Hon'ble Arjit Pasyat & Hon'ble S. H. Kapadia, JJ.

Appeal (Civil)  2595-2596 of 2000


Civil Appeal nos. 2597-2598 of 2000

Star Paper Mills Ltd.


State of U.P. & Ors.

Date of Decision        : 19th September, 2006

Constitution-Article 226-Scope for dismissal of Writ on the ground of alternate remedy.


Whether the High court was justified in dismissing the Writ Petition under Article 226 of the Constitution on the ground that alternate remedy was available?


The Hon’ble Apex Court has expressed its views as follows:

“Except for a period when Article 226 was amended by the Constitution (42nd Amendment) Act, 1976, the power relating to alternative remedy has been considered to be a rule of self imposed limitation. It is essentially a rule of policy, convenience and discretion and never a rule of law. Despite the existence of an alternative remedy it is within the jurisdiction of discretion of the High Court to grant relief under Article 226 of the Constitution. At the same time, it cannot be lost sight of that though the matter relating to an alternative remedy has nothing to do with the jurisdiction of the case, normally the High Court should not interfere if there is an adequate efficacious alternative remedy. If somebody approaches the High Court without availing the alternative remedy provided the High Court should ensure that he has made out a strong case or that there exist good grounds to invoke the extra-ordinary jurisdiction.

8.       Constitution Benches of this Court in K.S. Rashid and Sons v. Income Tax Investigation Commission and Ors. (AIR 1954 SC 207); Sangram Singh v. Election Tribunal, Kotah and Ors. (AIR 1955 SC 425); Union of India v. T.R. Varma (AIR 1957 SC 882); State of U.P. and Ors. v. Mohammad Nooh (AIR 1958 SC 86); and M/s K.S. Venkataraman and Co. (P) Ltd. v. State of Madras (AIR 1966 SC 1089), held that Article 226 of the Constitution confers on all the High Courts a very wide power in the matter of issuing writs. However, the remedy of writ is an absolutely discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted.

9.       Another Constitution Bench of this Court in State of Madhya Pradesh and Anr. vs. Bhailal Bhai etc. etc. (AIR 1964 SC 1006) held that the remedy provided in a writ jurisdiction is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defence legitimately open in such actions. The power to give relief under Article 226 of the Constitution is a discretionary power. Similar view has been re-iterated in N.T. Veluswami Thevar v. G. Raja Nainar and Ors. (AIR 1959 SC 422); Municipal Council, Khurai and Anr. v. Kamal Kumar and Anr. (AIR 1965 SC 1321); Siliguri Municipality and Ors. v. Amalendu Das and Ors. (AIR 1984 SC 653); S.T. Muthusami v. K. Natarajan and Ors. (AIR 1988 SC 616); R.S.R.T.C. and Anr. v. Krishna Kant and Ors. (AIR 1995 SC 1715); Kerala State Electricity Board and Anr. v. Kurien E. Kalathil and Ors. (AIR 2000 SC 2573); A. Venkatasubbiah Naidu v. S. Chellappan and Ors. (2000 (7) SCC 695); and L.L. Sudhakar Reddy and Ors. v. State of Andhra Pradesh and Ors. (2001 (6) SCC 634); Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha and Anr. v. State of Maharashtra and Ors. (2001 (8) SCC 509); Pratap Singh and Anr. v. State of Haryana (2002 (7) SCC 484) and G.K.N. Driveshafts (India) Ltd. v. Income Tax Officer and Ors. (2003 (1) SCC 72).

10.     In Harbans Lal Sahnia v. Indian Oil Corporation Ltd. (2003 (2) SCC 107), this Court held that the rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of compulsion and the Court must consider the pros and cons of the case and then may interfere if it comes to the conclusion that the petitioner seeks enforcement of any of the fundamental rights; where there is failure of principles of natural justice or where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged.

11.     In G. Veerappa Pillai v. Raman & Raman Ltd. (AIR 1952 SC 192); Assistant Collector of Central Excise v. Dunlop India Ltd. (AIR 1985 SC 330); Ramendra Kishore Biswas v. State of Tripura (AIR 1999 SC 294); Shivgonda Anna Patil and Ors. v. State of Maharashtra and Ors. (AIR 1999 SC 2281); C.A. Abraham v. I.T.O. Kottayam and Ors. (AIR 1961 SC 609); Titaghur Paper Mills Co. Ltd. v. State of Orissa and Anr. (AIR 1983 SC 603); H.B. Gandhi v. M/s Gopinath and Sons (1992 (Suppl.) 2 SCC 312); Whirlpool Corporation v. Registrar of Trade Marks and ors. (AIR 1999 SC 22); Tin Plate Co. of India Ltd. v. State of Bihar and Ors. (AIR 1999 SC 74); Sheela Devi v. Jaspal Singh (1999 (1) SCC 209) and Punjab National Bank v. O.C. Krishnan and Ors. (2001 (6) SCC 569), this Court held that where hierarchy of appeals is provided by the statute, party must exhaust the statutory remedies before resorting to writ jurisdiction.”

The Hon’ble Supreme Court has further observed as under:

“There are two well recognized exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their full course. Secondly, the doctrine has no application when the impugned order has been made in violation of the principles of natural justice. We may add that where the proceedings itself are an abuse of process of law the High Court in an appropriate case can entertain a writ petition.”





Hon'ble Ashok Bhan & Hon'ble Markandy Katju JJ.

Appeal (civil)  1610 of 2006

MRF Ltd., Kottayam


Assistant Commissioner (Assessment) Sales Tax & Ors.                                                    

Date of Decision : 21.09.2006

Industrial Incentives- The Kerala General Sales Tax Act, 1968-Section 10-Exemption from tax to units going for expansion/diversification/ modernization - SRO No. 1729/93 -Eligibility Certificate contain the date of commencement of commercial production and the monetary limit of exemption the unit is eligible for-Definition of word ‘Manufacture’ for the purpose of SRO 1729/93-Amendments and modifications in SRO No. 1729/93 by SRO No. 38/98 dated 15-1-1998 read with SRO No. 491/98, and SRO No. 1092/99 dated 31.12.1999-Effect of SRO No. 1092/99 on units which have been granted Eligibility Certificate before January 01, 2000-Appellant commenced commercial production on 31.12.1996 and was granted Eligibility Certificate on 30.6.1998-Application of SRO No. 38/98 & SRO No. 1092/99.

Whether amendment made in SRO No. 1729/93 by SRO No. 38/98 is clarificatory in nature and has retrospective effect?


The Hon’ble Apex Court has observed as follows:

“In any case MRF’s accrued right to exemption was not taken away or in any way affected by the amending notification SRO 38/98; which merely applied to those units which were established or expanded after 15.1.1998.   If an industrial unit had been set up prior to 15.1.1998 and had also commenced commercial production prior to 15.1.1998 then the amending notification SRO 38/98 would have no retrospective application at all.   The notification SRO 38/98 is prospective in operation which is evident by its mere reading as it specifically mentioned therein that:

“notification shall be deemed to have come into force with effect from the 1st day of January, 1998.””

Where the appellant had been granted Eligibility Certificate on 30-6-1998, whether it was entitled for exemption after commencement of SRO No. 1092/99 dated 31.12.1999?


The Hon’ble Apex Court has observed as under:

“22. On a co-joint reading of SRO 1729/93, SRO 38/98 and SRO 1092/99 the intention of the Government does not seem to take away the benefits of exemption in respect of manufactured products including compound rubber after 15.1.1998 (the date on which SRO 38/98 was issued) where commercial production had commenced prior to that date.  By virtue of the certificate of eligibility and by virtue of the exemption order granted pursuant to SRO 1729/93 dated 3.11.1993, MRF Ltd. had acquired the right to avail of tax exemption for a fixed period of 7 years from 30.12.1996 to 29.12.2003, in respect of products manufactured from raw rubber, including compound rubber.  In the eligibility certificate and in the exemption order the date of commencement of commercial production of all manufactured products, including compound rubber is stated to be 30.12.1996.  The Government had itself recognized that the benefit of tax exemption for the fixed period of 7 years would remain available to the units which have fulfilled the prescribed conditions, and have obtained the eligibility certificate etc. and have commenced commercial production before the date of any amendment to SRO 1729/93.  This had been stated by the State of Kerala in its counter affidavit before the High Court.  The relevant portion of which reads:

“As per letter No. 21002/B2/GD dated 28.08.93 the Government had clarified that the eligibility of an industrial unit for exemption has to be decided with reference to the notification existing on the date of commencement of commercial production.  The petitioner had commenced commercial production under the expansion/diversification and modernization programme on 30.12.1996.”

23.     In any case the doubt, if any,  was set at rest by the Government itself when, in Gazette Notification SRO 1092/99 dated 31.12.1999, it was stated that the benefit of exemption under SRO 1729/93 would not be available after 1.1.2000 with a saving clause, reproduced earlier, to the effect that industrial unit which had been sanctioned exemption/deferment as per notification SRO 1729/93 before the 1st day of January, 2000 shall continue to enjoy the concession for the full period covered by the order of exemption/deferment.”







Hon'ble Arijit Pasayat and Hon'ble S. H. Kapadia, JJ.

Appeal (civil)  3019 of 2004



NOS. 202 OF 2005, 3020 OF 2004 AND 3021 OF 2004


CIVIL APPEAL NO.      4232      OF 2006

(Arising out of SLP (C) No.5645/2005)


CIVIL APPEAL NO.      4233 OF 2006

(Arising out of SLP (C) No.5646/2005)


M/s. Jhunjhunwala & Ors


State of U.P. & Ors

Date of Decision: 22nd September, 2006

Manufacturer-The U.P. Trade tax Act, 1948-Section 2(ee)(ii)-A dealer who makes purchases from any other dealer not liable to tax on his sale under the Act other than sales exempted under Sections 4,4-A and 4-AAA- Appellants claimed to be doing business as commission agents to effect the commission business of horticulture produces of agriculturists - Commissioner’s circular dated 13.12.2000 suggesting that sales of such produces by commission agents are to be treated as sales by manufacturers-Validity of Circular

Where the appellant assessee was carrying on business of sale of timber, bamboo, ballies, etc. grown, sawn or cut by agriculturists on their land, whether, in view of the definition of the words ‘manufacture’ and ‘manufacturer’ in Sections 2(e) and 2(ee) of the U.P. Trade Tax Act, 1948, Commissioner’s circular dated 13-12-2000, in which assessing authorities were directed to treat sale of such goods by commission agent as sale by the manufacturer, was legally valid?


With the following observations, the Hon’ble Apex Court, after allowing the appeal, remanded the matter to the assessing authority and directed him to consider the case of the appellants without treating them to be manufacturers for the purpose of levy of tax, solely on the basis of the Circular:

“It was, therefore, necessary to be established that the seller was a manufacturer-dealer. Commissioner’s circular could not have created a liability by drawing inference that the purchases from farmers who have been grown, cut or sawn timbers, ballis, bamboos  will brings them within the umbrella of expression ‘manufacturer’.  The view that tax liability has been prescribed at the manufacturers and importers points and therefore after the amendment traders who purchase the timber from unregistered dealers fall within the category of manufacturer is indefensible.  There is no logic for such a conclusion, where the statutory definition does not say so.  It needs no emphasis that the circular cannot create tax liability. That is precisely what has been done which the High Court has failed to notice.  Therefore, to that extent the circular cannot be of any assistance for levying tax. The crucial words in the definition of “Manufacturer” is the sale of goods “after their manufacture”. As noted above, the expression “manufacture” cannot cover types of transactions referred to in the commissioner’s circular. Whether an activity amounts to manufacture has to be factually determined. There cannot be a direction to treat a particular type of transaction to be a manufacturing activity without examining the factual scenario. There cannot be a generalization in such matters.”

(B) Section 3-AAAA-purchases from unregistered dealers-Validity of Commissioner’s circular dated 13-12-2000

Whether, in view of the provisions of Section 3-AAAA of the U.P. Trade Tax Act, 1948, Commissioner’s circular dated 13-12-2000 is valid?


In its judgment, the Hon’ble Supreme Court has observed as under:


“Learned counsel for the State submitted that even purchases from a person who is not a registered dealer is also liable to tax in terms of Section 3-AAAA of the tax and the circular is, therefore, in order. The argument is not acceptable for the simple reason that in Section 3-AAAA the sine qua non for liability is that the goods must be liable to tax under the Act. That aspect has to be factually determined. The Commissioner’s circular is not and cannot be a substitute for such determination.  The assessments in these cases appear to have been done solely on the basis of the view expressed in the circular.” 





Hon'ble S.B. Sinha & Hon'ble Dalveer Bhandari, JJ.

Appeal (civil)  3419 of 2006

[Arising out of  SLP (Civil) No. 10371-10374 of 2004]


State of Punjab & Ors.


M/s. Amritsar Beverages Ltd. & Ors.

Date of Decision : 08th August, 2006

Seizure of books, accounts and documents-Seizure of Hard Disk -The Punjab General Sales Tax Act, 1948-Section 14-Documents to be returned by the Seizing Authority after taking extracts and after affixing his signatures and his official seal at one or more places thereon -Applicability  of provision to Computer Hard Disk.


Where law provides that Books, Documents and Accounts, seized under section 14 of the  Punjab General Sales Tax Act, 1948, are to be returned to the dealer by the authority making seizure within a stipulated period after taking extracts and affixing his signatures and his official seal at one or more places thereon but the law does not provide the procedure about affixing signature and official seal on Computer Hard Disk seized from the dealer, how for situational change could give rise to a new interpretation of such statutory provision?

Analysing the situation, the Hon’ble Supreme Court has observed as under;

“Creative interpretation had been resorted to by the Court so as to achieve a balance between the age old and rigid laws on the one hand and the advanced technology, on the other.  The Judiciary always responds to the need of the changing scenario in regard to development of technologies. It uses its own interpretative principles to achieve a balance when Parliament has not responded to the need to amend the statute having regard to the developments in the field of science.” 

“Section 14 of the Act although has been amended, the problem, in our opinion, should be dealt with keeping in view of the fact that the procedural laws should be construed to be ongoing statutes similar to the Constitution and, thus, creative interpretation according to the circumstances is permitted.  The Court in view of development of science has to meet and contend with challenges as an intermediary between the litigant and the court.”

“In SIL, Import, USA v. Exim Aides Silk Exporters, Bangalore, [(1999) 4 SCC 567], notice in terms of Section 138 of the Negotiable Instruments Act was construed to include notice by fax.

In State of Maharashtra v. Dr. Praful B. Desai [(2003) 4 SCC 601], this Court opined that recording of evidence through video conferencing  is permissible in terms of Section 273 of the Code of Criminal Procedure; stating:

          “This Court has approved the principle of updating construction, as enunciated by Francis Bennion, in a number of decisions. These principles were quoted with approval in the case of CIT v. Podar  Cement (P) Ltd. They were also cited with approval in the case of State v. S.J. Choudhary. In this case it was held that the Evidence Act was an ongoing Act and the word “handwriting” in Section 45 of that Act was construed to include “typewriting”. These principles were also applied in the case of SIL Import, USA v. Exim Aides Silk Exporters 9. In this case the words “notice in writing”, in Section 138 of the Negotiable Instruments Act, were construed to include a notice by fax. On the same principle courts have interpreted, over a period of time, various terms and phrases. To take only a few examples: “stage carriage” has been interpreted to include “electric tramcar”; “steam tricycle” to include “locomotive”; “telegraph” to include “telephone”; “banker’s books” to include “microfilm”; “to take note” to include “use of tape recorder”; “documents” to include “computer databases”.”


“The officers of the Sales Tax Department of the State of Punjab must have felt immense difficulties in giving effect to the provisions of Section 14 of the Act.  It no doubt mandates the authorities to return to the dealer all documents after examination or after having such copies or extracts taken therefrom as may be considered necessary within a period of 60 days of seizure but in the instant case even for the said purpose, not only a copy was required to be made from the hard disk, the same was required to be verified.  The Respondents were asked by the authorities of the department that they should come and verify the contents but they did not do so.  Active cooperation of the Respondents was necessary having regard to the proviso appended to Sub-section (3) of Section 14 of the Act inasmuch as in terms thereof the officer was entitled not only to affix his signature and his official seal at one or more places thereupon but also the dealer was required to give a receipt therefor. In case of a hard disk, literal compliance of the said provision was impossible.  Recourse to scientific method, therefore, was necessary.

It may be true that even in absence of cooperation from the Respondents nothing prevented the authorities of the Sales Tax Department to make out copies of the said hard disk or obtain a hard copy and fix their signatures or official seal in physical form thereupon and furnish a copy thereof to the Respondents.  However, the High Court failed to notice that as problem arose for the first time, the officers of the Sales Tax Department might not have been able to formulate or lay down their own procedure as indicated hereinbefore or otherwise.

          For the reasons aforementioned, although we are of the opinion that fulfillment of the conditions laid down in the proviso contained in  Clause (b) of Sub-section (3) of Section 14 of the Act are imperative in  character, the authorities may take recourse to the aforementioned procedure in respect of seizure of a hard disk.”




Hon’ble A.K. Yog, J. and Hon’ble Prakash Krishna, JJ.

Civil Misc. Writ Petition No.1615 of 2002

M/s. Reva Enviro Systems (P) Limited    


State of U.P. and others.

Date of Decision : 19th January, 2006

Refund-The U.P. Trade Tax Act, 1948 –Section 29-Appeal allowed by the Tribunal in favour of the dealer-Appeal order silent on the point of refund of the amount deposited by the dealer-Assessing Authority refused to allow refund in absence of specific order-Application, before the Tribunal under section 22 of the Act, rejected as barred by limitation-Admissibility of refund.

Where appeal of the dealer was allowed by the Tribunal and the dealer was held non taxable but no direction was given about refund of amount deposited by the dealer, whether the assessing authority was justified in refusing refund of the amount deposited by the dealer?


Allowing the writ petition filed by the dealer, the Honourable Court has observed as under:

“we are of the opinion that the authorities are duty bound under law as well as in equity to refund the excess amount of tax realized from the petitioner even if there is no specific direction, under section 29 of the Act, subject to doctrine of unjust enrichment as firmly laid down by Apex Court in the case of Mafatlal Industries Ltd. (supra).”

In reference to provisions of section 29 and Rule 71 of the U.P. Trade Tax Rules, 1948, the Hon’ble Court has observed as under:

“A bare perusal of the aforesaid section would show that a duty is cast upon the Assessing Authority by using the word ‘’shall’ to refund any amount of tax, fees or other dues paid in excess of the amount due from a dealer in the manner prescribed.”

“In this connection Rule 71 of U.P. Trade Tax Rules is also relevant. It has made a provision for giving effect to a Revisional order. It says that, if any, order passed on an appeal or revision has the effect of varying any order, the Sales Tax Officer (Assessing Officer) shall refund excess tax or fees or realized deficit, as the case may be.”

Where amount has been deducted by Industrial Finance Corporation of India from payments made to the petitioner and deposited as tax and where the petitioner was not found liable to pay tax, whether the amount can be refunded to the petitioner?


In the matter, the Hon’ble Court has observed as under:

“The case of the petitioner is that the aforesaid sum was deducted by the Industrial Finance Corporation out of the bills of the petitioner and were deposited by it on behalf of the petitioner (vide para 11 of the writ petition). The TDS certificate was filed as annexure-5 to the writ petition. Its genuineness or correctness has not been disputed in para 6 of the counter affidavit which is in reply to the contents of para 11 of the writ petition. It is not case of the department that the Industrial Finance Corporation of India is claiming that amount as payment of tax in their account. The pith and substance is that the amount was deducted by the Industrial Finance Corporation of India and was deposited with the department on behalf of the petitioner. It does not, therefore, lie in the mouth of the department to say that the aforesaid tax amount was not deposited by the petitioner.

          However, to protect the interest of  Revenue it is made clear that if the aforesaid two amounts as mentioned in the letter dated 1st of April, 2001 of the then Sales Tax Officer have  been credited or refunded to Industrial Finance Corporation of  India, the same shall not be treated to have been deposited for and on behalf of the petitioner. Otherwise the petitioner shall be entitled to get the refund of the same.”

Allowing the Writ Petition the Hon’ble Court Has passed the following orders:

“In the result we hold that the petitioner is entitled to get the refund of Rs.3,37,500/- and Rs. 19,700/- deposited by and or on behalf of the petitioner for the assessment years 1990-91 and 1991-92 at Lucknow through challans no.73 and 4 with interest at rate of  18 per cent as per section 29(2)  of the Act. The said amount shall be refunded to the petitioner within a period of one month from the date of production of certified copy of this order. In case of failure, the respondents shall also be liable to pay interest upon the interest amount as ordered by this Court in the case of S/S Assam Raodways (Delhi) (supra).  By moulding the relief we quash the last paragraph of the order dated 1st of April, 2001 (annexure-4) and the order of the Tribunal  dated 16/21st August, 2001 (annexure-8 to the writ petition).”