w w w . L a w y e r S e r v i c e s . i n


India Tyre and Rubber Company (India) Private Limited v/s Commercial Tax Officer Ii, Central Assessment Circle, Madras, and Others

    Writ Appeals Nos. 602, 603, 624 and 625 of 1979 in W.P. Nos. 682 of 1977 and 1449 to 1451 of 1978
    Decided On, 19 June 1980
    At, High Court of Judicature at Madras
    By, THE HONOURABLE CHIEF JUSTICE MR. ISMAIL & THE HONOURABLE MR. JUSTICE NAINAR SUNDARAM
   


Judgment Text
PADMANABHAN, J.


India Tyre and Rubber Co. (India) Private Limited, the petitioner in all the writ petitions, has filed W. P. No. 682 of 1977 for the issue of a writ of certiorarified mandamus to quash the order of the Sales Tax Appellate Tribunal, the second respondent herein, dated 22nd March, 1977, and to direct the second respondent to implied the petitioner in Appeal No. 891 of 1976 on his file. W.P. Nos. 1449, 1450 and 1451 of 1978 are filed by the petitioner for the issue of a writ of mandamus restraining the second respondent from taking up and considering Appeals Nos. 892, 893 and 894 of 1976. The facts leading to the filing of the writ petitions may be briefly stated as follows : The petitioner-company carries on business in the sales of tyres and rubber products. It also holds a manufacturing licence for tyres and rubber products. On 4th May, 1960, the petitioner-company entered into a contract with Dunlop India Limited, the third respondent herein. Under the said contract, Dunlop India Limited agreed to manufacture on behalf of the petitioner-company tyres and rubber products. It is further agreed that in all matters relating to purchase of raw materials, engagement of labour, conducting of such operations as may be incidental to or necessary for the manufacture of the said goods in the factory of Dunlop India Limited, the latter shall be acting on behalf of the petitioner-company. Under the terms of the said contract, Dunlop India Limited would be entitled to be reimbursed the actual cost of production together with incidental expenses at the rate of 5 per cent of such raw materials and production costs. The petitioner had also covenanted to bear and pay all actual charges and expenses incurred in connection with the said goods. It is the petitioner's case that the nature of the transactions under which Dunlop India Limited agreed to manufacture tyres and rubber products for the petitioner-company is a works contract. The petitioner-company had been submitting returns under the Tamil Nadu General Sales Tax Act (hereinafter called the Act) and the sales tax authorities had been finalising the assessment on the basis that the first point of sale in the State is at the point where the petitioner has been selling the goods manufactured for them by Dunlop India Limited. It is further averred in the affidavit filed in support of the writ petitions that till 1975 the sales tax authorities had accepted that the nature of the transaction between Dunlop India Limited and the petitioner-company was in the nature of a "works contract".While so, the Commercial Tax Officer II, Central Assessment Circle, Madras, the first respondent herein, issued a notice to the third respondent on 4th March, 1975. The notice was issued under section 16 of the Act for the assessment years 1969-70 to 1972-73 on the basis that the transaction between the petitioner and Dunlop India Limited was one of sale and that this factor had escaped notice at the time of the original assessment. Ultimately, the first respondent held that the transaction between the petitioner and Dunlop India Limited was one of sale and the assessment was finalised on that basis. Against the orders of the first respondent, Dunlop India Limited preferred appeals before the Appellate Assistant Commissioner and the latter dismissed the appeals by his order dated 10th September, 1976, but however the matter was remitted to the assessing authority for the purpose of determining the correct amount. Against the orders of the appellate authority, Dunlop India Limited have preferred Appeals Nos. 891 to 894 of 1976 before the second respondent, the Sales Tax Appellate Tribunal (hereinafter called the Tribunal), Madras. All the above appeals are now pending before the Tribunal.


While so, the petitioner-company filed petitions on 15th March, 1977, before the Tribunal which were diarised as serial Nos. 6767 to 6770 praying that it might be impleaded as party to Appeals Nos. 891 to 894 of 1976 filed by Dunlop India Limited. The Tribunal by its order dated 22nd March, 1977, returned the petitions on the ground that they did not fall under section 36(1) of the Act. The said order has been signed by the Secretary to the Tribunal. W.P. No. 682 of 1977 has been filed to quash the order of the Tribunal returning the petitions filed by the petitioner-company and to get itself impleaded in Appeal No. 891 of 1976 filed by Dunlop India Limited; and W.P. Nos. 1449, 1450 and 1451 of 1978 are filed to restrain the second respondent from taking up and considering Appeals Nos. 892, 893 and 894 of 1976.Counter-affidavits have been filed on behalf of respondents Nos. 1 and 2. According to the counter-affidavit, Dunlop India Limited is an assessee on the file of the first respondent. The first respondent revised the assessments for the years 1969-70 to 1972-73 by the order dated 10th November, 1975, by which it was held that the transactions between the assessee and the petitioner-company were sales eligible to single point tax at the assessee's hands. Against these orders, the assessee filed appeals before the Appellate Assistant Commissioner and the appellate authority concurred with the assessing authority in its finding as regards the liability of Dunlop India Ltd. to tax, but remanded the case for determination of the correct turnover. Against the said orders of the appellate authority, Dunlop India Limited have preferred Appeals Nos. 891 to 894 of 1976. Dunlop India Limited themselves have preferred petitions purporting to be under section 36(2) of the Act for impleading the petitioner-company as the second respondent. That petition is still pending consideration. While so, the petitioner filed four petitions before the Tribunal for being impleaded as a party in the appeals filed by Dunlop India Limited. As the petitions themselves were not maintainable, the Tribunal rejected the petitions under regulation 7(2) of the Sales Tax Appellate Tribunal Regulations. It is stated that since the petitioner-company was not a party before the assessing authority or the appellate authority, it had no locus standi to get itself impleaded as a party in the appeals before the Tribunal. It is further stated that under regulation 7(2) of the Sales Tax Appellate Tribunal Regulations, the Chairman, Sales Tax Appellate Tribunal, has power either to reject or order the papers to be returned to the party. The papers were returned in view of the fact that the Chairman had invoked the power under the said provisions.Mr. Parasaran, the learned counsel for the petitioner, raised the following contentions : (1) The petitioner was not heard before the second respondent passed the order returning the petitions filed by the petitioner-company to get itself impleaded in Appeals Nos. 891 to 894 of 1976. (2) The Tribunal has an inherent power to implied necessary or proper parties in the appeals, which are pending before them. (3) Under section 36 any person objecting to an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31 or an order passed by the Deputy Commissioner under sub-section (1) of section 32 has a right of appeal to the Tribunal. The words used in the section being "any person", any person aggrieved by the order of the Appellate Assistant Commissioner or the order passed by the Deputy Commissioner will have a right of appeal to the Tribunal. The words "any person" in the section, according to Mr. Parasaran, should not be confined only to the assessee alone against whom an order has been passed by the Appellate Assistant Commissioner or the Deputy Commissioner. In the submission of the learned counsel, the impact of the order of the assessing authority and the Appellate Assistant Commissioner, holding that the transaction between the petitioner and Dunlop India Limited is not in the nature of a works contract but in the nature of a sale, will be on the petitioner-company. Dunlop India Limited will be entitled to recover the amount of sales tax that might be levied against them from the petitioner-company. The amount involved will come to about Rs. 62, 00, 000. Therefore, the petitioner-company is aggrieved by the order of the assessing authority and the appellate authority and will have even a right of appeal against the order of assessment passed by the Appellate Assistant Commissioner under section 36 of the Act as a person aggrieved. If that is so, then certainly the petitioner-company will be a proper party in the appeals pending before the Tribunal. The real persons who will be affected by any order that might be finally passed by the Tribunal will be the petitioner-company and that, consequently, the petitioner-company has got a right to be heard in the appeals filed by Dunlop India Limited.The question for consideration is whether the contentions of the learned counsel for the petitioner are sustainable.


Though Mr. Parasaran, at the first instance, contended that the impugned order was liable to be set aside on the ground of violation of the principles of natural justice, in view of the fact that the petitioner was not beard before the order was passed, the learned counsel did not pursue this ground of objection. This is because ultimately the question whether the Tribunal had authority or jurisdiction to implead the petitioner-company in the appeals preferred by Dunlop India Limited is a question of law and that the same could be decided once for all by this Court.


The point that falls for consideration therefore is whether the Tribunal has jurisdiction to implead the petitioner-company in the appeals preferred by Dunlop India Limited.


In this context, it will be useful to understand the scheme of the Act. Section 2(g) defines a dealer as meaning any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes a local authority, company or Hindu undivided family which carries on such business, a casual trader, a commission agent, a broker or a del credere agent or an auctioneer or any other mercantile agent by whatever name called who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal and every local branch of a firm or company situated outside the State. Section 3 is the charging section. It states that every dealer other than a casual trader or agent of a non-resident dealer whose total turnover for a year is not less than fifty thousand rupees and every casual trader or agent of a non-resident dealer, whatever be his turnover for the year shall pay a tax for each year at the rate of four per cent of his taxable turnover. Section 11 states that the tax under the Act shall be assessed, levied and collected in such manner as may be prescribed. Section 12 deals with the procedure to be followed by the assessing authority. The assessment of a dealer shall be on the basis of the prescribed return relating to his turnover submitted in the prescribed manner within the prescribed period. If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incomplete or incorrect, the assessing authority shall, after making such enquiry as it may consider necessary, assess the dealer to the best of its judgment. Section 15 provides that where a dealer dies, his executor, administrator or other legal representative shall be deemed to be the dealer for the purposes of the Act and the provisions of the Act shall apply to him in respect of the business of the said deceased dealer and the liability of the executor, administrator or other legal representative is confined to the extent of the assets of the deceased dealer in his hands. Section 16 provides for assessment of escaped turnover. Section 18 deals with liability to tax of persons not observing restrictions and conditions notified under section 17. Section 20 provides for registration of dealers. Section 22 deals with collection of tax by a dealer. Section 23 provides for levy of penalty in certain cases. Sections 24 to 26 deal with payment and recovery of tax as well as recovery of penalty and mode of recovery. Section 31 provides that any person objecting to an order passed by the appropriate authority under section 4-A, section 12, section 14, section 15, sub-sections (1) and (2) of section 16, section 18, sub-section (2) of section 22, section 23 or section 27 may within a period of thirty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Assistant Commissioner having jurisdiction. Section 32 confers special suo motu powers on the Deputy Commissioner to call for and examine an order passed or proceeding recorded by the appropriate authority under section 4-A, section 12, section 14, section 15 or sub-sections (1) and (2) of section 16. Section 33 enables any person, objecting to an order passed or proceeding recorded under the Act for which an appeal has not been provided for in section 31, may within a period of thirty days from the date on which a copy of the order or proceeding was served on him in the manner prescribed, to file an application for revision of such order or proceeding to the Deputy Commissioner. Under section 34 suo motu power of revision has been conferred on the Board of Revenue to call for and examine an order passed or proceeding recorded by the appropriate authority under section 4-A, section 12, section 14, section 15 or sub-section (1) or (2) of section 16 or an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31 or by the Deputy Commissioner under sub-section (1) of section 32. Section 35 confers on the Board of Revenue powers of revision over the order passed by the Deputy Commissioner. Section 36 provides for appeal to the Appellate Tribunal. It reads as follows :

"(1) Any person objecting to an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31, or an order passed by the Deputy Commissioner under sub-section (1) of section 32 may, within a period of sixty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Tribunal :


Provided that the Appellate Tribunal may admit an appeal presented after the expiration of the said period if it is satisfied that the appellant had sufficient cause for not presenting the appeal within the said period.


(2) The appeal shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by such fee not exceeding one hundred rupees as may be prescribed.


(3) In disposing of an appeal, the Appellate Tribunal may, after giving the appellant a reasonable opportunity of being heard, -


(a) in the case of an order of assessment -


(i) confirm, reduce, enhance or annul the assessment or penalty or both;


(ii) set aside the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed; or


(iii) pass such other orders as it may think fit; or


(b) in the case of any other order, confirm, cancel or vary such order."


Section 37 provides for appeal to the High Court against an order of the Board of Revenue passed under section 34. Section 38 confers power of revision on the High Court against the orders of the Deputy Commissioner. It is therefore seen that only a dealer is affected either by an order of assessment or an assessment of escaped turnover under section 16. A dealer is given a right of appeal under section 31 to the Appellate Assistant Commissioner. In a dispute between the dealer and the commercial tax authorities regarding the correctness of the original assessment or assessment of escaped turnover, a third party has no interest at all to intervene. The question involved is purely one between the dealer concerned and the commercial tax authorities. Any assessment order that might be passed by the assessing authority or the various appellate or revisional authorities provided for in the Act will not be binding on any person other than the dealer. It is therefore difficult to conceive of a case where any person other than a dealer will be a necessary or a proper party either to the original assessment proceedings or in the appeals or revisions that may be filed by the dealer against the order of the assessing authority. The only persons who might be aggrieved by such orders will be the executor, administrator or other legal representatives of a dealer in the event of his death. In such a case, section 15 provides that where a dealer dies, his executor, administrator or the legal representatives shall be deemed to be the dealer for the purposes of this Act. Therefore, by virtue of this provision, they step into the shoes of the dealer in the proceedings taken under the different provisions of the Act.It is argued that under section 31 the right to object to an order passed by the appropriate authority is given to any person by preferring an appeal before the Appellate Assistant Commissioner. Similarly, under section 36 the right to prefer an appeal before the Tribunal against the order passed by the Appellate Assistant Commissioner is given to any person. It is further argued that the right of appeal is not confined only to a dealer. It must be implied that a right of appeal is also given to every person who feels aggrieved by the order of assessment. Extending this argument to the facts of this case, it is stated that by reason of the Appellate Assistant Commissioner and the assessing authority holding that the transaction between the petitioner-company and Dunlop India Limited is not a works contract but a sale, the petitioner-company will be liable to pay a sum of Rs. 62, 00, 000 to Dunlop India Limited. The petitioner-company is therefore an aggrieved person and will be consequently entitled to canvass the correctness of the order of the Appellate Assistant Commissioner confirming the original order of assessment before the Tribunal. A further argument is advanced that if section 36 is not so interpreted as to enable the petitioner-company to file an appeal or to intervene in the appeal preferred by Dunlop India Limited before the Tribunal, the petitioner-company will be without any remedy if Dunlop India Limited chooses not to press the appeal. I am not impressed by these contentions.


Sections 12, 14, 15 and sub-sections (1) and (2) of section 16 deal with orders of assessment. Under section 22 no person who is not a registered dealer shall collect any amount by way of tax or purporting to be by way of tax under the Act and no registered dealer shall make any such collection except in accordance with the provisions of the Act and the Rules made thereunder. Section 22(2) provides that if any person or registered dealer collects any amount by way of tax or purporting to be by way of tax in contravention of the provisions of sub-section (1), whether or not any tax is due from such person or dealer under the Act in respect of the transaction in which he collects such amount, the assessing authority may after giving such person or dealer a reasonable opportunity of being heard, by order in writing impose upon him by way of penalty a sum not exceeding one and a half times such amount. It is seen from this section that not only a registered dealer but also a person other than a registered dealer shall be subject to penalty if he contravenes the provisions of sub-section (1) of section 22. Section 31 similarly provides for an appeal against an order passed under section 23. Section 23 provides that if any person purchasing goods is guilty of an offence under clause (e) of sub-section (2) of section 45, the assessing authority may impose upon him by way of penalty a sum not exceeding one and a half times the tax payable on the turnover relating to the sale of such goods. It can therefore be seen that the words "any person" are used in contradistinction with the word "dealer" in sections 22(2) and 23. Such a person is given a right of appeal under section 31 against any order that might be passed against him under section 22(2) or 23. That is the reason why section 31 used the words "any person". Therefore, merely from the fact that a right of appeal is given under section 31 or 36 to "any person" it does not follow that a right of appeal is given to all persons whoever they may be who might for reasons known to them feel aggrieved by the order of either the assessing authority or the appellate authority. If the contention of the learned counsel for the petitioner is accepted then all persons with whom Dunlop India Limited might enter into contract for the manufacture and supply of tyres might have to be impleaded.Further, sections 31 and 36 contemplate that a copy of the order should be served on a person to enable him to file an appeal. It therefore follows that only a person against whom an order is passed will have a right of appeal.


Mr. Parasaran referred to section 96 of the Civil Procedure Code. The language of section 96 is that an appeal shall lie from every decree passed by any court exercising original jurisdiction to the court authorised to hear appeals from the decisions of such court. As a general principle no one can appeal from a decree unless he was a party to the action or was treated as such or is the legal representative of a party, or unless his privity in estate, title or interest is apparent on the face of the record. But a person who is not a party to the action may be allowed to appeal if he is adversely affected by the order, provided the appellate court thinks fit in its discretion to grant such leave. In State of Punjab v. Amar Singh the Supreme Court observed as follows :

"A person who is not a party to a decree or order may, with the leave of the court, prefer an appeal from such decree or order if he is either bound by the order or is aggrieved by it or is prejudicially affected by it."

It is therefore clear that any person claiming a right to prefer an appeal against a decree or order under section 96, C.P.C., must be a person who is bound by the decree or order or he is aggrieved by it or is prejudicially affected by it. In Maharaj Singh v. State of U.P. it is stated :

"The test whether a person is 'an aggrieved person' is to see whether he has a genuine grievance because an order has been made which prejudicially affects his interests." *


A person can be said to be aggrieved by an order only if that order directly affects or prejudices his interest. Decisions under section 96 have laid down that as a general rule a decision cannot be said to adversely affect a person unless it will operate as res judicata against him in any future suit. Therefore, under section 96, a person, who is not a party to the suit or his legal representative but cannot be affected by the decision of the court in any way, cannot file an appeal. It has been observed by a Bench of this Court in Kasi Chettiar v. Secretary of State 1941 AIR(Mad) 577.) that

"a right of appeal is not a mere matter of procedure. It is a substantive right and is primarily a creature of statute. As such, it can be exercised only by those in whom the power vests either expressly or by necessary implication" *


.Even if the principles, that have been applied to decide as to who will have a right of appeal under section 96, C.P.C., are applied to sections 31 and 36 of the Act, it will be clear that no person other than the person against whom an order has been passed will be adversely affected by the order and will be an aggrieved' person entitled to file an appeal. The assessment order will only be binding on the dealer who will be the assessee or his executor, administrator and legal representatives who are also deemed to be a dealer under the provisions of the Act. The petitioner, by any stretch of imagination, cannot be considered to be a person who is adversely or prejudicially or directly affected by the order of assessment. The effect of the order passed by the assessing authority is only that certain transactions of Dunlop India Limited would constitute a sale and not a works contract and, therefore, those transactions have to be included in the turnover of Dunlop India Limited for the years in question. Any opinion or finding that might be given by the assessing authority or by the appellate authorities under the Act on the question whether the transaction between Dunlop India Ltd. and the petitioner is a sale or a works contract will not be binding upon the petitioner and it will still be open to it to contend that this is only a works contract in any proceeding that may properly arise between Dunlop India Limited and the petitioner. If the assessment order or any of the orders of the appellate authorities confirming the assessment order is not binding on the petitioner, it cannot be said that the petitioner is aggrieved or adversely affected by such order. The order of assessment holding these transactions to be sale can only be enforced against Dunlop India Limited and if for any reason Dunlop India Limited does not pay the amount as per the order of assessment the commercial taxes department cannot enforce the order against the petitioner as the latter has nothing to do with Dunlop India Limited. Viewed from any point of view, it is not possible to conceive of any situation by which it can be said that the petitioner is adversely affected by the order. It is argued that the consequence of the commercial tax authorities holding that the supplies of tyres and rubber products by Dunlop India Limited to the petitioner under the agreement entered into between the two are in the nature of sale and not works contract will be to render the petitioner liable to pay to Dunlop India Limited the amount of sales tax levied on them on the said turnover. So far as the commercial tax authorities are concerned they are interested in realising the legitimate taxes from Dunlop India Limited. They are not concerned with the fact that, as a result of the order, Dunlop India Limited would be compelled to call upon the petitioner to reimburse the amount. The agreement between Dunlop India Limited and the petitioner itself does not make any reference to the petitioner's liability to pay the sales tax on the tyres and rubber products to be supplied by Dunlop India Limited if the transactions are found to be sale by the authorities concerned. Clause (c) of the agreement states that the petitioner would reimburse Dunlop India Limited with the cost of raw materials obtained by them for the manufacture of the goods. It is further agreed that the petitioner would pay a sum at the rate of 5 per cent of such cost of raw materials and production to cover incidental expenses to Dunlop India Limited. It is also further agreed that the petitioner would bear and pay Dunlop India Limited all actual charges and expenses incurred in connection with the said goods. On the face of the agreement there is no term by which the petitioner had unconditionally undertaken that it would pay whatever amount that Dunlop India Limited might be called upon to pay by way of sales tax if it is found by the commercial tax authorities that the transaction covered by the agreement constitutes a sale. Such being the case, the petitioner cannot be considered to be an aggrieved person entitling it to file an appeal under section 31 or 36 of the Act. Further it will be open to the petitioner to contend that the nature of the transaction between it and Dunlop India Limited is a works contract and not a sale in a civil court as and when Dunlop India Limited chooses to claim the amount from the petitioner. The right of the petitioner to get appropriate relief from the civil court is not taken away merely by the fact that in assessment proceedings against Dunlop India Limited the commercial tax authorities have held that the transaction in question is a sale and not a works contract. It therefore follows that the petitioner will not be a person entitled to file an appeal against the order of assessment either under section 31 or 36 of the Act. Therefore, the further argument that the petitioner is a necessary or a proper party in the appeals that are pending before the Tribunal also must fall to the ground. If the petitioner is not adversely affected or aggrieved by the order of assessment passed against Dunlop India Limited, the petitioner cannot be considered either to be a necessary party or a proper party in the appeals that are pending before the Tribunal. The petitioner will not equally be affected by whatever order that the Tribunal may pass in the appeals preferred by Dunlop India Limited.Mr. Parasaran then contended that there is an inherent power in the Appellate Tribunal to implead third parties in proceedings pending before it and the Tribunal was wrong in returning the applications preferred by the petitioner on the ground that they are not maintainable under section 36 of the Act. The existence of an implied or inherent power in any authority is based on the following principle found in Maxwell on the Interpretation of Statutes :


"Where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui jurisdictio data est, ea quoqe concessa esse vindentur, sine quibus jurisdictio explicari non potuit." *


The principle is thus stated in articles 5401 and 5402 of Sutherland Statutory Construction, III Edition :


"It is a firmly established rule that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective." *


In Domat's Civil Law, Cushing's Edition, Vol. 1, at page 88, it has been stated thus :


"It is the duty of the Judges to apply the laws, not only to what appears to be regulated by their express dispositions but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it."


Craies Observes :" One of the first principles of law with regard to the effect of an enabling act is that if a legislature enables something to be done, it gives power at the same time, by necessary implication, to do everything which is indispensable for the purpose of carrying out the purpose in view" *


(Craies on Statute Law, page 239). This principle is contained in the legal maxim

"quando lex aliquid concedit concedere videtur et illud sine quo res ipsa esse non potest" *


. This maxim has been translated in Broom's Legal Maxims, Tenth Edition, page 313, thus :

"Whenever anything is authorised, and especially if, as matter of duty, required to be done by law and it is found impossible to do that thing unless something else not authorised in express terms be also done, then that something else will be supplied by necessary intendment." *


In B. B. L. & T. Merchants' Association v. Bombay State Gajendragadkar, J., as he then was, observed as follows :


"In other words, the doctrine of implied powers can be legitimately invoked when it is found that a duty has been imposed or a power conferred on an authority by a statute and it is further found that the duty cannot be discharged or the power cannot be exercised at all unless some auxiliary or incidental power is assumed to exist. In such a case, in the absence of an implied power the statute itself would become impossible of compliance. The impossibility in question must be of a general nature so that the performance of duty or the exercise of power is rendered impossible in all cases. It really means that the statutory provision would become a dead-letter and cannot be enforced unless a subsidiary power is implied." *


In Income-tax Officer v. Mohd. Kunhi the Supreme Court had to consider the question whether the Income-tax Appellate Tribunal had an inherent power to grant stay. Grover, J., observed :


"An express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective. The powers which have been conferred by section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective." *


This principle has been reiterated by Ismail, J., in Ramamurthi v. Rangachari ( 1975 (1) MLJ 407.), where the learned Judge held that the appellate power of the Commissioner, H.R. & C.E., is not restricted by the statute either expressly or by necessary implication and it has been conferred in its widest possible term and includes a power to remand the matter to the Deputy Commissioner, viz., the original authority, for reconsideration which is incidental and necessary to effectively utilise the appellate power conferred upon him.Therefore no statutory authority has unlimited inherent powers. They have only such implied or incidental powers as are necessary for an effective exercise of the powers granted to them under the statute. In this particular case, the appellate power of the Tribunal under section 36(1) of the Act must be deemed to include by necessary implication all powers and duties incidental to and necessary for the effective exercise of its appellate jurisdiction. It cannot be contended that a power to implead third parties who are neither necessary parties nor proper parties for the effective disposal of the appeals preferred by Dunlop India Limited, the assessee, is also covered by necessary implication within its appellate jurisdiction. The nature of the incidental or implied powers held by a statutory authority for the effective exercise of its powers under the statute will vary from statute to statute and depend upon the particular context. Viewed in this light, I have no hesitation to repel the contention of the learned counsel for the petitioner that under section 36 of the Act the Tribunal had an inherent or implied or incidental power to implead all those who may feel themselves aggrieved by the assessment orders.


I shall now refer to certain decisions cited by Mr. Parasaran. The first is the decision in Dhani Devi v. S. B. Sharma. There, it was held that in the case of death of an applicant for the grant of a permit under the Motor Vehicles Act, the Regional Transport Authority has the power to substitute the person succeeding to the possession of the vehicle in place of the deceased applicant and to allow the successor to prosecute the application. This is on the principle that the relief sought for in the application is dependent upon and related to the possession of the vehicle. Therefore it was held that the application was capable of being revived at the instance of the person succeeding to the possession of the vehicle. This decision does not apply to the facts of the present case.The learned counsel then strongly relied upon the decision in Union of India v. Kailasam ((1974) 87 L.W. 670.). In that case, an accident to a motor vehicle took place at a railway-crossing gate. The claim petition was filed under the Motor Vehicles Act against the owner of the bus and the insurance company. The owner of the bus and the insurance company contended that it was the railway that was negligent inasmuch as the gateman employed at the level-crossing was responsible for the accident as he had kept the railway gate wide open for the highway traffic to pass, without any signal of the passing train. The claimants filed an interlocutory application to implead the railways. That was resisted by the railways on the ground that the Motor Accidents Claims Tribunal had no authority to hold the railways liable for payment of damages to the claimants. The Tribunal directed the railways to be impleaded as an additional party to the proceedings. Kailasam, J., as he then was, dismissed the revision petition filed by the railways on the ground that the question of negligence of the railways was a vital question and if it ultimately turned out that the Tribunal found the railways to be negligent, the railways would have a genuine grievance as that finding would be without giving an opportunity to them to repudiate the suggestion of negligence on their part. The situation before Kailasam, J., in that case was entirely different. There the question that directly arose was whether the accident happened due to the negligence of the driver of the bus or due to the negligence of the gateman of the railways employed at the level-crossing. Naturally therefore the railways were not only proper parties but also necessary parties to rebut any evidence that might be let in by the bus owner and the insurance company to throw the negligence on the part of the railways. In this particular case, there could be no competition between the petitioner and Dunlop India Limited in the proceedings pending before the Tribunal. It is open to the dealer, i.e., Dunlop India Limited, to produce all advance all necessary contentions before the tribunal to show that the transaction by which they made supplies of tyres and rubber products to the petitioner would constitute a works contract and not a sale. I am therefore of the view that the above decision is distinguishable on its own facts.The decision in Martin Burn Ltd. v. R. N. Banerjee ( 1958 SCR 514.) relates to the power of the Labour Appellate Tribunal to set aside an ex parte order. That turned upon the interpretation of section 9(1) of the Industrial Disputes (Appellate Tribunal) Act, Which invested the Labour Appellate Tribunal with the same powers as are invested in a civil court when hearing an appeal under the Code of Civil Procedure, 1908. Therefore, that decision cannot be of any help to the petitioner.


Having regard to the foregoing discussion, I am of the view that the petitioner is not entitled to be impleaded as a party in the appeals preferred by Dunlop India Limited against the orders of the Appellate Assistant Commissioner before the Tribunal. The Tribunal is a creature of the statute and all its powers must be confined to the four corners of the statute. Section 36 of the Act deals with the appellate jurisdiction conferred on the Tribunal and, consequently, it cannot be said that such a power to implead third parties as parties to the proceedings is either implied in the power conferred under section 36 or incidental to the said power. I therefore hold that there are no merits in these writ petitions. The writ petitions fail and are dismissed with costs. One set Rs. 500 - Advocate's fees.


ISMAIL, C.J. - These are appeals against the order of Padmanabhan, J., dated 26th September, 1979 (Page 275 supra.), dismissing Writ Petitions Nos. 682 of 1977 and 1449 to 1451 of 1978 filed by the appellant herein. The appellant, namely, Messrs. India Tyre and Rubber Company (India) Private Limited, Madras, carries on business in the sale of tyres and rubber products. It also holds a manufacturing licence for tyres and rubber products. On 4th May, 1960, it entered into an agreement with Dunlop India Limited, Madras, the third respondent in these appeals (hereinafter referred to as Dunlop), for the manufacture of tyres, tubes and accessories. According to the appellant, the transaction was in the nature of works contracts whereby Dunlop would apply labour and skill in the material of the appellant and would supply the product with the brand name of the appellant to be sold by the appellant in the open market. The further case of the appellant was that under the terms of the contract Dunlop would be entitled to he reimbursed the actual cost of raw materials obtained on behalf of the appellant and the cost of production together with incidental expenses at the rate of 5 per cent of the cost of such raw materials and production costs, and the appellant had covenanted to bear and pay all actual charges and expenses incurred in connection with the said goods. It is the case of the appellant that the nature of the transaction under which Dunlop agreed to manufacture tyres and rubber products for the appellant-company was works contract and the appellant-company had been submitting returns under the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as the Act), and the sales tax authorities had been finalising the assessments on the basis that the sales effected by the appellant alone were the first sales in the State and, therefore, taxable in this State. According to the appellant, till 1975, the sales tax authorities had accepted the nature of the transaction between the appellant and Dunlop as one of works contract. However, in 1975, the Commercial Tax Officer purported to take proceedings under section 16 of the Act for the assessment years 1969-70 to 1972-73 against Dunlop on the basis that the transaction between the appellant and Dunlop was one of sale and this factor had escaped the notice at the time of the original assessment. Overruling the objection of Dunlop the commercial tax authorities assessed Dunlop on the basis that it had sold the products manufactured by it to the appellant herein and the assessment orders were passed for the assessment years 1969-70 to 1972-73. Dunlop took up the matter further unsuccessfully before the Appellate Assistant Commissioner and ultimately it preferred appeals before the Sales Tax Appellate Tribunal (hereinafter referred to as the Tribunal) in Appeals Nos. 891 to 894 of 1976. When the said appeals were pending before the Tribunal the appellant filed a petition on 15th March, 1977, before the Tribunal praying that it may he impleaded as a party to the appeals, namely, Appeals Nos. 891 to 894 of 1976. The Tribunal, by its order dated 22nd March, 1977, returned the petition on the ground that it did not fall within the scope of section 36(1) of the Act. The appellant filed Writ Petition No. 682 of 1977 to quash the order of the Tribunal returning the petition filed by the appellant herein and to direct the Tribunal to implead the appellant as a party to the said appeals. Simultaneously, the appellant herein filed Writ Petitions Nos. 1449 to 1451 of 1978 for the issue of a writ of mandamus restraining the Tribunal from taking up and considering Appeals Nos. 891 to 894 of 1976 filed by Dunlop. The matter came before Padmanabhan, J., and the learned judge held that the appellant had no right to get itself impleaded as a party in the appeals preferred by Dunlop and, therefore, the return of the petition filed by the appellant was correct and that there was no question of the Tribunal being restrained from proceeding with the appeals filed by Dunlop. In this view, the learned Judge dismissed all the writ petitions. Hence the present appeals.Mr. K. K. Venugopal, the learned counsel for the appellant, contended that once the assessment on Dunlop becomes final, the appellant will have to pay the tax to Dunlop and, consequently, the appellant will be really affected by any order the Tribunal may pass in rejecting the appeals preferred by Dunlop and, therefore, the appellant has sufficient interest in the matter pending before the Tribunal and to have itself impleaded as a party to the appeals. The learned counsel for the appellant further contended that the principles of natural justice would be violated if the appeals preferred by Dunlop are dismissed, because, in such an event, Dunlop would claim the amount from the appellant and the appellant would have no answer to the claim, with the result, the appellant would be rendered liable to pay the amount without the appellant having an opportunity to sustain its contention as well as the contention of Dunlop that the nature of the transaction entered into between the parties was one of works contract. The learned counsel further drew our attention to sections 48 and 51 of the Act for the purpose of contending that in view of these statutory provisions, the appellant will have no remedy even to file a suit to question the correctness of the assessments made on Dunlop and that fact should he taken into account in determining the scope of the jurisdiction of the Tribunal for entertaining a petition like the one filed by the appellant herein before the Tribunal.


We have carefully considered the arguments of the learned counsel and we see no ground to differ from the view taken by the learned judge.


The learned judge, in the course of his order, has elaborately referred to the different sections contained in the Act and the purposes for which those sections were enacted. The result of such a consideration and discussion was the conclusion that the assessment of sales tax on a dealer in respect of his transactions is a matter entirely between the assessee and the commercial taxes department and there is absolutely no scope for anybody else coming on the scene and putting forward any contention either supporting the stand of the assessee or opposing the stand of the assessee. The learned judge pointed out that since the question of assessment is an entirely exclusive matter between the assessee and the department, any order that may be passed with regard to the assessment on a dealer cannot be said to be binding on any other person and, therefore, from this point of view also there cannot be said to be any violation of principles of natural justice.Before we proceed to deal with the arguments advanced before us, we may mention one thing immediately. The petition filed by the appellant herein before the Tribunal was returned by the Secretary to the Tribunal under the powers delegated to him by the Chairman of the Tribunal. Mr. Venugopal made it clear to us that he was not challenging the order on the ground that the Secretary had no right to return the petition and his argument was based on the assumption that the petition filed by the appellant had been returned by the Tribunal itself.


The main argument repeatedly put forward before us by Mr. Venugopal was that if the appeals preferred by Dunlop are dismissed by the Tribunal, the appellant will have to reimburse Dunlop in respect of the tax paid by it to the commercial taxes department and, therefore, the appellant will be damnified by any such order and, consequently, it must be given a chance to enter into the scene and defend the stand of Dunlop. We are unable to accept this contention. From the very nature of the case, the provisions of the Sales Tax Act are intended to deal with procedure for assessment and recovery of tax from a dealer who is liable to pay sales tax to the Government. The enactment is a taxing statute pure and simple and it does not purport to deal with any other claim by any other person against the assessee. The commercial taxes department is not concerned with the effect which the assessment made on a dealer may have on somebody else. All that the commercial taxes department is concerned with is to assess the dealer according to the provisions contained in the Act and realise the tax from him. Any claim between the assessee and a third party is totally foreign to the scheme of the provisions of the Act. A reading of the entire provisions of the Act makes it clear that it is a matter exclusively between the dealer who is liable to pay the tax under the Act and the authorities who are competent to levy the tax and collect the same, and there is no scope whatever for anybody else entering the arena either in support of the assessee or against the assessee. As we have pointed out already, the learned counsel's contention was that sections 43 and 51 of the Act prohibit any person challenging the validity of an assessment in any other proceeding and, therefore, if the appeals preferred by Dunlop are dismissed by the Tribunal, the appellant will he without a remedy for questioning the assessment. We are of the opinion that even assuming that sections 48 and 51 constitute an absolute bar to any person challenging the validity of an assessment in other proceedings except what is contemplated by the Act, still that will not enlarge the scope of the jurisdiction of the Tribunal to hear and determine the appeals properly instituted before it. Sections 48 and 51 of the Act read as follows :

"48. Assessment, etc., not to be questioned in prosecution. - (1) The order of assessment made under this Act shall be conclusive evidence in any prosecution or other proceeding.


(2) The validity of the assessment of any tax, or of the levy of any fee or other amount, made under this Act, or the liability of any person to pay any tax, fee or other amount so assessed or levied shall not be questioned in any criminal court in any prosecution or other proceeding, whether under this Act or otherwise."


" 51. Bar of suits and proceedings to set aside or modify assessments except as Provided in this Act. - (a) No suit or other proceedings shall, except as expressly provided under this Act he instituted in any court to set aside or modify any assessment made under this Act.


(b) No injunction shall he granted by any court in respect of any assessment made, or to be made, or in respect of any action taken, or to be taken, in pursuance of any of the provisions of this Act." *


The very purpose of the provisions contained in sections 48 and 51 is to avoid parallel proceedings as between the parties. Sections 48 and 51 are based on the assumption that a person who is interested in challenging the validity of an assessment should follow the procedure prescribed in the Act, and once he has followed the procedure prescribed in the Act, that is the end of the matter and he cannot thereafter reopen the whole thing by resorting to any other method by way of a defence to a prosecution as contemplated by section 48 or by way of initiating independent proceedings as contemplated by section 51. Therefore, it is reasonable to infer that the bar imposed by sections 48 and 51 will apply only to those persons who have got the remedy of having the assessment challenged according to the procedure prescribed by the Act itself. If a person does not have the competency to challenge the assessment according to the procedure prescribed by the Act, we do not think that the bar provided for in sections 48 and 51 will come into operation, provided such a person has got the necessary cause of action for initiating the other proceedings. Therefore, in our opinion, simply because sections 48 and 51 imposes a bar on questioning the validity of an assessment order in other proceedings it cannot be inferred that the scope of the jurisdiction of the officers and authorities functioning under the Act dealing with an assessment made under the Act should be enlarged.Let us now take up section 36 itself which is the section under which Dunlop had preferred appeals before the Tribunal. Sub-section (1) of section 36 of the Act reads as follows :

"36. Appeal to the Appellate Tribunal. - (1) Any person objecting to an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31, or an order passed by the Deputy Commissioner under sub-section (1) of section 32 may, within a period of sixty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Tribunal :


Provided that the Appellate Tribunal may admit an appeal presented after the expiration of the said period if it is satisfied that the appellant had sufficient cause for not presenting the appeal within the said period." *


The learned counsel for the appellant, at one stage of the argument, sought to contend that section 36 is not confined only to an assessee or a dealer preferring an appeal, and it uses the expression "any person objecting to an order ...." and, therefore, even a person other than the assessee, who may have sufficient interest in the assessment proceedings can prefer an appeal. We are unable to sustain this argument either. As a matter of fact, the expression "any person objecting to an order" occurring in section 36 is repeated in every one of the sections providing for an appeal or revision or review. In fact, section 31 is the section dealing with an appeal to the Appellate Assistant Commissioner against the order of the original authority, namely, the assessing officer. Even that section opens by saying "any person objecting to an order passed by the appropriate authority." Section 33 deals with the powers of revision by the Deputy Commissioner. Even that section opens by saying "any person objecting to an order passed ...." Similarly, section 35 deals with the powers of revision by the Tribunal. That section also opens by saying

"any person objecting to an order passed by the Deputy Commissioner under sub-section (3) of section 33 ..." *


We have already referred to the language of section 36. Section 37 deals with appeal to the High Court and that section also opens by saying

"any person objecting to an order passed by the Board of Revenue under section 34 ..." *


Section 38(1) provides for revision to the High Court and that section also says :


"Within ninety days from the date on which a copy of the order under sub-section (3) or sub-section (6) of section 36 is served in the manner prescribed, any person who objects to such order or the Deputy Commissioner may prefer a petition to the High Court on the ground that the Appellate Tribunal has either decided erroneously or failed to decide any question of law." *


Thus, it is clear that, the statute throughout uses the expression "any person objecting to an order". It does so for the simple reason that the statute itself contemplates persons other than a dealer being subjected to certain liabilities and since it is the intention of the statute that those persons also must be in a position to take up the matter further, the sections mentioned above use the expression "any person objecting to an order". In fact, the learned Judge refers to sections 22 and 23 for instance and from those sections, it is seen that there are persons other than the dealers who are subjected to some liability under the Act and those persons also are enabled to take up the matter further and that is why the expression "any person" occurs in those sections. The learned Judge states :


"Under section 22 no person who is not a registered dealer shall collect any amount by way of tax or purporting to be by way of tax under the Act and no registered dealer shall make any such collection except in accordance with the provisions of the Act and the Rules made thereunder. Section 22(2) provides that if any person or registered dealer collects any amount by way of tax or purporting to be by way of tax in contravention of the provisions of sub-section (1), whether or not any tax is due from such person or dealer under the Act in respect of the transaction in which he collects such amount, the assessing authority may after giving such person or dealer a reasonable opportunity of being heard, by order in writing impose upon him by way of penalty a sum not exceeding one and a half times such amount. It is seen from this section that not only a registered dealer but also a person other than a registered dealer shall be subject to penalty if he contravenes the provisions of sub-section (1) of section 22. Section 31 similarly provides for an appeal against an order passed under section 23. Section 23 provides that if any person purchasing goods is guilty of an offence under clause (e) of sub-section (2) of section 45, the assessing authority may impose upon him by way of penalty a sum not exceeding one and a half times the tax payable on the turnover relating to the sale of such goods. It can therefore he seen that the words 'any person' are used in contradistinction with the word 'dealer' in sections 22(2) and 23. Such a person is given a right of appeal under section 31 against any order that might be passed against him under section 22(2) or 23. That is the reason why section 31 used the words 'any person'. Therefore, merely from the fact that a right of appeal is given under section 31 or 36 to 'any person' it does not follow that a right of appeal is given to all persons whoever they may be who might for reasons known to them feel aggrieved by the order of either the assessing authority or the appellate authority." *


While agreeing with the above observations of the learned judge, we may point out that there are other provisions also in the Act which impose some liability or other than a dealer and that is the reason why the expression "any person objecting to an order" has been uniformly used in all the provisions dealing with appeals, revision or review. Whatever may be said of it, it can certainly be stated that "any person" contemplated by section 36 is a person on whom the statute directly imposes a liability and such a liability has been determined by a competent authority under the provisions of the Act and it can have no reference whatever to a person who is not immediately concerned with the proceeding under the Act and a person on whom the statute itself has not imposed any liability or obligation. By no stretch of imagination in this case it can be said that the statute has imposed any liability or obligation on the appellant herein with reference to the assessment to tax on the transactions of Dunlop. Therefore, we are clearly of the opinion that the appellant cannot be said to be a person who is competent to prefer an appeal under any of the provisions. We are dealing with the above question only because Mr. K. K. Venugopal contended that in view of the interest which the appellant has in sustaining the contention of Dunlop that the transaction constituted only a works contract, even if Dunlop did not prefer an appeal, the appellant would be entitled to prefer an appeal and, therefore, the appellant would be justified in getting itself impleaded as a party to the appeals preferred by Dunlop.


There are certain other circumstances also which will indicate that a person like the appellant, who is not directly and immediately concerned with the assessment made under the Act and on whom the Act itself has not imposed any liability or obligation, cannot prefer an appeal or get himself impleaded as a party to the appeal preferred by the dealer or the assessee. In dealing with the period of limitation within which the appeal should be filed, each one of these provisions expressly states that the period should be calculated from the date on which the order was served on the person who prefers the appeal. Certainly in this case, the order, which is the subject-matter of the appeals before the Tribunal could not have been served on a person like the appellant, who is a third party to the proceedings, and could have been served only on the person who has been assessed to tax and from whom the tax is demanded. If that also is taken into account, that constitutes the clearest possible indication that only a person on whom the authority functioning under the Act has imposed a liability or obligation, is given the right to prefer an appeal.There is also another circumstance which is present in all the cases of appeals whether it is an appeal under section 31 or under section 36 or an appeal to the High Court under section 37 or a revision to the High Court under section 38. In each one of these provisions, the situation as to what should happen to the liability to pay the tax under the order challenged is dealt with. In sub-section (5) of section 31 it is stated :


"Notwithstanding that an appeal has been preferred under sub-section (1), the tax shall be paid in accordance with the order of assessment against which the appeal has been preferred : Provided that the Appellate Assistant Commissioner may, in his discretion, give such directions as he thinks fit in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to his satisfaction, in such form and in such manner as may be prescribed." *


A similar language occurs in the other provisions also. These provisions inevitably contemplate the appellant being the assessee liable to pay tax and he being called upon to furnish security in the event of the appellant being given time for payment of the tax or the collection of the tax is being stayed. This is yet another indication to show that "any person" contemplated under the opening portions of the sections referred to above is the person on whom a liability to Pay tax, or liability to pay penalty or any other obligation has been imposed.


Mr. Venugopal logically contended that so long as somebody has got an interest in the matter, that interest being a real interest, he must be given an opportunity to put forward his own case and the principles of natural justice require such a procedure to he followed. In fact, he went to the extent of contending that under the Sales Tax Act, a dealer who is liable to pay tax is entitled to pass his tax to the purchaser and each one of the purchasers will have a real interest in the liability of the seller to pay tax, because when the seller is not liable to pay tax, he could not collect it from the purchaser and each one of the purchasers is a person entitled to file an appeal against the order of assessment made on the seller or entitled to intervene in an appeal preferred by the seller. We are clearly of the opinion that it is impossible to subscribe to any such proposition of law by converting the authorities or Tribunals created under the statute into a regular court for the purpose of deciding all disputes inter se between the dealer and other parties and certainly the authorities constituted under the statute do not have any such power and their powers are limited by the functions assigned to them and by the rules of procedure framed therefor.It may also be pointed out that section 54 of the Act itself provides as to what powers the authorities functioning under the Act will have by way of procedure. Section 54(1) states :


"An assessing authority or an appellate or revising authority (including the Appellate Tribunal) or any officer of the commercial taxes department not lower in rank than an Assistant Commercial Tax Officer shall, for the purposes of this Act, have all the powers conferred on a court by the Code of Civil Procedure, 1908 (Central Act 5 of 1908), for the purpose of -


(a) summoning and enforcing the attendance of any person and examining him on oath or affirmation; and


(b) compelling the production of any document." *


These are the only powers which the statute has conferred on the authorities functioning under the Act. Consequently, by implication, all other powers must be deemed to have been excluded except any power that may be said to be ancillary or incidental power for the purpose of the effective exercise of the actual power conferred on the authorities. Mr. K. K. Venugopal conceded that he is not relying on this ancillary or incidental power in support of his contention, because without the appellant, being impleaded as a party, the Tribunal can certainly exercise the appellate powers fully and effectively in disposing of the appeals preferred by Dunlop. But we are referring to section 54(1) merely for the purpose of showing that the authorities functioning under the Act are created by the Act for the purpose of enforcing the provisions of the Act and they being the creatures of that statute, their powers and jurisdiction have to be gathered only from the provisions and the purposes of the Act and from nothing else. This also, in our opinion, is a ground to reject the claim of the appellant herein.There is one thing more to which we would like to draw attention. That is the provision contained in section 57 of the Act. Section 57(1) states :


"All particulars contained in any statement made, return furnished or accounts, registers, records or documents produced under the provisions of this Act or in any evidence given or affidavit or deposition made, in the course of any proceeding under this Act or in any record of any proceeding relating to the recovery of a demand, prepared for the purposes of this Act shall be treated as confidential and shall not be disclosed." *


This is a provision similar to the one found in the Income-tax Act. But this provision is enacted to secure a complete and full disclosure of all materials relevant to the assessment from the assessee. If the flood-gate is wide open galore, and every purchaser would come on record and intervene in the appeal it will be totally opposed to the spirit and purpose behind the provision referred to above, namely, the desirability and necessity for treating the materials as confidential.


There is one other circumstance also to which we would like to draw attention. Padmanabhan, j., in his order, has expressly pointed out :


"On the face of the agreement there is no term by which the petitioner had unconditionally undertaken that it would pay whatever amount that Dunlop India Limited might be called upon to pay by way of sales tax if it is found by the commercial tax authorities that the transactions covered by the agreement constitute a sale." *


The necessity for making these observations arose because the appellant repeatedly contended before us as he had done before the learned judge also that the moment Dunlop is assessed to sales tax, the appellant would be liable to the same by way of reimbursing Dunlop under the terms of the agreement. It is in view of this only the learned judge has made this observation and in the grounds of appeal objection has been taken to this observation of the learned Judge. Though it will not be strictly relevant to decide this question in the present proceeding, certainly this Court is entitled to express it prima facie by way of rejecting the claim of the appellant herein. In this context reliance is placed exclusively on the following clause occurring in the agreement entered into between the appellant and Dunlop :

"In the manufacture of the said goods we will reimburse you with the cost of raw materials obtained on our behalf by you for manufacture of the said goods and the cost of production thereof. In addition, we will pay you a sum at the rate of 5 per cent of such cost of raw materials and production to cover you for incidental expenses. We will also bear and pay you all actual charges and expenses incurred in connection with the said goods. It is understood however that the sum of 5 per cent referred to above may be varied at any time and from time to time by mutual consent."


Even in this clause reliance is placed only on the sentence" we will also bear and pay you all actual charges and expenses incurred in connection with the said goods" *


. We are clearly of the opinion that the sales tax which may be paid by Dunlop cannot be comprehended by the expression "actual charges and expenses incurred in connection with the said goods". Obviously that clause intended to deal with any expenses which may be incurred by way of storage or conveyance or delivery, etc., and certainly not sales tax. We are expressing this opinion for the simple reason that the expression "sale" has been defined in section 2(n) of the Act as meaning every transfer of the property in the goods by one person to another. The liability to pay sales tax does not arise unless the goods already manufactured are sold by the manufacturer to somebody else, and once the manufacturer, in this case Dunlop, sells the goods to the appellant herein to pay sales tax, certainly that sales tax cannot come within the expression "actual charges and expenses incurred in connection with the said goods". Consequently, Padmanabhan, j., is right in this behalf also, even though for the purpose of negativing the relief claimed by the appellant such a finding is not strictly necessary.The learned counsel, Mr. Venugopal, repeatedly referred to section 64A of the Sale of Goods Act. Sub-section (1) of that section provides :


"Unless a different intention appears from the terms of the contract, in the event of any tax of the nature described in sub-section (2) being imposed, increased, decreased or remitted in respect of any goods after the making of any contract for the sale or purchase of such goods without stipulation as to the payment of tax where tax was not chargeable at the time of the making of the contract, or for the sale or purchase of such goods tax-paid where tax was chargeable at that time, -


(a) if such imposition or increase so takes effect that or increased tax, as the case may be, or any part of such tax is paid or is payable, the seller may add so much to the contract price as will be equivalent to the amount paid or payable in respect of such tax or increase of tax, and he shall be entitled to be paid and to sue for and recover such addition; and


(b) if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case may be, is paid or is payable, the buyer may deduct so much from the contract price as will be equivalent to the decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in respect of, such deduction."


Sub-section (2) of the said section is to the following effect :


" The provisions of sub-section (1) apply to the following taxes, namely :-


(a) any duty of customs or excise on goods;


(b) any tax on the sale or purchase of goods." *


We are unable to see any relevancy of this provision to the point in controversy. All that the section says is that it is open to the parties to agree as between themselves as to who should bear the burden of the tax not imposed at the time of the contract, but subsequently imposed or increased and who should get the benefit of the subsequent abolition of or decrease in the tax in force at the time of the contract. Even there, if the contract does not provide for it the section provides for what should be the relative rights and obligations of the parties to the contract. The section does not say that the person who is entitled to the benefit of the abolition or reduction of the tax or liable to pay the tax imposed or increased can intervene in the assessment proceedings of the other party in order to protect his right. Mr. Venugopal did not draw our attention to any decision of any court even under this section holding that the person who will be entitled to the benefit thereunder (of the tax either by way of reduction or addition) will have a right to intervene in the assessment proceedings taken against the other party. Therefore, we are of the opinion that even this section is not of any assistance to support the contention of the learned counsel.Mr. K. K. Venugopal drew our attention to three decisions in support of his contention that the Tribunal has the power to implead the appellant herein as a party to the appeals preferred by Dunlop. The first of the said decisions is a judgment of a Division Bench of this Court reported in Nadar Transports, Ti

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ruchirapalli, by its Managing Partner v. State of Madras, represented by the Secretary to Government, Home Department, Madras ( 1952 (2) MLJ 361.). In this case, the court was considering the scope of section 64(a) of the Motor Vehicles Act as it stood then. The judgment extracted the relevant provisions contained therein as follows : "Two sub-sections of section 64 of the Motor Vehicles Act are relevant in this connection. Under sub-section (a) 'any person aggrieved by the refusal of the Provincial or a Regional Transport Authority to grant a permit or by any condition attached to a permit granted to him, ' and under sub-section (f) any person .... who, having opposed the grant of a permit, is aggrieved by the grant thereof ..... .may, within the prescribed time and in the prescribed manner, appeal to the prescribed authority who shall give such person and the original authority an opportunity of being heard'." * The question which came to be considered by that Bench was that as the statute contemplated giving of an opportunity of being heard in the disposal of the appeal only to the person who preferred the appeal and the original authority who passed the order, what should happen to the person in whose favour the original order came to be passed. Only in that context, the court held that the person who succeeded before the original authority must be given an opportunity to sustain the order of the original authority, because, the allowing of the appeal only on hearing the appellant and the original authority will result in an order detrimental to or adverse to the claim or interest of the other person referred to above and that would violate the principles of natural justice. That is far different from the facts of the present case. That was a case where the other person will be directly affected by the allowing of the appeal without he being heard. But, in the present case, if the appeals of Dunlop are dismissed it cannot be said that the appellant will be directly affected by that order. If at all, the liability of the appellant will arise as a result of a totally independent transaction entered into between the appellant and Dunlop with which neither the Sales Tax Act nor the authorities functioning thereunder have anything to do.The other decision relied on is that of the Supreme Court in State of Gujarat v. Ambalal Haiderbhai. The Supreme Court in that case was concerned with the scope of the enquiry under rule 4 of the Land Acquisition (Companies) Rules, 1963. In dealing with that rule, the Supreme Court observed : "Although the above-mentioned rule is silent regarding the mode and method of the enquiry to be held by the Collector and the report of the Collector is of a recommendatory character, yet regard being had to the legislative history and purpose of the rule, and the mischief sought to be prevented, we have no hesitation in holding that, in conducting the enquiry, the Collector has, in the interest of fair play, to observe the principles of natural justice by affording the persons interested in the land a reasonable opportunity of being heard and of adducing material before the Collector to refute the allegations of the company. The concept Of natural justice as evident from the observations made in A. K. Kraipak's case has undergone a great deal of change in recent years." * We are of the opinion that that decision also has no relevancy to the facts of the present case because the Supreme Court in that case was dealing with a person interested in the land which was sought to be acquired and which has got a specific and definite connotation of its own. The learned counsel for the appellant also drew our attention to an unreported judgment of the Supreme Court in Civil Appeal No. 1098(N) of 1971 [Himalaya Tiles & Marbles (P.) Ltd. v. Francis Victor Coutinho (dead) by L.Rs. In that case the Supreme Court again had an occasion to consider the scope of the expression "any person interested" occurring in section 18(1) of the Land Acquisition Act. After extracting section 18(1) of the said Act, the Supreme Court observed : "It seems to us that the definition of 'a person interested' given in section 18 is an inclusive definition and must be liberally construed so as to embrace all persons who may be directly or indirectly interested either in the title to the land or in the quantum of compensation. In the instant case, it is not disputed that the lands were actually acquired for the purpose of the company and once the land vested in the Government, after acquisition, it stood transferred to the company under the agreement entered into between the company and the Government. Thus it cannot he said that the company had no claim or title to the land at all. Secondly, since under the agreement the company had to pay the compensation, it was most certainly interested in seeing that a proper quantum of compensation was fixed so that the company may not have to pay a very heavy amount of money. For this purpose, the company could undoubtedly appear and adduce evidence on the question of the quantum of compensation." * In our opinion, this decision also is not of any assistance to support the contention of the learned counsel for the appellant in the present case for more than one reason. In the first place, the Supreme Court was considering the scope of the expression "any person interested" occurring in the statutory provision and we are not concerned with any such situation in the present case. Secondly, when the Government propose to acquire a land for a company, the very Land Acquisition Act contemplates the Government entering into an agreement with the company and thereafter proceeding to acquire the land. As a matter of fact, section 41 of the Land Acquisition Act actually provides for the agreement to be entered into between the appropriate Government and the company on whose behalf the acquisition is to be made and states that the appropriate Government shall require the company to enter into an agreement with the Government providing to the satisfaction of the Government for the following matters, namely :(1) the payment to the appropriate Government of the cost of the acquisition; (2) the transfer, on such payment, of the land to the company; (3) the terns on which the land shall he held by the company, etc. The Land Acquisition Manual published under the authority of the Government of Tamil Nadu contains a form of the agreement to be entered into between the Government and the company, and one of the clauses contained therein is : "The company shall pay to the Government before the said land is transferred to the company the cost of the land as settled by the District Revenue Officer, Collector or if reference is made to court, by the final court of appeal, and all costs of acquisition inclusive of all payments and allowances in respect thereof payable under the said Act and all court's costs, pleader's fees, etc., incurred by the Government in defending the reference. If any made to the court as aforesaid and on appeal or appeals filed in connection therewith and all costs, pleader's fees, interest, etc., payable or paid by the Government to the claimants in the said reference and appeal ........" * Consequently, the agreement which the Supreme Court was considering was a statutory agreement contemplated in the Land Acquisition Act itself and, therefore, it can have no relevancy to a case like the present one where we are considering a single agreement between the two parties totally unconnected with the rights and liabilities under the Act. Hence, this decision also is not of any assistance to support the contention of the learned counsel. No other point was urged before us. Hence, the writ appeals fail and are dismissed. There will be no order as to costs.
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