income Tax Act. The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action.

In the present case the company contends that the conditions precedent for the assumption of jurisdiction u/s 34 were not satisfied and came to the Court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under Article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the Courts to give such relief in fit cases and the Courts would be failing to perform their duty if relief is refused without adequate reasons. In the present case -we can find no reason for which relief should be refused.

A few days later, a Bench of three judges of the Supreme Court in C.A. Abraham, Uppoottil, Kottayam Vs. The Income Tax Officer, Kottayam and Another, observed as follows:

In our view the petition filed by the Appellant should not have been entertained. The Income Tax Act provides a complete machinery for assessment of tax and imposition of penalty and for obtaining relief in respect of any improper orders passed by the Income Tax authorities, and the Appellant could not be permitted to abandon resort to that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Tribunal.

In the peculiar situation created by High Court in entertaining the petition and granting leave to appeal in that case, however, the Supreme Court went into the merits and did not feel justified at that stage in dismissing the appeal in limine. Hidayatullah and Shah, JJ. who were parties to this Judgment were, it may be pointed out, also members of the Bench hearing lie Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District, I and Another, . In A.V. Venkateswaran, Collector of Customs, Bombay Vs. Ramchand Sobhraj Wadhwani and Another, the matter was again considered by the Supreme Court. After noticing the argument that the writ petition in that case should have been dismissed in limine by the High Court because the aggrieved party had not exhausted all the statutory remedies open to him for having his grievance) redressed, Rajagopala Ayyangar, J., spoke thus:

We see considerable force in the argument of the learned Solicitor-General. We must, however, point out that the rule that the party who applies for the issue of a high prerogative writ should, be fore ho approaches the Court, have exhausted-other remedies open to him under the law, is not one which bars the* jurisdiction of the High Court, to entertain the petition or to deal with it, but is rather a rule which Courts have laid down for the exercise of their discretion. The law on this matter has been enunciated in several decisions of this Court but it is sufficient to refer to two cases.

Those two cases are Union of India (UOI) Vs. T.R. Varma, and State of U.P. v. Mohammad Noon AIR 1958 SC 86, from which relevant, passages were reproduced. The learned Judge then, proceeded to observe that the existence of other, legal remedies was not per-se a bar to the issue, of a writ of certiorari and there was no obligation imposed on the Court to relegate the aggrieved, party to the other legal remedies available, and finally expressed the Court''s opinion thus:

We need only add that the broad lines of the general principles on which the Court should act having been clearly laid down, their application-to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus, pre-eminently one of discretion, it is not possible-or even if it were, it would not be desirable to lay down Inflexible rules which should be applied with rigidity in every case which comes up before the Court.

That, the matter pertains to the sphere of discretion has again been repeated by the Supreme Court in The Collector of Monghyr and Others Vs. Keshav Prasad Goenka and Others, The position, as it emerges from the various decisions of the Supreme Court, is that the existence of an alternative remedy is not per se a bar to the issue of a writ by this Court which is a matter depending on its discretion to be judicially exercised on the facts and circumstances of each case.

In the case in hand, the Petitioner''s learned Counsel had actually approached the appellate Tribunal and asked for exemption which has been denied for reasons which are not shown to be tainted with any Infirmity which would attract this Court''s writ jurisdiction. The appellate order has been upheld by the revising authority as well. These orders seem to be fully within the competence of the authorities and are not shown to have resulted in grave injustice.

The Petitioner''s learned Counsel has also challenged the vires of Section 6(4) of the Act on the ground that this section confers on the prescribed authority completely uncontrolled and unregulated power to re-open past assessments. This, according to the learned Counsel, invalidates the provision. Sub-section (4) of Section 6 is in the following terms:

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If the prescribed authority is satisfied that the tax has not been correctly levied, charged and paid, he may after giving the owner a reasonable opportunity of being heard, proceed to levy the amount of tax due and recover'' the same. It is clear that the tax to be levied by the prescribed authority under this provision must be in accordance with the statutory provision and in this respect the power conferred is thus fully controlled and circumscribed by the provisions of the Statute. The only grievance which the Petitioner has pointed out is that this provision does not fix any limit as to time within which the correction in the levy of tax can be made. In. support of the challenge, no binding precedent or sound principle of law has been brought to our notice by the learned Counsel. There is no constitutional man-date to which our attention has been drawn which makes it obligatory on the Legislature to fix a time-limit within which incorrect'' levy charged or payment of tax can be corrected. Here again it must be borne in mind that revenue is the basic requirement of our Republic both for the purposes of maintaining good social order and for providing the necessary amenities to the citizens. The Scheme of the Act and the Rules show that it is the owner of transport vehicle concerned who has to collect the tax in question and to pay it to the State Government in the prescribed manner. The State that thus primarily to depend on the honesty of Such Assessees for the collection of the tax. In this background, in my opinion, mere failure of (fixing any time-limit in Sub-section (4) of Section 6 �or proceeding to levy the amount of tax the can-mot be considered to be so harassingly unreasonable as to affect its constitutional validity, assuming challenge: on such a ground to be permissible of which, as at present advised, I am far from convinced. It is a matter of legislative policy with which this Court is not concerned and indeed to review legislative policy in such matters would virtually be an unconstitutional intrusion into the legislative sphere. Courts, as is axiomatic, are concerned only with the power to enact statutes and not with their wisdom. And then, statutory provision otherwise within the competence of the Legislature must not be lightly struck down as unconstitutional except on clear and cogent grounds, for it implies a judicial determination that the lawmakers have, acted in disregard of their own limitations.

The contention that this wide power is I an unreasonable interference with the fundamental fights of the Petitioner has only to be stated to be rejected, because what the impugned provision aims at is to control fraud on revenue and this can by no means be construed to be an unreasonable encroachment on the Petitioner''s fundamental right.

The contention that the assessment order is prima facie contrary to law and, therefore, deserves to be quashed has also not appealed to be. The argument raised is that Rule 29 is not attracted in the present case, and, therefore, the assessment is unauthorised. This Rule is in the following terms:

Assessment or re-assessment of tax and rectification of clerical or arithmetical mistakes. If, inconsequence of definite information which that come into his possession, the appropriate Assessing Authority discovers that an owner has been Hinder-Assessed or has escaped assessment for any year, or tax less than the amount of tax due has been levied in the form of stamps through inadvertence, error or misconstruction or otherwise, the Assessing Authority may, at any time, within a period of three years following the close of the financial year to which it pertains, send a notice to the owner in form P.T.T. so/P.T.T. 12 and after hearing him and making such enquiry as he considers necessary, may proceed to assess or re-assess, as the case may be, and recover the tax payable by him.

The language of this rule covers all cases of underassessment or escaped assessment, with the result that prima facie this provision would appear to be applicable to the case in hand. Nothing cogent has been urged to persuade me to exclude the applicability of this rule from the Petitioner''s case. The contention that the Petitioner''s case is only covered by Rule 21 and not by Rule 29 is untenable. The former rule deals with assessment and occurs in Chapter VI; its language and context seems to suggest that it is meant for a purpose entirely different from the one for which Rule 29 has been framed. This contention thus also fails.

We have then been invited to go into the'' merits of the actual assessment and it has been urged that there is no basis for the amount determined by tire Assessing Authority. This matter, in view of the foregoing discussion, should be gone into and adjudicated upon under the statutory machinery prescribed, and it is not possible to allow the Petitioner to by-pass the appellate and revisional tribunals and the machinery provided by the statute, no special ground having been made out for adopting this course. Such points should properly be agitated before the departmental authorities; Nabha Rice and Oil Mills, Nabha Vs. State of Punjab and Others,

Lastly, it has been submitted that we should, in the peculiar circumstances of this case, direct the appellate Tribunal to hear the appeal without insisting on payment of the amount Assessed. In my view, it is not open to us to give any such direction on the facts and circumstances of this case because, as already observed, orders passed by the appellate and revisional authorities have not been shown to be tainted with any such serious infirmity which would justify our interference with them on the writ side. It may also be mentioned that at one stage the learned Counsel expressed ignorance about the fate of the appeal: whether it had been dismissed on account of non-deposit of tax or it was still pending. In case the appeal has been disposed of, obviously in the present proceedings, we cannot quash the final order passed lay the appellate Tribunal. In case it is still pending, it would certainly be open to the Petitioner to comply with the orders of the appellate Tribunal and seek redress for his grievance from that quarter.

For the foregoing reasons, this petition fails and is hereby dismissed but without any order as to costs. The other Writ Petitions too, fail and are similarly dismissed.

H.R. Khanna, J.

I agree.