# COMMISSIONER OF SALES TAX, M.P. INDORE AND ORS v. RADHAKRISHAN AND ORS

- **Citation:** [1979] 2 S.C.R. 33
- **Court:** Supreme Court of India
- **Decided:** 1978-10-06
- **Case number:** Criminal Appeal No. 78 c of 1972
- **Bench:** Jaswant Singh, P. S. Kailasam, A. D. Koshal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-sales-tax-m-p-indore-and-ors-v-radhakrishan-and-ors-7518
- **Pages:** 12

## Headnote

Madhya Pradesh General Sales Tax Act 1958-Whether partners can be
held liable for the tax assessed against the firm,
Sec. 22(4-A) and Sec. 46(1)(c)-Two different procedures for enforcing
and realizing the assessment-Whether valid-Vesting of discretionary power
B
in the State or public authorities or an officer of high standing is treated as a
C
guarantee that the powers will be used fairly and with a sense of responsibility.
The three respondents who were the three partners of a registered Partner·
ship doing the business of sale of bidis did not file any sales
tax
return.
They did not get the firm registered under the Madhya Pradesh General Sales
Tax Act 1958. Treating the firm as an unregistered de?ler a best

## Text

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COMMISSIONER OF SALES TAX, M.P. INDORE AND ORS.
A
v.
RADHAKRISHAN AND ORS.
October 6, 1978
[JASWANT SINGH, P. S. KAILASAM AND A. D. KOSHAL, JJ.J
Madhya Pradesh General Sales Tax Act 1958-Whether partners can be
held liable for the tax assessed against the firm,
Sec. 22(4-A) and Sec. 46(1)(c)-Two different procedures for enforcing
and realizing the assessment-Whether valid-Vesting of discretionary power
B
in the State or public authorities or an officer of high standing is treated as a
C
guarantee that the powers will be used fairly and with a sense of responsibility.
The three respondents who were the three partners of a registered Partner·
ship doing the business of sale of bidis did not file any sales
tax
return.
They did not get the firm registered under the Madhya Pradesh General Sales
Tax Act 1958. Treating the firm as an unregistered de?ler a best
judgment
n.
assessment was made by the sales-tax officer and deinand notices were accorOv
ingly issued.
Even so the firm failed to pay the tax. l'hereupon the Com~
missioner of Sales Tax accorded sanction under section 46(1)(c)
of
the
Madhya Pradesh General Sales Tax Act 1958 for criminal prosecution of the
three respondents.
Their v.-Tit petition for quashing the order for criminal
prosecution
wa.s
granted by the High Court.
E
On the questions (1) whether the three partners can be held liable for
the tax assessed against the firm and (2) v.-·hether the sanction given by the
Con1missioner for prosecution under section 46 ( 1) (c) is sustainable in law.
Dis1nissing the appeal the Court,
HELD : 1. (a) In the absence of a specific provision in the
.r\ct,
the
F
partners of the firm cnnnot be held liable for the tax assessed on the finn.
[38C]
(b) A firm in a partnership and a Hindu undivided family are recognised
as legal entities and as such proceedings can only be1 taken against the firm
or undivided family as the case may be.
Neither the partners of the firm nor
the n1c1nbers of the Hindu undivided family will be liable for the tax assessG
ed against the firm or the undivided Hindu fa·mily.
f37H~38/\l
Store of Puniab v. Mis Jullundur Vegetables Syndicate, [1966] 2 S.C.R. 457;
Kapur Chand Shrinial v. Tax Recovery Officer, Hyderabad and Ors., [1969]
1 S.C.R. 691; relied on.
(c) The definition of "dealer" in clause 2(d) of the Act makes it clear
that a firm is a separate entity and is a dealer for the purposes of the Act.
/\. firm under section 7 (2) of the Act is deemed to be a registered
dealer.
'Section 18 provides that the amount of tax due from a registered dealer shall
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SUPREME COURT REPORTS
[1979] 2 S.C.R.
A
be essessed separately for each year.
Accordingly the dealer, which is a firm
in this case, was assessed and notice given to the firm [37 A-C]
(d) In the absence of a specific provision (such as the one found in S. IS
of the Bombay Sales Tax Act 1959) th&t where a firm is liable to pay tax.
under the Act, the firm and each of its partners shall be jointly and severally
liable for such payment, the partners of a firm cannot be held liable for the
B
tax assessed on the firm. [38C]
c
2. (a) The provisions of the Act conferring
different
procedures
for
collection of tax canno!. be held to be invalid. [44B]
(l>) When power is conferred on high and responsible officers, they
are
expected to act with caution and impartiality while dischl3:rging
their
duties
and the circumstances under which they will choose either of the remedies
available shouJd be left to them.
The vesting 0£. discretionary power in the
State or public authorities or an officer of high standing is treated as a
guarantee that the power will be used fairly and with a sense of responsibility.
[42GJ
(c) The guidance wi1l have to be inferred from the policy of the law
itself, that is, if on particular facts of a case the Commissioner in
exercise
D
of his discretion comes to the conclusion that a more drastic remedy should
be taken, the exercise of that option cannot be termed u'nconstitutional. Courts
wt11 be justified in giving a liberal interpretation to the section in order to
avoid constitutional invalidity and reading down the sections if it becomes.
necessnry to uphold its validity. [43B, DJ
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(d) In the present case before a prosecution can be launched under section 46, it is necessary that the assessee should have failed to pay
the tax.
due within the time allowed without reasonable cause. The
duty of
the"
Commissioner is, therefore, to be satisfied that the assessee has failed without
roosonable cause and without recourse to prosecution under section 46(1) (c ),
the tax due cannot be collected. The provisions of section 22(4-A) can be
read as being applicable to cases in which the stringent step of prosecution is
considered not necessary.
The option is with the Commissioner and
if he
thinks levy of penalty would achieve the purpose of collection of the tax he
can have recourse to the proyisions of section 22 ( 4-A).
Before levying a
penalty under section 22(4-A), the Commissioner shall give reasonable opportunity of being heard as to why the penalty should not be levied.
Reading
the two provisions harmoniously, discretion is given to the Commissioner to
re6ort to one of the t\vo remedies as the facts of the case may require.
In
graver cases he \vill be justified in taking the drastic remedy and resorting
to prosecution in the criminal court if he is satisfied that such a course is
necessary for the collection of the tax expeditiously.
If the discretion is not
properly exercised the Court may be justified in interfering in such cases but
the law cannot be held to be invalid.
The present case is a grave case of
failure to pay the tax as repeated reminders went unheeded. The Commissioner
on the facts. "vas fully justified in coming to the conclusion that resort to
prosecrition was necessary. [43E-44A]
( e) Taking into account the scheme of the Act, it can be inferred that
a more drastic remedy is to be taken \\'hen such a step is found necessary
on the facts of a case.
Thus construed the validity of the section cannot be
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c. s. T. v. RADHAKRISHAN (Kaiia_.1m, !.)
35
questioned, but if the facts of a case do not warrant taking of the graver
A
step and no adequate reasons are found that order in such circumstances may
be found to be invalid. [44B-C]
,,Jaganlal
l'ha~anfal (P) Ltd. v. Municipal Corporation of Greater
Bofflba-y and Ors., (1974] 2 S.C.C. 402, State of Kcrala fJl1d Ors. v.
C. M. Franci.< & Co. & Ors., [1961] 12 S.T.C. 119, Shanti Prasad
Jain v. The Director of Enforcement, {1963] 2 S.C.R. 297, Rayale
Corporation (P) Ltd. & Ors. v. Director of Enforcement, New Delhi
[1970] I SCR 639; Ram Swarup v. Union of India, A.l.R. 1965 SC
247, Province of Bombay v. Bonibay Municipal Corporation, 73 I.A.
271, R. S. Joshi, S.T.O. -Gujarat etc. v. Ajit Mills Ltd., Al1mcdahad
& Anr. etc., [19781 I SCR 338; referred to.
B
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
78 c
of 1972.
From the Judgment and Order dated 16-3-1971 of the Madhya
Pradesh High Court in Misc. Petition No. 85/69.
S. K. Gambhtr for the Appellant.
H. W. Dhabe and A. G. Ratnaparkhi for Respondents Nos. 1-3.
The Judg;r;~nt of the Court was delivered by
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KAILASAM, J.-This appeal is by Commissioner of Sales "lax, M.P.,
Indore and t.'irce others by certificate of fitness granted by the High
E
C0urt of M aJhya Pradesh from the judgment and order dat·2d 16th
March, 1971 in Miscellaneous Petition No. 85 of 1969, whereby the
High Court aliow~d the petition filed by the respondents and quashed
(a) the sanction for criminal prosecution of the respondents accorded
by the Commissioner of Sales Tax by his memorandum dated 29th
April, 1966 and (b) the proceedings before the criminal court starred
F
under section 46(1 )(c) of the Madhya Pradesh General Sa\.es Tax
Act, 1958, in Criminal Case No. 4344 of 1968.
The three respondents are the three partners of a firm known as
Ml•. Ramakrishna Ramnath. It is a registered partnership firm.
The
firm was engaged in business of sale of bidis and during the relevant
G
period used to purcha~e tendu leaves from the dealers. The firm faikd
to file any return and get itself registered under the St11te of Madhya
P_radesh. The firm was treated as unregistered dealer and was assessed
to sa:es-tax ou the basis of the best judgment. There mere three assessment orders.
The first was for the period 1-11-1956 to 23-10-1960
by an order dated 26th December, 1964, ass•;,ssing the firm. at Rs.
H
16,380 and imposing a penalty of Rs. 5,000.
The second order
related to the period 21-10-1960 to 8-11-1961 and was dated 20th
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SUPREME COURT REPORTS
[1979] 2 S.C.R.
Deo;:mber, 1964. The firm was assessed to Rs. 8,080 and a penalty
of Rs. 2,000 was imposed. The third order was dated 20th December,
1964 and was for the period 9-11-1961 to 28-10-1962.
The assessme·at against the firm was for Rs. 8,000 and a penalty of Rs. 2,000
was imposed. The demand notices were issued in the forms prescribed
in the name of the firm by the Sales Tax Officer.
The firm failed to
pay the tax and by the impugned order dated 29-4-1966 the Commissioner accorded sanction for criminal prosecution of the three respondents who were partners of the firm m1Ckr section 46 ( 1 )( c) of the
Act. A challan was filed on 9th December, 1968 a:;id a criminal Case
No. 4344 of 1968 was registered and tho respondents were asked to
appear on 20th February, 1969. On 17th February, 1969 the respondents filed writ potition out of which the present appeal arises for
quashing the order of sanction for criminal prosecution dared 29th
April, 1966 given by the Conunissioner of Sales Tax a:ad of the proceedings before the criminal court in Criminal Case No. 4344 of 1968.
By its judgment dated !6th March, 1971 the High Court allowed
the petition and quashed the sanction for criminal prosecntion given
by the Commissioner of Sales Tax and the criminal proceedings. The
High Court co·asidering th;: general and legal importance of the question, granted a certificate of fitness to the Commissioner of Sales Tax
and the present appeal is thus before this Court.
Two questions that arise in this appeal aro : (i) whether the three
partners can ho held liable for the tax assessed against the firm; (ii)
whe:her the sanction given by the Commissioner for prosecution under
sectio·:i 46(l)(c) is sustainable in law.
Regarding the first question the High Court held that the r"sult of
non-payment of tax against a firm cannot be visited on individual partners of the firm.
It was only the firm that was assessed for liability
for tax fur all the three periods. In spite of repealed notices the firm
did "10t pay the assessment or the penalty that was imposed. The notice
of demand in Form 19 prescribed under M.P. Gm~ral Sales Tax Act,
1958 (hereinafter to be referred as Act) was sent to the firm demanding payment of the tax and penalty with a direction that the whole sum
should be deposited in the Government trea.,ury within 30 days from
tht: rccc1pL of the notice of the demand ~:.nd tLc treasury receipt in
proof of payment of the sum should be produced before the Sales Tax
Officer. Tho dealer received a notice on 6th January, 1965, but failed
to deposit the sum as directed.
On these facts the Inspector of Sales
Tax came to the conclusion that the dealer had committed an offence
under section 46 (I) ( c) of the Act and accorded sanction under sectio"1
46(2) of the Act for prosecuting the three surviving partners of the
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37
firm who are the three respondents herein. The question arises whether under the ci.rcumstances the partners can be prosecuted for the
default of payment of tax and penalty by the firm. 'Dea!llr' is defined
in clause 2(d) of the Act. It includes undeI section 2(d) (1) a local
authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carried
on such business.
This definition makes it clear that the firm is a
separate entity and is a dealer for the purposes of the Act. The firm
under---Section 7(2) of the Act was deemed to be a registered dealer.
Section 18 provides that the amount of tax due from a registered
dealer shall be assessed separately for each year.
Accordingly the
dealer, which is a firm in this case, was assessed and notice given to
the firm.
In Stat<" of Punjab v. M/s. Jullundur V,1getahles Syndicate!') this
Court held that th·~ firm which was assessed to sales-tax under the
East Punjab General Sales Tax was a separate entity under the Act.
The firm was assessed to sales tax in 1953. The order was set aside
by the Financial Commissioner, and proceedings were started for fresh
assessment but by that time the firm was dissolved. The Sales Tax
Officer made the assessment even though the firm had already been
dissolved.
The High Court on a reference held that the firm being a
separate' entity under the Act, there was ;:io machinery provided under
the Act for assessing a firm after its dissolution in respect of turnover
of business before the dissolution. This Court held that though under
the partnership law a firm is not a legal entity, for the purpose of sales
tax under the Act, it is a legal entity, and therefore, on dissolution
the firm ceases to be a legal entity and there is no provision in the Act
as it stood in 1953 expressly empowering th~ assessing authority to
assess the dissolved firm in respect of the turnover before its dissolution. There was no further scope for assessing the firm which ceases
to have legal existence.
In Kapurchand Shrimal v. Tax Recovery .Officer Hyderabad
&
Ors.,(') a case arising out of the· Income Tax Act, this Court held that
the Legislatur·~ having treated a Hindu undivided family as a taxable
entity distinct from bdividual members constituting it, proceedings for
assessment and recovery of the tax having been taken against the Hindu
undivided family, it was not open to the tax recovery officer to initiate
proceedings against the manager of the Hindu n;:idivided family for
his arrest and detention. These two cases clearly establish that a furn
in a partnership and a Hindu 'lll!divided family aP;! recogoised as legal
(1) [1966] 2 S.C.R. 457.
(2) [1969] 1 S.C.R. 691.
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SUPREME COURT REPORTS
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entities and as such proceedings can O':lly be taken against the firm or
undivided family as the case may be. Neither the partners of t!v~ lirm
nor the members of the Hindu undivided family will be liable for the
tax assessed against the firm or the undivided Hindu family. It may
be noted that section 276(d) of the Income Tax Act specifically includes all partners withi;:i the definition of th,, word 'firm' and a company includes directors. In Bombay Sales Tax Act 1959 under section
18 it is specifically provided that where any firm is liable to pay tax
under the Act, the firm and each of the partners of the firm shall be
iointly and severally liable for such payment.
In the absenc~ of a
~pecific provision as found in section 18 of the Bombay Act the partners of the firm cannot be hdd liable for the tax assessed on the firm.
On this point we agree with the High Court that the partners cannot
be made liable for the tax assessed on the firm.
The second question that arises is whether the sanction given by
the Commissicmer is sustainable in law.
The validity of the sanction
is questioned on the ground that under th,, Sales Tax Act the Commissioner is entitled to pursue two ditrerent procedures for enforcing and
realizing the assessment made but as there is no guidance as to the
circumstances
in
which
he
should
resort
to
either o[
the
two procedures, the provisions regarding grant of sa::iction is invalid.
The two procedures that are available are under sections 22( 4-A) and
46(1) (c) of the Act.
Section 22(4-A) runs as follows:
"( 4-A) If the tax assessed under this Act or any of the
Acts repealed by section 52 or any other account due under
this Act or any instalment thereof is ~ot paid by any deal·or
or other persons liable to pay such tax, other amount due or
auy instalment thereof within the time specified ther~fore in
the notice of demand or in the order permitting payment in
instalme::its or within the time· allowed for its payment by the
appellate or revising authority, the Commissioner may, after
giviug the dealer OE other person a reasonable opportunity of
being heard, direct that such dealer or person shall, in addition to the amount due, pay, by way of penalty, a sum equal
to:-
(a) one per ce::it of such amount for each month or part
thereof for the first three months after the date specified for its payment; and
(b) one and half per cent of such amount for each month
or part thereof subsequent to the first three months
aforesaid."
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c. s. T. v. RADHAKRISHAN (Kailasam, J.)
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There had been subsequent amendments by Act 3i of 1975 but
they are '.:!Ot relevant for the purposes of this case. Section 22(4-A)
was inserted by the M.P. Act 16 of 1965 and was published in the
gazette of 3rd April, 1965 and by a Notification dated 9th April, 1965
was brought into force on 15th April, 1965. The Notice was given
'by the Commissioner demanding payment of the tax and penalty from
the firm within 31 days on 4th January,. 1965. The period expired
<Y:t 5th February, 1965. The sanction for prosecution was given by the
Commissioner on 29th April, 1966. Hefore the High Court as well
.as before this Court both the counsel for the respondents and the State
.conceded that section 22( 4-A) is retrospective in operation and, therefore, sub-section is applicable to the facts of the case. The sub-section
provides that when the amount due is not paid within the time allowed,
the CommissiO'.:lcr may after giving the dealer a reasonable opportunity
of being heard direct that such dealer in addition to the amount due
pay by way of penalty a sum as specified in sub-clauses (a) and (b)
1o sub-section ( 4-A). The procedure prescribed in section 22( 4-A)
for collection of the amount is by levy of a penalty, after giving the
dealer a reasonable opportunity of being heard.
A
B
The other procedure that is available to the Commjssimer is by
taking proceedings under section 46 of the Act.
Section 46 enume-
,rates certain offences and penalties for contravention of some of the
provisions of the Act. We ar•o concerned with section 46(l)(c) which
.reads as follows :-
"46(1) (c) Whoever, without reasO'.:lable cause fails to
pay the tax due within the time allowed, shall, without prejudice to the recovery of any tax that may be due from him,
be punishable with simple imprisonment which may extend to
six months or a fine not exceeding one thousand rupees or
with both, and when th·~ offence is a corrtinui'ag offence, with
a further fine not exceeding fifty rupees for every day the
offence continues."
Sub section (2) provides that no Court shall take cognizance of
any offence pu'.:lishable under this Act or any ruk made thereunder
except with the previous sanction of the Commissioner. If action is
10 be taken under section 46, the Commissioner will have to find
ihat the dealer has failed to pay the tax within the time allowed and
without reasonable cause.
The submission of the learn.ed counsel is
ihat the procedure u::ider s·~ction 46 if taken is harsh and more severe
than the one contemplated under section 22(4-A) which enables the
Commissioner to levy a penalty and that too only after giving a reasonable opportunity of being heard.
Before initiating prosecution the
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SUPREME COURT REPORTS
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Commissicraer is not under an obligation to give any notice to the
assessee.
Section 47-A was introduced from 1st January, 1964 by
M.P. Act No. 20 of 1964 which provides that no prosecution for contravention of any provision of this Act or of rules made thereunder
shall be instituted in respect of the same facts on which a penalty ha&
been imposed under' this Act or the said rules, as the case may. be.
By the i:1troduction of section 47-A it is seen that when once proceedings are taken under section 22(4-A) no prosecution under section
46(1)(c) can be instituted. The position, therefore, is that the Commissioner is at lib~rty to choose only one of the two remedies and the
challenge is that one is harsher than the other and there is no guidance
provided to the Commissioner as to which of the procedure he should
adopt in a given case.
An authoritative statement of the Supreme Court on this point is
found in Magan/al Chaganlal (P) Ltd., vs. Municipal Corporation of
Greatet Bombay and Others. (1)
It was observed that one finds
it
difficult to reconcile oneself to the position that the mere possibility
of resort to the Civil Court should make invalid a procedure which
would otherwise be valid. It can very well be argued that as long as
a procedure does not by itself violate either Art. 19 or Art. 14 and is
thns constitutionally valid, the fact that that procedure is more onerous
and harsher than the procedure in the ordinary civil Courts, should not
make that procedure void merely because the authority competent to
take action can resort to that procedure in the case of some and
ordinary civil court procedure in the case of others.
That a constitutionally valid provision of law should be held to be void because there
is a possibility of its being resorted to in the case of some and the
ordinary civil Court procedure in the case of others somehow makes
one feel uneasy and that has been responsible for the attempts to get
round the reasonaning which is the basis in the decision in Northern
India Caterers v. State of Punjab.(')
It was further held that if from the preamble and surrounding
circumstances as well as provisions of the statute themselves explained and amplified by affidavits necessary guidelines
can be inferred
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the statute will not be hit by Art 14.
The provisions in revenue recov~ry Acts and other Acts creating special tribunals and procedure
for expeditious recovery of revenue and state dues are held to be in
public interest and do not violate Article 14.
Regarding the validity of two remedies for recovery of sales-tax,
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the Supreme Court in State of Kera/a and Other v. C. M. Francis &
(I) [1974] S.C.C. 402.
(2) [1967] 3.S.C.R. 399
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Co. and Others( 1) held that if two remedies are open, both can be resorted, at the option of the authorities recovering the amount unless
the Statute in express words lays down that one remedy is to the exclusion of the other.
The two remedies that were available in
the
case were, one under section 13 of the Act which provided that if the
tax is not paid it may be recovered as if it were an arrear of land
revenue and the other under section 19 which provided that any person
who failed to pay within the time allowed any tax assessed on him
under the Act shall on conviction by the Magistrate of the First Class
be liable to pay fine which may extend to one thousand rupees.
This
Court after observing that the question that arose was whether section
19 should prevail over section 13 of the Act stated that "both the
sections lay down mode of recovery of arrears of tax and as has already
been noticed by the High Court, lead to the applicatiqn of process
of recovery by attachment and sale of movable and immovable properties belonging to the tax-evader and it
cannot be said that one·
proceeding is more general than the other, because there is much that
is common between them, in so far as mode of recovery is concerned".
Referring to section 19 the Court observed that in addition to recovery
of the amount, it gives power to the magistrate to convict and sentence the offender to fine or in default of payment of fine, to imprisonment and expressed its opinion that neither of the remedies for recovery
is destmctivc of the other, because if two remcoics are open, both
can be resorted to, at the option of the authorities
recovering the
amount.
This decision supports the contention of the learned counsel
for the appellant that when two remedies, one under section 22 ( 4-A)
and another under section 46(1) (S) are available,
both can be
resorted to at the option of the authorities recovering the amount but
for section 47A.
In the case referred in (!961) 12 S.T.C. 119, the
two remedies were, one by collection of the amount as an arrear of
land revenue and the other by resorting to prosecution before the criminal court. In Shanti Prasad Jain v. The Director of Enforcement(')
the question arose whether discretion left !o the executive to choose
between two
preliminary procedures was
discriminatory.
Under
section 23A, the Director of Enforcement may adjudge the matter himself and levy a penalty not exceeding three times the value of the foreign
exchange. in respect of which the contravention had taken place or
Rs. 5,000 whichever is more or he may send it on to a court if he
considers that a more severe penalty than he can impcse is called for
whereupon on a conviction by a court, the person is punishable with
imprisonment for two years or fine.
The Court observed that under
(1) (1961) 12 S.T.C. 119.
(I) [1963] 2 S.C.R. 297.
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SUPREME COURT REPORTS
[1979] 2 s.c.R.
section 23-D, the necessary guidance is given in that at any stage of lhc
inquiry the Director of Enforcement is of opinion that having regard to
tl1c circumstances of the case the penalty which he is empowered to
impose would not be adequate he shall instead of imposing any penalty
must make a complaint in writing to the Court. As sufficient guidance
was given regarding circumstances under which cases can be transferreJ to the criminal court, the Court held that the power is not unguided
or arbitrary.
In Rayale Corporation (P) Ltd. & Ors. vs.
Director
of Enforcement, New Delhi('), this Court following the Shanti Prasad
Jain's case (supra) held that the Director of Enforcement can only file
a complaint by acting in accordance with proviso to section 23D (1)
which clearly lays down that the complaint is only to be filed in those
cases where at any stage of the inquiry the Director of Enforcement
comes to the conclusion that, having regard to the circumstances of the
case, the penalty which he is empowered to impose could not be adequate.
1 Shanti
Prasad Jain's case (supra) as well as the Rayale
Corporation's case (supra) there we.re clear guidelines as to when
prosecution can be resorted to and on that basis the Court held that
the power cannot be said to be unguided.
The decision in (1961) 12
S.T.C. page 119 (supra) was not referred to in the two decisions.
In
Ram Sarup v. Union of India & Another(')
the question arose as
to whether the power under section 125 of the Army Act which empowered the officer either to try a case by court-martial or by an
ordinary court or by a criminal court, was left entirely within his discretion without any guidance, was violative of Article 14 of the Constitution.
The Court held that the choice as to which court should try
the accused is left to the responsible military officers under whom the
accused is serving and these officers were to be guided by consideration
of the exigencies of the service, maintenance of discipline in the army,
speedier trial, the nature of the offence and the person against whom
the offence is committed.
When power is conferred on high and responsible officers they are expected to act with caution and impartiality
while discharging their duties and the circumstances under which they
will choose either of the remedies available should be left to them. The
vesting of discretionary power in the state or public authorities or an
officer of high standing is treated as a guarantee that the power will be
used fairly and with a sense of responsibility.
It has been held by the Privy Council in Province of Bombay v.
Bombay Municipal Corporation(•) that every statute must be supposed
H
(1) [1970] 1 S.C.R. 639.
(2) A.I.R. 1965 S.C. 247.
(3) 73 I.A. 271.
f
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c. s. T. v. RADHAKRISHAN (Kailasam, !.)
43
to be for public good at least in inteution and therefore of few laws
can it be s~id that the law confers unfettered discret!onery power since
the policy of law offers guidance for the exercise of discretionary power.
Applying the principles of this decision to the present case, the guidance
will have to be inferred from the policy of the law itself, that is, if on
particular facts of a case the Commissioner who is an officer of high
standing, in exercise of his discretion comes to the conclusion that more
drastic remedy should be taken, the exercise of that option cannot be
termed as unconstitutional. In considering the validity of a statute
the presumption is in favour of its constitutionality and the burden is
upon him who attacks it to show that there has been a clear transgression of constitutional principles.
For sustaining the presumption
of constitutionality the Court may take into consideration matters of
common knowledge, matters of common report, the history of the
times and may assume every state of facts which can be conceived. It
must always be presumed that the Legislature understands and correctly
appreciates the need of its own people and that discrimination, if any,
is based on adequate grounds. It is well settled that courts will be
justified in giving a liberal interpretation to the section in order to
avoid constitutional invalidity.
These principles have given rise to
rule of reading down the section if it becomes necessary to uphold
the validity of the sections. In the present case it is seen,
under
section 46 before a prosecution can be launched, it is necessary
that the assessee should have failed to pay the tax due within the
time allowed without reasonable cause.
The duty of the Commissioner is therefore, to be satisfied that the assessee has tailed without
reasonable cause and without recourse to prosecution under section
46(1) (c) the tax due cannot be collected.
The provisions of section
22 (4-A) can be read as being applicable to cases in which the stringent
step of prosecution is considered not necessary.
The option is with
the Commissioner and if he thinks levy of penalty would achieve the
purpose of collection of the tax he can have recourse to che provisions
of section 22(4-A). Before levying a penalty under section 22(4-A),
the Commissioner shall gi~, reasonable opportunity of being heard as
to why the penalty should not be levied.
Reading the two provisions harmoniously, we are of the view that the discretion is given to
the Commissioner to resort to one of the two remedies as the facts of
the case may require. In graver cases he will be justified in taking the
drastic remedy and resorting to prosecution in the criminal court if he
is satisfied that such a course is necessary for the collection of the tax
expeditiously. If the discretion is uot properly exercised the coort
may be justified in interfering in such cases but the law cannot be held
to be invalid.
In the present case, we have no doubt, it is a grave case
A
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A
B
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SUPREME COURT REPORTS
(1979] 2 S.C.R.
of failure to pay the tax as repeated reminders went unheeded. The
Commissioner on the facts is fully justified in coming to the conclusion
that resort to: prosecution is necessary.
On a consideration of the
decjsious on the QOint we are satisfied that there is nothing illegal in
conferring different procedures on the authorities.
Taking into account the scheme of the Act it can be inferred that a
more drastic remedy is to be taken when such a step is found necessary
on the facts of the case. Thus construed the validity of the section cannot
be questioned, but if the facts of the case do not warrant taking of the
graver step and no adequate reasons are found that order in such
circumstances may be found to be invalid.
In R. S. Joshi, S.T.O. Gujarat etc. v. Ajit Mills Ltd., Ahmedabad
& Anr. etc. etc.(') the validity of provisions of the Act which gave the
authority a discretion either to proceed under section 3 7 or section
63 (1) of the Bombay Sales Tax Act without specific guidelines was
considered. It was pointed out that section 37 provided for levy of
penalty and forfeiture while under section 63 (1) (h)
the person
becomes liable to be criminally prosecuted for contravening the provisions of section 46 without reasonable excuse and held that there is
no contraventio_n of Article 14.
In the result we hold that the provisions of the Act conferring
different procedures for collection of tax cannot be held to be invalid.
But in view of our finding that the partners cannot be proceeded with
for collection of arrears of the firm this appeal stands dismissed with
costs.
N.V.K.
Appeal dismissed.
(!) [1978] l S.C.R. 338
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