judgement:
appeal No. 1923 of 1966.
Appeal by special leave from the order dated February 14, 1966 of the Central Govt.
Labour Court, Rajasthan, Jaipur in Misc.
Application No. CLC 4 of 1964.
G. L. Sanghi and P.M. Tiwari for the appellant.
111 M. K Ramamurthi, J. Ramamurthi and Vineet Kumar, for the respondent.
The Judgment of the Court was delivered by Mitter, J.
This appeal by special leave is from an order of the Central Government Labour Court, Rajasthan passed on February 14, 1966 on an application under section 33 C (2) of the filed by the respondent, Hari Har Nath Bhargava, holding that the latter was entitled to supervisory allowance under paragraph 164 (b) (9) of the Sastry Award even for the period when the latter was not actually performing supervisory duties.
The facts in this case may be shortly stated.
The respondent was appointed a clerk by the State Bank of Jaipur in 1949.
He was transferred to Kota in the year 1952.
He was entrusted with supervisory work from 6th April, 1954.
The bank executed a power of attorney in his favour on May 31, 1954 in pursuance of a resolution of its Board of Directors passed on 20th May, 1954.
He was transferred from Kota to Jaipur on July 12, 1955.
On December 27, 1955 he was posted at Sikar where he had to perform supervisory duties.
On January 1, 1956 he was promoted to the cadre of junior officers of the bank.
On March 31, 1964 the respondent filed an application before the Central Government Labour Court, Rajasthan under section 33 C (2) praying for computation of special allowance under what is known as the Sastry Award on the ground that he had been discharging supervisory duties from 6th April, 1954 to 1st January, 1956.
By this time the Bank of Jaipur had amalgamated with the Bank of Bikaner and the amalgamated bank, the appellant before us, came to be known as the State Bank of Bikaner and Jaipur.
The execution of the power of attorney dated 29th May, 1954 was admitted but the appellant denied "that the duties entrusted to the respondent constituted performance by him of any supervisory nature of work".
A point was also taken that although no period of limitation is laid down by any statute with regard to applications under section 33 C of the Act the respondent 's claim being a stale one should not be entertained.
112 The appellant amended its written statement in 1965 wherein it was stated that the respondent was only required to perform the functions enumerated in the power of attorney as and when so directed by the bank.
As a matter of fact, he had been entrusted with supervisory duties from 6th April, 1954 to 12th July, 1955 and thereafter from 27th December, 1955 to 6th January, 1956.
The respondent was examined before the Labour Court where he said that he was "the second signatory at Kota during the period, April 1954 to middle of July 1955".
At the Jaipur branch where he was transferred, there were many signatories above him, while at Sikar there was only another such signatory and he was the second officer.
Obviously what he meant by the word "signatory" was a person authorised by the bank to discharge the functions covered by the power of attorney.
The relevant portion of the said power of attorney read "The Bank do here by nominate constitute and appoint Shree Hari Har Nath Bhargava in the service of the said bank at Kota to be the true and lawful attorney of the said bank at its registered office at Jaipur aforesaid or at any other place or places in India where the said bank may have or establish branches or agencies and to which he may from time to time or at any time be appointed by the said bank as Branch Manager, Agent, Sub Agent, Accountant, or in any capacity whatever for and in the name of and on behalf of the said bank to do, transact jointly with Secretary, Manager, Sub Manager etc.
the matters and things mentioned thereafter.
" The matters mentioned included the endorsement of "hundies, drafts, cheques, warrants, railway receipts, pension bills and other negotiable and mercantile instruments and to commence, prosecute, enforce, defend, answer and oppose any suit or other legal proceedings and demands touching any matters in which the bank was or may thereafter be interested or concerned.
" 113 It is worthy of note that after the execution of the power of attorney the respondent was empowered to, discharge functions which could only be described as.
supervisory in nature and unless there was a command or direction that he should not act thereon or unless the power of attorney was cancelled his authority, to act in a supervisory capacity would continue in force.
The Sastry Award is not on record in extenso but paragraph 164 thereof quoted by the Labour Court shows; that certain categories of employees were to be considered as fit for special allowances.
These included inter alia stenographers, cashiers (other than routine clerks), supervisors, clerks in charge, departmental in charges and head clerks.
The award noted that although scales of basic pay and dearness allowance for clerical and subordinate staffs had been laid down for doing ordinary duties, there were certain posts even in these grades for which an incumbent required special qualifications or skill for the efficient discharge of the duties assigned and an extra payment in such cases was necessary by way of, recognition of and compensation for the skill or responsibility.
The award further noted that : "Having regard to the numerous banks of varying sizes and resources, it is not possible to have one general pattern of allowances for such special types of work. .
It is neither easy nor desirable to bring them all into one fairly general rule regardless of the bank 's past practice or present capacity." Paragraph 162 of the award shows that there were three, ways in which this extra payment might be provided for (1) The employee might be given additional increments in the same scale.
(2) He might be paid a lump sum allowance in addition to his other emoluments.
This was said to have the advantage of carrying a man even beyond the usual maximum limit.
(3) He might be given a higher scale leading up to a higher maximum. 114 According to the award it was on the whole better to adopt either the first or the second method or sometimes even a combination of both.
According to the Labour Court the underlying idea behind the said award was that when one general scale for clerical service had been provided in the award, it was thought just and proper that persons with special qualifications or skill required for discharging work carrying with it greater responsibility than the usual work should definitely get higher emoluments than the ordinary workmen.
The Labour Court said that "this did not mean that the person of the same qualifications and skill who had been granted the powers of attorney by the bank should be allowed special allowance only for any particular period unless a man was temporarily appointed to do supervisory work".
In the result, the Labour Court allowed the respondent supervisory allowance at Rs. 40 p.m. with ,effect from 6th April, 1954 to 31st December, 1955 with, consequential benefits.
It is to be noted however that although a point had been taken in the written statement of the bank about the delay in the filling of the application under section 33 C it had not been pressed before the Labour Court.
Mr. Sanghi appearing for the appellant was prepared to concede that so far as the periods 6th April, 1954 to 12th July, 1955 and 27th December, 1955 to 31st December, 1955 were concerned he was not contesting the claim.
But in so far as the period 13th July, 1955 to 27th December, 1955 was concerned, his client was pressing the appeal as a matter of principle as this would constitute a test case by which other similar cases might fall to be decided.
This Court had to deal with a case where an identical question arose.
In State Bank of Hyderabad vs V. A. Bhide (1) this Court had to consider the claims of the respondents in that appeal for payment of special allowance granted to supervisors under what were known as the Sastry and Desai awards.
It was there contended on behalf ,of the appellant bank that in order to claim the supervisory allowance the parties must establish that the main or essential duties entrusted to them and actually discharged by (1)[1969] them were duties and functions of a supervisory nature.
This Court considered the Sastry and Desai awards and observed (at p. 727) : ". before a person can claim the supervisory special allowance, he must establish that he has discharged the duties and functions which are similar to 0r the same as the duties or functions assigned to supervisors coming under category 9.
This decision [Lloyds Bank Ltd. vs Panna Lal Gupta and others (1)] also makes it clear that in deciding the status of an employee claiming the special allowance, the designation of the employee is not decisive and what determines the status is a consideration of the nature of the duties and functions assigned to the employee concerned.
" In our view the payment of a special allowance is called for when an employee discharges duties of a supervisory nature or is accorded the status of a person competent to discharge functions of a supervisory character.
If no power of attorney is execute& as in this case but in fact the employee is asked to render services of a supervisory character and the employee does such work at the request of the bank, he becomes entailed to the allowance.
Once however a power of attorney giving the wide powers of agency as was done in this case is executed, it should be held that the management had placed him in a category of persons with responsibility and the employee was to discharge the responsibility without any further request in that behalf.
It may be that the initial giving of power of attorney was necessitated by the fact that at Kota there was only one officer besides the respondent who could discharge duties like endorsing hundies, drafts etc.
and it became necessary for the bank to have a second officer who could carry on this kind of work.
But the power of attorney does not show that the bank thought it necessary to clothe the respondent with the said powers only for discharging his duties when he was at Kota.
The power of attorney was operative at any branch of the bank irrespective of the capacity which might be occupied by the respondent at a particular point of time.
It may be (1) 116 that at Jaipur there was a number of officers superior to the respondent who were empowered to discharge duties mentioned in the power of attorney but this does not necessarily lead to the inference that the respondent lost his responsibility or was denuded of the powers while he was at Jaipur.
If he discharged any of the duties men tioned in the power of attorney the same would be lawful and would be binding on the bank.
The fact that he was not actually called upon to discharge such functions did not take away from his responsibility or status of a person ,competent to discharge functions of a supervisory character and we see no reason why he should be deprived of supervisory allowance unless the bank gave him notice that he was not to act on the power of attorney while at Jaipur.
We therefore hold that the Labour Court had come to the correct conclusion.
Mr. Sanghi tried to urge the point that the Labour ,Court should not have entertained the application as being inordinately belated and that even though the Labour Court did not adjudicate on this point it was open to the bank to urge it before us.
We made it clear that we were not going to entertain this plea in view of the fact that although the point had been taken in the written statement of the bank, it was not agitated before the Labour Court and further was not taken even in the special leave petition.
In the result, the appeal is dismissed.
The order for costs made at the time of the grant of the special leave will stand.
S.C. Appeal dismissed.

summary/full:
The respondent, a clerk of the appellant bank, was entrusted with supervisory work and a general power of Attorney was executed in his favour to endorse Hundies cheques, warranty, Railway receipts, pension bills and other negotiable and mercantile instruments and to prosecute, defend, answer and oppose any suit etc.
on behalf of the appellant bank.
The respondent filed an application before the Labour Court, Rajasthan under section 33C (2) of the , praying for computation of special allowance under the Sastri Award, on the ground that he was discharging supervisory duties.
The Labour Court, allowed supervisory allowance of Rs. 40 p.m. with consequential benefits.
In appeal to this Court the appellant bank ,contended that since the respondent was not called upon to perform the functions enumerated in the power of attorney, he is not entitled to any special allowance.
Dismissing the appeal.
HELD : (i) The payment of a special allowance was called for when an employee discharged duties of a supervisory nature or was accorded the status of a person competent to discharge functions of a supervisory character.
[115d] (ii) Since the Management by the power of Attorney, had placed the respondent in a category of persons with responsibility and entrusted him with functions of a supervisory character and the employee was to discharge that responsibility, he was entitled to supervisory allowance no matter, whether he was actually called upon to discharge such functions or not for a certain period of time.
[1 15F, 11 6B] State Bank of ' Hyderabad vs V. A. Bhinde, [1969] 2 L. L. J. 713, referred to.


judgement:
Appeal No. 344 of 1967.
Appeal from the judgment and order dated July 8, 1966 of the, Bombay High Court in Appeal No. 17 of 1964.
V. A. Seyid Muhammad and section P. Nayar, for the appellant.
section J. Sorabjee, J. R. Gagrat and B. R. Agarwala, for the respondents.
The Judgment of the Court was delivered by Shelat, J.
This appeal, by certificate, arises from the res pondent 's suit in respect of fines and penalties recovered from them by the Collector of Customs, Bombay for the alleged contravention of section 3 of the Imports and Exports (Control) Act, 1947 and.
section 167(8) of the .
The respondents held an import licence dated July 10, 1956 permitting them to import parts and accessories of motor cycles and scooters as per appendix XXVI of the Import Policy Book for July December 1956.
Under the said licence, the respondents, imported certain goods which arrived in two consignments, each containing 17 cases, by two different ships.
According to the respondents, the goods so imported by them were motor cycle parts which their licence authorised them to import.
The Customs authorities, on the contrary.
held, on the examination of the goods, that they constituted 51 sets of "Rixe Mopeds complete in a knocked down condition".
The Deputy Collector of Customs thereupon held an enquiry in pursuance of two show cause notices issued by him.
The result of the enquiry was an order under which the Deputy Collector directed confiscation of the said goods with 'an option to the respondents to pay certain sums in lieu of confiscation and also personal penalties.
That order was passed on the basis that the goods imported were not parts and accessories of motor cycles and scooters permissible under entry 295 of the Schedule to the 560 Import Control Order, but were motor cycles/scooters in completely knocked down condition, prohibited under remark II against entry 294, a licence in respect of goods covered by it would authorise import of motor cycles and Scooters.
The order of the Deputy Collector dated November 19, 1957 reads as under: "On examination of the goods and scrutiny of the documents relating to the Bills of Entry stated above, it was ascertained that M/s. Tarachand Gupta & Bros. had imported 51 sets of "Rixe" Mopeds complete (except tyres, tubes and saddles) in a knocked down condition.
The total number of consignments covered by the aforesaid two Bills of Entry were.
sufficient to give exactly 51 sets complete, Rixe 'Mopeds ' (except for tyres, tubes and saddles which would in any case have required a separate licence).
The packing was also such as to show that those were nothing but "Mopeds" in a disassembled condition, since each of the cases contains components relating to three mopeds.
Moreover, it was found that major components such as the frames, completely fitted with electrical wires and control cables and grips had been imported in equal numbers.
All these went to show that the goods were not imported as spare parts but as complete vehicles in a knocked down condition.
The goods were therefore, considered to be correctly classifiable under item 75(2) of the I.C.T. corresponding to section No. 294, IV of the I.T.O. Schedule.
The licence under which clearance was sought, could not, therefore, be accepted.
" The Deputy Collector rejected the respondents ' contention that the two consignments which arrived in two different ships at different dates should be viewed separately, that the machines were incomplete as they were without tyres, tubes and saddles and therefore they could not be said to constitute motor cycles in knocked down condition.
He held, on the other hand, that though the goods were not in completely knocked down condition it made no difference as the tyres, tubes and saddles were easily obtainable in India and their absence did not prevent the machines being otherwise complete.
He also found that there was a trade practice under which traders were supplying motor cycles without tyres, tubes and saddles unless the purchaser specially asked for these parts.
According to him, the goods could not be regarded as spare parts but were 'Mopeds in disassembled condition".
In the suit filed by the respondents in the High Court against the said order, the Trial Judge held, on the authority of the 561 Secretary of State vs Mask & Co.(1) that an order of a statutory tribunal, such as the Collector of Customs under the , which the statute makes final, subject, of course, to an appeal provided under it, can be set aside in a suit before a civil court on two grounds only, namely, where the provisions of the Act have not been complied with, or where the tribunal has failed to act in conformity with the fundamental rules of judicial procedure.
He rejected the respondents ' contention that the case fell within the first ground and held that however erroneous the Collector 's decision might be since it was within his jurisdiction to decide whether the goods fell under one entry or the other, a civil court had no jurisdiction to grant relief.
He also held that the order could not be said to be without or in excess of jurisdiction and was, therefore, not a nullity.
The order consequently required to be set aside if the respondents were to have any relief, and therefore, article 14 of the Limitation Act, 1908 applied.
On that basis he held the respondents ' suit to be time barred and dismissed it.
We may, at this stage,, mention that in 'a similar matter involving import of spare parts and accessories under a licence relating to entry 295, the Collector 's order, on the basis that the goods fell under entry 294, as the spare parts in question could, it all the different indents were taken together, constituted auto cycles in completely knocked down condition, was held to be bad as "the Collector 's approach to the matter was wholly wrong by a Division Bench of the same High Court in D. P. Anand vs M/s. T. M. Thakore & Co.(2) According to that judgment, the jurisdiction of the Collector was to ascertain whether the goods, such as they were, were properly imported under the licence relating to goods under entry 295, i.e., whether they were spare parts and accessories, and not to go further and find out whether they would, when put together, constitute auto cycles in completely knocked down condition as envisaged by entry 295, and therefore, the order was amenable to interference by the High Court.
The Trial Judge held, on the authority of this judgment that on merits the Collector of Customs was in error in holding the respondents guilty of importing goods not covered by the licence held by them and that the Collector would have been bound by that judgment had it been delivered before he passed the impugned order.
He, however, was of the view that whereas the High Court in D. P. Anand 's case(2) interfered with the order in its writ jurisdiction.
a suit could not lie as the impugned order was within the jurisdiction of the Collector and the mere fact that he applied a wrong entry did not invest the civil court with the jurisdiction to entertain a suit and set aside such an order.
(1) (1940) 67 I.A. 222 (2)Civil appeal No. 4 of 1959, decided on August 17, 1960 (H.C) 562 The Letters Patent Bench of the High Court, following the judgment in Anand 's case,(1) agreed with the Trial Judge that on merits the Collector was in error.
Following that judgment, the Bench also, held that the Collector 's jurisdiction was limited to ascertain whether or not the goods imported by the respondents were spare parts and accessories covered by entry 295 in respect of which they undoubtedly held the licence, .
and therefore, he could not have lumped together the two consignments which, though imported under one licence, arrived separately and were received on different dates and could not have come to the conclusion that the plaintiffs (i.e. the respondents herein) had imported 51 "Rixe" mopeds in a completely knocked down condition.
The, Bench also held that upon the principle laid down in Anand 's case(1) it was not for the Collector to ascertain whether the goods, if assembled together, would constitute 51 "Rixe" Mopeds in C.K.D. condition The respondents were entitled to import the said goods, and therefore, section 167(8) of the did not apply and the respondents consequently could not have been held guilty of breach either of that section or section 3 of the Imports and Exports (Control) Act.
The Bench also held that the decision of this Court in Girdharilal Bansidhar vs Union of India(2) did not overrule but only distinguished the judgment in Anand 's case,(1) and therefore, the binding force of that decision remained unshaken.
Regarding the jurisdiction of civil courts, the Division Bench held that where the question is simply whether one or the other entry applies and the tribunal, to which jurisdiction is entrusted in that behalf, decides it erroneously, even then its order, made final by the statute conferring such jurisdiction, cannot be made the subject matter of a suit.
On the other hand, where its jurisdiction is confined to see whether the importation is under a particular entry or not, but while deciding such a question, the tribunal ,takes into account extraneous considerations, such as an entry which has no bearing upon the question, the case would fall outside the ambit of the powers of th statutory authority.
The question, in other words, would then be, whether the tribunal has exceeded its jurisdiction and therefore acted in non compliance with the provision of the statute under which it has to decide the question.
The Division Bench deprecated the attempt on the part of the Collector in considering the two consignments together and making out a case that the two, when put together, would make it possible to regard the goods as ' "Rixe" Mopeds in C.K.D. condition.
Such 'an attempt, the Bench observed, was "a new classification conjured up by the authorities to rope in the imports as being illegal which according to the terms of the licence and entry No. 295 would be clearly legal".
Lastly, the Division Bench disagreed with the Trial Judge who had held that the article (1) C.A. No. 4 of 1959 decided on Aug. 17, 1960 (H.C.) (2) ; 563 in the Limitation Act applicable was article 14, on the ground that once it was accepted that the order was in excess of jurisdiction it was a nullity, and therefore, there was no question of its having to be set aside.
Following A. Venkata Subba Rao vs Andhra Pradesh, (1) it held that the suit fell under article 62, and therefore, was within time.
Counsel for the Union of India challenged the correctness of ,the judgment of the Division Bench and urged that the had clearly vested in the Collector the authority to decide whether the goods in question fell within entry 295 or not and for which the respondents had been granted the licence.
His decision, subject, of course, to an appeal and revision provided under the Act, being final, could not be challenged in a suit save under the well recognized exceptions that his decision was not in compliance with the provisions of the Act, or that he had failed to follow the fundamental principles of judicial procedure.
The present case, according to him, was one of importing "Rixe" Mopeds in C.K.D. condition, not permissible either under entry 295 or entry 294, and therefore, was a case where the importer,misusing his licence, had attempted to do indirectly what he could not do directly.
There was, according to him, no question of the Collector 'acting in excess of his jurisdiction or in non compliance with the provisions of the Act, and therefore, the Trial Judge was right in holding that no suit lay against his action.
Before we proceed to consider these contentions it is expedient first to look at the provisions of the relevant law.
Under section 3 of the Imports and Exports (Control) Act, 1947, the Central Government by an order can provide for prohibiting, restricting or otherwise controlling inter alia the import of goods of any specified description and all goods to which any such order applies are deemed to be goods of which the import has been prohibited by the and all the provisions of that Act are to have effect accordingly.
The Imports (Control) Order 1955, passed under the power reserved under the Act, by cl.
(3) thereof, provides that no person shall import any goods of the description specified in Sch.
I thereto except under and in accordance with a licence granted by the Central Government or by an officer specified in Sch.
Sub cl.
(2) of cl.
(3) provides that if it is found that the goods imported under a licence do not conform to the description given in such a licence under which they are claimed to have been imported, then without prejudice to any action that may be taken against the licensee under the in respect of such importation, the licence may be treated as having been utilised for importing the said goods.
(1) ; 564 Entries ' 294 and 295 of section II of of Sch.
I of the Import Trade Control Policy for the period July December 1956 are in this connection the relevant entries.
Entry 294 deals with import ,of motorcycles and scooters.
Remark (ii) in its column No. 6 lays down that "Licences granted under this item will not be valid for the import of motor cycles/scooters in a completely knocked down condition".
Remark (iii), however, provides that applications from approved manufacturers for import of motor cycles,/ scooters in C.K.D. condition will be considered ad hoc by the Chief Controller, Imports in consultation with Development Wing.
Entry 295 deals with "Articles (other than rubber tyres and tubes) adapted for use as parts and accessories of motor cycles and motor scooters, except such articles as are adapted for use as parts and accessories of motor cars".
Entry 41 in deals with import of rubber tyres and tubes and other manufactures of rubber not otherwise specified.
Section 167(8) of the provides that goods shall liable to confiscation if the goods, the importation of which is for the time being prohibited or restricted by or under Ch.
IV, are imported contrary to such prohibition or restriction and any person concerned in any such importation shall be liable to penalty prescribed therein.
Section 188 of the Act makes an order.
passed in appeal against the Collector 's order, final subject only to the power of revision under section 191.
The position then is, under 'entry 294 above cited import under the requisite licence of motor cycles and scooters was permitted.
However, a licence permitting import of motor cycles and scooters could not be used for import of motor cycles and scooters in C.K.D. condition.
Even then, the prohibition was not absolute because approved manufacturers could apply and get licences to import motor cycles 'and scooters in C.K.D. condition, albeit on an ad hoc basis.
It is thus clear that entry 294 deals with the import of motor cycles and scooters and the import, though only by approved manufacturers, of motor cycles and scooters in C.K.D. condition.
The entry is complete in itself so far as import of motor cycles 'and scooters complete and assembled and also in C.K.D. condition is concerned.
The words "completely knocked down condition" in the entry are not used in any technical sense, and therefore, must be given their ordinary dictionary meaning, i.e., "made or constructed so as to be capable of being knocked down or taken apart, as for transportation; in parts ready to be assembled".
(see Webster 's New International Dictionary, Vol.
P. 1371 and, also Words and Phrases.
Permanent Edition,% Vol. 23, p. 560).
Under entry 295, except for rubber tyres and tubes for whose import a separate licence could be obtained under entry 41 of 565 Part V, there are no limitations as to the number or kind of parts or accessories which can be imported under a licence obtained in respect of the goods covered thereunder.
Prima facie, an importer could import all the parts and accessories of motor cycles and scooters and it would not be a ground to say that he has committed breach of entry 295 or the licence in respect of the goods described therein, that the parts and accessories imported, if assembled, would make motor cycles and scooters in C.K.D. condition.
There are no remarks against entry 295, as there are against entry 294, that a licence in respect of goods covered by entry 295 would not be valid for import of spares and accessories which, if assembled, would make motor cycles and scooters in C.K.D. condition.
Apart from that, the. goods in question did not admittedly contain tyres, tubes and saddles, so that it was impossible to say that they constituted motor cycles and scooters in C.K.D. condition.
The first two could not be imported and were in fact not imported because that could not be done under the licence in respect of goods covered by entry 295 which expressly prohibited their import and a separate licence under entry 41 of Part V would be necessary.
The third, namely, saddles were not amongst the goods imported.
No doubt, there was, firstly, a finding by the Collector that a trade practice prevailed under which motor cycles and scooters without tyres, tubes and saddles could be sold.
Secondly, the tyres and tubes could be had in the market here and so also saddles, so that if an importer desired, he could have sold these goods as motor cycles and scooters in C.K.D. condition.
The argument was that since there was a restriction in entry 294 against imports of motor cycles and scooters in C.K.D. condition, the importer could not be allowed to do indirectly what he could not do directly.
The argument apparently looks attractive.
But the question is what have the respondents done indirectly what they could not have done directly.
In the absence of any restrictions in entry 295, namely, that a licence in respect of goods covered by entry 295 would not be valid for import of parts and accessories which, when taken together, would make them motor cycles and scooters in C.K.D. condition, the respondents could import under their licence all kinds and types of parts and accessories.
Therefore, the mere fact, that the goods imported by them were so complete that when put together would make them motor cycles and scooters in C.K.D. condition, would not amount to a breach of the licence or of entry 295.
Were that to be so, the position would be anomalous as aptly described by the High Court.
Suppose that an importer were to import equal number of various parts from different countries under different indents and at different times.
and the goods were to reach here in different consignments and on different dates instead of two consignments from the same 566 country as in the present case.
If the contention urged before us were to be correct, the Collector can treat them together and say that they would constitute motor cycles and scooters in C.K.D. condition.
Such an approach would mean that there is in entry 295 a limitation against importation of all parts and accessories of motor cycles and scooters.
Under that contention, even if the importer had sold away the first consignment or part of it, it would still be possible for the Collector to say that had the importer desired it was possible for him to assemble all the parts and make motor cycles and scooters in C.K.D. condition.
Surely, such a meaning has not to be given to entry 295 unless there is in it or in the licence a condition that a licensee is not to import parts in such a fashion that his consignments, different though they may be, when put together would make motor cycles and scooters in C.K.D. condition.
Such a condition was advisedly not placed in entry 295 but was put in entry 294 only.
The reason was that import of both motor cycles and scooters as also parts and accessories thereof was permitted, of the first under entry 294 and of the other under entry 295.
A trader having a licence in respect of goods covered by entry 294 could import assembled motor cycles and scooters, but not those vehicles in C.K.D. condition, unless he was a manufacturer and had obtained a separate licence therefor from the Controller of Imports who, as aforesaid, was authorised to issue such a licence on an ad hoe basis.
Thus the res triction not to import motor cycles and scooters in C.K.D. condition was against an importer holding a licence in respect of goods covered by entry 294 under which he could import complete motor cycles and scooters and not against an importer who had 'a licence to import parts and accessories under entry 295.
If Dr. Syed Mohamad 's contention were to be right we would have to import remark (ii) against entry 294 into entry 295, a thing which obviously is not permissible while construing these entries.
Further, such a condition, if one were to be implied in entry 295, would not fit in, as it is a restriction against import of motor cycles and scooters in C.K.D. condition and not their parts and accessories.
There is, therefore, no question of a licensee under entry 295 doing indirectly what he was not allowed to do directly.
What he was not allowed to do directly was importing motor cycles and scooters in C.K.D. condition under a licence under which he could import complete motor cycles and scooters only.
That restriction, as already observed, applied to a licensee in respect of goods described in entry 294 and not a licensee in respect of goods covered by entry 295.
The result is that when the Collector examines goods imported under a licence in respect of goods covered by entry 295 what he has to ascertain is whether the. goods are parts and accessories, 567 and not whether the goods, though parts and 'accessories, are so comprehensive that if put together would constitute motor cycles and scooters in C.K.D. condition.
Were he to adopt such an approach, he would be acting contrary to and beyond entry 295 under which he had to find out whether the goods imported were of the description in that entry.
Such an approach would, in other words, be in non compliance of entry 295.
The question then is whether such a reading of the two entries is in any way contrary to the decisions of this Court.
In Girdharilal Bansidhar,(1) the principle laid down was that the High Court in its writ jurisdiction does not sit in appeal over the correctness of the decision of the authorities under the on appreciation of entries in the Hand Book or in the Indian Tariff Act.
In that case, the appellant, who had a licence to import iron and steel bolts, nuts, etc., imported nuts and bolts which were the components of 'Jackson Type Single bolt oval plate belts fasteners", which were described in the bill of entry as 'store bolts and nuts '.
The Customs found that these were in reality the actual components of Jackson Type Single belt oval plate belts fasteners, import whereof was totally prohibited.
The Collector, while arriving at his decision, took into account also the fact that washers, the third component of the prohibited article, were imported by a firm owned by the appellant 's relations.
On these facts, this Court held (1) that importing components of a prohibited article was importing the prohibited article, (2) that the evidence that washers imported by the relations of the appellant was considered by the Collector as evidence to confirm his conclusion that the nuts and bolts imported by him were in reality the components of the prohibited article, and (3) that where the decision of the statutory authority is whether an item falls under one or the other entry, the High Court could not interfere with that decision on the groun d that it is erroneous.
That is because when a statute confers power on an authority to decide a particular question, its decision, even if it is erroneous,, is still within its jurisdiction.
What needs to be observed in that decision is that the Collector 's decision was, under which of the two competing entries the imported items fell, that is, whether the goods were bolts and nuts or were components of the prohibited article.
And the Court there laid down the well established principle that the High Court, under article 226, could not interfere with the decision of the authority upon whom jurisdiction to decide the question, whether the goods fell under one or the other entry, was conferred on the ground that it was erroneous.
Further, the nuts and bolts imported by the appellant could only be, used as Components of the prohibited article.
In other words, the import was of parts of the (1) ; 568 prohibited article and therefore of the prohibited article.
It was, therefore, that the Court held (1) that the Customs ' decision was not incorrect, and (2) that the importer could, not be allowed to do indirectly what he could not do directly.
It will be noticed that the Bombay decision in D. P. Anand 's case(1) was not dissented from but only distinguished, and therefore, the High Court in the present case was justified in following it.
It is true, however, that counsel for the appellant there relied on that decision in support of his proposition that a ban on a completed article cannot be read as a ban on the importation of its constituents, which, when assembled, would result in the prohibited article, and this Court pointed out in answer that in D. P. Anand 's case,(1) the imported components could not have when assembled, made up the completed article because of the lack of certain essential parts which admittedly were not available in India and could not be imported.
The real distinction, however, between the two cases was that the decision of the Collector in D. P. Anand 's case(1) was not, as was the decision in Girdharilal 's case, (2) under which of the two competing entries the imported goods fell but that the imported goods in question, if assembled, together, would not be the goods covered by the entry, and therefore, not the goods in respect of which the licence was granted.
Further, the articles in question, even when assembled together, were not prohibited articles as in Girdharilal 's case (2).
Girdhari lal 's case(2) is clearly distinguishable because it is not as if motor cycles and scooters are prohibited articles as was the case there.
The restriction is not against licensees importing motor cycles and scooters under entry 294 and parts and accessories under entry 295 but against the licensees under entry 294 importing motor cycles and scooters in C.K.D. condition.
The question in the instant case was not under which of the two entries, 294 or 295, the goods fell, but whether the goods were parts and accessories covered by entry 295.
In Firm Illuri Subbayya Chetty & Sons vs Andhra Pradesh, ( 3 the suit filed by the appellants was for recovery of a sum paid by way of purchase tax under the Madras General Sales Tax Act, 1939.
The cause of action was that the amount had been illegally recovered.
Relying on section 18A of the Act, this Court held that the expression "any assessment made under this Act" in that section was wide enough to cover all assessments made by the appropriate authorities under the Act and even if an assessment was incorrect, so long as it was within the jurisdiction of the authorities, it was not non compliance of the statute, and therefore, was not covered by the principle laid down in the case of Mask & Co.(4) The Court observed: (1) C.A. 4 of 1959 dt.
Aug. 17, 1960(H.C.) (2) ; (3) [1964] 1.S.C.R. 752.
(4) [1948] L.R. 67 I.A. 222.
569 "There is no justification for the assumption that if a decision has been made by a taxing authority under the, provisions of a taxing statute, its validity can be chal lenged by a suit on the ground that it is incorrect on merits and as such it can be claimed that the provisions of the said statute have not been compiled with." This principle was repeated in Dhulabliai vs Madhya Pradesh(1) where it was held that where a statute gives finality to the orders of the special tribunal the civil court 's jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit, i.e., to correct an assessment which is erroneous.
The Court also pointed out that in the Firm Illuri Subbayya Chetty & Sons ' case, (2) it had been said that Mask & Co. 's case(3) was an authority for the proposition that non compliance with the provisions of the statute would render the entire proceedings before the authority illegal and without jurisdiction.
The case of Panthulu vs Andhra Pradesh (4) illustrates as to when an authority can be said to have acted in non compliance with the provisions of the statute under which it derives its authority.
Section 3(2) of the Madras Estates Land (Reduction of Rent) Act, XXX of 1947 authorised the State Government to fix the rates of rent in respect of each class, of ryoti land in each village in the State after considering the recommendations of the special officer and the remarks of the Board of Revenue.
Section 8(1) provided that no order passed under section 3(2) could be challenged in a civil court.
The suit filed by the appellants disputed the legality of the notification reducing the rates of land in respect of the dry delta ryoti lands in a village on the ground that the class of land had been determined to be delta ryoti lands on the basis only of the settlement register which did not contain any entry with respect to the village in question, that the settlement register could not be treated as conclusive and that proper factual enquiry was necessary. 'Me High Court held that the suit was not main tainable by reason of section 8(1).
Dua, J., speaking for the Bench.
held that under section 2 the special officer had to determine the average rate of cash rent per acre for each class of ryoti land such as wet, dry or garden. 'Ibis could only be done on relevant material.
The special officer, however, had based his determination on a report of his assistant, who had considered the entry in the settlement register of another village.
That meant that the special officer had made his determination on irrelevant evidence, i.e., on the register which did not contain any data with respect to the land in the village in question.
On these facts he hold that the (1) ; (3) [1948] L.R.67 I.A. 222.
(2) ; (4) [1970] 2 S.C.R.714 570 .determination by the special officer was based on no evidence with the result that it was in violation of the fundamental principles of judicial procedure.
A fortiori, the order of the Government made, under section 3(2) on the basis of the recommendations of the special officer was not in conformity with the provisions of the Act and was therefore outside the purview of section 3(2) and consequently section 8(1) was inapplicable.
Thus, sec.
8(1) was held not to apply because the Government 's determination could not be said to be one under section 3 (2).
The words "a decision or order passed by an officer of Customs under this Act" used in section 188 of the must mean a real and not a purported determination.
A determination, which takes into consideration factors which the officer has no right to take into account, is no determination.
This is also the view taken by courts in England.
In such cases the provision excluding jurisdiction of civil courts cannot operate so as to exclude an inquiry by them.
In Anisminic Ltd. vs The Foreign Compensation Commission(1) Lord Reid at pages 213 and 214 of the Report stated as follows : "It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision 'is a nullity.
But in such cases the word "jurisdiction" has been used in a very wide sense, and I have come to the conclusion that it is better not to use the term except in the narrow and original sense of the tribunal being entitled to enter on the enquiry in question.
But there are many cases where, although the tribunal had jurisdiction to enter on the enquiry, it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity.
It may have given its decision in bad faith .
It may have made a decision which it had no power to make.
It may have failed in the course of the enquiry to comply with the requirements of natural justice.
It may in perfect good faith have misconstrued the provisions giving it power to art, so that it failed to deal with the question remitted to it and decided some question which was not remitted to it.
It may have refused to take into account something which it was required to take into account.
Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account.
I do not intend this list to be exhaustive.
But if it decides a question remitted to it for decision without committing any of these errors it is as much entitled ,to decide that question wrongly as it is to decide it rightly." (1) [1969]1 All E.R. 208.
571 To the same effect are also the observations of Lord Pearce at page 233.
R, vs Fulham, Hammersmith and Kensington Rent Tribunal(1) is yet another decision of a tribunal properly embarking on an enquiry, that is, within its jurisdiction, but at the end of it making an order in excess of its jurisdiction which was held to be anullity though it was an order of the kind which it was entitled to make in a proper case.
The principle thus is that exclusion of the jurisdiction of the civil courts is not to be readily inferred.
Such exclusion, however, is inferred where the statute gives finality to the order of the tribunal on which it confers jurisdiction and provides for adequate remedy to do what the courts would normally do in such a proceeding before it.
Even where a statute gives finality, such a provision does not exclude cases where the provisions of the particular statute have not been complied with or the tribunal has not acted in conformity with the fundamental principles of judicial procedure The word "jurisdiction" has both a narrow and a wider meaning.
In the sense of the former, it means the authority to embark upon an enquiry; in the sense of the latter it is used in several aspects, one of such aspects being that the decision of the tribunal is in non compliance with the provisions of the Act.
Accordingly, a determination by a tribunal of a question other than the one which the statute directs it to decide would be a decision not under the provisions of the Act, and therefore, in excess of its jurisdiction.
The respondents ' licence admittedly authorised them to import goods covered by entry 295.
They could, therefore, legitimately import, on the strength of that licence, all and several kinds of parts and accessories of motor cycles and scooters.
The only question, therefore, before the Collector was whether the respondents ' licence covered the goods imported by them, i.e., whether the goods were parts and accessories.
If they were, the imports were legitimate and no question of their being nut covered by the licence or the respondents having committed breach of section 3 of the Imports and Exports (Control) Act or section 167(8) of the could possibly arise.
What the Collector, however, did was that he put the two consignments together and held that they made up 51 'Rixe ' Mopeds in C.K.D. condition and were, for that reason, not the articles covered by entry 295 but articles prohibited under remark (ii) of entry 294.
But entry 294 deals with the motor cycles and scooters complete and assembled.
Remark (ii) against that entry prohibits an importer who held a licence to import motor cycles and scooters from importing motor cycles and scooters in C.K.D. condition.
Remark (ii) containing that prohibition had nothing to do with entry 295 which did not (1) 572 contain any limitations or restrictions whatsoever against imports of parts and accessories.
That being so, if an importer has imported parts and acces sories, his import would be of the articles covered by entry 295.
The Collector could not say, if they were so covered by entry 295, that, when lumped together, they would constitute other articles, namely, motor cycles and scooters in C.K.D. condition.
Such a process, if adopted by the Collector, would mean that he was inserting in entry 295 a restriction which was not there.
That obviously he had no power to do.
Such a restriction would mean, that though under a licence in respect of goods covered by entry 295 an importer could import parts and accessories of all kinds .and types, he shall not import all of them but only some, so that when put together they would not make them motor cycles and scooters in C.K.D. condition.
In the present case even that was not so because he would have to buy tyres, tubes and saddles to convert them into motor cycles and scooters into C.K.D. condition.
That would be tantamount to the Collector making a new entry in place of entry 295 which must mean non compliance of that entry and acting in excess of jurisdiction during the course of his enquiry even though he had embarked upon the enquiry with jurisdiction.
, In our view that was precisely what the Collector did.
This is, therefore, not one of those cases where between ,two competing entries the statutory authority applied one or the ,other, though in error, and where, a civil court cannot interfere.
In this view the order was in non compliance of the provisions ,of the statute, and therefore. was covered by the exceptions laid down in Mask & Co. 's case(1).
It was not an order in respect of which the Collector was invested with jurisdiction.
That being so, 'the provision excluding the jurisdiction of the civil courts was not applicable.
Indeed, the order was a nullity and article 14 of the Limitation Act of 1908 could not be applied to hold the suit time barred.
Even if Art, 14 applied, it would not be time barred, if, as the High Court pointed out, the date of the appellate order was taken into consideration.
The judgment of the Division Bench of the High Court, there fore, must be upheld.
Consequently, the appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
(1) [1948] L.R. 67 IA.

dataset_name: IN-Abs

summary/full:
Under cl. 3 of the Imports (Control) Order, 1955, passed under section 3 of the Imports and Exports (Control) Act, 1947, no person shall import any goods of the description specified in Sch.
I except in accordance with a licence, and if it was found that the goods imported did not conform to the description in the licence, then, without prejudice to any action that may be taken against the licensee under the Sea Customs Act, such goods would be treated as having been imported without a valid licence in that behalf.
Under Entry 294 of section 11 of Part IV of Sch.
I of the Import Trade Control Policy (July to December 1956), import of motor cycles and scooters was permitted under an appropriate licence, but such a licence could not be used for their import in a completely knocked down (C.K.D.) condition except by approved manufacturers.
That is, there was no absolute phohibition for their import in C.K.D. condition.
The words completely knocked down conditions are not used in any technical sense and have the dictionary meaning of "made or constructed so as to be capable of being knocked down or taken apart as for transportation; in parts ready to be assembled".
Under Entry 295, except for rubber tyres and tubes, for whose import a separate licence could be obtained, there are no limitations as to the number or kind of parts or accessories of motor cycles and scooters which can be imported under a license obtained in respect of the goods.
There are no remarks against this entry as there are against Entry 294, that the licence would not be valid for import of spares and accessories which, if assembled, would make motor cycles and scooters The respondents ' licence authorised them to import goods covered by Entry 295, and they imported certain goods which arrived in two different consignments and on two different dates.
They did not contain tyres, tubes and saddles so that it was impossible to say that they constituted motor cycles and scooters in C.K.D. condition.
The Collector of Customs and the Central Board of Revenue in appeal, however, put the two consignments together and held that trade practice did not require the supply of tyres and tubes and saddles while supplying motor cycles, and that therefore they made up mopeds in C.K.D. condition and were, for that reason, not the articles covered by Entry 295 but articles prohibited under Entry 294.
The goods were directed to be confiscated with an option to the respondents to pay certain 'sums in lieu of confiscation, and personal penalties.
The respondent filed a suit in the High Court and the trial Judge dismissed it on the authority of Secretary of State vs Mask & Co. [1948] L.R. 67 I.A. 222, and that the suit was time barred under article 14 of the Limitation Act.
In appeal, the Divisional Bench followed Anand vs Thakore & Co., a decision of that High Court, and allowed the appeal.
In appeal to this Court, 558 HELD: (1) The mere fact that the goods imported by the respondents wereso complete that when put together would make motor cycles and scooters in C.K.D. condition would not amount lo a breach of the licence or of entry 295.
The restriction not to import motor cycles and scooters in C.K.D. condition was against an importer holding a licence in respect of the goods covered by entry 294 under which he could import complete and assembled motor cycles and scooters, and not against an importer who had a licence to import parts and accessories under entry 295.
[565 G H; 566 E] (2)When the Collector examines goods imported under a licence in respect of goods covered by Entry 295, what he has to ascertain is whether the goods are parts and accessories, and not whether the goods, though parts and accessories, are so comprehensive that if put together would constitute motor cycles and scooters in C.K.D. condition, because, it would then mean that there is in the entry a limitation against importation of all parts, and accessories of motor cycles and scooters.
Such an approach, would be acting contrary to and beyond entry 295, and in non compliance of the entry and would lead to the anomalous result that even if the importer had sold away one consignment or part of it, the Collector could still say that had the importer desired it was possible for him to assemble all parts and make motor cycles and scooters in C.K.D. condition.
[566 A C, H; 567 A B] (3)This Court in Girdhari Lal Bansidhar vs Union of, India; , , laid down that the High Court under article 226 of the Constitution, could not, on the ground that it was erroneous, interfere with the decision of the authority upon whom jurisdiction was conferred to decide the question whether the goods fell under one or other entry, that is, under which of two competing entries the goods fell.
This Court also held that the import of parts of a prohibited article was import of the prohibited article, and that the importer could not be allowed to do indirectly what he could not do directly, and distinguished the case in Anand vs Thakore & Co. In Anand 's case, it was held that the jurisdiction of the Collector was only to ascertain whether the goods were spare parts and accessories and not to find out whether if put together they would constitute auto cycles in C.K.D. condition.
[567 B C; 568 B E] (4)In the present case also the question before the Collector was whether the respondents ' licence covered the goods imported by them, that is; whether the goods were parts and accessories.
It is not, therefore, one of those cases where between two competing entries the statutory authority applied one or the other and where a civil court cannot interfere even if the statutory authority committed an error., [572 C E] (5) Exclusion of jurisdiction of Civil Courts is not to be readily inferred.
Such exclusion is inferred when the statute gives finality to the order of the tribunal on which it confers jurisdiction and provides for adequate remedy to do what the courts would normally do in such a proceeding before it.
Even where the statute gives finality such a provision does not exclude cases where the provisions of the particular statute have not been complied with or the tribunal has not acted in conformity with fundamental principles of judicial procedure, and a determination by a tribunal of a question other than the one which the statute directs it to decide would be a decision not under the provisions of the Act.
[571 B E] Firm illuri Subbayya Chetty & Sons vs Andhra Pradesh, ; , Dhulabhai vs Madhya Pradesh, [1968] 3 S.C.R. 662, Panthulu vs Andhra Pradesh, ; , Anisminic Ltd. vs Foreign Com 559 pensation Commissioner; , and R. vs Fulham, Hammersmith and Kensington Rent Tribunal, , referred to.
(6)Therefore, the decision in the present case was covered by the exception laid down in Mask & Co. 's case and the provision excluding the jurisdiction of the civil court would not be applicable.
Since non compliance with the provisions of the Act would be acting in excess of jurisdic tion the Collector 's order was a nullity and article 14 of the Limitation Act, 1908, could not be applied.
Even if it was applicable, the suit would not be barred if the date of the appellate order of the customs authorities was taken into consideration.
[572 E F]


judgement:
Appeal No. 1369 of 1968.
Appeal from the judgment and order dated August 1, 1967 of the Andhra Pradesh High Court in Case Referred No. 68 of 1964.
section T. Desai, J. Ramanurthi, R. N. Sachthey and B. D. Sharma, for the appellant.
M. Natesan and K. Jayaram, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from the judgment of the Andhra Pradesh High Court in a case referred under section 66(1) of the Income Tax Act, 1922 (hereinafter referred to as the Act).
The respondent who is the assessee is a registered firm running a hotel at Secunderabad with branches at Sultan Bazar and King Kothi in Hyderabad.
During the previous year ending 30th September, 1959 relating to the assessment year 1960 61, the assessee incurred an expenditure of Rs. 57,154/ in installing sanitary fittings and of Rs. 1,370/ for pipe line fittings.
The assessee claimed development rebate on these two items at the rate of 25 per cent under section 10(2)(vi b) of the Act amounting in the aggregate to Rs. 14,629/ .
The Income Tax Officer disallowed the claim.
On appeal, the Appellate Assistant Commissioner upheld the disallowance.
An appeal was taken to the Appellate Tribunal.
The Tribunal rejected the appeal holding that the definition of "plant" must necessarily be the same, whether it was for claiming depreciation under section 10(2)(vi) or for development rebate under section 10(2)(vi b).
Accordingly, it was held that the sanitary and pipe line fittings did not fall within the meaning of the word "plant".
On being moved under section 66(1) of 170 the Act, the following question was referred for the opinion of the High Court : "Whether the sanitary fittings and pipelines, installed in the King Kothi branch of the Hotel, constituted 'plant ' within the meaning of sec.
10(5) of the Indian Income tax Act and whether the assessee is entitled to develop ment rebate in respect thereof under sec.
10(2) of the Act The High Court answered the question in the affirmative and in favour of the assessee.
The only question that was argued before the High Court and which has been debated before us is whether sanitary and pipe line fittings in a building which is run as a hotel would fall within the meaning of the word "plant" in section 10(2)(vi b) of the Act.
Section 10(1) of the Act provides that tax shall be payable by an assessee in respect of the profits and gains of any business profession or vocation.
Sub section (2) gives the allowances which have to be made in computation of such profits and gains.
Clause (vi) of that sub section relates to the depreciation in respect of "such buildings, machinery, plant or furniture being the property of the asses see".
Clause (vi b) of section 10(2) is as follows: "(vi b) in respect of a new ship acquired or new machinery or plant installed after the 31st day of March, 1954, which is wholly used for the purposes of that business carried on by the assessee, a sum by way of development rebate in respect of the year of acquisition of the ship or of the installation of the machinery or plant, equivalent to. . .
Section 10(5) provides inter alia that in sub section (2) " plant" includes "vehicles, books, scientific apparatus and surgical equipment purchased for the purpose of the business, profession or vocation".
171 The main argument of the learned counsel for the Commissioner of Income Tax who is the appellant is that the word "plant" should not have been given a wide meaning and should have been interpreted according to the common understanding in commercial circles among persons who deal in plant and machinery.
It is asserted that the development rebate cannot be claimed in respect of the items which have become a part of the building itself.
It has also been pointed out that the assessee while claiming depreciation allowance has included the assets in question under the head "furniture and fittings" the rate claimed being 9 per cent which was duly allowed by the Income Tax Officer.
This rate of 9 per cent was applicable under Rule 8 only to furniture and fittings used in hotels etc.
If the assets were to be treated as plant, only the general rate of 7 per cent would be applicable.
The definition of "plant" must necessarily, therefore, be the same whether it be for claiming depreciation under section 10(2)(vi) or for development rebate under section 10(2)(vi b).
It has also been suggested that the primary meaning of the word "plant" has connection with mechanical or industrial business or manufacture of finis hed goods from raw goods and that sanitary and pipe line fittings could not possibly satisfy those conditions.
Now it is well settled that where the definition of a word has not been given, it must be construed in its popular sense if it is a word of every day use.
Popular sense means "that sense which people conversant, with the subject matter with which the statute is dealing, would attribute to it".
In the present case, section 10(5) enlarges the definition of the word "plant" by including in it the words which have already been mentioned before.
The very fact that even books have been included shows that the meaning intended to be given to "plant" is wide.
The word "includes" is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute." When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and import but also those things which the interpretation clause declares that they shall include.
The word "include" is also susceptible of other constructions which it is unnecessary to go into.
172 The case J. Lyons and Company Limited vs Attorney General (1) relied upon by the learned counsel for the appellant apart from being distinguishable hardly supports the contention of the appellant.
In that case, it was I held that electric lamps and fittings in a tea shop were not part of the apparatus used for carrying on the business but were part of the setting in which the business was carried on, and, therefore, were not "plant", within the meaning of certain provisions of the War Damage Act, 1943.
It was observed at page 286 "if these articles are plant, it can only be by reason that they are found on premises exclusively devoted to trade purposes.
Trade plant alone need be considered". ' The meaning of "plant" as given in Yar mouth vs France (2) was accepted as correct.
According to that meaning "plant" includes whatever apparatus or instruments are used by a businessman in carrying on his business".
In our judgment, the more apposite decision is that of the Court of Appeal in Jarrold (Inspector of Taxes) vs John Good & Sons Ltd. (3) There the nature of the assessee 's business required that its office accommodation should be capable ' of sub division into a number of rooms varying in size etc.
according to the requirements from time to time of the agencies which it carried on.
The office accommodation consisted of a large open floor space in which partitions could be erected so as to subdivide the floor space into a number of rooms of any size.
Certain partitions were made which were screwed to the floor and ceiling only and could be easily moved if it was desired to alter the size of number of the rooms.
The question was whether these partitions were plant within sections 279 and 280 of the English Income Tax Act 1952, so as to entitle the company to allowances under those sections.
There the material words in the statute were "where the person carrying on a trade in any year of assessment has incurred expenditure on the provision of machinery or plant for the purposes of the trade.
" It was held that the partitions were "plant" as they were used in the carrying out of the company 's trade or business.
Donovan, L.J. held that the partitions were used to enable the trader to cope with the vicissitudes of (1) 1.
(2) (3) 173 the business as it increased and diminished and relied on the finding of the commissioners that the flexibility of accommodation which the partitions provided was a commercial necessity for the company.
Further illustrations were given of assets which would fall within the meaning of "plant".
"The heating installation of a building may be passive in the sense that it involves no moving machinery, but few would deny it the name of plant".
The same thing could, no doubt be said of many air conditioning and water softening installations".
It cannot be denied that the business of hotelier is carried on by adapting a building or premises in a suitable way to be used as a residential hotel where visitors come and stay and where there is arrangement for meals and other amenities are provided for their comfort and convenience.
To have sanitary fittings etc.
in a bath room is one of the essential amenities or conveniences which are normally provided in any good hotel, in the present times.
If the partitions in Jarrold 's case (supra) could be treated as having been used for the purpose of the business of the trader, it is incomprehensible how sanitary fittings can be said to have no connection with the business of the hotlier.
He can reasonably expect to get more custom, and earn larger profit by charging higher rates for the use of rooms if the bath rooms have sanitary fittings and similar amenities.
We are unable to see how the sanitary fittings in the bath rooms in a hotel will not be "plant" within s.10(2)(vi b) read with Section 10(5) when it is quite clear that the intention of the Legislature was to give it a wide meaning and that is why, articles like books and surgical instruments were expressly included in the definition of "plant".
In decided cases, the High Courts have rightly understood the meaning of the term "Plant" in a wide sense.
(See Commissioner of ' Income tax, U.P. vs Indian Turpentine and Rosin Co. Ltd.).
(1) If the dictionary meaning of the word "plant" were to be taken into consideration on the principle that the literal construction of a statue must be adhered to unless the context renders it plain that such a construction cannot be put on the words in question this is what is stated in Webster 's Third New International Dictionary: (1) 17 4 "Land, buildings, machinery, apparatus and fixtures employed in carrying on trade or other industrial business.
It is, however, unnecessary to dwell more on the dictionary meaning because looking to the provisions of Act, we are satisfied that the assets in question were required by the nature of the hotel business which the assessee was carrying on.
They were not merely a part of the setting in which hotel business was being carried on.
The High Court was right in not accepting the reasoning of the Tribunal based on the rates relating to depreciation under s.10(2)(vi) and the assessee having claimed that the sanitary and pipe line fittings fell within the meaning of "furniture and fittings ' in Rule 8(2) of the Rules.
It has been rightly observed that the Rules were meant only for the purpose of carrying out the provisions of the Act and they could not take away what was conferred by the Act or whittle down its effect.
If the assessee had claimed higher depreciation allowance that would not detract from the meaning of the word plant in clause (vi b) of section 10(2).
In the result, this appeal fails and it is dismissed with costs.
V.P.S. Appeal Dismissed.

summary/full:
During the assessment year 1960 61, the assessee, a registered firm running hotels, incurred expenditure in installing sanitary and pipeline fittings in its hotels.
On the question whether such fittings in a building run as a hotel fell within the meaning of the word 'plant ' in section 10(2)(vi b) of the Income tax Act, 1922, and the assessee was therefore entitled to development rebate under that sub section, the High Court, in reference, answered in favour of the assessee.
Dismissing the appeal to this Court, HELD: (1) Apart from the dictionary or literal meaning of the word 'plant ', the context of the provisions of the Act shows that sanitary and pipe line fittings are 'plant ' under section 10(2)(vi b) read with section 10(5).
[173H; 174A B] In computing the profits and gains of a business under section 10(1) o the Act allowances by way of depreciation in respect of 'plant ' under section 10(2)(vi) and by way of development rebate in respect of 'plant ' under section 10(2)(vi b) have to be made.
Under section 10(5), 'plant ' includes vehicles, books, scientific apparatus and surgical equipment purchased for the purpose of the, business profession or vocation.
Where a word is not defined in a statute, it must be construed in its popular sense, that is, that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it.
The word 'includes ' is generally used to enlarge the meaning of words or phrases used in the statute so that, words and phrases may be construed as comprehending not only such things as they signify according to their nature and import, but also these things which the interpretation clause declares that they shall include.
The fact that even books have been included in 'plant ' shows that the meaning given to 'plant ' is wide.
It should cover sanitary and pipe line fittings.
[170E H; 171E H, 173F] To have such fittings in a bath room is one of the essential amenities or conveniences which are normally provided in any good hotel, and the hotelier can reasonably expect to get more custom and earn a larger profit by charging higher rates.
Therefore, the fittings in the present case, were not merely a part of the setting in which the hotel business was being carried on, but were required for the purpose of the hotel business.
[173C G] C.I.T., U.P. vs Indian Turpentine and Rosin Co. Ltd., (1 970) , approved.
Jarrold (Inspector of Taxes) vs John Good & Sons Ltd., , applied.
169 J. Lyons Co. Ltd. vs Attorney General, and Yar mouth vs France, , referred to.
(2) The fact that the assessee while claiming depreciation allowance had included the fittings in question under the head 'furniture and fittings ' and claimed higher depreciation allowance than what would be applicable to 'plant ', would not detract from the meaning of the word 'plant ' in section 10(2)(vi b).
[174C E]


judgement:
Appeal No. 1899 of 1967.
Appeal by special leave from the judgment and order dated August 24, 1966 of the Calcutta High Court in Income tax Reference No. 91 of 1962.
G. C. Sharma, F. Kuwnaria, B. R. Diwan and P. K. Mukherjee, for the appellant.
Jagadish Swarup, Solicitor General, P. L. Juneja, R. N. Sachthey and B. D. Sharma, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from the judgment of the Calcutta High Court in an Income tax Reference.
The assessee who is the appellant is a public limited company doing the business of jute and manufacturing of jute goods.
The method of accounting followed by the assessee is the mercantile system.
During the assessment year 1955 56 (the previous year ended on 31st December, 1954), the assessee claimed a deduction of Rs. 1,49,776/on account of sales tax determined to be payable by the sales tax authorities on the sales made by the assessee during the.
aforesaid previous year.
The sequence of dates may be mentioned.
The income tax return was filed on 13th January, 1956.
The demand notice was served by the Sales Tax authorities on the 21st November 1957.
On 9th November, 1959, the assessee filed a revised return claiming the aforesaid deduction.
The assessee had taken the order by which the demand for such tax had been created to the higher departmental authorities, as it was contesting its liability to the extent that had been determined.
The Income tax Officer, however, completed the assessment on 11th March, 2 7 9 1960 before any final decision was given in the proceedings relating to the assessment of sales tax.
According to the Income Tax Officer, the assessee was not entitled to claim the deduction of the aforesaid amount of sales tax inasmuch as it had denied its liability to pay that amount and had made no provision in its books with regard to the payment of that amount.
The Appellate Assistant Commissioner confirmed the order of the Income tax Officer.
The Appellate Tribunal dismissed the,, appeal of the assessee.
The following question of law was referred by the Tribunal for the opinion of the High Court: "Whether on the facts and in the circumstances of the case, amount of Rs. 1,49,776/ .
which was claimed by the assessee as a deduction on account of sales tax was deductible as a business expense?" The High Court was of the opinion that unpaid and disputed sales tax liability could not form the basis of a claim for deduction for the purposes of income tax.
The reasoning of the High Court mainly was that for the purpose of claiming a deduction under section 10(2) (xv) or the Income Tax Act, 1922 (hereinafter called the "Act"), mere legal liability was not enough.
There had to be an expenditure in the first place and it must be laid Out or expended wholly and exclusively for the purpose of such business.
The High Court further held that unpaid and disputed sales tax could not be validly deducted in the computation of business income even under section 10 (1) of the Act.
It has been submitted on behalf of the assessee that sales tax paid or unpaid would be admissible deduction under section 10 (2)(xv) as well as under section 10 (1).
It is pointed out that if the method of accounting adopted by the assessee is cash system,, it would qualify for deduction only in the year in which it has been actually paid.
If the method of accounting is mercantile system, then the deduction will be permissible in the year to which the liability relates irrespective of the point of time wheel the liability has actual been discharged.
Section (10)5 provides that in sub section (2) "paid" means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed, under the section.
The argument proceeds that in order 19 L1245 Su CI/71 280 therefore, that sales tax may qualify for deduction under section 10 (2) (xv), it has to be in the nature of an 'expenditure ' which has either been actually paid during the year of account or for the payment of which, the liability has been incurred in the accounting year, according as the method of accounting followed by the assessee is cash system or mercantile system.
It is indisputable that the amount of sales tax paid or payable by the assessee is an 'expendi ture ' within the meaning of section 10 (2) (xv).
The amount in question was thus a kind of expenditure about which there can be no doubt that it had been laid out or expended wholly or exclusively for the purpose of business carried on by the assessee.
The submission on behalf of the assessee in the alternative is that apart from valid deductibility of sales tax as an expenditure under section 10 (2) (xv) of the Act, it is a permissible deduction even under section 10 (1).
The profits of a business which are to be assessed to tax must be real profits and they have to, be ascertained on ordinary principles of commercial trading and commercial accounting.
Where an assessee is under a liability or is bound to make certain payment from the gross receipts, the profits and gains can only be net amount after 'such an amount is deducted from the gross profits or receipts.
In Commissioner of Income tax, West Bengal II vs Royal Boot House,(1) it was held that where the assessee followed the mercantile system of accounting and, without disputing the liability to pay the Sales Tax had made a provision for its payment in its account even though he had not actually paid the tax over to the authorities, the assessee was entitled to deduction in respect of the provision for sales tax from his income under section 10(2) (xv) of the Act.
It was, pointed out that under the provisions of the Sales Tax statutes, the liability to pay the tax was not dependent upon assessment or demand but was an obligation to pay the tax either annually, quarterly or monthly, as the case might be.
This case was and has been sought to be distinguished by the Revenue on the ground that the liability to pay the Sales Tax had not been disputed and the assessee had made a provision for its payment in its account As, will be presently (1) 281 seen this distinction is without substance and does not affect the true legal position.
Now under all sales tax laws including the statute with which we are concerned, the moment a dealer makes either purchases or sales which are subject to taxation, the obligation to pay the tax arises and taxability is attracted.
Although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax is independent of the assessment.
It is significant that in the present case, the liability had even been quantified and a demand had been created in the sum of Rs. 1,49,776/ by means of the notice dated 21st November, 1957 during the pendency of the assessment proceedings before the Income Tax Officer and before the finalisation of the assessment.
It is not possible ' to comprehend how the liability would cease to be one because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the contention of the assessee did not prevail with regard to the quantum of liability etc.
An assessee that follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains were being computed.
It can again not be disputed that the liability to payment of sales tax had accrued during the year of assessment even though it had to be discharged at a future date.
In Pope The King Match Factory vs Commissioner of Income tax, Madras (1) a demand for excise duty was served on the assessee and though he was objecting to it and seeking to get the order of the Collector of Excise reversed, he debited that amount in his accounts.
on the last day of his accounting year and claimed that amount as a deductible allowance on the ground that he was keeping his accounts on the mercantile basis.
The Madras High Court had no difficulty in holding that the, assessee had incurred an enforceable legal liability on and from the date on which he received the Collector 's demand for payment and that his endeavor to get out of that liability by preferring appeals could not in any way detract from or retard the efficacy of the liability which (1) 28 2 had been imposed upon him by the competent excise authority.
In our judgment, the above decision lays down the law correctly.
The main contention of the learned Solicitor General is that the assessee failed to debit the liability in its books of accounts and, therefore, it was debarred from claiming the same as deduction either under section 10 (1) or under section 10 (2) (xv) of the Act.
We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although under the law, a deduction must be allowed by the Income Tax Officer, the assesses will lose the right of claiming or will be debarred from being allowed that deduction.
Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter.
The assessee who was maintaining accounts on the mercantile system was fully justified in claiming deduction of the sum of Rs. 1,49,776/being the amount of sales tax which it was liable under the law to pay during the relevant accounting year.
it may be added that the liability remained in tact even after the assessee had taken appeals to higher authorities or Courts which failed.
The appeal is consequently allowed and the judgment of the High Court is set aside.
The question which was referred is answered in favour of the assessee and against the Revenue.
The assessee will be entitled to costs in this Court and in the High Court.
Appeal allowed.

summary/full:
The appellant was a public limited company doing the business of jute and manufacturing of jute goods.
It followed the mercantile system of accounting.
Before the Income tax Officer in connection with the assessment year 1955 56 the appellant claimed a deduction on account of assessed sales tax.
The demand of sales tax waS contested by the appellant before the higher sales tax authorities but before the matter was finalised the Income tax Officer completed the assessment.
He disallowed appellant 's claim for deduction of sales tax on the ground that the liability, to pay sales tax had not been accented by the appellant and no provision had been made in its books with regard to payment of the assessed amount.
The authorities Linder the Act dismissed the appeals.
The High Court in reference was of the opinion that unpaid and disputed sales tax liability could not form the basis of a claim for deduction In appeal by special leave to this Court the appellant submitted that sales tax paid or unpaid would be admissible deduction under s.10(2)(xv) as well as section 10(1) of the Income tax Act, 1922, and that where the mercantile system of accounting was observed the deduction would be permissible in the year to which the liability relates irrespective of the point of time when the liability has been actually discharged.
HELD: Under all sales tax laws including the statute applicable to the present case the moment a dealer makes either purchase or sales which are subject to taxation, the obligation to pay tax arises and taxability is attracted.
Although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax is independent of the assessment.
In the present case the liability had even been quantified.
The liability could not cease to be one merely because the assessee had taken proceedings before higher authorities.
An assessee that follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains were being computed even though it had to be discharged at a future date.
[281B F] Commissioner of Income tax West Bengal II vs Royal Boot House, and Pope The King Match Factory vs Commissioner of Income tax Madras, , applied.
278 The contention that since the assessee had failed to debit the liability in its books of accounts, it was debarred from claiming the same as deduction either under s.10(1) or s.10(2)(xv) of the Act could not be accepted.
Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can existence or absence of entries in the books of accounts be decisive or conclusive in the matter.
[282 C E] The appeal must accordingly be allowed.