CASE ANALYSIS: DHULABHAI VS.

STATE OF MADHYA
PRADESH AIR 1969 SC 78, 1968 SCR (3) 662.
THE CODE OF CIVIL PROCEDURE PSDA

SUMBITTED TO SUMBITTED BY
MS. RICHA GUPTA ANISHA (V-K)
FACULTY (VSLLS) 02417703520

VIVEKANANDA SCHOOL OF LAW AND LEGAL STUDIES (VSLLS)

VIVEKANANDA INSITITUTE OF PROFESSIONAL STUDIES, DELHI
 ACKNOWLEDGEMENT

I am very thankful to the management of VIPS who provided me a great opportunity to do a project
on drafting a writ petition for their valuable suggestions throughout this research work.

I sincerely express my deep sense of gratitude to MS. RICHA GUPTA, faculty of Vivekananda
School of law and legal studies, Pitampura for her extraordinary cooperation, invaluable guidance,
and supervision.

I would also like to thank my supervisor who was an inspiration, motivation and moral support,
and suggestion during the course of the study.

I am respectfully thankful to my parents for their valuable consent, support, and guidance which
helped me to complete the research.
At last, I cover my gratitude to all the staff and the library, for providing their kind support, and
help well wishes.

Anisha
NAME OF THE COURT: Supreme Court DATE OF JUDGMENT: April 05, 1968
of India

APPELLANTS: Dhulabhai and Others RESPONDENT: State of Madhya Pradesh

and Others

BENCH: M. Hidayatullah, C.J.

A.N. Grover
C.A. Vaidialingam
K.S. Hegde
R.S. Bachawat

FACTS

• The dealers (appellants) of tobacco purchased tobacco locally or from extra state places for
the purpose of selling it for different uses like smoking, eating and for preparing bidis in
Ujjain.

• Madhya Bharat Sales Tax Act (Act 30 of 1950) was enacted in May 1950. Provisions laid
down under this act clearly stated that, every dealer whose sales have exceeded the case of
an importer and manufacturer Rs. 5,000 and in other cases Rs. 12,000 had to pay tax in
respect of sales or supplies of goods (section3).

• This act empowers Government under Section 5 to specify the point of the sales at which
the tax is payable, Government can also fix the minimum and maximum rates of tax leaving
through notification.

• Through these notifications government-imposed tax at different rates on tobacco also

some sellers dealing in tobacco of the same price were exempted from paying taxes.
 • The appellants served notices under Section 80 of the Code of Civil Procedure and filed
the present suits for refund of the tax on the ground that it was illegally collected and were
in contravention with the provisions laid down under the Indian constitution.

ISSUES

• Whether the collection of non-uniform taxes from the importer or manufacturers was
violative of Article 301 and Article 304(a) of the Indian Constitution.

• Whether the aforesaid suit was maintainable in view of Section 17 of the Madhya Bharat
Sales Tax Act, 1950.

• Whether the jurisdiction conferred on the taxing authorities includes the jurisdiction of
determining the nature of the transaction or the decision about the character of the
transaction, a decision on a collateral fact?

• It was questioned whether the relief of repayment is to be sought out by the taxpayer
through the action of civil court or such order can also be entertained in High Court in the
exercise of its writ jurisdiction conferred in Article 226 of the Indian Constitution?

• Where defense of the Limitation Act 1963 could be raised?

CONTENTION BY APPELLANT

• Appellant referred the Section 9 of the Code of Civil Procedure which clearly states that
the court can try all the civil suits unless barred which means that jurisdiction of the Civil
Courts subsumes all the cases except to the extent it is excluded by an express provision of
law or by clear intendment arising from such law, also as per Article 301bars on the
imposition of tax. In compliance with the references, the question raised was whether this
suit was barred expressly by Section 17 of the Madhya Bharat Sales Tax Act.
 • In various precedent cases based on similar facts and circumstances like Bhailal Bhai
Gokal Bhai v. State of M.P and State of Tripura v. The Province of East Bengal, District
Court Judges held that it is mandatory for the commissioner or appellant authority to refund
the taxes wrongly collected to the taxpayers (Section 21 of Madhya Bharat Sales Tax Act.).
In the first case, the notifications provided by the government were declared ultra vires and
Article 301 of the Constitution is not saved by Art. 304(a).

• They raised the question of the competency of the high court in aforesaid matters. It was
argued that in the cases of Raleigh Investment Co. v. Governor-General Council [1947]
Secretary of State v. Mask and I. S. Chetty & Sons v. State of Andhra Pradesh, High court
considered itself incompetent to resolve that suit, then how the court can adjudicate into
the matter of the present case.

CONTENTION BY RESPONDENT

• It was argued that the taxes levied by them were in compliance with the provisions laid
down in Section 3 and Section 5 of the Madhya Bharat Sales Tax Act (Act 30 of 1950).

• The question raised was if the matter is related to the correctness of the imposition of tax
within the valid framework of the statute, then Section 17 of this Act clearly states that
assessment made under this act shall not be called in the question of any court, then how
the court can make a decision regarding this matter.

JUDGMENT

• Court referred to the cases of Raleigh Investment Co. v. Governor-General Council and
other similar cases and enunciated that all those cases were supported by the authority, so
it didn’t find it necessary to enter into that matter. It was held in the cases where the liability
of tax and the remedies in case of default is created by statute then the remedy contemplated
 by the statute must be followed and thus it is not open to the assessee to pursue the ordinary
process of Civil Courts.

• Court pinned on the matter of limitation period, it was held that in the cases where the writ
petition is filed within 3 years, a refund will be provided there but if the parties approached
High Court after the lapse of 3 years, those cases would not be entertained and no refund
will be given to them as tax authorities if not barred by limitation are entitled to in a Civil
court.

• the case of Raleigh Investment Co. Ltd. v. Governor-General in Council, the Civil Courts
were excluded from exercising their jurisdiction by Section 226 of the Government of India
Act, 1935 and Section 67 of the Indian Income Tax Act.

• Later this decision by the court was strengthened in K. S. Venkataraman & Co. v. the State
of Madras was concluded in this case that the High Court has the power to raise the question
on the validity of any provision made under any Act.

• On the basis of references, it was stated that many acts had provisions due to which
decisions were made without an express provision ousting the jurisdiction of the Civil
Courts and in fact there was no adequate machinery for raising such kinds of questions
before authorities.

• The judge examined the remedies provided by the Indian Income-tax Act and found that
all authorities were creatures of the statute and functioned under it so the decision taken by
them to levy taxes could not be overruled and the decision came in the favor of taxing
authorities.

CONCLUSION

• Section 9 of CPC which is generally referred to as the gateway of this Act, primarily deals
with the question of civil court’s jurisdiction. It states that the civil court has jurisdiction
to entertain a suit of civil nature unless its cognizance is expressly barred or barred by some
necessary implication. From the abovementioned case it becomes clear that even if the
jurisdiction of a civil court is barred, it can still decide whether the provisions of an Act
have been complied with or whether an order was passed dehors the provisions of law.
Though the Civil court has jurisdiction to examine whether tribunal and quasi-judicial
bodies or statutory authority is acting within its jurisdiction but once it is found that such
authority had initial jurisdiction then the court cannot give any erroneous order to the
authority.