# M/s. NAND LAL RAJ KISHAN v. COMMISSIONER OF SALES TAX, DELHI

- **Citation:** [1962] 1 S.C.R. 283
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** S. K. Das, J. L. Kapur, M. Hidayatullah, J.C. Shah, T. L. Venkatarama Aiyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-nand-lal-raj-kishan-v-commissioner-of-sales-tax-delhi-2019
- **Pages:** 8

## Headnote

Sales Tax Act-Security demanded for payment of tax-V alidity of-Bengal Finance (Sales Tax) (Delhi Amendment) Act, r956
(Act r7 of z956), s. 8A.
The validity of s. SA of the Bengal Finance (Sales Tax
(Delhi Amendment) Act, 1956, enabling the Commissioner of
Sales Tax to demand security from dealers for payment of tax
was challenged by the petitioners on the grounds that (i) the
section gave undefined, unlimited and unrestricted power to the
com1nissioner, (ii) no limit was fixed for the amount of security,
and (iii) the section did not provide for any enquiry before the
demand of security, nor did it provide for an opportunity of
being heard being given to the person against whom the order
was proposed to be passed.
Held, that• s. SA did not give any unlimited or unrestricted
power to the Commissioner of Sales Tax. The power of the
Commissioner of Sales Tax was subject to the condition that it
(l) [1958] 9 S.T.C. 194.
March r4.
284
SUPREME COURT REPORTS
(1962)
I96I
must appear to him to be necessary to demand security for the
proper realisation of the tax. The power to levy a tax includes
M /s. Nand Lal the power to impose reasonable safeguards for collecting it and
Raj Kishan
demanding security for the proper payment of tax is neither an
v.
arbitrary nor an unreasonable restriction.
Com1nissioner of
•
.
Sales Tax. Delhi
Durga Prasad Khaitan v. Commercial Tax Officer, [r957] 8
S.T.C. 105, approved.
&·Another
Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh,
[1954] S.C.R. 803, distinguished.
Virendra v. The State of Punjab, [r958] S.C.R. 308 and Kishan
Chand Arora v. The Commissioner of Police, Calcutta, [rg6r] 3
S.C.R. 135, referred to.
The power of the Commissioner as regards the amount of
security was not unlimited because the order of the Comm.ssioner was subject to revision and scrutiny by the Chief C mmissioner.
In the instant case an opportunity having been given to the
petitioners for submitting their defence and an explanation
having been actually submitted by the petitioners there was no
violation of the principles of natural justice. A second opportunity for oral hearing was not obligatory.
ORIGINAL JURISDICTION:
Petition No. 77 of 1958.
Petition under Art. 32 of the Constitution of India
for enforcement of Fundamental Rights.
Bhavani Lal and P. 0. Agarwala, for the petitioners.
0. K. Daphtary, Solicitor-General of India, R. Ganapathy Iyer and T. M. Sen, for the respondents.
1961. March 14. The Judgment of the Court was
delivered by
s. K. Das J.
S. K. DAS, J.-This is a writ petition under Art. 32
of the Constitution. The petitioners, Messrs. Nand
Lal Raj Kishan, carry on a business of commission
agents at Delhi and are liable to pay sales tax in respect of their business under the provisions of the
Bengal Finance (Sales Tax) Act, 1941, as in force in
Delhi. They filed returns for four quarters of 195455 and claimed exemption in respect of sales of certain goods to the registered dealers under the prov isions of s. 5(2)(a)(ii) of the said Act. By his ordor
•
dated April 11, 1956, the Sales Tax O:fficrer disallowed
~
11'.
the exemption claimed by the petitioners mainly on
1
the ground that the alleged sales were made to "those
I S.C.R. SUPREME COURT REPORTS
2S5
registered dealers whose activities had gone underground." The Sales. Tax Officer issued a demand notice
for a sum of Rs. l,ll,S90-11-0 on account of sales tax.
The petitioners then carried an appeal to the Assistant
Commissioner of Sales Tax, Delhi. The Assistant
Commissioner set aside the order of the Sales Tax
Officer and remanded the case for a fresh decision in
the light of certain judgments given by the Chief
Commissioner, Delhi, in a number of similar cases. In
the meantime, the Bengal Finance (Sales Tax) Act,
1941, was amended by the Bengal Finance (Sales Tax)
(Delhi Amendment) Act, 1956, being Act No. 17 of
1956. This amending Act which came into force on
October 27, 1956, inserted a new section, which is
s. SA of the Act. This section reads as

## Text

1 S.C.R. SUPREME COURT REPORTS
283
Taxes (1 ), also they were held not to be vegetables
'96'
which specifically meant Sabzi, Tarkari and Sak. ThereRamavatar
fore apart from the fact that the legislature by using Budhaiprasad Etc.
two distinct and different items i.e. item 6 "vegetav.
hies" and item No. 36 "betel leaves" has indicated its Assista"t Sales
intention, decided cases also show that the word Tax Officer. Akola
"vegetables" in taxing statutes is to be understood as
Kapur J.
in common parlance i.e. denoting class of vegetables
which are grown in a kitchen garden or in a farm and
are used for the table.
In our view, betel leaves are not exempt from taxation. These petitions therefore fail and are dismissed
with costs. One hearing fee.
Petitions dismissed.
M/s. NAND LAL RAJ KISHAN
v.
COMMISSIONER OF SALES TAX, DELHI
AND ANOTHER
(S. K. DAS, J. L. KAPUR, M. HIDAYATULLAH,
J.C. SHAH, and T. L. VENKATARAMA AIYAR, JJ.)
Sales Tax Act-Security demanded for payment of tax-V alidity of-Bengal Finance (Sales Tax) (Delhi Amendment) Act, r956
(Act r7 of z956), s. 8A.
The validity of s. SA of the Bengal Finance (Sales Tax
(Delhi Amendment) Act, 1956, enabling the Commissioner of
Sales Tax to demand security from dealers for payment of tax
was challenged by the petitioners on the grounds that (i) the
section gave undefined, unlimited and unrestricted power to the
com1nissioner, (ii) no limit was fixed for the amount of security,
and (iii) the section did not provide for any enquiry before the
demand of security, nor did it provide for an opportunity of
being heard being given to the person against whom the order
was proposed to be passed.
Held, that• s. SA did not give any unlimited or unrestricted
power to the Commissioner of Sales Tax. The power of the
Commissioner of Sales Tax was subject to the condition that it
(l) [1958] 9 S.T.C. 194.
March r4.
284
SUPREME COURT REPORTS
(1962)
I96I
must appear to him to be necessary to demand security for the
proper realisation of the tax. The power to levy a tax includes
M /s. Nand Lal the power to impose reasonable safeguards for collecting it and
Raj Kishan
demanding security for the proper payment of tax is neither an
v.
arbitrary nor an unreasonable restriction.
Com1nissioner of
•
.
Sales Tax. Delhi
Durga Prasad Khaitan v. Commercial Tax Officer, [r957] 8
S.T.C. 105, approved.
&·Another
Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh,
[1954] S.C.R. 803, distinguished.
Virendra v. The State of Punjab, [r958] S.C.R. 308 and Kishan
Chand Arora v. The Commissioner of Police, Calcutta, [rg6r] 3
S.C.R. 135, referred to.
The power of the Commissioner as regards the amount of
security was not unlimited because the order of the Comm.ssioner was subject to revision and scrutiny by the Chief C mmissioner.
In the instant case an opportunity having been given to the
petitioners for submitting their defence and an explanation
having been actually submitted by the petitioners there was no
violation of the principles of natural justice. A second opportunity for oral hearing was not obligatory.
ORIGINAL JURISDICTION:
Petition No. 77 of 1958.
Petition under Art. 32 of the Constitution of India
for enforcement of Fundamental Rights.
Bhavani Lal and P. 0. Agarwala, for the petitioners.
0. K. Daphtary, Solicitor-General of India, R. Ganapathy Iyer and T. M. Sen, for the respondents.
1961. March 14. The Judgment of the Court was
delivered by
s. K. Das J.
S. K. DAS, J.-This is a writ petition under Art. 32
of the Constitution. The petitioners, Messrs. Nand
Lal Raj Kishan, carry on a business of commission
agents at Delhi and are liable to pay sales tax in respect of their business under the provisions of the
Bengal Finance (Sales Tax) Act, 1941, as in force in
Delhi. They filed returns for four quarters of 195455 and claimed exemption in respect of sales of certain goods to the registered dealers under the prov isions of s. 5(2)(a)(ii) of the said Act. By his ordor
•
dated April 11, 1956, the Sales Tax O:fficrer disallowed
~
11'.
the exemption claimed by the petitioners mainly on
1
the ground that the alleged sales were made to "those
I S.C.R. SUPREME COURT REPORTS
2S5
registered dealers whose activities had gone underground." The Sales. Tax Officer issued a demand notice
for a sum of Rs. l,ll,S90-11-0 on account of sales tax.
The petitioners then carried an appeal to the Assistant
Commissioner of Sales Tax, Delhi. The Assistant
Commissioner set aside the order of the Sales Tax
Officer and remanded the case for a fresh decision in
the light of certain judgments given by the Chief
Commissioner, Delhi, in a number of similar cases. In
the meantime, the Bengal Finance (Sales Tax) Act,
1941, was amended by the Bengal Finance (Sales Tax)
(Delhi Amendment) Act, 1956, being Act No. 17 of
1956. This amending Act which came into force on
October 27, 1956, inserted a new section, which is
s. SA of the Act. This section reads as follows:
"S. SA. Security from certain class of dealers.-
The Commissioner, if it appears to him to be necessary so to do for the proper realisation of the tax
levied under this Act, may impose for reasons to be
recorded in writing as a condition of the issue of a
registration certificate to a dealer or of the continuance, in effect, of such a certificate issued to any
dealer, a requirement that the dealer shall give
security up to an amount and in the manner approved by the Commissioner for the payment of the
tax for which he may be or become liable under
this Act."
On May 17, 1957, the petitioners asked for a fresh
registration certificate on the ground that their original certificate had been lost in transit. They further
asked for the addition of some more items of goods in
the registration certificate, such as cigarettes, bidis
and glass of all kinds. Thereupon the Sales Tax Officer
made certain enquiries and found that the petitioners
had been frequently shifting their places of business
and the sales alleged to have been made by them to
some registered dealers were not genuine, because those
persons could not be traced at the addresses given.
On a report being submitted to the Commissioner of
Sales Tax, Delhi, the Commissioner asked the Sales
Tax Officer to issue a notice to the petitioners. On
Ig6I
ftf /s. l•la11d Lal
Raj Kishan
v.
Commissioner of
Sales Tax, Delhi
& Another
S. K. Das].
2S6
SUPREME COURT REPORTS
[1962]
I96r
July 13, 1957, such a notice was issued to the petitioners to show cause why they should not be asked to
M~~j ~~:a;ai fhurnish ~ .securifty oSfARTs.hl0,00~ .in accohrdance with
v.
t e prov1s10ns o s.
.
e pet1t10ners t en appearCommission" of ed before the Sales Tax Officer and made a statement
Sal" ra., Delhi that they were not prepared to deposit any amount as
& Another
security. They also filed a written explanation objecting to the demand of security. The matter was then
s. K. Das J.
referred to the Commissioner of Sales Tax who considered the explanation of the petitioners anq the report of the Sales Tax Officer. The Commissioner expressed his finding in the following words:
"In view of the reputation that the dealer enjoys
in the market, namely, that he being a commission
agent has been engaged in the business of selling
goods to other commission agents, all sales being
effected to unscrupulous registered dealers, frequent
changes in the name and place of business without
giving specific details, late submission of information
regarding the changes in the name and place of
business, non-submission of returns for the year
1956-57 within the prescribed time, it appears necessary to demand security under section SA of the
Bengal Finance (Sales Tax) Act, 1941 as in force in
Delhi."
Accordingly, on November 27, 1957, he made an order
directing the petitioners to furnish security either in
cash or by two personal sureties for a sum of
Rs. 5,000 by December 15, 1957. Against the aforesaid order of the Commissioner the petitioners went
in revision to the Chief Commissioner of Delhi. The
.Chief Commissioner heard Counsel for the petitioners
and by his order dated April 15, 1958, dismissed the
application in revision. The petitioners then filed a
writ petition in the Punjab High Court which was
summarily dismissed.
On the present writ petition the petitioners have
impugned the order of the Commissioner dated November 27, 1957 on the ground that s. SA of the Act
under which the order was passed is constitutionally
invalid. They have challenged the validity of s. 8A
on three grounds: firstly, it is contended that s. SA
•
..
•
I S.C.R. SUPREME COURT REPORTS
287
gives an undefined, unlimited and unrestricted power
r96r
to the Commissioner of Sales Tax; secondly, it is cond
h
M/s. Nand Lal
tended that no limit is fixed with regar to t e amount
Raj Kishan
of security which may be demanded under the secv.
tion; and thirdly, it is contended that the section Commissioner of
imposes an unreasonable restriction on the right of Sales Tax, Delhi
the petitioners to carry on their business inasmuch as
& Another
it does not provide for any enquiry before the demand
-
S. !(. Das J.
for security is made, nor does it provide for an opportunity being given to the person against whom the
order is proposed to be passed of being heard before
such order is passed.
We do not think that these grounds have any subs~ance. Section SA does not give unlimited or unrestricted power to the Commissioner of Sales Tax. It
states inter alia that the Commissioner may impose
for reasons to be recorded in writing as a condition of
the issue of registration certificate to a dealer, or of the
continuance of such a certificate, a requirement that
the dealer shall give security up to an amount and in
the manner approved by the Commissioner for the
payment of the tax for which he may be or become
liable under the Act: this power of the Commissioner
is, however, subject to the condition that it must
"appear to him to be necessary so to do for the proper
realisation of the tax levied under the Act". In
other words, the Commissioner may exercise his power
of demanding security only when he considers it
necessary to do so for the proper realisation of the tax
levied under the Act. By no stretch of argument
can it be suggested that the power is an unlimited
or an unrestricted power. Learned Counsel for the
petitioners has referred us to the decision of this Court
in Messrs. Dwarka Prasad Laxmi Narain v. The State
of Uttar Pradesh (1). That was a case in which under
cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953,
the licensing authority was given absolute power to
grant or refuse to grant, renew or refuse to renew,
suspend, revoke, cancel or modify any licence under
the Order. It was pointed out by this Court that
there was nothing to regulate or guide the discretion
(1) [1954) S.C.R. 803.
288
SUPREME COURT REPORTS
[1962]
z96r
of the licensing officer and the provision impugned
M/s. Nand Lal therein committed to the unrestrained will of a single
Raj Kishan
individual the power to grant, withhold or cancel licv.
ences in any way he chose. That is not the position
Commissioner of here. Section SA itself gives the necessary guidance
Sales Tax, Ddhi when it savs that the Commissioner may exercise his
& Another
1 • h
•t ·
t d
f
h
_
power on y w en I
IS necessary o o so or t e pros. K. Das J.
per realisation of the tax levied under the Act. In a
later decision of this Court in Virendra v. The State of
Punjab (1) it was pointed out that in Dwarka Prasad's •
case (2) the impugned provision prescribed no principles and gave no guidance in the matter of the exercise of the power, but in a case where the exercise of
the power is conditioned by the statute itself, the
ratio in Dwarka Prasad case(') does not apply. The
same view was reiterated in Kishan Chand Arora v.
The Commissioner of Police, Calcutta(~).
Section 7(4a)(i) of the Bengal Finance (Sales Tax)
Act, 1941, gives the power to the Commissioner to
demand reasonable security for the proper payment
of tax payable under the Act. This section came in
for consideration of the Calcutta High Court in Durga
Prasad Khaitan v. Commercial Tax Officer(') and it
was held that the section did not confer unfettered or
arbitrary power to the Commissioner. We approve
of the view expressed therein that the power to levy
a tax includes the power to impose reasonable safeguards in collecting it, and demanding security for
the proper payment of the tax payable under the
Act is neither an arbitrary nor an unreasonable restriction.
As to the contention that there is no limit to the
amount which can be demanded as security, it is only
necessary to point out that the amount that can be
demanded as security must have relation to the payment of the tax for which the person concerned may
be or become liable under the Act. The amount must
depend on the nature of the business, its turnover and
the amount of tax payable thereon by the person
concerned. Furthermore, the order of the Commissioner under s. SA is subject to revision by the Chief
(1) [1958] S.C.R. 308, 321.
(2) [1954] S.C.R. 803.
(3) [1961] 3 S.C.R. 135·
(4) [1957] 8 S. T.C. 105.
~
lo. "('
~
'
I I
i
• •
I S.C.R. SUPREME COURT REPORTS
289
Commissioner and if an arbitrary or unreasonable
r96r
amount is demanded, the order of the Commissioner
'\\ b
b'
b
C
1'14 /s. Nand Lal
Wl
e su iect to scrutiny y the hief Commissioner.
llai Kisha"
We do not think that even in the matter of the
v.
amount of security, the power of the Commissioner is Commission" of
unlimited or unrestricted.
s.1., Ta•, V•lhi
As to the last contention that the section does not
provide for any enquiry or any opportunity being
given to the person against whom the order is proposed
to be passed of being heard, this point was taken
before the Chief Commissioner and the Chief Commissioner rightly pointed out that the principles of
natural justice would apply and the person to whose
prejudice the order is to be made must be given an
opportunity to say whatever he has to say in his
defence. In the present casti, such an opportunity
was given to the petitioners. A notice was issued to
the petitioners by the Sales Tax Officer. The petitioners appeared before the Sales Tax Officer, submitted
a written explanation and also made oral submissions.
The Commissioner had before him the report of the
Sales Tax Officer, the explanation submitted by the
petitioners in reply to the notice issued, and also the
statements made by them.
It has been contended on behalf of the petitioners
that no oral hearing was given to the petitioners by the
Commissioner of Sales Tax and learned Counsel for
the petitioners has made a grievance that the order of
the Commissioner was passed without hearing the
petitioners. It may be pointed out here that when the
petitioners were heard by the Chief Commissioner in
support of their application in revision, they made no
grievance on the score that the Commissioner of Sales
Tax had not given them a second opportunity of a
fresh oral hearing. \Ve do not think that a second
opportunity like the one suggested on behalf of the
petitioners was either m;icessary or obligatory. The
petitioners had an opportunity·' of saying what they
had to say agi1inst the demand of security. They raised
their objections which were considered by the Commissioner wh-0, in spite of those objections, came to the
conclusion that it was necessary to ask the petitioners
37
6- Another
S. K. Das].
290
SUPREME COURT REPORTS
(1962]
to furnish security for the proper realisation of the
tax levied or leviable under the Act. We agree with
M 1'· Nand Lal the Chief Commissioner that there was no violation of
Raj Kishan
v.
the principles of natural justice in the present case.
Commissioner of
For the reasons given above we hold that there is
Sales Tax, Delhi no merit in the petition which is accordingly dismissed
& Another
with costs.
S. K. Das J.
I96I
March z4.
Petition di~missed.
MRITUNJOY PANI AND ANOTHER
v.
NARMANDA BALA SASMAL AND ANOTHER
(K. SUBBA RAO and RAGHUBAR DAYAL, JJ.)
Mortgage-Right of redemption-Suit, when maintainableMortgagor and Mortgagee-Legal position-Indian Trusts Act, r88a
(II of r882), s. 90.
Usufructuary mortgage bond was executed in favour of the
father of the appellant who was put in possession of the mortgaged property. One of the terms of the usufructuary mortgage
was that in case of failure of payment of rent by the mortgagor,
the mortgagee was to pay off the arrears of rent to the landlord,
which obligation the mortgagee did not honour as a result of
which the property was brought to sale and ultimately purchased by the mortgagee.
The mortgagor filed a suit against the mortgagee, the appellant's father, for redemption of the mortgage and for possession.
The defence inter alia was that the mortgagee had purchased
equity of redemption in execution of the rent decree and that
the mortgagor had no longer any right to sue him for redemption and their remedy, if any, was to sue for setting aside the
sale on the ground of fraud or otherwise.
Held, thats. 90 of the Trusts Act read with the illustration
(c) lays down the principle that no one can be allowed to benefit
for his own wrongful act.
Held, further, that the legal position with regard to mortgagor and mortgagee was that:-
( I) the governing principle is that "once mortgagee
..,... ·. -
• I
,,
....