judgement:
Civil Appeal No. 82 of 1971.
From Judgment and Decree dated 26.2.65 of Allahabad High Court in first appeal No. 457 of 1952.
J.P. Goyal and S.K. Jain for the appellants.
V.C. Mahajan and A. Subhashini for the respondents.
The Judgement of the Court was delivered by SEN, J.
This appeal on certificate brought from the judgment and decree of the Allahabad High Court dated February 26, 1965 reversing the judgment and decree of the Civil Judge, Agra dated August 25, 1952 and dismissing the plaintiffs ' suit for recovery of Rs. 26,000 raises a question of some importance upon s.80 of the Code of Civil Procedure, 1908.
The facts giving rise to this appeal may be shortly stated.
On November 12, 1949, the plaintiffs Ghanshyam Dass and his two minor brothers Shree Ram and Mohan Lal brought the suit out of which this appeal arises, in the Court of the Civil Judge, Agra for recovery of a sum of Rs. 26,000 against the Dominion of India through the Defence Secretary, New Delhi.
It was pleaded that their late father Seth Lachman Dass Gupta entered into a contract with the Governor General in Council for the supply of charcoal to the Military Supply Depot at Agra during the period from April 1, 1943 to March, 31, 1944.
In pursuance thereof, he made necessary supplies and received payments for the same at the contractual rates from time to time.
It was pleaded that tho contract contained an escalation clause viz. clause 8, to the effect that in case the price of charcoal increased by more than 10% of the stipulated rate during the subsistence of the contract, the contractor would be entitled to the price at the higher rate.
It was alleged that from 232 the date of the contract, the rate of charcoal went up continuously to 44.8% in July, August and September 1943, 93.1% in October November and December 1943 and 82.7% in January, February and March 1944.
Accordingly Seth Lachman Dass made a demand for payment of price at the increased rate.
The military authorities paid at the enhanced rate for part of the supplies while for the rest they refused to pay at more than the contractual rate.
Seth Lachman Dass served a notice exhibit A 8 on the Dominion of India through the Defence Secretary under s.80 of the Code of Civil Procedure 1908.
lt appears that before his death,.
On or about September 15, 1948 he received a letter from the military authorities rejecting his claim for payments at the enhanced rate but before he could institute any suit he died on October 28, 1949.
Thereafter, on November 12, 1949 the plaintiffs who ale his three sons, brought the suit as his legal heirs and successors claiming the amount.
The defendants contested the claim inter alia on the ground that the notice exhibit A 8 given by Seth Lachman Dass could not inure for the benefit of the plaintiffs and therefore the suit was bad for want of a notice under s.80 of the Code.
The learned Civil Judge, however, held that no further notice under s.80 was necessary as the notice exhibit A 8 served by the plaintiffs ' father Seth Lachman Dass must enure for their benefit.
He found that the plaintiffs were entitled in terms of clause 8 of the contract to receive a sum of Rs. 20,710.50 p. being the difference between the enhanced rate and the contractual rate for the supplies paid for and accordingly decreed the plaintiffs claim to that extent.
But on appeal the High Court, his decision on the point was reversed upon the view that the notice exhibit A 8 given by the plaintiffs ' father was insufficient and was nota valid notice under s.80 of the Code of Civil Procedure insofar as the plaintiffs were concerned.
The short question involved in this appeal is whether the notice exhibit A 8 given by the plaintiffs ' father Seth Lachman Dass Gupta before his death under s.80 of the Code of Civil Procedure, 1908 would enure for the benefit of the plaintiffs.
Section 80 of the Code as it stood on the date of the institution of the suit, insofar as material, is reproduced below: "80.
Notice: No suit shall be instituted against (the Government) or against a public officer in respect of any act purporting to be done by such public officer in his official 233 capacity, until the expiration of two months next after notice in writing has been delivered to, or left at the office of (a) in the case of suit against the Central Government . . . a Secretary to that Government: ** ** ** ** and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left.
" In the celebrated case of Bhagchand Dagadusa & Ors.
vs Secretary of State for India in Council & Ors., the Judicial Committee of the Privy Council held that this section is express, explicit an mandatory and it admits of no implications or exceptions.
The words of Viscount Summer delivering the judgment of the Privy Council have become classical : "Section 80 is express, explicit and mandatory, and it admits of implications or exceptions.
A suit in which (inter alia) an injunction is prayed still "a suit" within the words of the section, and to read any qualification into it is an encroachment on the function of legislation.
Considering how long these and similar words have been read throughout most of the Courts in India in their literal sense, it is reasonable to suppose that the section has not been found to work injustice, but, if this is not so, it is a matter to be rectified by an amending Act.
The Privy Council rejected the contention put forward before them that the section deals with mere procedure and held that the requirements of s.80 are to be strictly complied with and are applicable to all forms of action and all kinds of relief.
It further held that s.80 imposes a statutory and unqualified obligation upon the Court and in the absence of compliance with s.80, the suit was not maintainable, either as to the declaration sought or injunction prayed for.
234 Earlier, in some cases, a liberal construction was put upon the section and it was held that a notice is sufficient if it substantially fulfils its objection in informing the parties concerned of the nature of the suit to be filed, and that a notice is not invalid merely because it is given by two out of three plaintiffs But since the Privy Council judgment in Bhagchand 's case, supra, strict compliance with the terms of s.80 has been enforced and a notice given by one of two plaintiffs has been held to be insufficient.
Again, in a case where the plain tiffs ' father gave notice and then plaintiffs filed a suit after the father 's death, the notice given by the father in respect of the same cause of action was held insufficient : Mahadev Dattatraya Rajarshi vs Secretary of State for India following Buchan Singh vs Secretary of State.
It is plain from the terms of s.80 that the notice must fulfil the requirements set out therein.
It is essential that the notice must state the names, descriptions and places of residence of all the plaintiffs.
A notice must be such as to enable the addressee or the recipient to indentify the claimant.
In Vallayan Chettiar & ors.
vs The Government of the Province of Madras & Anr.
Lord Sumner delivering the judgment of the Privy Council referred to the observations of Lord Sumner in Bhagchand 's case that s.80 is explicit and mandatory and admits of no implications or exemptions, and observed that: "There should be identity of the person who issues the notice and who brings the suit.
To hold otherwise would be to admit an implication or exception for which there is no justification. " .
There, the question was whether a suit brought by two plaintiffs was competent when notice under s.80 was given by only one of them.
The Privy Council having regard to the mandatory requirements of s.80 of the Code held that there was no valid notice and accordingly upheld the judgment of the High Court dismissing the plaintiff 's suit.
So also in Government of the Province Bombay vs Pestonji Ardeshir Wadia & Ors., the Privy Council reiterated the same principles where no notice had been served under s.80 specify 235 ing the names and addresses of all the trustees and therefore the provisions of the section had not been complied with and it was accordingly held that the suit was incompetent.
As to the requirement that the notice must state the cause of action and the reliefs claimed, there is a large body of decisions laying down that a notice under the section should be held to be sufficient if it substantially fulfils its object in informing the parties concerned of the nature of the suit to be filed.
In consonance with this view, this Court in Dhian Singh Sobha Singh & Anr.
vs Union of India, Union of India vs Jeewan Ram, State of Madras vs C.P. Agencies and Amar Nath vs Union of India has held that though the terms of the section have to be strictly complied with, that does not mean that the notice should be scrutinized in a pedantic manner or in a manner divorced from common sense.
On this principle, it has been held that notice which states the cause of action and the reliefs described in the annexed copy of the plaint (which forms part of the notice) though defective in form, complies substantially with the section.
The point to be considered is whether the notice gives sufficient information as to the nature of the claim such as would enable the recipient to avert the litigation.
The relevant passage from the judgment in Dhian Singh Sobha Singh 's case, supra, is set out below: "We are constrained to observe that the approach of the High Court to this question was not well founded.
The Privy Council no doubt laid down in Bhugchand Dagadusa vs Secretary of State that the terms of this section should be strictly complied with.
That does not however mean that the terms of the notice should be scrutinized in a pedantic manner or in a manner completely divorced from common sense.
As was stated by Pollock C.B. in Jones vs Nicholls ; "We must import a little common sense into notices of this kind. ' ' Beaumont C.J. also observed in Chandu Lal Vadilal vs Government of Bombay, ILR "one must construe section 80 with some regard to common sense and to the object with which it appears to have been passed 236 The question as to whether notice under s.80 was invalid for want of identity of the plaintiffs directly arose in the case of S.N. Dutt vs Union of India.
There, a notice was served by the appellant who was the sole proprietor of a business styled S.N. Dutt & Co., (in the name of S.N. Dutt & Co.) and thereafter he filed a suit against the Union of India describing the plaintiff as "Surendra Nath Dutt sole proprietor of a business carried on under the name and style of S.N. Dutt & Co.".
This Court upheld the decision of the Calcutta High Court dismissing the plaintiff 's suit holding that the person who issued the notice was not the same as the person who filed the suit.
The contention that the appellant was carrying on business under an assumed name and therefore the notice was valid as S.N. Dutt & Co. was merely the name and style of the business which he was carrying on, was rejected.
The Court held that since no suit could be filed by S.N. Dutt & Co in that name as it was not a partnership firm, it could not give a valid and legal notice in that name, and a valid notice could only be given in the name of S.N. Dutt.
The decision merely reiterates the rule laid down by this Court in Bhagchand that 'section 80, according to its plain meaning, requires that there should be identity of the person who gives the notice with the person who brings the suit".
The Court distinguished the decisions in Dhian Singh Sobha Singh and C.P. Agencies on the ground that the Court was dealing with defect in describing the cause of action and the relief claimed and where it Concerns the relief and the cause of action, it may be necessary to use common sense to find out whether s.80 of the Code has been complied with, and stated: "But where it is a question o f the name of the plaintiff, there is in our opinion (little scope for the use of common sense,) for either the name of the person suing is there in the notice or it is not.
No amount of common sense will put the name of the plaintiff there, if it is not there." In the case of Raghunath Dass.
v Union of India & Anr.
the same question arose but the Court struck a discordant note there.
There, the notice emanated from M/s Raghunath Dass Mulkhraj and in the body of the notice at several places the expression "we" was used.
Further, the plaintiff had purported to sign for M/s Raghunath Dass Mulkhraj but at the same time he signed the notice as proprietor of M/s Raghunath Dass Mulkhraj.
The Court held 237 that was a clear indication of the fact that M/s Raghunath Dass Mulkhraj was a proprietary concern and the plaintiffs was its proprietor.
In repelling the contention that there was no identity of the person who gave the notice with the person who filed the suit the Court observed: "Whatever doubts that might have been possibly created in the mind of the recipient of the notice, after going through the body of the notice as to the identity of the would be plaintiff, the same would have been resolved after going through the notice as a whole.
" There, the plaintiff had averred in the plaint that he was carrying on his business under an assumed name and style of M/s Raghunath Dass Mulkhraj meaning thereby that the concern was a proprietary concern and that the name given to it was only a trade name.
Me had also stated in the plaint that he had given a notice under s.80 of the Civil Procedure Code.
In the written statement filed on behalf of the Dominion of India, the validity of the notice issued was not challenged.
Regarding the notice in question there was only an averment in the written statement that suit was barred by s.80 of the Code as no notice under that section appears to have been served on the Administration.
In repelling the contention That the suit was bad for want of notice under s 80 of the Code, the Court said: "The object of the notice contemplated by that section is to give to the concerned Governments and public officers opportunity to reconsider the legal position and to make amends or settle the claim, if so advised without litigation.
The legislative intention behind that section in our opinion is that public money and time should not be wasted on unnecessary litigation and the Government and the public officers should be given a reasonable opportunity to examine the claim made against them lest they should be drawn into avoidable litigations.
The purpose of law is advancement of justice.
The provisions in s.80, Civil Procedure Code are not intended to be used as bootstraps against ignorant and illiterate persons.
In this case we are concerned with a narrow question.
Has the person mentioned in the notice as plaintiff brought the present suit or is he someone else ? This question has to be decided by reading the notice as a whole in a reasonable manner.
" 238 In the ultimate analysis, the question as to whether a notice under s.80 of the Code is valid or not is a question of judicial construction.
The Privy Council and this Court have applied the rule of strict compliance in dealing with the question of identity of the person who issues the notice with the person who brings the suit.
This Court has however adopted the rule of substantial compliance in dealing with the requirement that there must be identity between the cause of action and the reliefs claimed in the notice as well as in the plaint.
As already stated, the Court has held that notice under this section should be held to be sufficient if it substantially fulfils its object of informing the parties concerned of the nature of the suit to be filed.
on this principle, it has been held that though the terms of the section have to be strictly complied with, that does not mean that the notice should be scrutinized in a pedantic manner divorced from common sense.
The point to be considered is whether the notice gives sufficient information as to the nature of the claim such as would the recipient to avert the litigation.
In the present case, in the notice exhibit A 8 the name, description and place of residence of the plaintiff Seth Lachman Dass, the father of the plaintiffs, was given but unfortunatory before filing the Suit he died and thereafter within the period of limitation the suit was instituted by his sons on the basis of the said notice.
The notice exhibit A 8 undoubtedly fulfils the requirement of s.80 insofar as the cause of action and the relief claimed are concerned as they are absolutely the same as set out in the plaint.
As stated in Dhian Singh Sobha Singh, the notice must substantially fulfil its work of intimating the parties concerned generally of the nature of the suit intended to be filed and if it does so, it would be sufficient compliance of the section as to the requirement that it should state the name, description and place of residence of the plaintiff, there must be identity of the person who issues the notice with the person who brings the suit Now so far as the name and description of the plaintiff concerned the notice gives the name as Seth Lachman Dass Gupta.
The notice exhibit A 8 duly reached the concerned department and they dealt with the notice.
It is not that the Government had no opportunity to examine the nature of the claim and decide whether its should accept or contest the claim The military authorities served a reply on Seth Lachman Dass before his death that his claim was not acceptable.
There was no other alternative for Seth Lachman Dass but to have brought a suit for the enforcement of his claim.
239 If he could not file a suit due to his death, his right to file the suit A devolved upon his heirs i.e. the plaintiffs.
If the view taken by the High Court is allowed to stand, great injustice would be done to the litigants in the matter of filing suits against the Government.
If fresh notice is insisted upon in such cases, the period of limitation to file a suit may expire in the meantime.
Such a situation is not intended by the Code.
The authorities relied upon by the High Court in non suiting the plaintiffs are of ancient vintage.
In Mahadev Dattattraya Rajarshi 's case, supra, the Bombay High Court relying upon the decision of the Allahabad High Court in Buchan Singh, held that the language of s.424 of the Code of 1882, the predecessor of s.80 of the present Code which was substantially in the same terms, was imperative and absolutely debarred the Courts from entertaining a suit without complying with the provisions of the section.
In Buchan Singh 's case, supra it was observed by the Allahabad High Court at p.191: "If we acceded to this contention, it appears to us that we should be adding words to s.424 which find no place in it.
It would be necessary to add after the words "name and place of abode of the intending plaintiff" some such words as "or of the party through whom such intending plaintiff claims.
" The Court of first instance here tried to distinguish the decision in Buchan Singh on the ground that the word "intending" appearing in s.424 of the 1882 Code had been omitted from s.80 of the present Code, and therefore the word "plaintiff ' j should be construed in a generic sense.
The High Court however following the decision of the Bombay High Court in Mahadev Dattaraya Rajarshi held that the notice must contain the name of the actual plaintiff who could bring the suit adding that "the notice must be given by the person who becomes the plaintiff and by no other".
We are afraid, that is taking too technical a view of the matter.
S.80 of the Code is but a part of the Procedure Code passed to provide the regulation and machinery, by means of which the Courts may do justice between the parties.
It is therefore merely a part of the adjective law and deals with procedure alone and must be interpreted in a manner so as to subserve and advance the cause of justice rather than to defeat it.
In Sangram Singh vs Election Tribu 240 nal, Kotah & Anr., Vivian Bose, J. in his illuminating language dealing with the Code of Civil Procedure said: "It is procedure, something designed to facilitate justice and further its ends: not a penal enactment for punishment and penalties; not a thing designed to trip people up.
Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it.
Our laws of procedure are based on the principle that "as far as possible, no proceeding in a court of law should be allowed to be defecated on mere technicalities".
Here, all the requirements of s.80 of the Code were fulfilled.
Before the suit was brought, the Dominion of India received a notice of claim from Seth Lachman Dass.
The whole object of serving a notice under 5.80 is to give the Government sufficient warning of the case which is going to be instituted against it was that the Government, if it so wished, settle the claim without litigation or afford restitution without recourse to a court of law.
That requirement of s.80 was clearly fulfilled in the facts and circumstances of the present case.
It is a matter of common experience that in a large majority of cases the Government or the public officer concerned make no use of the opportunity afforded by the section In most cases the notice given under s 80 remains unanswered till the expiration of two months provided by the section.
It is also clear that in a large number of cases.
as here, the Government or the public officer utilised the section merely to raise technical defences contending either that no notice had been given or that the notice actually given did not comply with the requirements of the section.
It is unfortunate that the defendants came forward with a technical plea that the suit was not maintainable at the instance of the plaintiffs, the legal heirs of Seth Lachman Dass on the ground that no fresh notice had been given by them.
This was obviously a technical plea calculated to defeat the just claim.
Unfortunately, the technical plea so raised prevailed with the High Court with the result that the plain tiffs have been deprived of their legitimate dues for the last 35 years, 241 The Law Commission in the Fourteenth Report, volume 1 on the Code of Civil Procedure, 1908 at p.475 made a recommendation that s.80 of the Code should be deleted.
It was stated as follows: "The evidence disclosed that in a large majority of cases, the Government or the public officer made no use of the opportunity afforded by the section.
In most cases the notice given under section 80 remained unanswered till the expiry of the period of two months provided by the section.
It was also clear that in a large number of cases, Governments and public officers utilized the section merely to raise technical defences contending either that no notice had been given or that the notice actually given did not comply with the requirements of the section.
These technical defences appeared to have succeeded in a number of cases defeating the just claims of the citizens.
" The Law Commission in the Twenty Seventh Report on the Code at pp.21 22 reiterated its earlier recommendation for deletion of s.80 and in the Fifty Fourth Report at p.56 fully concurred with the recommendation made earlier.
In conformity with the recommendation of the Law Commission, s.80 has undergone substantial changes.
By s.27 of the Code of Civil Procedure (Amendment) Act, 1976 which was brought into effect from February 1, 1977, the existing s.80 has been re numbered as s.80(1) and sub ss.(2) and (3) have been inserted.
Sub s.(2).
as inserted has been designed to give an urgent and immediate relief against the Government or the public officer with the leave of the Court.
But the Court shall not grant relief in the suit, whether interim or otherwise, except after giving to the Government or public officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit.
Proviso to sub s.(2) enjoins that the Court shall, if it is satisfied, after hearing the parties that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to it after complying with the requirements of sub s.(1).
Sub s.(3) as inserted by s.27 of the Code of Civil Procedure (Amendment) Act.
1976 reads as follows : "80(3).
No suit instituted against the Government or against a public officer in respect of any act purporting to be done by such public officer in his official capacity shall be 242 dismissed merely by reason of any error or defect in the notice referred to in sub section (1) if in such notice (a) the name, description and the residence of the plaintiff had been so given as to enable the appropriate authority or the public officer to identify the person serving the notice and such notice had been delivered or left at the office of the appropriate authority specified in sub section (1), and (b) the cause of action and the relief claimed by the plaintiff had been substantially indicated," By sub.s.(3), Parliament has brought in the rule of substantial compliance.
The present suit would be directly covered by sub s.(3) of s.80 so introduced if the suit had been brought after February 1, 1977.
Unfortunately for the plaintiffs, s.97 of the Amendment Act provides that the amendment shall not apply to pending suit and the suits pending on February 1, 1977 have to be dealt as if such amendment had not been made.
Nevertheless the Courts must have due regard to the change in law brought about by sub s.(3) of s.80 of the Code introduced by the Amendment Act w.e.f. February 1, 1977.
Such a change has a legislative acceptance of the rule of substantial compliance laid down by this Court in Dhian Singh Sobha Singh and Raghunath Dass.
As observed in Dhian Singh Sobha Singh 's case, supra, one must construe s.80 with some regard to common sense and to the object with which it appears to have been enacted.
The decision in S.N. Dutt vs Union of India 's case, supra, does not accord with the view expressed by us and is therefore overruled .
Before parting with the case we consider it necessary to refer to one more aspect.
It has frequently come to our notice that the strict construction placed by the Privy Council in Bhagchand 's case, supra, which was repeatedly reiterated in subsequent cases, has led to a peculiar practice in some Courts.
Where urgent relief is necessary the practice adopted is to file a suit without notice under s.80 and obtain interim relief and thereafter to serve a notice, withdraw the suit and institute a second suit after expiry of the period of the notice.
We have to express our strong condemnation of this highly objectionable practice.
We expect that the High Courts will take necessary steps to put a stop to such practice.
243 The result therefore is that the appeal succeeds and is allowed.
The judgment and decree passed by the Allahabad High Court dated February 26, 1965 are set aside and those of the learned Civil Judge, Agra dated August 25, 1952 are restored with costs throughout.
The plaintiffs shall be entitled to further interest on the decretal amount at 6% per annum from August 25, 1952, the date of the decree passed by the Civil Judge, Agra, till realization.
S.R Appeal allowed.

summary:
The plaintiff 's father Seth Lachhman Dass Gupta entered into a contract with the Governor General in Council for the supply of charcoal to the Military Supply Depot, Agra and received payments for the same at the contractual rate from time to time.
The contract contained an escalation clause viz. cl.8 to the effect that in case the price of charcoal was increased by more than 10% of the stipulated rate during the subsistence of the contract, the contractor would be entitled to the price at the higher rate.
During the period of the contract, the rate of charcoal went up continuously.
The military authorities paid at the enhanced rate for the part of supplies while for the rest they refused to pay more than the contractual rate.
He accordingly served a notice to the Government under section 80 of the Code of Civil Procedure, 1908 making a claim for payment of a sum of Rs. 20,710.50 p. in terms of clause 8 of the contract being the difference between the enhanced rate and the contractual rate for the supplies paid for.
But before he could bring the suit against the Government, he died.
Thereupon, the respondents brought a suit as his legal heirs and successors claiming the amount.
The defendants contested the claim inter alia on the ground that the notice given by Seth Lachhman Dass could not ensure for the benefit of the plaintiff 's and therefore the suit was bad for want of notice under section 80 of the Code.
The Court of first instance held that no further notice under section 80 was necessary as the notice served by the plaintiff 's father Seth Lachhman Dass must inure to their benefit.
on appeal, the High Court reversed his decision on the point and held that the notice given by the plaintiff 's father was insufficient and was not a valid notice under section 80 of the Code insofar as the plaintiff 's were concerned.
Against the judgment, the plaintiff 's preferred an appeal by special leave.
Allowing the appeal, the Court 230 ^ HELD: 1.
The question as to whether a notice under section 80 is valid or not is a question of judicial construction.
section 80 of the Code is but a part of the .
Procedure Code passed to provide the regulation and machinery, by means of which the courts may do justice between the parties.
It is therefore merely a part of the adjective law and deals with procedure alone and must be interpreted in a manner so as to subserve and advance the cause of justice rather than to defeat it.
As far as possible, no proceedings in a court of law should be allowed to be defeated on mere technicalities.
This is the principle on which ours laws of procedure are based.
[238A, 239G H, 240A C] 2.
The whole object of serving a notice under section 80 is to give the Government sufficient warning of the case which is going to be instituted against it and that the Government, if it so wished can settle the claim without litigation or afford restitution without recourse to a court of law.
Though the terms of section 80 have to be strictly complied with, that does not mean that the notice should be scrutinised in a pedantic manner divorced from common sense.
The point to be considered is whether the notice gives sufficient information as to the nature of the claim such as would enable the recipient to avert the litigation.
If the notice substantially fulfills its work of intimating the parties 'concerned generally of the nature of the suit intended to be filed, it would be sufficient compliance of the section.
While interpreting the pre amended section the courts must have due regard to the change in law brought about by sub section
(3) of section 80, which shows legislative acceptance of the rule of substantial compliance instead of strict compliance.
[240D E, 242C E] Sangram Singh vs Election Tribunal Kotah relied on.
In the present case the requirement of section 80 that there must be identity between the cause of action and the relief claimed in the notice as well as in the plaint, 15 fulfilled.
As regards the requirement of identity of the person who issues the notice with the person who brings the suit, in this case the notice contained the name of the original claimant i.e. the father of the plaintiffs.
The . notice reached the concerned department of the Government where the Government had opportunity to ' examine the nature of the claim and decide whether it should accept or contest the claim.
The concerned Government authorities served a reply on the plaintiff 's father that his claim was not acceptable.
There after he died and his right to file the suit for enforcement of the claim having devolved upon his heirs i.e. the plaintiff 's, the plaintiffs filed the suit for enforcement of the same claim.
In the circumstances, if section 80 is held to have not been complied with, as done by the High Court, great injustice would be done to the plaintiffs in the matter of filing suits to the Government inasmuch as in case of insistence on fresh notice, the period of limitation to file the suit would expire in the meantime.
Such a situation is not intended by the Code.
Thus the requirement of section 80 was clearly fulfilled in this case but the High Court having allowed the technical plea of the defendants, the plaintiffs have been deprived of their legitimate claim for at least 35 years.
[238D H, 239A C, 240G H] S.N. Dutt vs Union of India, [1962]1 S.C.R. 560; Mahadev Dattatraya Rajshri vs Secretary of States for India ; and Bachchu Singh vs Secretary of State for India in Council, , overruled.
231 Raghunath Dass vs Union of India, ; ; Union of India vs A Jeewan Ram A.I.R. 1958 S.C. 905; State of Madras vs C.P. Agencies, A.I.R. 1960 S.C. 1309 and Amar Nath Gogra vs Union of India,[1964]1 S.C.R. 651, affirmed.
Bhagchand Dagadusa vs Secretary of State of India in Council, [1927] I.A. 338; Vallayan Chettiar vs Government of the Province of Madras [1947] I.A. 74: and Government of the Province of Bombay vs Pestonji Ardeshir Wadia [1949] 76 I.A. 57; referred to.


judgement:
TE JURISDICTION: Writ Petition (Crl) No. 708 of 1984.
(Under Article 32 of the Constitution of India) And Special Leave Petition (Crl) Nos.
1949 50 of 1984 (From the Judgment and Order dated 13.3.84 and 16.3.84 of the Bombay High Court in Special Case Nos. 24/82 & 3/83) Murli Bhandare, Govinddas, Ms. Bina Gupta, H.R. Bhardwaj and PP.
Singh for the petitioner.
Ram Jethmalani, Ashok Desai and Ms. Rani Jethmalani for the respondents.
The Order of the Court was delivered by AMARENDRA NATH SEN, J. There is no merit in this Writ Petition.
The writ petition is accordingly dismissed.
In my view, the writ petition challenging the validity of the order and judgment passed by this Court as nullity or otherwise incorrect cannot be entertained.
I wish to make it clear that the dismissal of this writ petition will not prejudice the right of the petitioner, to approach the Court with an appropriate review petition or to file any other application which he may be entitled in law to file.
483 DESAI, J. I broadly agree with the conclusion recorded by my brother.
The learned Judge in deciding the S.L.P. (Crl) Nos.
1149 50/1984 has followed the decision of this Court.
The learned Judge was perfectly justified and indeed it was the duty of the learned Judge to follow the decision of this Court which is binding on him.
Special leave petitions are dismissed.
H.S.K. Petitions dismissed.

dataset_name: IN-Abs


judgement:
Appeal No. 103 of 1950.
Appeal from a Judgment of the Bombay High Court (Chagla C.J. and Tendolkar J.) dated 25th March, 1949, in Income Tax Reference No. 31 of 1948.
M. C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the appellant.
R.J. Kolah, for the respondent.
Oct. 1.
The Judgment of the Court was delivered by KANIA C.J.
This is an appeal from a judgment of the High Court at Bombay and it arises out of the opinion ex pressed by the High Court in respect of a question submitted to it by the Income tax Tribunal.
The material facts are these.
The respondent is a textile mills company carrying on the business of manufacturing and selling textile goods.
For the assessment years 1943 44 and '1944 45, covering the accounting periods ending with the calendar years 1941, 1942 and 1943, the respondent claimed the expenditure incurred by it in registering for the first time its trade marks which were not in use prior to the 25th February, 1937, as revenue expenditure and an allowable deduction out of its income for the said periods, under section 10(2) (xv) of the Indian Income tax Act.
Following the decision of the Bombay High Court in Commissioner of Income tax, Bombay vs The Century Spinning 13 and Weaving and Manufacturing Co. Ltd.(1), the Tribunal allowed the claim of the assessee.
At the desire of the appellant, the Tribunal submitted the following question for the opinion of the High Court : "Whether, on the facts of the case, the expenditure incurred by the assessee company in registering for the first time its trade marks which were not in use prior to the 25th February, 1937, is revenue expenditure and an allowable deduction under section 10(2) (xv) of the Indian Income tax Act ?" The High Court, following its previous decision and finding that the fact of the trade marks having come into use after the 25th of February, 1937, made no difference in the result, answered the question in the affirmative.
The Commissioner of Income tax, Bombay, has come on appeal to us.
It was argued on behalf of the appellant that the ques tion whether a certain disbursement was of a capital or revenue nature, has to be decided according to the principle laid down in British Insulated and Helsby Cables Ltd. vs Atherton(2).
In that case the company which carried on the business of manufacturers of insulated cables established a pension fund for its clerical and technical salaried staff.
The fund was constituted by a trust deed which provided that members should contribute a percentage of their salaries to the fund and that the company should contribute an amount equal to half the contributions of the members; and further that the company should contribute a sum of pound 31,784 to form the nucleus of the fund and to provide the amount necessary in order that past years of service of the then existing staff should rank for pension.
That sum was arrived at by an actuarial calculation on the basis that the sum would ultimately be exhausted when the object for which it was paid was attained.
The House of Lords held that this payment was in the nature of capital expenditure and was therefore not an admissible deduction.
Although in the opinions expressed by the different members of the House of Lords (1) (2) 14 the line of approach is not completely the same, the principle stated by Lord Cave in his speech has been test distinguish capital expenditure from revenue expenditure.
It was recognised that a sum of money expended, not of necessi ty and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carry ing on of business, may yet be expended wholly and exclu sively for the purposes of the trade.
The Lord Chancellor observed that the question appeared to be a question of fact which was proper to be decided by the Commissioners upon the evidence brought before them in each case.
The test that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing that is going to recur every year was considered an useful element in arriving at the decision but was not certainly the deci sive fact.
The Lord Chancellor observed as follows: "But when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advan tage for the enduring benefit of the trade, I think that there is very good reason for treating such an expenditure as properly attributable not to revenue but to capital.
" In order to appreciate the true position here Correctly it is next necessary to notice the relevant provisions of the Indian .
It may be noted that before this Act there was no in India but it was recognised that an action lay for infringement of a trade mark independently of an action for passing off goods.
The Act opens with the preamble "whereas it is expedient to provide for the registration and more effective protection of trade marks . "Section 2(1) of the Act defines a trade mark as meaning "a mark used or proposed to be used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right to use the mark, whether with or without any indication of the identity of that person.
" Section 14 permits the 15 proprietor of a trade mark to have the trade mark regis tered.
The Attorney General, on behalf of the appellant, relied on sections 20, 21, 28 and 29 in support of his contention.
He argued that before the , although the proprietor of a trade mark could maintain an action for infringement of his trade mark and the cause of action in such a case was quite different from the cause of action in an action for passing off goods, by the the right of the owner of the trade mark is in creased by section 21, and it is made assignable independ ently of the goodwill under sections 28 and 29 of the .
The question thus resolves itself into whether by reason of these two incidents the case falls within the principle laid down by Lord Chancellor Cave, as mentioned above.
In our opinion, the contention urged on behalf of the appellant must fail.
It is not contended that by the a new asset has come into existence.
It was con tended that an advantage of an enduring nature had come into existence.
It was argued that just as machinery may attain a higher value by an implementation causing greater produc tive capacity, in the present case the trade mark which existed before the acquired an advantage of an enduring nature by reason of the and the fees paid for registration thereunder were in the nature of capital expenditure.
In our opinion, this analogy is falla cious.
The machinery which acquires a greater productive capacity by reason of its improvement by the inclusion of some new invention naturally becomes a new and altered asset by that process.
So long as the machinery lasts, the im provement continues to the advantage of the owner of the machinery.
The replacement of a dilapidated roof.
by a more substantial roof stands on the same footing.
The result however of the is only two fold.
By regis tration, the owner is absolved from the obligation to prove his ownership of the trade mark.
It is treated as prima facie proved on production of the registration certificate.
It thus merely saves him the trouble of leading evidence, in the event of a suit, in a court 16 of law, to prove his title to the trade mark.
It has been said that registration is in the nature of collateral security furnishing the trader with a cheaper and more direct remedy against infringers, Cancel the registration and he has still his right enforceable at common law to restrain the piracy of his trade mark.
In our opinion, 'this is neither such an asset nor an advantage as to make payment for its registration a capital expenditure.
In this connec tion it may be useful to notice that expenditure incurred by a company in defending title to property is not considered expense of a capital nature.
In Southern (H. M. Inspector of Taxes) vs Borax Consolidated Limited(1).
it is there stated that where a sum of money is laid out for the acqui sition or the improvement of a fixed capital asset it is attributable to capital, but if no alteration is made in the fixed capital asset by the payment, then it is properly attributable to revenue, being in substance a matter of maintenance, the maintenance of the capital structure or the capital asset of the company.
In our opinion, the advantage derived by the owner of the trade mark by registration falls within this class of expenditure.
The fact that a trade mark after registration could be separately assigned, and not as a part of the goodwill of the business only, does not also make the expenditure for registration a capital expend iture.
That is only an additional and incidental facility given to the owner of the trade mark.
It adds nothing to the trade mark itself.
In the judgment of the High Court some emphasis is laid on the fact that by reason of registration the duration of the trade mark is only for seven years, and it does not thus possess that permanency which is ordinarily required of an expenditure to make it a capital expenditure and in order to prove the existence of a benefit of an enduring character.
The learned Attorney General contended that the view that as the benefit of registration lasted for seven years, i.e., for a limited period, it prevented the expenses of registra tion being treated as capital expenditure, is unsound (1) [1942] 10 I.T.R. Suppl.
17 and for that contention he relied on Henriksen (Inspector of Taxes) vs Grafton Hotel Ltd.(1).
In that case, tenants of licensing premises by agreement with the landlord paid by instalment the monopoly value fixed by the licensing jus tices when granting the licence under section 14 of the Licensing (Consolidation) Act, 1910.
These were sought to be deducted as revenue expenditure but were disallowed by the Court.
Lord Greene M.R. first considered that the pay ment fell into the same class as the payment of a premium on the grant of a lease or the expenditure on improvements to the property which justices may require to be made as a condition of granting a licence.
Having reached that conclu sion he rejected the argument that the payment not being made in one lump sum but by instalments made a difference in the character of the payment.
He observed as follows : "Whenever a licence is granted for a term, the payment is made as on a purchase of a monopoly for that term.
When a licence is granted for a subsequent term, the monopoly value must be paid in respect of that term and so on.
The payments are recurrent if the licence is renewed, they are not peri odical so as to give them the quality of payments which ought to be debited to revenue account.
The thing that is paid for is of a permanent quality although its permanence, being conditioned by the length of the term, is shortlived.
A payment of this character appears to me to fall into the same class as the payment of a premium on the grant of a lease, which is admittedly not deductible.
" The Attorney General relied on these observations to point out that the permanence of the advantage was thus not dependent on the number of years for which it was to enure for the benefit of the proprietor of the trade mark.
In our opinion, these observations have to be read in the context in which they have been made.
The learned Master of the Rolls was discuss ing only the question of payment being made by instalments as not making any difference in the nature of the (1) 3 18 expenditure.
It was first held by him that the payment in question was of a capital nature and of the same character as premium paid on the grant of a lease and was therefore necessarily of a capital nature.
Having come to that conclu sion, he only rejected the contention that because the premium was paid in more instalments than one it lost its character a capital expenditure.
In our opinion, this is an entirely different thing from stating that the fact of the advantage being for a limited time altered the character of the payment in any way.
As observed by Viscount Cave L.C. the question is always one of fact depending on the circumstances of each case individually.
In our opinion, the decision of the High Court reported in Commissioner of Income tax, Bombay vs The Century Spin ning and Weaving and Manufacturing Co. Ltd.(1) is correct and in the present case also the contention of the appellant must fail.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.

summary:
The expenditure incurred by a company carrying on the manufacture and sale of textile goods in registering for the first time its trade marks which were not in use prior to the 25th January, 12 1937, is revenue expenditure and an allowable deduction under Sec.
10 (2) (xv) of the Indian Income tax Act.
The fact that a trade mark after registration could be sepa rately assigned and not as a part of the goodwill of the business only, does not make the expenditure for registra tion capital expenditure.
It is only an additional and incidental facility given to the owner of the trade mark; it adds nothing to the trade mark itself.
Judgment of the Bombay High Court affirmed.
Commissioner of Income tax, Bombay vs The Century Spin ning and Weaving and Manufacturing Co. Ltd. ([1947] approved.
British Insulated and Helsby Cables Ltd. vs Atherton ([1926] A.C. 205), Southern vs Borax Con solidated Ltd. ([1942] 10 I.T.R. Supp. 1), Henriksen vs Grafton Hotel Ltd. ([1942] 2 K.B. 184) referred to.


judgement:
ivil Appeal No. 232 of 1955.
Appeal under Article 132 (1) of the Constitution of India from the Judgment and Order dated November 24, 1954, of the former Travancore Cochin High Court in Original Petition No. 53 of 1954.
T.N. Subramania Iyer and R. Ganapathy Iyer, for the appellant.
K.S. Krishnaswamy Iyengar and Sardar Bahadur, for the respondent.
April 2.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with a certificate of fitness under article 132 (1) of the Constitution is directed against the order of the High Court of Travancore Cochin dismissing the Original Petition No. 53 of 1954 filed by the appellant under article 226 for quashing the order of the Sales Tax Officer, 2nd Circle, Quilon, assessing him to sales tax on a net assessable turnover of Rs. 7,54,144 8 4 for the year 1951 52 (1st April, 1951 to 31st March, 1952) and for issuing proper directions to the Sales Tax Authorities to assess the same according to law.
The appellant is a registered manufacturer of cocoanut oil and cake who has obtained a certificate of registration in Form VI as per sub r.
(i) of r. 20 of the Travancore Cochin General Sales Tax Rules, 1950.
The business of the appellant for the purposes of this appeal consisted in the ' purchase of copra, manufacture of cocoanut oil and cake and sale of the same to parties inside the State of Travancore Cochin and sale of the oil to parties outside the State.
In the year 1951 52, the appellant purchased copra of the value of Rs. 7,16,048 1 4 and after manufacturing oil therefrom in his oil mills he sold the oil partly in the State and partly outside the State and the cake 839 entirely within the State.
, The total value of the oil sold was Rs. 6,76,719 0 11 out of which the sales outside the State were of the value of Rs. 3,67,816 10 1 and the value of the cake sold in the State was Rs. 67,155 155.
The total gross turnover of the appellant was thus Rs. 14,59,923 1 8 and he claimed to deduct therefrom the whole of the purchase price of the copra under r. 7 (1) (k) read with r. 20.
The net turnover according to him was therefore only Rs. 7,43,875 0 4 and he claimed to deduct out of this a further sum of Rs. 3,67,816 10 1 being the sale price of oil in inter State transactions which could not be taxed under article 286 of the Constitution, thus showing a net assessable turnover of only Rs. 3,76 058 6 3.
The Sales Tax Officer, 2nd Circle, Quilon, however fixed the net assessable turnover of the appellant at Rs. 7,54,144 8 4.
He took the purchase value of the copra at Rs. 7,16,048 1 4 but added thereto Rs. 3,08,902 6 10 and Rs. 67,155 15 5 being the respective values of the oil and the cake sold inside the State, excluding the sale price of inter State sales of oil, namely, Rs. 3,67,816 10 1, from such computation.
Having thus excluded the sale price of inter State sales of oil, he deducted only the value of the copra corresponding to the oil sold inside the State namely, Rs. 3,35,216 0 0, as against the sum of Rs.7,16,048 1 4 deducted by the appellant.
He added a sum of Rs. 3,385 0 3 being the price of gum sold by the appellant and deducted a further sum of Rs. 6,130 15 6 being the sales tax collected by him.
He thus arrived at the net assessable turnover of Rs. 7,54,144 8 4 and assessed the appellant for sales tax on the same.
The appellant preferred an appeal to the Assistant Sales Tax Commissioner (S.T.A. No. 1480 of 1953 54) who dismissed the same by his order dated May 10, 1954.
A further petition to the Government for redress met with the same fate and the appellant thereupon filed the petition in the High Court of Travancore.
Cochin being O.P. No. 53 of 1954 with the result indicated above.
The decision of this appeal turns on the construction of the relevant provisions of the Travancore Cochin 340 General Sales Tax Act, 1125 (Act XI of 1125 M.E.) and the Travancore Cochin General Sales Tax Rules, 1950, made thereunder which may be conveniently set out here.
The preamble to the Act stated that it was enacted to provide for the levy of a general tax on the sale of goods in the United State of Travancore and Cochin.
Section 2 (j) defined a " sale " as under: " Sale " with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration. . . .
Explanation (2) Notwithstanding anything to the contrary in the Sale of Goods Act for the time being in force, the sale or purchase of any goods shall be deemed for the purpose of the Act, to have taken place in the United State wherever the contract of sale or purchase might have been made.
" Section 2 (k) defined " turnover " as " the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. " An explanation was added to this definition ' which is, however, not material for our purpose.
Section 3 was the charging section and it provided for levy of taxes on sales of goods in the terms following: " (1) Subject to the provisions of this Act;(a) every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every Indian rupee in such turnover. . . (3) A dealer whose total turnover in any year is less than ten thousand Indian rupees shall not be liable to pay any tax for that year under sub section_ (1) or sub section (2).
841 (4) For the purposes of this section and the other provisions of this Act turnover shall be determined in accordance with such rules as may be prescribed.
(5) The taxes under sub sections (1) and (2) shall be assessed, levied, and collected in such manner and in such instalments, if any, as may be prescribed.
Provided that: (i) in respect of the same transaction of sale, the buyer or the seller but not both, as determined by such rules as may be prescribed, shall be taxed; (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him." Section 4 enacted that the provisions of the charging section shall not apply to the sale of electrical energy and any goods other than arrack and foreign liquor on which duty is or may be levied under the Travancore or Cochin Abkari Act, or the Travancore or Cochin Opium Act.
Section 24 conferred upon the Government power to make rules to carry out the purposes of the Act.
The Act as originally enacted received the assent of the Rajpramukh on January 5, 1950.
After the advent of the Constitution, however, the Act was amended by the Travancore Cochin General Sales Tax (Amendment) Act, 1951, and section 26 was added thereto which ran as under: ' " Notwithstanding anything contained in this Act : (a) a tax on the sale or purchase of goods shall not be imposed under this Act (i) where such sale or purchase takes place outside the State of Travancore Cochin; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India ; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide.
(2) The explanation to 842 clause (1) of article 286 of the Constitution of India shall apply for the interpretation of sub clause (i) of clause(a) of sub section (1).
" The Travancore Cochin General Sales Tax Rules, 1950, which were made by_the Government under the rule making power conferred upon it by sub sections 4 & 5 of section 3 read with section 24 of the Act laid down inter alia the provisions in regard to the determination of the total turnover of a dealer which was liable to be taxed.
Rule 4 provided for the determination of the gross turnover: " (1) Save as provided in sub rule (2) the gross turnover of a dealer for the purposes of these rules ,shall be the amount for which goods are sold by him.
(2) In the case of the undermentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which the goods are.
bought by him.
(a) Cocoanut, copra, ground nut and its kernel.
(b) Cashew, and its kernel.
Rule 7 provided that the tax or taxes under section 3 or 5 or the notification,or notifications under section 6 shall be levied on the net turnover of a dealer.
It further provided that in determining the net turnover, the amounts specified in cls.
(a) to (k) were, subject to the conditions specified therein, to be deducted from the gross turnover.
Clause (k) is relevant for our purpose.
It specified " all amounts which a registered manufacturer of cocoanut and/or groundnut oil and cake may be entitled to deduct from his gross turnover under Rule 20 subject to the conditions specified in the rule. " Rule 20 so far as it is material for our purpose provided: " 1.
Any dealer who manufactures cocoanut/ groundnut oil and cake from cocoanut and/or copra or groundnut and/or/kernel purchased by him may on application to the assessing authority having jurisdiction over the area in which he carries on his business, 843 be registered as a manufacturer of cocoanut/groundnut oil and cake and a certificate issued in Form VI. 2.
Every such manufacturer shall be entitled to a deduction under clause (k) of sub rule (i) of rule 7 equal to the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover.
" It is not necessary to refer to any other rule for the purposes of this appeal.
The main controversy between the parties centres on the method of calculation of the net turnover.
The appellant contends that in the calculation of such net turnover he is entitled to include the total value of the oil sold by him, viz., Rs. 6,76,719 0 11, irrespective of the fact whether these sales were effected inside the State or outside the State and deduct therefrom the total value of copra purchased by him from which the whole quantity of oil sold by him was manufactured, viz., Rs. 7,16,048 1 4.
The resultant figure, according to him, represents the net assessable turnover on which the Sales Tax Authorities would be entitled to assess him to sales tax if the position in law was as is stood before the amendment of the Act by the Travancore Cochin General Sales Tax (Amendment) Act, 1951.
He next contends that section 26 which was added to the Act by the Travancore Cochin General Sales Tax (Amendment) Act 1951, prohibits the levy amongst others of a tax on the sale or purchase of goods where such sale or purchase takes place in the course of inter State trade or commerce.
This is an overriding provision which, it is contended, entitled him to deduct the value of the oil sold outside the State, viz., Rs. 3,67,816 10 1, from the assessable turnover arrived at as above.
The result of this mode of calculation is that he claims to deduct from the gross turnover the whole of the purchase price of copra, viz., Rs. 7,16,048 1 4 and not the purchase price of copra which can be allocated to his sales of oil inside the State.
The Sales Tax Authorities on the other hand, contend that the appellant is not entitled to take into 844 computation at all his 'sales of oil outside the State and is also not entitled to deduct from his gross turnover the purchase price of copra allocated to the oil sold to persons outside the State.
They claim to lift the whole of these sales of oil outside the State inclusive of the purchase price of the copra which can be allocated to them out of the calculations of the net turnover because of the provisions of section 26 set out above, relying upon the non obstante provision contained therein, viz., "Notwithstanding anything contained in this Act, a tax on the sale or purchase of goods shall not be imposed under this Act where such sale or purchase takes place in the course of inter State trade or commerce.
" We have to decide which of these calculations of the net turnover is correct having regard to the relevant provisions of the Act and the rules made there under.
The definition of 'sale" contained in section 2 (j) is wide enough to include, the sales of oil manufactured by the appellant whether these sales are effected inside the State or outside the State.
The definition of " turnover " contained in section 2 (k) of the Act also makes no distinction between the sales inside the State and out,side the State.
The " turnover " is there defined as the aggregate amount for which goods are either bought or 3old by a dealer and, that definition comprises within its scope both these types of sales whether inside the State or outside the State.
This turnover of a dealer is under section 3, sub section
(4) to be determined in accordance with such rules as may be prescribed.
Rule 4 made by the Government under the rule making power prescribes that the gross turnover of a dealer for the purposes of the rules shall be the amount for which the goods are sold by him.
This rule also does not make any distinction between sales inside the State or outside the State.
After having thus provided for the inclusion of all sales within the gross turnover, r. 7 provides that the tax or taxes under section 3 (which is the charging section) shall be levied on the net turnover of a dealer.
Such net turnover is to be arrived at after deducting from the gross turnover various 845 amounts specified in cls.
(a) to (k) thereof and cl.
(k) provides that a registered manufacturer of cocoanut and/or groundnut oil and cake will be entitled to deduct from his gross turnover such amounts as are mentioned in r. 20 subject to the conditions specified therein.
The deduction under r. 20 is available to a dealer who manufactures cocoanut/groundnut oil and cake from cocoanut and " /or copra or groundnut and/or kernel purchased by him and he is entitled to deduct the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover.
Here also we find no distinction made between sales inside the State or outside the State.
On a prima facie reading of these provisions contained in the Act and the rules made thereunder it would appear that a manufacturer of cocoanut or groundnut oil and cake would be entitled to include in his gross turnover the total value of the oil sold by him Whether inside the State or outside the State and to deduct from such gross turnover the whole of the value of the copra purchased by him and converted into oil and cake irrespective of the fact whether such oil or cake was sold by him inside the State or outside the State.
The only thing which he had to do under r. 20, sub r.(2) was to include the amount for which the oil is sold in his turnover and he would then under r. 7(1)(k) be entitled to deduct from his gross turnover the whole of the price of the copra purchased and converted by him into oil and cake, again irrespective of the fact whether the same had been sold by him inside the State or outside the State.
This was certainly the position as it obtained prior to the addition of the section 26 to the Act by the Travancore Cochin General Sales Tax (Amendment) Act, 1951.
We have, therefore., to consider what is the impact of section 26 on the other provisions of the Act and the rules made thereunder.
The High Court decided against the appellant observing that the definitions given in section (2)(j) and (k) of the Act applied only in the absence of "anything 109 846 repugnant in the subject or context", and on a perusal of the relevant provisions of the Act and the rules made thereunder, it was of opinion that these definitions were clearly inapplicable for the following reasons: "There can be no doubt that what has been intended is a taxation of copra at the purchase point and the avoidance of sales tax in respect of the oil extracted by a registered manufacturer from such copra to the extent of the value of the copra used for the said manufacture in all those cases where but for the concession he would have been liable to pay both the purchase tax on copra and the sales tax on oil under the Travancore Cochin General Sales Tax Act, 1125.
In other words, the object is the avoidance of a double taxation by the State, one at the purchase point of copra and the other at the sale point of oil, and it is impossible to invoke the definition and say that the concession will be available to a registered manufacturer even in those cases where only one and not both the taxes can be realized from him under the provisions of the Act.
" The answer given by the learned counsel for the appellant to the above reasoning was that in fiscal statutes what you have got to look to is not the spirit of the statute but the letter of the law; and if you could not bring a particular tax within the letter of the law, the subject could not be made liable for the same.
Our attention was drawn in this connection to the observations of Lord Russell of Killowen in Inland Revenue Commissioners vs Duke of Westminster(1) : "I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a Court 's view of what it considers the substance of the transaction, the Court thinks that the case falls within the contemplation or spirit of the statute.
The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case." As Lord Cairns said many years ago in Partington vs The Attorney General (1): "As I understand the (1) , 24.
(2)(1869) , 122.
847 principle of all fiscal legislation it is this: if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be.
On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be.
" The passage was quoted with approval by the Privy Council in the Bank of Chettinad vs Income Tax Commissioner (1) and the Privy Council registered its protest against the suggestion that in revenue cases "the substance of the matter" may be regarded as distinguished from the strict legal position.
(See also F. L. Smidth & Co. vs F. Greenwood (2)).
It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law.
If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed.
If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter.
We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax Authorities.
It may be noted at the outset that the main bulk of the Sales Tax Acts enacted by the various Provincial Legislatures was enacted before the Constitution.
There were on the Statute Book various Sales Tax Acts enacted by the Provincial Legislatures, viz., Bihar Sales Tax Act, 1947, Bengal Finance (Sales Tax) Act, 1941, Madhya Pradesh Sales Tax Act, 1947, Madras Sales Tax Act, 1939, Mysore Sales Tax Act, 1948, Orissa Sales Tax Act, 1947, East Punjab General Sales Tax Act, 1948, and the Uttar Pradesh Sales Tax Act, (1) A.I.R. (1940) P.C. 183.
(2) VIII T.C. 193, 206, 348 1948, all of which levied sales tax on a more or less uniform basis bringing within their ken not only the sales which were actually effected within the territory but also sales where adopting the nexus theory eve1 one of the ingredients of sale was found to have taken place within the territory.
The Assam Sales Tax Act, 1947, and the Hyderabad General Sales Tax Act, 1950, also followed the same pattern.
When the Constitution came to be inaugurated on January 26, 1950, article 286(2) laid down restrictions on the State Legislatures to enact laws imposing or authorising the imposition of tax on the sale or purchase of goods in certain cases therein specified, so that after January 26, 1950, no State could impose a tax on the sale or purchase of goods falling within these categories.
The Sales Tax Acts enacted by the various Provincial Legislatures had, therefore, to be brought in line with this provision of the Constitution and various expedients were devised by the State Legislatures in order to effectuate this object.
This object was sought to be achieved in the main bulk of the Sales Tax Acts by adding towards the end of the Acts sections like section 26 of the Travancore Cochin General Sales Tax Act, 1125, incorporating therein the terms of article 286 of the Constitution.
The non obstante provision was thus enacted in the main bulk of the Sales Tax Acts which laid down: "Notwithstanding anything contained in this Act the tax on the sales or purchase of goods shall not be imposed under this Act where. . . (and the provisions of article 286 were in terms incorporated therein).
" A different expedient was adopted in the Assam Sales Tax Act, 1947 and the Hyderabad General Sales Tax Act, 1950.
The Assam Sales Tax Act, 1947, had incorporated therein an addition to the charging section (section 3 of the Act) and section 3 (1 A) which was inserted by section 3 of the Assam Sales Tax (Amendment) Act, 1947 (Assam Act IV of 1951) was to the following effect: "Nothing in sub section (1) shall,except in cases covered by the first proviso to sub section (12) of section 2 of this Act be deemed to render any dealer 849 liable to tax on the sale of goods where such sale takes place: (1) outside the State of Assam; (2) in the course of the import of the goods into, or export of the goods out of, the territory of India; or (3) in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide.
The Hyderabad General Sales Tax Act, 1950 had a similar provision incorporated in its definition of sale given in section 2 (k) of the Act.
The Explanation (2) which was substituted for the original Explanation (2) by section 2 of the Hyderabad General Sales Tax (Amendment) Act, 1950 (Hyderabad Act XXXII of 1950) read as under: Explanation (2) " Notwithstanding anything to the contrary in any other law for the time being in force, a transfer of goods in respect of which no tax can be imposed by reason of the provision contained in Article 286 of the Constitution, shall not be deemed to be "sale" within the meaning of this clause.
" A further expedient which was adopted in this connection may be noted in r. 5 of the Bombay Sales Tax Rules, 1952, enacted under the Bombay Sales Tax Act, 1952 (Bombay Act XXIV of 1952), which authorised the deduction of certain sales coming within article 286 of the Constitution while calculating the taxable turnover of a dealer.
We are not called upon to express any opinion as to whether the incorporation of the provisions of article 286 of the Constitution in the charging section as it was done in the Assam Sales Tax Act, 1947, or in the definition of "sale" as it was done in the Hyderabad General Sales Tax Act, 1950, or even in the rules in regard to the calculation of taxable turnover as it was done in the Bombay Sales Tax Rules, 1952, had the effect of taking the sales falling within the categories specified in article 286 out of the purview of the respective Sales Tax Acts, so that they would not be included at all within the calculation of the net turnover on which only the sales tax could be levied.
What was done in the instant case before us as in the bulk of the Sales 850 Tax Acts above noted was the incorporation of those provisions of article 286 of the Constitution therein by adding a non obstante provision at the end of the respective Sales Tax Acts in the manner above indicated.
The definition of "sale" was not amended nor was the charging section.
The rules as to the calculation of the net turnover also remained the same, without any deduction in regard to sales coming within article 286 of the Constitution being incorporated therein, with the result that the Sales Tax Authorities founded themselves upon the non obstante provision incorporated in the Act by the addition of section 26 therein by the Travancore Cochin General Sales Tax (Amendment) Act, 1951.
What, then, is the effect of this non obstante provision ? This Court in Aswani Kumar Ghosh vs Arabinda Bose (1) made the following observations in connection with the non obstante clause: "It should first be ascertained what the enacting part of the section provides on a fair construction of the words used according to their natural and ordinary meaning, and the non obstante clause is to be understood as operating to set aside as no longer valid anything contained in relevant existing laws which is inconsistent with the new enactment.
" The same ratio applies to the construction of the non obstante provision contained in section 26 of the Act with reference to all the other provisions of the Act that preceded the same.
In our opinion, section 26 of the Act, in cases falling within the categories specified under article 286 of the Constitution has the effect of setting at nought and of obliterating in regard thereto the provisions contained in the Act relating to the imposition of tax on the sale or purchase of such goods and in particular the provisions contained in the charging section and the provisions contained in r. 20 (2) and other provisions which are incidental to the process of levying such tax.
So far as sales falling within the categories specified in article 286 of the Constitution and the corresponding section 26 of the Act are concerned, they are, as it were, (1) ; , 21, 22.
851 taken out of the purview of the Act and no effect is to be given to those provisions which would otherwise have been applicable if section 26 had not been added to the Act.
If these provisions of the Act and the rules made thereunder do not apply to.
the sales falling within those categories, the value thereof cannot be included in the turnover of the dealer and no question would &rise of the applicability of r. 7 (1) (k) and r. 20 (2) at all to these cases.
The amount for which the oil is sold in inter State trade or commerce would not be lawfully included in the turnover of the dealer and if the amount for which such oil is sold cannot thus be included in his turnover no occasion would arise for the deduction under r. 7 (1) (k) of the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by the dealer into such oil and cake.
A distinction was sought to be made between the inclusion of the value of such oil in the turnover of the dealer for the purpose of assessment and the levy of tax thereupon.
It was urged that the inclusion of such oil in the turnover for the purpose of assessment was quite distinct from the liability for tax which was the only thing prohibited by section 26 of the Act and therefore the value of such oil could be lawfully included in the turnover involving as a necessary consequence the deduction of the value of the copra purchased by the dealer and converted by him into such oil from such turnover, the resultant turnover being the net turnover for the purposes of assessment, the value of the oil sold in the course of inter State trade or commerce being further deducted therefrom by reason of the operation of section 26 of the Act, thus making in effect a distinction between assessable turnover and the taxable turnover.
Reliance was placed in support of this position on the observations of this Court in Messrs. Chatturam Horilram Ltd. vs Commissioner of Income Tax, Bihar and Orissa(1): " As has been pointed out by the Federal Court in Chatturam vs C.I.T., Bihar(,) (quoting from the (1) ; , 297.
(2) , 126.
852 judgment of Lord Dunedin in Whitney vs Commissioners of Inland Revenue (1) 'there are three stages in the imposition of a tax.
There is the declaration of liability, that is the part of the statute which determines what person in respect of what property are liable.
Next, there is the assessment.
Liability does not depend on assessment.
That, ex hypothesi, has already been fixed.
But assessment particularises the exact sum which a person liable has to pay.
Lastly, come the methods of recovery if the person taxed does not voluntarily pay" The appellant, however, forgets that the three stages in the imposition of a tax which are laid down here predicate, in the first instance, a declaration of liability as the starting point.
If there is a liability to tax, imposed under the terms of the taxing statute, then follow the provisions in regard to the assessment of such liability.
If there is no liability to tax there cannot be any assessment either.
Sales or purchases in respect of which there is no liability to tax imposed by the statute cannot at all be included in the calculation of turnover for the purpose of assessment and the exact sum which the dealer is liable to pay must be ascertained without any reference whatever to the same '.
There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non liability to tax or non imposition of tax on the other.
In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed.
In the latter case, the sales or purchases are exempted from taxation altogether.
The Legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are not liable to any such imposition (1) 853 of tax.
If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the Act at all.
The very fact of their non liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed.
If this distinction is borne in mind, it is clear that section 26 of the Act enacts a provision with regard to nonliability of these transactions to tax and these transactions were therefore taken out of the purview of the Act.
We are therefore of opinion that the non obstante provision contained in section 26 of the Act has the effect of taking these transactions out of the purview of the Act with the result that the dealer is not required nor is he entitled to include them in the calculations of his turnover liable to tax thereunder.
This position is not at all affected by the provision with regard to registration and submissions of returns of the sales tax by the dealers under the Act.
The legislature, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of article 286 of the Constitution, may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealer 's turnover.
Such inclusion, however, for the purposes aforesaid would not affect the non liability of these transactions to levy or imposition of sales tax by virtue of the provisions of article 286 of the Constitution and the corresponding provision enacted in the Act, as above.
We are, therefore, of opinion that the conclusion reached by We are therefore therefore, of opinion that the conclusion reached by the High Court was correct; the calculations of the net turnover made by the Sales Tax Authorities were also correct; and this appeal must stand dismissed with costs.
Appeal dismissed.

summary:
The business of the appellant consisted in the purchase of copra, manufacture of cocoanut oil and cake therefrom and sale of oil and cake to parties inside the State of Travancore Cochin and sale of oil to parties outside the State.
Before the coming into force of the Constitution of India, under the provisions of the Travancore Cochin General Sales Tax Act, 1125, and the rules made thereunder, for the purposes of assessment to sales tax, the appellant wag entitled to include in his gross turnover the total value of the oil sold by him whether inside the State or outside the State and to deduct therefrom the whole of the value of the copra purchased by him.
Subsequently, in 1951, the Act was amended by the addition of section 26 which, inter alia, provided: "Notwithstanding anything contained in this Act. a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter ,State trade. .
For the year 1951 1952, the Sales Tax Officer assessed the appellant to sales tax on a net assessable turnover by taking the value of the whole of the copra purchased by him, adding thereto the respective values of the oil and the cake sold inside the State and deducting only the value of the copra corresponding to the oil sold inside the State.
It was contended for the appellant that in the calculation of the net turnover he was entitled to include the total value of the oil sold by him, both inside and outside the State, and deduct therefrom the total value of the copra purchased by him, and further that, under the overriding provision of the Act under section 26, he was entitled to have the value of the oil sold outside the State deducted.
Held, that the calculation made by the Sales Tax Officer of the net turnover was correct.
The non obstante provision contained in section 26 of the Act has the effect of taking transactions relating to inter State trade out of the purview of the Act and they are excluded in the calculation 108 838 of the gross turnover as well as the net turnover on which sales tax can be assessed.
Aswani Kumar Ghosh vs Arabinda Bose, ; , relied on.