TITAGHUR PAPER MILLS CO. LTD. versus STATE OF ORISSA

Citation: [1983] 2 S.C.R. 743 · Decided: 13-04-1983 · Supreme Court of India · Bench: A.P. SEN · Disposal: Dismissed

Cited by 7 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

' 
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743 
TITAGHUR PAPER MILLS CO. LTD. 
v. 
STATE OF ORISSA 
April 13, 1983 
(A.P. SEN, E.S. VENKATARAMIAH AND R.B. MISRA, JJ.} 
Sales-tax-Central Sales Tax Act, 1956-Repeated notices for production 
of records issued to assessee-Best judgment assessment made-Assessee, if 
could impugn order under Article 226 of the Constitutian. 
It appears that proceedings under r. 12(5) of the Central Sales Tax 
(Orissa) Rules 1957 and under sub-s. (4) of s. 12 of the Orissa Sales Tax Act, 
1947 were initiated against the petitioners for the assessment year .1980-81 in 
relation to assessment of tax on sales in the course of inter-state 1rade and com· 
merce under· the Central Sales Tax Act, 1956 and inside sales effected during 
the year in question undef the Orissa Sales Tax Act, 1947. Despite repeated 
opportunities to get themselves ready for the assessment of tax and to produce 
their account books and other documents, they sought adjournments on the 
one pretext or another. 
Eventually the Assistant Sales Tax Officer, Cuttack 
It circle, Cutta9k before whom the assessment proceedings were pending, 
refused to grant any further adjournment and proceeded to best judgment 
assessment and treated the gross turnover of Rs. 7,13,94,903.63 p. as 
returned by the petitioners for purposes of the Central Sales Tax Act, 1956 
to be their taxable turnover. 
Similarly, he treated the gross turnover of 
Rs. 2,02,07,852.65 p returned by the petitioners as representing inside sales 
vis-a-vis the State of Orissa to be their taxable turnover. After allowing 
adjustment of Rs. 27,88 ,388 .47 p paid by the petitioners, the learned Sales 
T;ix Officer raised a demand for the payment of a sum of R~. 43,57,101.89 p 
towards tax on sales in the course of inter-State trade and commerce payable 
under the, Central Sales Tax Act, 1956 and after allowing adjustment of 
Rs. 1,08 ,480.11 p paid by the petitioners, he raised the demand for payment 
of a sum ofR;. 13,06,069.60 pas tax payable under the Orissa Sales Tax Act, 
1947. Thus the petitioners were faced with a total demand of Rs. 56,57,171.49 p 
for the assessment year 1980-81. 
The petitioners instead of preferring 
appeals under sub-s (I) ofs. 23 of the Act filed petitions before the High Court 
under Art. 226 of the Constitution challenging the validity of the two 
orders of assessment. The High Court was not sa ti tied that this was a case 
of inherent Jack ot jurisdiction or any violation of principles of natural justice 
and accordfitgly held that the1 Were not entitled to invoke the extraordinary 
juriSdiction of the High Court under Art. 226 of the Constitution, 
Dismissing the Petitions, 
HELD : In 1he provenance, of tax where the Act provides for a complete 
machinery which enables an assessee to efl'ective!y1 raise in the courts the 
11uestion of the validity of an asse>S!"ent ~~nic d an alternative jurisdictl91\ 
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I. 
744 
SUPREME COURT REPORTS 
(1983) 2 S.C.R. 
to the High Court to interfere under Art. 226 of the Constitution. The phrase 
"made under the Act'' describes the provenance of the assessment; it does not 
relate to its accuracy in point of law. The use of tt.e machinery provided by 
the Act, not the result of that use, is the test. [748 G-H; 749 AJ 
Under the scheme of the Act, there is hierarchy of authorities before 
which the petitioners can get adequate redress against the wrongful act 
complained of. They have the right to prefer an appeal before the pre£cribed 
authority under sub-s. (1) of s. 23 of the Act. If they are dissatisfied with the 
decision in the appeal, they can prefer a further appeal to the Tribunal under 
sub-s. (3) of s. 23 of the Act, and then ask for a case to be stated on 
a question of law for the opinion of the High Court under s. 24 of the Act. The 
Act provides for a complete machinery to challenge an order of assessment, and 
the impugned orders of assessment can only be challenged by the mode prescri· 
bed by the Act and not by a petition under Art. 226 of the Constitution. 
(751 F-H] 
Ra.leigh Investment Company Limited v. Governor General in Council, 
74 IA 50, followed. 
K. S. Veukataraman & Co. v. State of Madras [1966] 2 SCR 229 and 
State of Uttar Pradesh v. Mohammad Nooh [1958] SCR 595 ; distingnished. 
The question whether a provision is ultra vires or not cannot obviously 
be decided by any of the authorities created by the Act and t_herefore cannot 
be the subject matter of a ref

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