Dhulabhai vs State of Madhya Pradesh case explained

Dhulabhai and Others vs the State of Madhya Pradesh (1968)
Writ Petition (Civil) 260 to 263 of 1967
Date of judgment: 05.04.1968

In this law note, you will learn about the facts, issues, arguments, and judgment of the case Dhulabhai and Others vs the State of Madhya Pradesh.

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Facts of the Case

The appellant (Dhulabhai) is a tobacco dealer. They used to purchase tobacco locally or import it from other states to sell it to the people for uses like eating, smoking, and making bidis, especially in Ujjain.

Section 3 of the Madhya Bharat Sales Tax Act, 1950, states that all dealers will have to pay tax for the sales and supply of goods; they will pay five thousand rupees for sales exceeding those of the importer and manufacturer, and twelve thousand rupees for the remaining scenarios.

Section 5 of the Madhya Bharat Sales Tax Act, 1950, empowers the government to specify the point of sale as to when the tax is payable. The government is also empowered to change the highest and lowest tax rates by issuing a notification.

Through these notifications, the government imposes taxes on tobacco products at different rates.

In this case, some sellers were not subject to the tax and were selling tobacco at the same price.

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In Madhya Pradesh, no taxes were imposed on the trade of tobacco, which is the buying and selling of such goods. Instead, the authorities collected tax from the appellants in different quarters in various amounts.

Finally, for a refund of the said tax money, a civil suit was filed by the appellants under section 80 of the Civil Procedure Code, 1908, on the grounds that Article 301 and Article 304(a) of the Indian Constitution were violated because the collection of the tax was illegal.

Issues Raised

There were five significant issues raised in the case of Dhulabhai vs the State of Madhya Pradesh:

  1. Whether Article 301 and Article 304(a) of the Indian Constitution permit the non-uniform imposition of taxes on importers and manufacturers.
  2. Whether the above-mentioned civil suit is valid as per section 17 of the Madhya Bharat Sales Tax Act, 1950.
  3. Whether the jurisdiction given to the taxing authorities also extends to decide the nature or character of the monetary proceedings.
  4. Whether the relief must be granted to the person, who has been wronged by the civil suit or can it be granted by the High Court using the writ jurisdiction stated under Article 226 of the Indian Constitution.
  5. Whether the defence as per the Limitation Act, 1963 can be considered.


These were the arguments advanced by both appellants and respondents in the case of Dhulabhai vs the State of Madhya Pradesh:

Arguments of the Appellant

While arguing, the appellant referred to section 9 of the CPC, stating that the court can try all civil suits unless they are expressly or impliedly barred. So, is section 17 of the Madhya Bharat Sales Tax Act expressly barred from being tried? Also, Article 301 of the Indian Constitution bars the tax levying.

The appellants also mentioned that in precedent cases like the State of Tripura vs the province of East Bengal and Bhailal Bhai Gokal Bhai vs the state of Madhya Pradesh, which had similar facts and issues, the court held that there is a compulsion on a commissioner with authority to give the wrongly collected tax money back to the taxpayers, as stated under section 21 of the Madhya Bharat Sales Tax Act.

They also raised the question of the competency of the High Court. The appellant put forth his concern that, in the following cases of Raleigh Investment Co. Ltd. vs the Governor-General Council, Secretary of State vs Mask, and IS Chetty and Sons vs the State of Andhra Pradesh, the High Court held that it was incompetent to try these matters, so how can the High Court can try the present case.

Arguments of the Respondent

The respondent countered the appellant’s claim by stating that they imposed taxes as per section 3 and section 5 of the Madhya Bharat Sales Tax Act, 1950.

They also argued that section 17 of the Madhya Bharat Sales Tax Act, 1950, states that the court cannot question the assessment made under this Act, so the court cannot make a decision regarding this issue and can’t decide whether the imposition of the tax was right or decide the validity as per the statute’s structure.

Judgement of the Case

While deciding upon the matter, the court considered several similar cases like Raleigh Investment Co. Ltd. vs the Governor-General Council. Still, the court observed that all the cases had some support from an authority, so the court decided not to indulge further.

The court further stated in cases where there’s a compulsion to abide by the statute, tax payment and default remedies are created by the statute. Therefore, it is open to following the procedure conducted by the civil courts.

Concluding on the matter regarding the limitation period, the court held that if the writ petition is filed with the High Court within three years, then the refund shall be processed; otherwise, if the petition is not filed within three years, no refund will be provided.

When we look at the case of Raleigh Investment Co. Ltd. vs the Governor-General in Council, section 226 of the Government of India Act, 1935, along with section 67 of the Indian Income Tax Act, prohibited the civil court from exercising their jurisdiction.

Further, in KS Venkataraman and Co. vs the State of Madras, the court reinforced the judgment mentioned above by stating that the High Court has the power to question the provisions written in any Act to check its adequacy.

It was also stated that decisions were made based on various provisions. Because they were covered across many Acts, the decisions made here were without express provisions, which ousted the civil court’s jurisdiction. Also, there was a lack of proper procedure to raise these issues before the designated authorities.

The judges analysed the Indian Income Tax Act and realised that each of the authorities, regardless of their work, falls under the statute and performs their duties under it. Hence, the decision taken by the authorities to collect taxes cannot be overruled, and because of this, the decision came in favour of the authorities who imposed taxes.

Principles Governing Jurisdiction and Remedies in Civil Courts and Special Tribunals

These are the set of principles that outline the boundaries and considerations relevant to civil courts and special tribunals. These principles address matters such as jurisdiction, the adequacy of remedies, limitations on raising ultra vires issues, and the availability of legal recourse for challenging constitutionality or unconditional provisions:

  1. When the civil courts have jurisdiction and a set remedy for a matter, then to such matters, there shall be no interference from the orders of the special tribunals which are being concluded by the statute.
  2. An examination of an Act regarding the adequacy and sufficiency of the provided remedies is admissible when a bar is expressly imposed on the jurisdiction of a court. Still, then the adequacy of the Act is not a decisive factor in maintaining the civil court’s jurisdiction.
  3. The issue of provisions of an Act being ultra vires shall not be raised before tribunals founded under the same Act.
  4. A suit is open when a provision’s constitutionality is challenged or a provision has been announced to be unconditional.


Section 9 of the CPC establishes the jurisdiction of a civil court and thus serves as an introduction to the Act. Section 9 of the CPC states that the court can try all civil suits unless they are expressly or impliedly barred. From our case, we can conclude that, regardless of whether a civil court is barred from taking up a case or not, the court’s authority can extend to analysing the compliance with the provisions of the Act. The court’s power also extends to checking whether a tribunal, quasi-judicial body, or statutory authority operates within its jurisdiction’s purview. Still, if it finds that the authorities have initial jurisdiction, the civil court cannot direct such courts or show any authority.

Footnote: Madhya Bharat Sales Tax Act, 1950 was during the pre-independence era and has now been repealed and is no longer in force. After independence, after the formation of the state of Madhya Pradesh, it adopted the Central Sales Tax Act, 1956.

Gayatri Singh
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