judgement:
titions Nos. 133, 165, 169 172, 185, 218, 219, 227, 228, 230,239, 252, 253, 248 and 249 1968.
Petition under article 32 of the Constitution of India for the enforcement of the fundamental rights.
S.V. Gupte, S.K. Mehta and K.L. Mehta, for the petitioners (in W.P. No. 133 of 1968).
C.D. Garg, S.K. Mehta and K.L. Mehta, for the petitioners (in W.P. No. 165 of 1968).
Harder Singh, for the petitioners (in W.Ps.
Nos. 169 and 170 of 1968).
V.C. Mahajan, S.K. Mehta and K.L. Mehta, for the petitioners (in W.Ps.
171,172, 218, 219, 227, 228, 230, 239, 248, 249, 252 and 253 of 1968).
M.C. Chagla, A.N. Sinha and B.P. Jha, for the petitioners (in W.P. No. 185 of 1968).
Niren De, Solicitor General, O.P. Malhotra and R.N. Sachthey, for the respondents (in W.P. Nos. 133 and 165 of 1968).
A nand Saroop, Advocate General for the State of Haryana and R.N. Sachthey, for the respondents (in W.P. Nos. 218, 219, 227 & 228 of 1968).
O.P. Malhotra and R.N. Sachthey, for the respondents (in W.P. Nos.
169 to 172 of 1968).
R.N. Sachthey,, for the respondents (in W.P. Nos. 185, 230, 239, 248, 249, 252 and 253 of 1968).
B. Datta and P.C. Bharatari, for the interveners (in W.P. No. 165 of 1968).
546 The Judgment of the Court was delivered by Hidayatullah, C.J.
These are 17 petitions challenging the validity of the Punjab General Sales Tax (Amendment and Validation) Act, 1967 (Act No. 7 of 1967) by the Punjab Legislature and the Punjab Sales Tax (Haryana Amendment and Validation)Act, 1967.
Thirteen of these petitions challenge the Punjab Amendment Act and four challenge the Haryana Amendment Act.
The petitioners are firms or companies dealing in cotton or oil seeds.
Their business is to purchase ginned and unginned cotton for manufacturing yarn and selling the said cotton also to registered and unregistered dealers both inside and outside the State.
The petitioners of the second category purchase oil seeds for use in manufacture of edible oils.
The surplus oil seeds are sold to other dealers, registered or unregistered, inside and outside the State of Punjab.
Both these commodities are essential commodities to which the Central Sales Tax Act applies.
Certain provisions of these Amending Acts are challenged on the ground that they offend section 15 of the Central Act and are also unconstitutional being in violation of Articles 14 and 19.
The Punjab General Sales Tax Act was passed in 1948.
It was amended from time to time.
The Act as it stood on April 1, 1960, was challenged in Bhawani Cotton Mills Ltd. vs State of Punjab and anr.(1).
On April 10, 1967 this Court by majority struck down certain portions of the Act on the ground that they were in conflict with the provision of section 15 of the Central Act.
On November 1, 1966 .the former State of Punjab bifurcated and the States of Punjab and Haryana came into existence.
On December 29, 1967, the Punjab Legislature enacted Act 7 of 1967 amending the original Act, and the following day the President 's Act intituled the Punjab General Sales Tax (Haryana Amendment and Validation) Act, 1967 (Act No. 14 of 1967) was passed for Haryana.
Both the Acts were preceded by Ordinances which they replaced.
It is not necessary to refer to the Ordinances.
Section 15 of the (54 of 1956) provided as follows: "15.
Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State.
Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely : (1) ; 547 (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent of the sale or purchase price thereof, and such tax shall not be leviable at more than one stage; (b) where a tax has been levied =under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State.
" The section provides that in respect of declared goods the tax (sales or purchase) shall not exceed the prescribed limit and shall not be levied at more than one stage and shall be refunded to persons from whom it is collected if the goods are sold in the course of inter state trade or commerce.
The original Punjab General Sales Tax Act, 1948 was challenged before this Court in Bhawani Cotton Mills Ltd. 's case(1).
The Act in defining the tax able turnover in section 5 (2) allowed certain deductions and one such deduction in cl.
(vi) was: " . . turnover during that period on the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter State trade or commerce, or in the course of export out of the territory of India: Provided that in the case of such a sale to a registered dealer, a declaration, in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction.
" The original section, as it stood on April 1, 1960, read as follows: "5.
Rate of tax.
(1) Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates not exceeding four naye paise in a rupee as the State Government may by notification direct: Provided . . . . . . (1) ; 548 Provided ,further that the rate of tax shall not exceed two naye paise in a rupee in respect of any declared goods as defined in clause (c) of section 2 of the , and such tax shall not be levied on the purchase or sale of such goods at more than one stage: Provided . . (2) In this Act the expression "taxable turnover" means that part of a dealer 's gross turnover during any period which remains after deducting therefrom (a) his turnover during that period on (i) . . . . (ii) sales to a registered dealer of goods declared by him in a prescribed form . . (vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter State trade or commerce, or in the course of export out of the territory of India: Provided that in the case of such a sale to a registered dealer a declaration in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction.
It was contended in that case that section 2(ff), 5 (1) second proviso and 5(2)(a)(vi) were in conflict with section 15 of the Central Act.
Bhawani Mills were dealers registered under the Punjab General Sales Tax Act, 1948 and for the assessment years 1960 61 1961 62 and 1962 63 the Mills denied their liability to the Central Sales Tax on the purchase of cotton in the accounting year.
The scheme of the Act then in force put the tax on purchase of cotton (which was a declared commodity) 'at the rate of 2 naye paise in a rupee.
By the second proviso to section 5 (1) it was further provided that such tax shall not be levied on the purchase or sale of such goods at more than one stage.
The word 'dealer ' at that time was defined as follows: 549 Dealer means any person including a Department of Government who in the normal course of trade sells or purchases any goods that are actually delivered for the purpose of consumption in the State of Punjab.
irrespective of the fact that the main place of business of such person is outside the said State and where the main place of business of ' any such person is not in the said State, 'dealer ' includes the local manager or agent of such person in Punjab in respect of such business.
" The provisions for taxing purchases of cotton were challenged on the ground that there was a possibility of the tax being levied at more than one stage, the provisions of the second proviso notwithstanding.
The argument was summarized by our brother Vaidialingam thus: "In this case, according to the appellant, it has to send quarterly returns, even during the accounting year and, as per section 10(4) of the Act, it has to pay also tax.
in accordance with the returns submitted by it for every quarter.
In the returns that are being sent, the dealer will have to include all purchases of cotton, effected by him during the quarter for which the return is sent.
There is no indication, either in the Act.
or in the rules or ,the forms prescribed, as to whether the persons from whom the appellant purchased cotton, have paid tax or not.
Section 15 of the Central Act is not restricted only to registered dealers.
There will also be nothing to guide the appellant to know as to whether the goods, purchased by it, have 'been sold to it by its vendor within the period mentioned in cl.
(vi) of section 5(2)(a) of the Act.
Under those circumstances, there is always a possibility, or even a certainty, of more persons than one having paid tax or being made liable to pay tax in respect of the same goods at different stages.
That is quite opposed to the provisions of section 15 (a) of the Central Act.
Even otherwise, it is pointed out that if a person has purchased cotton and sells it after the period provided for in section 5 (2)(a) (vi), that party is liable to pay sales tax and would have also paid the same.
Another purchaser from the said party will also be liable to pay tax.
on the same commodity, if he sells the goods, after 'the period mentioned in cl.
That is, two persons are made liable for payment of tax in respect of the same commodity.
In other words the purchases of the same item of declared goods, by the persons indicated above, are made liable for tax, whereas under the Central Act.
there can be only one levy and collection of tax at one stage, either on sale or on purchase." 550 Learned counsel in that case showed by way of contrast how the Madras, Mysore, Andhra Pradesh and U.P. had avoided such a consequence.
In answer, it was pointed out by the State that since the tax was levied, whether on sale or purchase, at the very first transaction, the stage was fixed and that the dealer could always claim exemption under section 5(2)(a)(vi) or a refund under section 12 of the Act.
This Court in its majority judgment did not consider that the second proviso to section 5 (1) by its mere declaration prevented the levy of tax at more than one stage.
The difficulty however, remained that the Act itself did not indicate the stage at which the tax was to be levied and because under section 15(1) of the Central Act there could be no liability for payment of tax unless this stage was so stated in the Act or the rules thereunder.
It was pointed out that a dealer would have to show in his return all purchases of cotton and pay the tax with his return.
There was nothing which would have enabled the dealer to know whether the tax had already been paid by another dealer and to exclude from his return those transactions.
The dealer could not take a chance as heavy penalties were provided.
This was particularly so where the goods passed through an unregistered dealer 's hands at an intermediate stage.
In dealing with the latter part of the reasons this Court gave an example which may be quoted here: " . if a dealer, 'A ' sells the declared foods to 'B ', six months after the close of the year (B being a registered dealer), A becomes liable to purchase tax.
But, if B sells the identical declared goods, again, after the period mentioned in sub el. (vi), he will also be liable to pay purchase tax.
That means, in respect of.
the same item of declared goods, more than one person is made liable to pay tax and the tax is also levied at more than one stage.
That is not permissible under section 15(a) of the Central Act.
If goods are resold to a nonregistered dealer, within the period, sub el.
(vi), will not help the original purchaser.
We may also point out, at this stage, that sub cl.
(vi) of section 5(2)(a), negatives the assumption that the normal rule, under the Act, in respect of declared goods, is to levy the tax on the first purchaser.
" This Court then referred to section 12 where there is a provision for refund which taken with rules 48 58 allowed for refund to be claimed, and found the provisions insufficient to get over the difficulty.
This Court observed: "Even in the matter of obtaining refunds, there can be no controversy, that the appellant will have to place, before the officer concerned, particulars of transactions connected with the commodity, in question and also the 551 basis on which it claims the relief.
It will be absolutely difficult, if not impossible, for persons like the appellant, to collect materials in this behalf, because, there is no provision, contained either in the Act or the rules, on the basis of which it will be entitled to be supplied with all the material information, relevant, for sustaining a request for refund.
If the Central Act makes it mandatory that the tax can be collected only at one stage, in our opinion, it is not enough for the State to say that a person, who is not liable to pay tax, must nevertheless, pay it in the first instance, and then claim refund, at a later stage.
We may state that the question as to how far a party can ask for refund, without the order of assessment being set aside, by appropriate proceedings, is highly doubtful; because at the time when the actual order of assessment is passed, in certain eases, it may not be possible for a party to say whether he is entitled to exemption, or not, under sub cl.
(vi) of section 5(2) of the Act.
If a person is not liable for payment of tax at all, at any time, the collection of a tax from him, with a possible contingency, of refund at a later stage, will not make the original levy valid; because, if particular sales or purchase are exempt from taxation altogether, they can never be taken into account, at any stage, for the purpose of calculating or arriving at the taxable turnover and for levying tax." Relying upon the observations in .4.
V. Fernandez vs State of Kerala (1) this Court concluded: " . the provisions contained in a statute with .respect to exemptions of tax or refund or rebate, on the one hand, must be distinguished from the total nonliability or non imposition of tax, on the other.
These observations, also, in our opinion, effectively provide an answer to the stand taken by the State, in this ease that section 12 of the Act provides an adequate relief, by way of refund, even if tax is collected at an earlier stage." The Amending Acts which are now challenged set about removing these difficulties.
These amendments are again challenged on the same lines.
It is convenient to take the two Amending Acts separately.
First we shall take up for consideration the Punjab amendments.
Here, we are concerned only with a few of the amendments made by the Amending Act 7 of 1967.
Section 5 was amended retrospectively from different dates.
In subsection (1), in the second proviso, the words "as defined in el. ; 552 of section 2 of the , and such tax shall not be levied on the purchase of sale of such goods at more than one stage" are now omitted.
After the second proviso another proviso is introduced: In sub section
1 A, the words "in respect of such goods other than declared goods" are substituted retrospectively from 16th December, 1965 for the words "in respect of such goods. ' After sub section
(2) a new sub section (3) from October 1,1958.
We may now set out the 5th sub section as it emerges from the amendment before we deal with the objections: "Section 5 Rate of tax (1) Subject to the provisions of this Act, there shall be levied on the taxable turnover of a dealer a tax at such rates not exceeding six naye paise in a rupee as the State Government may by notification direct.
" (2) In this Act the expression 'taxable turnover means that part of a dealer 's gross turnover during any period which remains after deducting therefrom (a) his turnover during that period on (i) . .
(vi) the purchase of ' goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter State trade or commerce, or in the course of export out of the territory of India; Provided that in the case of such sale to a registered dealer, a declaration, in the prescribed front and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction.
(3) Notwithstanding anything contained in this Act (a) in respect of declared goods tax shall be levied at one stage and that stage shall be (i) in the case of goods liable to sales tax, the stage of sale of such goods by the last dealer liable to pay tax under this Act; (ii) in the case of goods liable to purchase tax, the stage of purchase of such goods by the last dealer liable to pay tax under this Act; (b) the taxable turnover of any dealer for any period shall not include his turnover during that period 553 on any sale or purchase of declared goods at stage other than the stage referred to in subclause (i).
or as the case may be, sub clause (ii) of clause (a).
" In addition, a new section, section 11 AA was added to the following effect: "11 AA.
Review of certain assessments, etc.
of tax on declared goods : (1) Notwithstanding anything contained in this Act.
the Assessing Authority shall (whether or not an application is made to him in this behalf), review all assessments and reassessments made before the commencement of the Punjab GeneraI Sales Tax Amendment and Validation Act, 1967, in respect of declared goods and make such order varying or revising the order previously made as may be necessary for bringing the order previously made into conformity with the provisions of this Act as amended by the Punjab General Sales Tax (Amendment and Validation) Act.1967: Provided that no proceeding for review shall be initiated without giving the dealer concerned a notice in writing of not less than thirty days.
(2) Any dealer on whom a notice is served under sub section (1) may within thirty days from the date of receipt of such notice intimate in writing the assessing authority of his intention to abide by the assessment or reassessment sought to be reviewed and if he does so.
the assessing authority shall not review such assessment or reassessment under this section.
(3) No order shall be made under this section against any dealer without giving such dealer a reasonable opportunity of being heard.
(4) Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary but subject to the provisions of the foregoing sub sections any assessment.
reassessment.
levy or collection of any tax in respect of declared goods made or purporting to have been made, and any ' action or thing taken or done or purporting to have done in relation to such assessment.
are assessment.
levy or collection under the provision of this Act before the commencement of the Punjab General 554 Sales Tax (Amendment and Validation) Act, 1967, shall be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under this Act as amended by the Punjab General Sales Tax (Amendment and Validation)Act, 1967.
" The argument is that the position has not altered at all even after the amendments and the liability to taxation at different stages remains still and the Act continues to be in conflict with the Central Act on the same reasons on which Bhawani Mills case(1) proceeded.
It is argued that the amendments have been made retrospective but no machinery is provided to enable the dealer to discover that the goods had been taxed before and the single stage at which the tax is to be levied is still not clearly discernible.
This is the main argument but there are many supplementary arguments which we shall notice later.
For the present we confine our attention to the main point.
The stage of tax is now stated in section 5(3)(i) and (ii).
In the case of sales tax, the stage of tax is the sale of such goods by the last dealer liable to pay the tax and in the case of purchase tax the stage is purchase by the last dealer liable to pay the tax.
It is also provided that the turnover of any dealer for any period shall not include his turnover during that period of any sale or purchase of declared goods at any other stage than the stage so mentioned.
It will be seen that the matter is now in the hands of the dealer.
He has to find out for himself whether he is liable to pay the tax or not.
A dealer knows what he has done with his goods or is going to do with them.
If he knows that he is not the last dealer having parted with the goods to another dealer or he knows that he is going to use the goods or sell them to consumers, he knows when ' he is not liable to tax and when he is.
Therefore, he will not include the transaction in his taxable turnover in the first case but include it in the second.
Goods in the hands of a dealer are not taxed.
They are only taxed on the last purchase or sales.
This information is always possessed by a dealer and by providing that he need not include in his turnover any transaction except when he is the last dealer, the position is now clear.
It is contended that even so the dealer may not know that he is the last dealer and may make some mistake.
The law does not take .into account the actions of persons who are negligent or mistaken but only of persons who act correctly, according to law.
If the dealer is clear 'about his own position he is now quite able see whether he is the last purchaser liable to pay the tax or the last seller liable to pay the tax.
The Act by Specifying the stage ; 555 as the last purchase or sale by a dealer liable to pay the tax makes the stage quite clear and by giving an option to him not to include such transactions in his return saves him from the liability to pay the tax till he is the dealer liable to pay the tax.
In our opinion, therefore, the present provisions of the Act are quite clear and are quite sufficient to make the amended Act accord with the Central Act.
The arguments noted in the earlier case of this Court do not therefore arise.
It will thus be seen that the present Act does not suffer from any of the defects from which the unamended Act had suffered.
It is, however, contended that the Act has been made retrospective but no machinery is provided to discover if the declared goods were assessed to tax more than once.
As we have already pointed out, the matter is within the ken of the dealer himself and it is ,for him to decide whether he would not claim the benefit of section 11AA and ask for a refund or in future transactions delete the sales from his taxable turnover when he is not the last dealer liable to pay the tax.
Therefore the retrospectivity of the Act does not make any difference.
It is not contended before us that it was not within the competence of the Punjab Legislature to pass such an Act retrospectively.
The defect pointed out is the self same defect which was noticed in Bhawani Mills case(1).
But that defect no longer exists.
It is argued further that there is a discrimination between the two kinds of manufacturers.
In the definition of 'dealer ' in section (2)(d) and in the proviso to section 1 IAA it is submitted discrimination arises because of the opportunity given to a dealer to ask for reassessment or to submit to the old assessment.
This is open to every dealer and the intention is to give ,an opportunity to the dealer himself leaving it to his own will whether to ask for a refund or not.
This hardly can be said to create a discrimination.
Lastly it is contended that there is a delegated legislation in that the maximum has been provided without indication of the circumstances under which the tax is to be levied.
This, it is said, creates unguided delegation to administrative authority, the function of the legislature.
It is to be noticed that the Central Act itself gives power to the legislature to choose a rate of tax at not more than 3 per cent of the taxable turnover.
The tax levied is well within that limit and therefore the legislature has chosen the maximum and has left it free to the authorities to impose the tax within that maximum regard being had to the requirements of revenue and the expenditure necessary for the State.
We may now deal with some arguments which are common both sets of cases before considering the case of the Haryana amendment.
It is ,argued that the organisation of the State (1) ; 556 took place on November 1, 1966 and the amendment in some of its parts seeks to amend the original Act from a date anterior to this date.
In other words, the legislature of one of the States seeks to amend a law passed by the composite State.
This argument entirely misunderstands the position of the original Act after the reorganisation.
That Act applied now as an independent Act to each of the areas and is subject to the legislative competence of the legislature in that area.
The Act has been amended in the new States in relation to the area of that State and it is inconceivable that this could not be within the competence.
If the argument were accepted then the Act would remain unamendable unless the composite State came into existence once more.
The scheme of the States Reorganization Acts makes the laws applicable to the new areas until superseded, amended or altered by the appropriate legislature in the new States.
This is what the legislature has done and there is nothing that can be said against such amendment.
In regard to Haryana cases also the same arguments are urged.
It is contended that the amended Act there also offends section 15 for the reasons which we have given.
Neither the amendment of section 55 in this area nor the introduction of section 11AA for refund offends against section 15 of the Central Act or the equality clause of the Constitution.
It is said that pending cases will always be reconsidered whether or not an application in that behalf is made but in the case of disposed of cases it depends upon the party to intimate in writing that he has no objection to the assessment or reassessment already made.
If any objection can be taken it will 'be by those whose cases are pending and not by those whose cases have been closed.
The option to submit to the assessment is open to every one alike and there is no discrimination if a party wants that his case need not be reconsidered.
He has only to state that in writing and that would be the end of the matter.
If he wants his case to be reconsidered then he can go before the Tribunal and get his case reconsidered.
It is also urged in this connection that there is a discrimination between the imported goods and local goods.
It is said that the discrimination is also between the first purchase in the case of imported goods and last sale in the case of local goods.
Since the imported goods might be more expensive by reason of freight etc.
or intermediary sales having taken place, it is said.
that the burden of tax will be heavier and therefore this will offend against the equality clause and article 304 of the Constitution.
In our opinion this argument is without any substance.
The rate of tax same in every case.
In State of Madras vs
N.K. Nataraja Mudaliar(1).
this Court stated that the essence of articles 301 and 303 is to enable the State by a law "to impose on goods imported (1) [1969] S.C.R. 557 from other States or the Union territories any tax to which similar goods manufactured or produced in the State are subject, so, however as not to discriminate between goods so imported and goods so manufactured or produced.
" It was pointed out by this Court that "imposition of differential rates of tax by the same State on goods manufactured or produced in the State and similar goods imported in the State is prohibited by that clause.
But where the taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced,Art.
304 has no application".
Here also the tax is at the same rate and therefore the tax cannot be said to be higher in the case of imported goods.
It may be that when the rate is applied the resulting tax is somewhat higher but that does not offend against the equality contemplated by article 304.
That is the consequence of ad valorem tax being levied at a particular rate.
So long as the rate is the same Art.304 is satisfied.
Even in the case of local manufactures if their cost of production varies, the net tax collected will be more or less in some cases but that does not create any inequality because inequality is not the result of the tax but results from the cost of production of the goods or the 'cost of their importation.
This ground, therefore, has also no substance.
We do not think it necessary to set down here the provisions of the Haryana Amendment Act because they follow the scheme of the Punjab Amendment Act in substance and what we have said in regard to the Punjab Amending Act applies mutatis mutandis to Haryana Amendment Act also.
In the result these petitions have no substance.
They are dismissed with costs.
One set of hearing fee.
Y.P. Petitions dismissed.

summary/full:
In Bhawani Cotton Mills vs Stale of Punjab 119671 3 S C R 577 this Court struck down section 5(1) second proviso and sections 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948 as contravening section 15 of the Central Sales Tax Act, 1955.
because, neither the Punjab Act nor the rules made thereunder indicated, as required by the Central Act the stage at which tax was to be levied.
After the formation of the new States of Punjab and Haryana, the Act was amended by the legislatures of the two States by Act 7 of 1967 and 14 of 1967 respectively.
The amen,dments fixed it at the stage of sale or purchase of respectively, goods by the last dealer liable to pay tax.
In a writ petition before this Court the petitioners contended that (i) the position had not altered at all even after the amendments and the liability to taxation at different stages still remained and therefore the Act con.tinned to be in conflict with the Central Sales Tax Act; (ii) the legislatures of the two States were not competent to amend retrospectively an act passed by the composite State; (iii) by leaving it free to the executive to impose the tax within the maximum fixed there was excessive delegation of legislative functions; (iv) there was discrimination in the new section 11AA and the opportunity given to a dealer to ask for reassessment or to submit to the old assessment and (v) the Act discriminated between imported goods and local goods and therefore contravened the equality clause and article 30.
of the Constitution.
HELD: Dismissing, the petition.
(1) The Act by specifying the stage its the last purchase or sale a dealer liable It) pay the tax makes the stage quite clear.
The matter now in the hands of the dealer and he has to find out for himself whether he is liable to pay the tax or not.
A dealer knows what he has done with his goods or is going to do with them.
By providing that he need not include in his turnover any transaction except when he is the last dealer, the position is now made clear.
[553 F. G] (2) The competency of the Icgislatures of Punjab and Haryana to amend an Act passed the composite State cannot be questioned.
After reorganisation the Act applied as an independent Act to each of the areas and is subject to the legislative competence of the legislature in that area.
[556 B] (3) There is no abdication of legislative funtions in favour of the administrative authoritv as the Central Act itself gives power to the legislature to choose a rate of tax at not more than 3% of the taxable turnover.
The tax levied is well within that limit and therefore the legislature has chosen the maximum and has left it free to the 545 authorities to impose the tax within that maximum regard being had to the requirements of revenue and the expenditure necessary for the State.
[555 G] (4) The opportunity given to a dealer in section 11AA to ask for reassessment or to submit to the old assessment does not result in discrimination.
This is open to every dealer and the intention is to give an opportunity to the dealer himself leaving it to his own will whether to ask for a refund or not.
[555 E F] (5) When a taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced.
Article 304 has no application.
So long as the rate is the same article 304 is satisfied.
In the instant case the tax is at the same rate and therefore tax can,not be said to be higher in the case of imported goods.
When the rate is applied the resulting tax may be somewhat higher but that does not contravene the equality contemplated by article 304.
[557 B. C] State of Madras vs
N.K. Natraja, Mudaliar, [1969] 1 S.C.R. referred to


judgement:
Appeal No. 13 of 1966.
Appeal from the judgment and order dated January 13, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Writ No. 557 D of 1961.
M.P. Vashi, Dalip K. Kapur,, S.V. Tambwekar and A. G. Ramaparkhi, ,for the appellant.
D. Narsaraju, R.M. Mehta and S.P. Nayar, for the respondents.
The Judgment of the Court was delivered by Hegde, J.
In this appeal by certificate though.
several contentions were raised in the memo of appeal only two of them were pressed at the time of hearing.
They are: (1) under the circumstances of the case the confiscation ordered by the Collector, Central Excise is illegal and (2) under any circumstance he could not have confiscated the entire quantity of tobacco used in the mixture.
The appellants are tobacco merchants in Dashrath village near Baroda in Gujarat State.
At the relevant time they were holding Central Excise licence in form L 2 and L 5 for the purpose of storing, selling and processing duty paid and non duty paid tobacco.
They had their own duty paid and non duty paid godowns.
In about December 1958 according to their books they possessed the following lots of different varieties of tobacco.
variety of tobacco Quantity Rate of duty Veriety of tobacco Quantity Rate of duty Bmds.
Rs. Biri Patti " 251.8 1.20 np per Ib Stems Kandi " 287.20 0.50 Do.
Rava " 1326.14 0.50 Do.
Stalk Kandi " 57.20 0.06 Do.
582 On December 13, 1958 the appellants obtained permission from the Local Central Excise authorities to mix the above lots of tobacco.
The percentage of different varieties of tobacco when mixed would have been as under: Rava 68.97 % Stems Kandi 14.86 % Biri Patti 13.07 % Stalk Kandi 3.00% On December 23, 1958 when the process of mixing was still going on the Superintendent of Central Excise, Preventive Headquarters, Baroda and his party raided the duty paid premises of the appellants.
There he seized the entire mixture tobacco weighing Mds.
2004.3 srs.
i.e. 1,64,834.50 lbs.
of tobacco.
According to that Superintendent when experiments were conducted he found in the above mixture percentage of different varieties as under: Rava 44 % Biri Patti 51.50 % Stems Kandi 3 .74 % From this he concluded that 'considerable quantity of non duty paid Biri Patti tobacco had been utilised in the manufacture of the mixture.
Hence notice was issued to the appellants on January 6, 1959 to show cause why action should not be taken against them under rule 40 of the Central Excise Rules 1944 inasmuch as they brought into duty paid premises 60,770 lbs.
of Biri Patti tobacco without payment of duty.
It was also alleged in that notice that the appellants had removed certain quantity of Rava tobacco from L 2 premises.
The appellants submitted their reply on March 13, 1959.
At the hearing before the Collector as the appellants challenged the correctness of the experiments conducted by the Superintendent, Central Excise, the Collector himself in the presence of the appellants conducted a fresh experiment.
On the basis of that experiment he came to the conclusion that the results obtained by the experiment conducted by the Superintendent, Central Excise are by and large correct.
By his order dated April 13, 1959, the Collector, Central Excise held the appellants guilty of contravening rule 40 and consequently levied on them a penalty of Rs. 2,000 as well as the duty payable under law.
He also ordered the confiscation of the seized tobacco weighing 1,64,834.50 lbs.
But he gave an option to the appellants of redeeming the same on payment.
of a fine of Rs. 1 lac.
The appellants paid the amount of fine.
under protest and got the goods released.
Thereafter they moved the High Court of Bombay under article 226 of the Constitution for quashing the order of the Collector but that application was withdrawn as the appellants first 583 wanted to exhaust their remedy under the Central Excise Act.
The appellants unsuccessfully went up in appeal and thereafter in revision under the Central Excise and Salt Act, 1944 against the order of the Collector.
After the 3rd respondent dismissed their revision petition they filed in the High Court of Punjab at Delhi Civil Writ No. 557 D of 1961 challenging the legality of the order made by the Collector of Central Excise on April 13, 1959.
That petition was dismissed by a Division Bench of that Court on January 13, 1964.
This appeal is brought against that decision.
in this Court the finding of the Collector of Central Excise that the appellants were guilty of mixing the duty paid tobacco with non duty paid tobacco and thereby they contravened rule 40 was not challenged.
Nor was there any dispute about the quantity of non duty paid tobacco used in the mixture.
The main contention of Mr. M.P. Vaish, learned Counsel for the appellants was that under rule 40, the Collector could not have confiscated the tobacco mixture as it consisted of both duty paid tobacco as well as tobacco on which duty had not been paid.
His alternative contention was that under any circumstance the Collector could not have confiscated anything more than 60,770 ' lbs.
of the mixture which can be said to represent Biri Patti tobacco on which duty had not been paid.
In support of his first contention he heavily relied on the decision of K.T. Desai, J. in Messrs. Valitmahomed Gulamhusain Sonavala & Co. vs C.T. A. Pillai (1).
The seized tobacco mixture weighed 1,64,834.50 lbs.
That included 60,770 lbs.
of Biri Patti tobacco on which duty had not been paid.
But on the remaining quantity duty had been paid.
The tobacco seized was found in the godown licenced to store duty paid tobacco.
Hence the appellants were clearly guilty of contravening rule 40 of the Central Excise Rules which reads: "Except as provided in the proviso to sub rule (1) of rule 32 and in rule 171 no wholesale purchaser of unmanufactured tobacco for the purpose of trade or manufacture and no wholesale purchaser of other unmanufactured products from a curer shall receive into any part of his premises or into his custody or possession, any unmanufactured tobacco or other unmanufactured products, other than tobacco or other unmanufactured products imported from a foreign country otherwise than under a valid permit granted by an officer showing that the proper duty has been paid; and every such wholesale purchaser who receives or has in his custody or possession any such goods, in contravention of this rule shall, in respect of every such offence, be liable to pay the duty leviable on such (1) (1960) 42 B.L.R., p. 634.
584 goods, and to a penalty which may extend to two thousand rupees, and the goods shall also be liable to confiscation." .lm0
In view of this rule the legality of the order made by the Collector in so far as he levied duty as well as penalty cannot be challenged and was not challenged before us.
But so far as the confiscation is concerned ' it was urged that under the rule in question only tobacco on which duty had not been paid could alone have been confiscated.
In the instant case even according ,to the finding of the Collector only on 66,770 lbs.
of Biri Patti tobacco the duty had not been paid; but on the remaining tobacco seized duty had been paid, it was not possible to separate the duty paid tobacco from the non duty paid tobacco; hence it was impermissible for the Collector to confiscate the said tobacco under Rule 40 as that rule permitted the confiscation of only non duty paid tobacco.
In Sonavala 's case(1) referred to earlier Desai, J. had held that the right to confiscate smuggled goods under section 167(8) of the does not carry with it the right to confiscate unsmuggled goods.
The words "such goods ' appearing in section 167(8) of the Act cannot be interpreted .to mean similar goods.
It is not open to the Customs authorities to confiscate similar goods even though they may be of the same quality, bulk and value.
The words 'such goods ' mean the very goods which have been smuggled.
If the smuggled goods lose their identity, it would not be open to the Customs officers to confiscate any part of those goodS.
Where, therefore, gold that has been smuggled has in the melting process got so mixed up with gold that is unsmuggled that it is impossible to separate the smuggled gold from the unsmuggled one, the right to confiscate smuggled gold ceases when the two get inextricably mixed up.
The broad proposition laid down by Desai, J. undoubtedly supports the contention advanced on behalf of the appellants.
We shall presently show that this statement of the law is not correct but it is necessary to mention at this juncture that in the Sonavala 's case(1) an innocent third party had purchased the smuggled gold for proper value and mixed the same with unsmuggled gold, which circumstance had an important bearing on the decision of the case.
In Institutes of Justinian at page 104 dealing with the topic commixtio it is observed: "If the things mixed, still remaining the property of their former owners, were easy to separate again, as for instance, cattle united in one herd, when one owner brought his claim by vindicatio 'his property was restored to him without difficulty but if there was difficulty in separating the materials from each other, as in dividing the grains of wheat in a heap, the obvious (1960) 42 B.L.R.p.
585 mode would be to distribute the whole heap in shares proportionate to the quantity of wheat belonging to the respective owners.
But it might happen that the wheat mixed together was not all of the same quality, and therefore the owner of the better kind of wheat would lose by having a share determined in amount only by the quantity of his wheat; and the judge therefore was permitted to exercise his judgment how great an addition ought to be made to his share to compensate for the superior quality of the wheat originally belonging to him.
" In Williams on Personal Property (18th Edn.) at p. 50, it is observed: "The acquisition of ownership by accession or confusion of substances also presupposes a previous title.
Thus the young of a domestic animal belong to the owner of the mother.
If any substances, for instance tallow, belonging to.
various owners be mixed by consent or accidentally, the mass appears to belong to the owners of its parts in common.
And if the confusion be made wilfully by one without the other 's leave, the mass belongs to the latter, whose ownership is thus unlawfully invaded." Dealing with the same topic it is observed in Halsbury 's Laws of England 3rd Edn.
(Vol. 29) at p. 378.
"Ownership of goods may be acquired by confusion or intermixture, if the goods, when mixed, are indistinguishable.
If the goods are mixed by agreement or consent the proprietors have an interest in common in proportion to their respective shares; if mixed by accident or the act of a third party, or which neither owner is responsible, the proprietors become owners in common of the mixed property in proportion to the amounts contributed.
Where, however, one man wilfully mixes his goods with those of another without the approbation or knowledge of the other, the whole be longs to the latter.
" The law on this topic was stated by Bovill, C.J. as early as 1868 ' in Spence and Anr.
vs The Union Marine Insurance Co. Ltd.(1) thus: "In our own law there are not many authorities to be found upon this subject but, as far as they go, they are in favour of the view, that, when goods of diffe (1) Law Reports (Common Pleas) 3, 1867 68.
586 rent owners become by accident so mixed together as to be undistinguishable, the owners of the goods so mixed become tenants in common of the whole, in the proportions which they have severally contributed to it.
The passage cited from the judgment of Blackburn, J., in the case of the tallow which was melted and flowed into the sewers, is to that effect: Buckley vs Gross.
And a similar view was adopted by Lord Abinger in the case of the mixture of oil by leakage on board ship in Jones vs Moore. ' "It has been long settled in our law, that where goods are mixed so as to become undistinguishable, by the wrongful act or default of one owner, he cannot recover, and will not be entitled to his proportion, or any part of the property, from the other owner, but no authority has been cited to shew that any such principle has ever been applied, nor indeed could it be applied, to the case of an accidental mixing of the goods of the two owners; and there is no authority nor sound reason for saying that the goods of several persons be the property of their several owners, and become bona vacantia.
" The same principle was again reiterated by the House of Lords in Smurthwaite and Ors.
vs Hannay and Ors.(1) The rules enunciated above are of assistance in finding out a solution to the problem before us though they do not govern the same.
In the instant case there is no doubt that the appellants were guilty of an unlawful act in mixing duty paid tobacco with the non duty paid tobacco but the fact remains that they were the owners of both those lots at the time they mixed them and hence the legal principles set out earlier do not cover such a case.
It must also be remembered that in dealing with a provision relating to forfeiture we are dealing with a penal provision.
It would not be proper for us to extent the scope of that provision by reading into it words which are not there and thereby widen the scope of the provision relating to confiscation.
Rule 40 permits the Central Excise authorities to confiscate only those goods on which duty has not been paid.
It does not permit them either specifically or by necessary implication to confiscate other goods.
Therefore it was not permissible for the Collector to confiscate the entire tobacco mixture.
At the same time no person can be permitted to benefit by his wrongful act.
No rule of law should be so interpreted as to permit or encourage its circumvention.
If by the wrongful act of a party he renders it impossible for the authorities to confiscate under rule 40 the non (1) [1894] A.C.p.
587 duty paid goods it is in our opinion open to those authorities to confiscate from out of the goods seized, goods of the value reasonably representing the value of the non duty paid goods mixed in the goods seized.
Applying that rule to the facts of this it follows that the Collector, Central Excise could have confiscated out of the tobacco seized,.
much of it as can be held to reasonably represent the value of the tobacco on which the duty had not been paid.
As noticed earlier the tobacco confiscated had been returned to the appellants after realising from them a sum of Rs 1 lac as fine.
The Counsel for the parties agreed at the hearing that the ' value of the Biri Patti tobacco used in the mixture for which no duty had been paid could be fixed at Rs. 35,000.
In view of this agreement it is not necessary for us to remit the case back to the Collector of Central Excise for assessing the value of the tobacco on which duty had not been paid.
In view of our earlier findings the fine to be levied on the appellants in lieu of the confiscation that could have been ordered has to be fixed at Rs. 35,000.
From this it follows that the Collector has to refund to the appellants a sum of Rs. 65,000 which he has collected from them in excess of the aforementioned Rs. 35,000.
The appeal is allowed to that extent.
In the circumstances of the case we direct the parties to bear their own costs both in this Court as well as before the High Court.
R.K.P.S. Appeal allowed in part.

dataset_name: IN-Abs

summary/full:
The appellants were tobacco merchants in Baroda in Gujarat State and were holding Central Excise licence in Forms L 2 and L 5 for the purpose of storing, selling and processing duty paid and non duty paid tobacco.
On December 23, 1958 while the process of mixing some tobacco was going on in a godown where duty paid tobacco was.
kept, the Superintendent of Central Excise., Preventive Headquarters, Baroda and his party raided the premises of the appellants and seized a mixture of tobacco weighing 1,64,834.50 lbs.
tobacco This mixture included 60,770 lbs.
of tobacco on which duty had not been paid.
After the 'appellants were issued a show cause notice why action should not be taken against them under rule 40 of the Central Excise Rules, 1944, and after they had filed their reply, the Collector, Central Excise, by his order dated April 13, 1959 held the appellants guilty of contravening rule 40 levied on them a penalty of Rs. 2,000 as well as the duty payable under the law, and also ordered the confiscation of the entire quantity of the tobacco seized.
As he gave the appellants the option of redeeming the same on payment of a fine of Rs. 1 lakh, they paid the fine under protest and secured release of the tobacco.
The appellant 's appeal as well as revision against the Collector 's order under the provisions of the Central Excise and Salt Act, 1944, were both dismissed.
The appellants then filed a writ petition under article 226 of the Constitution challenging the legality of the Collector 's order but this was dismissed by the High Court.
In appeal to this Court the only challenge was to the Collector 's order of confiscation.
It was contended, relying on the decision in Messrs. Valimahomed Gulamhusain Sonavala & Co. vs
C.T.A. Pillai, (1960) 42, B.L.R., p. 634, that the Collector could not have confiscated the tobacco mixture as it consisted of both duty paid tobacco as well as tobacco on which duty had not been paid, the alternative contention was that the Collector could not in any extent have.
confiscated more than 60,770 lbs.
of mixture which could be said to represent tobacco on which duty had not been paid.
HELD: Rule 40 permits the Central Excise.
authorities to confiscate only those goods on which duty had not been paid.
It does not permit them either specifically or by necessary implication to confiscate other goods.
Therefore it was not permissible for the Collector to confiscate the entire tobacco mixture.
At the same time no person can be permitted to benefit by his wrongful act.
No rule of law should be so interpreted as to permit or encourage its circumvention.
If by the wrongful act of a party he renders it impossible for the authorities to confiscate under 581 rule 40 the non duty paid goods, it is open to those authorities to confiscate from out of the goods seized, goods of the 'value reasonably representing the value of the non duty paid goods mixed in the goods seized.
Applying that rule to the facts of the present case it follows that although the appellants were guilty under Rule 40 of an unlawful act in mixing duty paid tobacco with non duty paid tobacco, the Collector could have confiscated out of the tobacco seized so much of it as can be held to reasonably represent the value of the tobacco on which the duty had not been paid.
[586 G 581 B] As the parties were agreed that the value of the tobacco used in the mixture for which no duty had been paid could be fixed at Rs. 35,000,.
the fine to be levied on the appellant in lieu of the confiscation that could have been ordered had to.
be fixed at Rs. 35,000.
The Collector therefore had to refund to the appellant a sum of Rs. 65,000.
Institutes of Justinian, p. 104; Williams on Personal Property (18th edition) p. 50; Spence and Ant.
vs The Union Marine Insurance Co. Ltd., Law Reports (Common Pleas) 3, 1867 68 and Smurthwaite and Ors.
vs Hannay and Ors.
, [1894] A.C.p. 494; referred to.


judgement:
iminal Appeal No.219 of 1966.
Appeal by special .leave from the judgment and order dated February 7, 1966 of the Madhya Pradesh High Court Indore Bench in Criminal Appeal No. 127 of 1965.
H.K. Puri, for the appellant.
I. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Shah, J.
The appellant Nirbhay Singh was tried before the Court of Session, Ujjain, for causing the death of Bhagwanti his mother by inflicting injuries to her with a spear.
The Sessions Judge convicted the appellant of the offence of culpable homicide not amounting to murder, and sentenced him to suffer rigorous imprisonment for seven years.
An appeal preferred by the appellant from jail was summarily dismissed by the High Court of Madhya Pradesh on March 16, 1965.
Thereafter the State of Madhya Pradesh preferred an appeal on March 31, 1965, against the order acquitting the ' appellant of the offence of murder.
The High Court issued notice to the appellant and after hearing counsel for the State and the appellant set aside the order of acquittal and convicted the appellant of the.
offence of murder, and in substitution of the order of sentence imposed by the Court of Session sentenced him to suffer imprisonment for life.
The appellant has appealed to this Court with special leave.
571 Counsel for the appellant urged that the judgment of the High Court dated March 16, 1965, dismissing the appellant 's appeal from the order of conviction under section 304 Part II I.P. Code became final, and that the judgment of the Court of Session got merged into the judgment of the High Court and thereafter the High Court was incompetent in an appeal filed by the State to modify that order and convict the appellant for the offence of murder.
Counsel relied in support of his contention upon sections 369 and 430 of the Code of Criminal Procedure.
Section 369 provides: "Save as otherwise provided by this Code or by any other law for the time being in force or, in the case of a High Court by the Letters Patent or other instrument constituting such High Court, no court, when it has signed its judgment, shall alter or 'review the same except to correct a clerical error.
" Section 430 provides: "Judgments and orders passed by an Appellate Court upon appeal shall be final, except in the cases provided for in section 417 and Chapter XXXII.
" We are unable to hold that the High Court was in the circumstances of the case debarred by the provisions relied upon from entertaining an appeal by the State against the order of acquittal of the offence of murder passed by the Court of Session.
The right to appeal against the order of.
acquittal is expressly conferred upon the State by section 417 of the Code, and section 369 does not purport to place any restriction upon the exercise of that right.
Section 369 occurs in Ch.
XXV/and prima facie applies to judgments of the courts of first instance.
Section 430 applies to judgments of appellate Courts; it declares the judgment of an appellate Court final except in the cases provided for in section 417 and Ch.
XXXII.
In terms the 'provision applies to.
all judgments of Appellate Courts Courts of the District Magistrate, Courts of Session and the High Courts.
Finality of the judgment of the Appellate Court declared by section 430 is subject to.
two restrictions, i.e. the judgment may be set aside or modified in an appeal under section 417 of the Code by the High Court, and in exercise of the power conferred upon the Courts under Ch.
XXXII which deals with the exercise of power to entertain references and revisions.
Judgment of a High Court in appeal is not subject to the exercise of any appellate or revisional power exercisable under the Code.
The exception declared in section 430 therefore only applies to judgment of a court subordinate to the High Court exercising appellate power.
572 There is however no warrant for the argument that when an appeal preferred by a person convicted of an offence is dismissed summarily by the High Court under section 421 of the Code of Criminal Procedure, the judgment of the trial court gets merged in the judgment of the High Court and it cannot thereafter be modified even at the instance of any other party affected thereby, and in respect of matters which were not and could not be dealt with by the High Court when summarily dismissing the appeal.
When the High Court dismisses an appeal of the person accused summarily and without notice to the State, the High Court declines thereby to entertain the grounds set up for setting aside the conviction of the accused.
That judgment undoubtedly binds the accused and he cannot prefer another appeal to the.
High Court against the same matter in respect of which he had earlier preferred an appeal.
But it is a fundamental rule of our jurisprudence that no order to the prejudice of a party may be passed by a court, unless the party had opportunity of showing cause against the making of that order.
When an appeal of a convicted person is summarily dismissed by the High Court the State has no opportunity of being heard.
The judgment summarily dismissing the appeal of the accused is a judgment given against the accused and not against the State or the complainant.
If after the appeal of the accused is summarily dismissed, the State or the complainant seeks to prefer an appeal against the order of acquittal, the High Court is not prohibited by any express provision or implication arising from the scheme of the Code from entertaining.
the appeal.
Where, however, the High Court issues notice to the State in an appeal by the accused against the order of conviction, and the appeal is heard and decided on the merits, all questions determined by the High Court either expressly or by necessary implication must be deemed to be finally determined, and there is no scope for reviewing those orders in any other proceeding.
The reason of the rule is not so muck the principle of merger of the judgment of the trial court into the judgment of the High Court, but that a decision rendered by the High Court after hearing the parties on a matter in dispute is not liable to the reopened between the same parties in any subsequent enquiry.
Cases do frequently arise where a person is charged at the trial with the commission of a grave or major offence and he is convicted of a minor offence, the conviction for the minor offence amounting to his acquittal for the major offence.
Where an appeal against the order of conviction for the minor offence at the instance of the convict is entertained and decided, the State having opportunity of being heard on the merits of the dispute.
, in an appeal subsequently filed at the instance of the State against the order of acquittal, the High Court is precluded from reconsidering all those matters which were expressly decided or flow as a neces 573 sary implication of the earlier judgment.
Any other view is likely to cause the gravest inconvenience in the administration of justice and the principle of finality of judgments would be sadly disturbed.
If, for instance, against an order of acquittal passed for a grave offence, the State prefers an appeal and the appeal is summarily dismissed, it would be impossible to contend that thereby the accused is prevented from filing an appeal against the order of conviction.
Similarly where the accused prefers an appeal against the order of conviction of a minor offence and that appeal is summarily dismissed, the accused cannot prefer another appeal, but the State will not be precluded from preferring an appeal against the order of acquittal because the State had no opportunity of being heard at the earlier stage.
Where, however, notice had been issued in an appeal at the instance of the accused and the State had art opportunity of being heard, the decision of the Court will be regarded as a decision on the merits of the transaction which resulted in the conviction of the accused and that decision cannot be reopened in any subsequent enquiry.
These principles are, in our judgment, supported by abundant authority.
In U.J.S. Chopra vs State of Bombay(1), the appellant Chopra was convicted by the Trial Magistrate of an offence under .
the Bombay Prohibition Act.
His appeal to the High Court of Bombay was summarily dismissed.
Thereafter the State of Bombay applied to the High Court of Bombay for an order for enhancement of sentence, and notice was issued to Chopra to show cause against enhancement of the sentence.
Chopra pleaded that he was entitled to show cause against the order of conviction.
This Court held that the summary dismissal of the appeal preferred by Chopra did not preclude him from showing cause against his conviction under section 439 (6) of the Code of Criminal Procedure, even though his appeal was summarily dismissed.
The case, in our judgment, involves two propositions that after the dismissal of the appeal of Chopra, an application at the instance of the State for enhancement of sentence was maintainable, and that Chopra could canvass the correctness of his conviction, summary dismissal of his appeal notwithstanding.
If the principle of merger of judgment by a summary dismissal of the appeal of the accused is valid, the State could not in U.J.S. Chopra 's case(1) have been permitted to exercise the right to apply for enhancement of the sentence.
Bhagwati, J., speaking for the majority of the Court expressed the view that a judgment pronounced by the High Court in the exercise of its appellate or revisional jurisdiction after issue of a notice and a full hearing in the presence of both the parties is a final judgment which replaces the judgement of the Court of first instance, thus constituting the only (1) ; 4 Sup.
C.I./69 4 574 final judgment to be executed in accordance with law.
When, however, a petition or appeal presented by a convicted person from jail is summarily dismissed under section 421 or a revision application made by him is dismissed in limine the order passed by the High Court does not amount to an expression of the opinion of the Court arrived at after due consideration of the evidence and all the arguments.
In Pratap Singh vs The State of Vindhya Pradesh (Now Madhya Pradesh)(1) this Court held that where a person convicted has exercised the right of presenting an appeal from jail and that appeal has been summarily dismissed under section 421 of the Code of Criminal Procedure, no further appeal lies at his instance through an Advocate.
The distinction between U.J.S. Chopra 's case(2) and Pratap Singh 's case(1) is clear: summary dismissal of the appeal filed by the accused does not bar any proceeding which the State may be competent to initiate against the order passed in favour of the accused, but another appeal by the accused after summary dismissal of his earlier appeal is barred.
In The State vs Babulal and Bherumal,(3), a Division Bench of the Rajasthan High Court held that where the accused charged under section 302 I.P. Code was convicted under section 324 J.P. Code and the appeal of the accused against his conviction under section 324 I.P. Code was dismissed by the High Court on his own prayer that he did not desire to press it and there was no hearing given to.
the State, the order of the High Court was not such a judgment as would preclude the High Court from hearing an appeal by the State against the acquittal of the accused for the offence under section 302 J.P. Code.
In State vs Kalu(4) a Full Bench of the Madhya Bharat High Court held that where after an appeal against conviction under section 423 (1 )(b) of the Code of Criminal Procedure by the accussed has been dismissed by an appellate Bench of the High Court, an appeal filed against an order of acquittal of the accused of other charges by the State under section 417 is not competent.
In the view of the High Court the reason of the rule is that the earlier decision was final, and if the appeal of the State against acquittal was heard on merits, it might disturb the finality of the earlier judgment.
In The State vs Mansha Singh Bhagwant Singh(5) the Punjab High Court expressed a similar view.
In that case also the accused at the trial charged with the offence punishable under section 302 was convicted by the Sessions Judge of the offence under section 304 Part II I.P. Code.
In appeal against the order of conviction by the accused the High Court after hearing 'the State confirmed the (1) ; (2) ; (3) A.I.R. 1956 Raj. 67.
(4) A.I.R. 1952 M.B. 81.
(5) I.L.R. (1958) Punjab 1475.
575 order.
An appeal filed by the State against the order of acquittal of the accused for murder was held not maintainable.
In State vs Diwanji Gardharji and others(1) a Division Bench of the High Court of Gujarat apparently held after discussing many other points not relevant here that when an appeal of time accused against the order of conviction and sentence for the offence under section 304 Part II I.P. Code has been dismissed after a hearing, in an appeal by the State against the order of acquittal for the offence under section 302, the question of the accused having committed an offence of culpable homicide not amounting to murder cannot be allowed to be canvassed.
In the present case the order passed by the High Court at the earlier stage w,rs an order of summary dismissal of the appeal flied by the accused.
No notice of appeal flied by the accused was given to the State, and the State had no opportunity of being heard thereon.
It is true that the High Court had at the earlier hearing called for the record of the case from the Court of Session in exercise of the power under section 421 (2) and after persuing the record had dismissed the appeal.
But that is not relevant in determining the legal effect of the order of the High Court.
The appeal fails and is dismissed.
G.C. Appeal dismissed.

summary/full:
The appellant was tried for causing the death of his mother by inflicting injuries with a spear.
The Sessions Judge convicted the appellant of the offence of culpable homicide not amounting to murder, and sentenced him to suffer rigorous imprisonment for seven years.
An appeal preferred by him from jail was summarily dismissed by the High Court.
Thereafter the State filed an 'appeal against the order acquitting the appellant of the offence of murder.
The High Court issued notice to the appellant and after hearing counsel on both sides, convicted the appellant of the offence of murder, and in substitution of the sentence imposed by the Court of Session, sentenced him to suffer rigorous imprisonment for life.
Appeal was filed in this Court by special leave.
On behalf of the appellant it was urged that the judgment of the High Court dismissing summarily the appellant 's appeal against conviction under section 304 became final, and that the judgment of the Court of Sessions got merged into the judgment of the High Court and thereafter the High Court was incompetent in an appeal filed by the State to modify that order and convict the appellant for the offence of murder.
Reliance was placed on sections 369 and 430 of the Code of Criminal Procedure.
HELD: (i) The right to appeal against the order of acquittal is expressly conferred upon the State by section 417 of the Code and section 369 does not purport to place any restriction upon the exercise of that right.
Section 369 ' occurs in Chapter XXVI and prima facie applies to judgments of the courts of first instance.
[571] (ii) Finality of the judgment of the Appellate Court disclosed by section 430 is subject to two restrictions i.e. the judgment may be set aside or modified in an appeal under section 417 of the Code by the High Court and in exercise of the power conferred upon the courts under Ch.
XXXII which deals with the exercise of power to entertain references and revisions.
Judgment of a High Court in appeal is not subject to the exercise of any appellate or revisional power exercisable under the Code.
The exception declared in section 430 therefore only applies to judgment of a court subordinate to the High Court exercising appellate power.
[571 G] (iii) There is no warrant for the argument that when an appeal preferred by a person convicted of an offence is dismissed summarily by the High Court under section 421 of the Code of Criminal Procedure.
the judgment of the trial court gets merged in the judgment of the High Court and cannot thereafter be modified.
The summary dismissal of the appeal of the person accused, binds the accused but not the State which has not been heard.
[572 A, D] If after the appeal of the accused is summarily dismissed the State or the complainant seeks to prefer an appeal against the order of acquit 570 tal, the High Court is not prohibited by any express provision or implication 'arising fro.m the scheme of the Code from entertaining the appeal.
When, however, the High Court issues notice to the State in an appeal by the accused against the order of conviction and the appeal is heard and decided on the merits all questions determined by the High Court either expressly or by necessary implication must be deemed to be finally determined, and there is no scope for reviewing those orders in any other proceeding: The reason of the rule: is not so much the principle of merger of the judgment of the, trial court into the judgment of the High Court, but that a decision rendered by the High Court, after hearing the parties on a matter in dispute is not liable to be reopened between the same parties in any subsequent enquiry.
[572 E, F] (iv) The fact that at the earlier hearing the High Court called for the record of the ease from the court of session in exercise of the power under section 421(2) and after persuing the record dismissed the appeal, was not relevant in determining the legal effect of the order of the High Court.
[575 D] U.J.S. Chopra vs State of Bombay, ; , applied.
Pratap Singh vs State of Vindhya Pradesh (Now Madhya Pradesh) ; , distinguished.
State vs Babulal and Bherumal, A.I.R. 1956 Raj. 67, State vs Kalu, A.I.R. 1952 M.B. 81 and State vs Mansha Singh Bhagwant Singh, I.L.R. (1958) Punjab 1475, referred to.


judgement:
Criminal Appeal No.185 of 1966.
Appeal by special leave from the judgment and order dated June 3, 1966 of the Allahabad High Court, LuCknow Bench inCriminal Revision Applications No. 410 and 413 of 1964.
R.K. Garg, S.C. Agarwala, section Chakravarti and section S.Shukla, for the appellants.
O.P. Rana and Ravindra Bana, for the respondent.
of 1964.
The appellant, Lalta filed a money suit No. 54 of 1955 in the Court of Civil Judge, Gonda against Swami Nath on the basis of a pronote and receipt dated July 1, 1952 on the allegation that Swami Nath had taken a loan of Rs. 250 from him and executed a promisory note and a receipt in lieu thereof.
Swami Nath filed a written statement in that suit denying to have taken any loan or to have executed any pronote and receipt in favour of Lalta.
It appears that prior to the institution of this suit Swami Nath had filed a complaint on January 24, 1955 against Lalta and others alleging that they had forcibly taken his thumb.
impressions on a number of blank forms of pronotes and receipts.
The case arising out of the Criminal complaint came to be heard by a Magistrate Second Class who by his judgment dated May 31, 1956 acquitted Lalta and the other persons complained against.
The Criminal c 'ase against Swami Nath proceeded on the.
charges framed under sections 342 and 384, Indian Penal Code.
In the Civil Suit which was filed by Lalta, the defendant Swami Nath moved an application for a report being called from the Superintendent, Security Press, Nasik regarding the year of the revenue.
stamps affixed on the pronote and the receipt.
The matter was accordingly referred to the Superintendent, Security Press, Nasik and the report received was that the stamps in question had been printed on December 21, 1953 and were issued for the first time on January 16, 1954 to the Treasury.
Subsequent to the receipt of the report Lalta did not put in appearance and the suit was dismissed for default on June 1, 1956.
The Civil Judge was moved for filing a complaint against the appellants for committing forgery.
The Civil Judge Gonda actually filed a complaint on, November 9, 1956 against Lalta for offences under sections 193, 194, 209, 465, 467 and 471, Indian Penal Code and against Tribeni and Ram Bharosey for 'an offence under section 193, Indian Penal ' Code.
The complaint was enquired into by a First Class Magistrate who committed the appellants to the Court of Sessions.
By his judgment dated November 27, 1963, the Assistant Sessions Judge, Gonda convicted Tribeni and Ram Bharosey under section 467 read with section 109, Indian Penal Code and sentenced them to 3 years rigorous imprisonment.
He found Lalta guility under section 467, Indian Penal Code and sentenced him to 3 years rigorous imprisonment.
Lalta was also convicted under section 471, Indian Penal Code and sentenced to 2 years rigorous imprisonment.
He was also found guilty under section 193, Indian Penal Code and sentenced to rigorous imprisonment for two years.
The appellants took the matter in appeal to the Sessions Judge, Gonda who by his order dated October 17, 1964 set aside the convie 528 tion of Lalta under section 193, Indian Penal Code but maintained the conviction of the appellants under the other sections.
Tribeni, Lalta and Ram Bharosey filed Revision Applications before the Allahabad High Court which by its order dated June 3, 1966 affirmed the order of the Sessions Judge, Gonda and dismissed the Revision Applications.
In support of this appeal Mr. Garg put forward the argument that in view of the fact that Swami Nath 's complaint had been ,dismissed by the Second Class Magistrate on May 31, 1956, the prosecution case with regard to the act of forgery must fail and the conviction of Lalta under section 467 and section 471, Indian Penal ,.Code was not sustainable.
It was also pointed out that the ,charge of abetment against Ram Bharosey and Tribeni under section 467 read with section 109, Indian Penal Code and section 471 read with section 109, Indian Penal Code must fail for the same reason.
In our opinion, the argument put forward on behalf of the appellants is well founded and must be accepted as correct.
In Pritam Singh vs The State of Punjab(1), it was pointed out by this Court that the effect of a verdict of acquittal passed by a competent court on a lawful charge and after a lawful trial is not completely stated by saying that the person acquitted cannot be tried again for the same offence, but to that it must be added that the verdict is binding and conclusive in all subsequent proceedings between the parties to.
the adjudication.
In that case the appellant had been acquitted of the charge under section 19(f), Arms Act for possession of a revolver.
There was a subsequent prosecution of the appellant for ,an offence under section 302, Indian Penal Code and the possession of the revolver was a fact in issue in the later case which had to be established by the prosecution.
It was held that the finding in the former trial on the issue of prossession of revolver will constitute an estoppel against the prosecution, not as a bar to the trial and conviction of the appellant for a different offence but as precluding the reception of ,evidence to disturb the finding of fact.
Section 403, Criminal Procedure Code embodies in statutory form the accepted English rule of autrefois acquit.
The section reads as follows: "403.
(1) A person who has once been tried by a Court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force; not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made (1) A.I.R. 1956 S.C. 415.
529 under section 236, or for which he might have been convicted under section 237.
(2) A person acquitted or convicted of any offence may be afterwards tried for any distinct offence for which a separate charge might have.
been made against him on the former trial under section 235, sub section (1).
(3) A person convicted of any offence constituted by any act causing consequences which, together with such act, constituted a different offence from that of which he was convicted, may be after wards tried for such last mentioned offence, if the consequences had not happened, or were not known to the Court to have happened, at the time when he was convicted.
(4) A person acquitted or convicted of any offence constituted by any acts may, notwithstanding such acquittal or conviction, be subsequently charged with, and tried for, any other offence constituted by the same acts which he may have committed if the Court by which he was first tried was not competent to try the offence with which he is subsequently charged.
(5) Nothing in this section shall affect the provisions of section 26 of the , or of section 18 8 of this Code.
Explanation.
The dismissal of a complaint, the stopping of proceedings under section 249, the discharge of the accused or any entry made upon a charge under section 273, is not an acquittal for the purposes of this section.
" Section 26 of the which is referred to in section 403, Criminal Procedure Code enacts as follows: "Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments but shall not be liable to be punished twice for the same offence.
" It is manifest in the present case that.
the appellants cannot plead the bar enacted in section 403(1) of the Criminal Procedure Code.
It is equally manifest that the prosecution of the appellants would be permitted under sub section
(2) of section 403, Criminal Procedure Code.
The question presented for determination in this appeal is, however, different.
The question is whether where an issue of fact has been tried by a competent court on a former occasion and a finding has been reached in favour of an accused, such a 530 finding would constitute an estoppel or res judicata against the prosecution, not as a bar to the trial and conviction of the accused for a different offence but as precluding the reception of evidence to disturb that finding of fact when the accused is tried subsequently even for a different offence which might be permitted by the terms of section 403(2), Criminal Procedure Code.
The distinction between the principle of autrefois acquit and the rule as to issue estoppel; in other words, the objection to the reception of evidence to prove an identical fact which has been the subject matter of an earlier finding between the same parties clearly brought out in the following passage from the judgment Wright,.
J. in The Queen vs OIlis(1): "The real question is whether this relevant evidence of the false pretence on July 5 or 6 ought to have been excluded on the ground that it was part of the evidence given for the prosecution at the former trial, at which the prisoner was charged with having obtained money from Ramsey on that false pretence, and was acquitted of that charge.
" Speaking of this type of estoppel, Dixon, J. stated in The King vs Wilkes ( 2 ): "Whilst there is not a great deal of authority upon the subject, it appears to me that there is nothing wrong in the view that there is an issue estoppel, if it appears by record of itself or as explained by proper evidence, that the same point was determined in favour of a prisoner in a previous criminal trial which is brought in issue on a second criminal trial of the same prisoner.
That seems to be implied in the language used by Wright, J. in R.v. Oilis which in effect I have adoptde in the foregoing statement. . .
There must be a prior proceeding determined against the Crown necessarily involving an issue which again arises in a subsequent proceeding by the Crown against the same prisoner.
The allegation of the Crown in the subsequent proceeding must itself be inconsistent with the acquittal of the prisoner in the previous proceeding.
But if such a condition of affairs arises I see no reason why the ordinary rules of issue estoppel should not apply.
Such rules are not to be confused with those of res judicata, which in criminal proceedings are expressed in the pleas of autrefois acquit and autrafois convict.
They are pleas which are concerned with the judicial determination of an alleged criminal liability and in the case of (1) , 768 769.
(2) ; ,518.
531 conviction with the substitution of a new liability.
issue estoppel is concerned with the judicial establishment of a proposition of law or fact between parties.
It depends upon well known doctrines which control the relitigation of issues which are settled by prior litigation.
" The same question was the subject matter of consideration by the High Court of Australia in a later case Marz vs The Queen(1).
The question at issue was the validity of a conviction for rape after the accused had been acquitted on the charge of murdering the woman during the commission of the act.
In a unanimous judgment by which the appeal of the accused was allowed, the High Court stated as follows : "It is a negation in the alternative upon which, so long as the verdict stood in its entirety, the applicant was entitled to rely as creating an issue estoppel against the Crown.
He was entitled to rely upon it because when he pleaded not guilty to the indictment of murder the issues which were thereby joined between him and the Crown necessarily raised for determination the existence of the three elements we have mentioned and the verdict upon those issues must, for the reasons we have given, be taken to have affirmed the existence of the third and to have denied the existence of one or other of the other two elements.
It is nothing to point that the verdict may have been the result of a misdirection of the judge and that owing to the misdirection the jury may have found the verdict without understanding or intending what as a matter of law is its necessary meaning or its legal consequences.
The law which gives effect to issue estoppels is not concerned with the correctness or incorrectness of the finding which amounts to an estoppel, still less with the processes of reasoning by which the finding was reached in fact; it does not matter that the finding may be thought to be due to the jury having been put upon the wrong track by some direction of the presiding judge or to the jury having got on the wrong track unaided.
It is enough that an issue or issues have been distinctly raised and fou nd.
Once that is done, then, so long as the finding stands, if there be any subsequent litigation between the same parties, no allegations legally inconsistent with the finding may be made by one of them against the other.
" It is therefore clear that section 403, Criminal Procedure Code does not preclude the applicability of this rule of issue estoppel.
(1) ; , 68 69.
532 It was contended by Mr. Rana on behalf of the respondent that the decision of this Court in Pritam Singh 's case(x) was based on the observations of the Judicial Committee in Sambasivam vs Public Prosecutor, Federation of Malaya(2) and the decision in Pritam Singh 's case(1) required reconsideration because the principle could have no application ,to India where the principle of autrefois acquit is covered by a statutory provision viz., section 403, ' Criminal Procedure Code which must be taken to be exhaustive in character.
We are unable to accept this contention as right.
We have already pointed out that section 403, Criminal Procedure Code does not preclude the applicability of the rule of issue estoppel.
In any event, the rule is one which is in accordance with sound principle and supported by high authority and there are already two decisions of this Court, viz., Pritam Singh 's case(1) and a later case Manipur Administration vs Thokchom, Bira Singh(3) which have accepted the rule .as a proper one to be adopted.
We therefore do not see any reason for casting any doubt on the soundness of the rule or for taking a different view from that adopted in the two earlier decisions of this Court referred to.
If the rule of issue estoppel is applied to the present case, it follows that the charge with regard to forgery must fail against all the appellants.
The reason is that the case of Swami Nath is solely based upon the allegation that his thumb impressions were obtained.
on blank forms of promissory notes and receipts on January 7, 1955 by the use of force.
If the finding of the Second Class Magistrate on this issue is final and cannot be reopened, the substratum of the present prosecution case fails and the charges of forgery under sections 467 and 471, Indian Penal Code cannot be established against any of the appellants.
For these reasons we hold that this appeal must be allowed, the judgment of the Allahabad High Court dated June 3, 1966 must be set aside and the convictions of each of the appellants and the sentence imposed upon them should be quashed.
If the appellants are still in jail they should be set at liberty forthwith.
V.P.S. Appeal allowed.
(1) A.I.R. 1956 S.C. 415.
(2) (3) ; L3Sup.
C.I/69 2,500 19 1 70 GIPF.

summary/full:
The first appellant filed a suit on a promissory note.
Prior to the institution of the suit, the executant of the promissory note had filed a complaint against the appellants alleging that they had forcibly taken his thumb impressions on a number of blank forms of promissory notes.
The Magistrate 'acquitted the, appellants.
Thereafter.
the suit on the promissory note was dismissed on the ground that the promissory note was a forgery because, the stamps affixed were of a date later than that of the promissory note.
The Court then filed a complaint against the appellants for the offence of forgery.
The appellants were convicted for forgery and abetment of forgery.
In appeal to this Court, HELD: In the earlier criminal case, the allegation that the executant 's thumb impressions on blank forms were obtained by force, was found to be false.
That finding was final and could not be reopened because of the rule as to issue estoppel.
Therefore, the sub stratum of the present case failed and the appellants could not be convicted for the offence of forgery and its abetment.
[532 D F] The rule of issue estoppel is not covered by section 403, Criminal Procedure Code, which deals with the principle of autrefois acquit: but that section does not preclude the applicability of the rule.
The rule is in accordance with sound principle and was applied in two decisions of this Court, namely, Pritam Singh vs State of Punjab, A.I.R. 1956 S.C. 415 and Manipur Administration vs Thockechom Bira Singh, ; There is no reason for casting any doubt on its soundness or for taking a different view.
[532 B D]