# STATE OF GUJARAT & ANR. ETC. ETC v. PATEL RANJIBHAI DHANBHAI & ORS. ETC. El'C

- **Citation:** [1979] 3 S.C.R. 788
- **Court:** Supreme Court of India
- **Decided:** 1979-05-01
- **Bench:** Y. V. Chandrachud
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-gujarat-anr-etc-etc-v-patel-ranjibhai-dhanbhai-ors-etc-el-c-7802
- **Pages:** 14

## Headnote

R. S. SARKARIA,
N. L. UNTWALIA,
P. S. KAILASAM AND E. S. VENKATARAMIAH, JJ.]
Bombay Soiro Tax Act 1959-Ss. 33(b) a11d 35(1)~Bombay Sale>' Tax
Act, 1953-S. 14(b) validity of-lf offend Art. 14
of the
Co11.rt1tufiunProcedure under s. 33(b) if more onerous than the procedure under 1. 35,.
Section 33(6) of the Bombay Sales Tax Act 1959 provides that if the
CP1nmissioner of Sales Tax has reason to believe that a dealer
i.~ liable to pay
tnx bul has failed to apply for registration within the time as rcquit·ed by s. 22,
the Con1mhsioner shall assess to the best of his judgrn~nt the au1ount Of tax
due from the dealer in respect of such period and any period subsequent
thereto.
Section 35(1) provides that if the C'ornmission,:r has reason to believe
that any turnover chargeabl'e to tax has es~aped assessment he may proceed
to assess or re-assess the amount of tax due, as the case nw.y be.
Section 14(6) of the Bombay Sales Tax Act, 1953 provides that if the
Collector is satisfied that any dealer has been liable to pay the tax in respect
of any period he shall assess to th'e best of his judgment the amount of tax
from the dealer.
Section 15 of the 1953 Act provides that if the Collector
is satisfied that any turnover has escaped assess1ncnt he may proceed to assess
or re-assess the an1ount of tax.
In C.A. 287/72 the Sales Tax Officer after
is~uing notice.; under s. 14(6)
of 1953 Act to the erstwhile partners of the asses'iee firlll af(er its dissolution
to show cause why they should not be assessed to tax and \vhy a penalty
should not be imposed on them for not getting themselves registered under the
Act made a best judgment assessment under s. 33(6) of the 1959 Act and
imposed a penalty. In C.A. Nos. 289/72 am! 290/72 the Sales Tax Officer
made a best judgment ass'ess.ment and imposed penalty under s. 36(2) on
account of the assessees' failure to get their
respective
firms
reg~stered as
dealers under the Act.
Relying mainly on the judgment of this Court in Anandji llari Das & Co.
v. S. P. Kasture & Ors. (A.I.R. 1968 S.C. 565) and Ghanshyan1das \. Regional
Assistant Commissioner of Sales Tax, Nagpur (A.I.R. 1964 S.C. 766), the
High Court held that the provisions of ss. 33(6) and 35 of the 1959 Act overlap each other and that s. 33(6) offends Art. 14 of the Constitution and as such
is void because all cases of escapement of assessment by a dealer can be dealt
with at the sweet will of the assessing authority under either of these provisions,
that the procedure provided ins, 33(6) was more onerous than the one provided
in s. 35 inasmuch as, unlike the latter section, no perio<l of limitation had
been provided for taking action under s. 33(6), that no guidelines had been
provided and that the choice of one procedure in preference to the other is
left to the arbitrary whim of the' assessing authority.
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GUJARAT V. P. R. DHANBHAI
789
Jn the second batch of cases the assessees were unregistered dealers who
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were assessed under s. 14(6) of the, 1953 Act. Following the decision of a
Division Bench of the Bombay High Court which held that s. 14(6) of the
1933 Act ·was violative of Art. 14 of the Constitution and therefore void, the
Sales tax Tribunal directed the orders passed by the aflsessing authorities be set
a!ld.e.
It w.u contended on behalf of the State Governments that s. 33(6) is a
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special provision confined to an unregistered dealer, who is guilty of committing
a two-fold violation of the: law enacted in that provisio11, that the special
provisi"n excludes the application of the general provision ins. 35(1) and the
case of unregistered dealer who escapes assessment on account of his failure
to get himself registered, that the case of Anandii Hari Das C;:. Co. was distinguishable because that was a case of a registered dealer whil~ the cases on
hand were cases of unregistered dealers and that the procedure provided in
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s. 33(6) is not more onerous than the one prescribed und~r s. 35.
AUo\\ing the appeaols,

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788
STATE OF GUJARAT & ANR. ETC. ETC.
v.
PATEL RANJIBHAI DHANBHAI & ORS. ETC. El'C.
May 1, 1979
(Y. V. CHANDRACHUD, C.J.,
R. S. SARKARIA,
N. L. UNTWALIA,
P. S. KAILASAM AND E. S. VENKATARAMIAH, JJ.]
Bombay Soiro Tax Act 1959-Ss. 33(b) a11d 35(1)~Bombay Sale>' Tax
Act, 1953-S. 14(b) validity of-lf offend Art. 14
of the
Co11.rt1tufiunProcedure under s. 33(b) if more onerous than the procedure under 1. 35,.
Section 33(6) of the Bombay Sales Tax Act 1959 provides that if the
CP1nmissioner of Sales Tax has reason to believe that a dealer
i.~ liable to pay
tnx bul has failed to apply for registration within the time as rcquit·ed by s. 22,
the Con1mhsioner shall assess to the best of his judgrn~nt the au1ount Of tax
due from the dealer in respect of such period and any period subsequent
thereto.
Section 35(1) provides that if the C'ornmission,:r has reason to believe
that any turnover chargeabl'e to tax has es~aped assessment he may proceed
to assess or re-assess the amount of tax due, as the case nw.y be.
Section 14(6) of the Bombay Sales Tax Act, 1953 provides that if the
Collector is satisfied that any dealer has been liable to pay the tax in respect
of any period he shall assess to th'e best of his judgment the amount of tax
from the dealer.
Section 15 of the 1953 Act provides that if the Collector
is satisfied that any turnover has escaped assess1ncnt he may proceed to assess
or re-assess the an1ount of tax.
In C.A. 287/72 the Sales Tax Officer after
is~uing notice.; under s. 14(6)
of 1953 Act to the erstwhile partners of the asses'iee firlll af(er its dissolution
to show cause why they should not be assessed to tax and \vhy a penalty
should not be imposed on them for not getting themselves registered under the
Act made a best judgment assessment under s. 33(6) of the 1959 Act and
imposed a penalty. In C.A. Nos. 289/72 am! 290/72 the Sales Tax Officer
made a best judgment ass'ess.ment and imposed penalty under s. 36(2) on
account of the assessees' failure to get their
respective
firms
reg~stered as
dealers under the Act.
Relying mainly on the judgment of this Court in Anandji llari Das & Co.
v. S. P. Kasture & Ors. (A.I.R. 1968 S.C. 565) and Ghanshyan1das \. Regional
Assistant Commissioner of Sales Tax, Nagpur (A.I.R. 1964 S.C. 766), the
High Court held that the provisions of ss. 33(6) and 35 of the 1959 Act overlap each other and that s. 33(6) offends Art. 14 of the Constitution and as such
is void because all cases of escapement of assessment by a dealer can be dealt
with at the sweet will of the assessing authority under either of these provisions,
that the procedure provided ins, 33(6) was more onerous than the one provided
in s. 35 inasmuch as, unlike the latter section, no perio<l of limitation had
been provided for taking action under s. 33(6), that no guidelines had been
provided and that the choice of one procedure in preference to the other is
left to the arbitrary whim of the' assessing authority.
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GUJARAT V. P. R. DHANBHAI
789
Jn the second batch of cases the assessees were unregistered dealers who
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were assessed under s. 14(6) of the, 1953 Act. Following the decision of a
Division Bench of the Bombay High Court which held that s. 14(6) of the
1933 Act ·was violative of Art. 14 of the Constitution and therefore void, the
Sales tax Tribunal directed the orders passed by the aflsessing authorities be set
a!ld.e.
It w.u contended on behalf of the State Governments that s. 33(6) is a
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special provision confined to an unregistered dealer, who is guilty of committing
a two-fold violation of the: law enacted in that provisio11, that the special
provisi"n excludes the application of the general provision ins. 35(1) and the
case of unregistered dealer who escapes assessment on account of his failure
to get himself registered, that the case of Anandii Hari Das C;:. Co. was distinguishable because that was a case of a registered dealer whil~ the cases on
hand were cases of unregistered dealers and that the procedure provided in
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s. 33(6) is not more onerous than the one prescribed und~r s. 35.
AUo\\ing the appeaols,
HELD: I. Section 33(6) of the 1959 Act and s. 14(6) of the 1953 Act
do not violate ArL
14 of the Constitution and are valid.
[801C]
2. Section 33(6) is, in terms, restricted in its application to the case of an
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unregistered dealer whose modus operandi to evade tax involves ab .initio dis-
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regard of the law. It does not apply to a registered dealer who has escaped
38.!essm·ent or has bee~1 under-assessed or assessed at a lower rate or has been
wrongly allowed any deductions or has concealed any material particulars relating to sales or purchases or has knowingly furnished incorrect returns. The
case of such a registered dealer will fall under s. 35 and not under CJ. 33(6).
Section 33(6) is a special provision confined to a pa.rticular ciass of tax-evaders,
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namely, unregistered dealers; while s. 35 is a general provision to deal with
cases of escapEd assessment or under-assessment.
Generalia special!buv nor.
dt:rogant is a cardinal principle of interpretation. It mean'3 that the genera]
provisions must always yield to the special provisions. Construed in accordance
with this fundamental principle the special class of unregistered dealers covered
by s. 33(6) must be, taken to have been excluded from the purview of the
general proYisions in s. 35. Thus considered, it is clear that in the c~e of an
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unregistered dealer who evades tax by committing the double default qpecified
ins. 33(6), action can be taken only under that section and not under s. 35.
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3. Putting the umegistered dealer v;:ho, though liable to pay tax, fails to get
himself registered and does not pay any tax in a separate class to be dealt with
under s. 33 (6) differently from other dealers falling under s. 35. rests on
inteJligible differentia having a rational nexus with the object of p1'Cventing tax
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evasion. Though no limitation has been prescribed for taking action under
s. 33(6) against an unregistered dealer fa.Hing thereunder there i'3 rational basis
for not putting any restriction as to the length of tima
~..-itb.in \Vhich action
can be taken under s. 33 (6). The reason is that tax evasion by the unregi~tered
dealers in this class because of the clandestine modus operandi adopted by
them, and wholesale disregard of the law, is more contumacious in character,
more sinister in its effect both on the Iaw~abiding tax-payers anil the collection
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of public revenue, and more difficult to detect than tax-evasion by a. registered
dealer. When a dealer applies for and obtains a registration certificate under
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[1979] 3 S.C.R.
the Act, he thereby admits his liability to pay tax.
In his case the Sales-tax
Authorities have basic information in pursuance of which thef can, by the
exercise 0f due vigilance, check and detect any tax-evasion by him within
reasonable time. This reasonable time is the period of limitation fixed by the
Legislature in s. 35. But the case of a tax-evading unregistered
dealer
is
different. In his case, the Authorities have on their record no basic information
such as the registration record which would supply them a 'lead' to work upon.
For lack of information and the secrative nature of the modus operandi, tax ..
evading activities of an unregistered dealer may go on undetected for years on
end. That is why for taking action under s. 33 (6) against a tax-evadina unregistered dealer, the Legislature has not fixed any period uf limitation.
[SOOD; 799 G-Hl
4. The procedure provided in s. 33(6) cannot be said to be more onerous
than the one specified in s. 35. The requirement as to issue of a notice to the
defaulter and giving an opportunity of being heard, is a CQmtn'Jn feature of
both the sections. Although under s. 33(6) the assessment is made on best
judgn1c:nt basis, it cannot be made arbitrarily or capriciously. It bas to be
made after taking into account all relevant material gathered by the Taxation
Officer or produced before him by the assessee in response to the notice. If
an assessment under s. 33(6) is made upon inadequate materials, but on honest
and fair guess-work, then it will be but due to the deliberate default of the
assessee in supplying the necessary information, 'The differrential mode of
assessment under s. 33 (6) is thus founded upon rational criteria.
[SOOE-0]
5. The ratio of Anandji Haridas is not applicable to the facts of the present
cases. 'fhe former was dealing with a registered dealer whereas the instant
case is concerned with unregistered dealers. Upon a proper construction of
the two provisions, such unregistered dealers can be proceeded again.;;t under
s. 33(6) of the 1959 Act or s. 14(6) of the 1953 Act and not under s. 35
or s. 15 of the respective Acts. There is no over-lapping between these two
because s. 35 cannot be applied to the case of an unr~gistered dealer falling
within the purview of the special provisions in s. 33(6). Thilj w&~ clear from
s. 35(2) as it stood at the time material to tliese cases.
[SOOH]
Anandii Hari Das & Co. v. S. P. Kasture & Ors.
A.I.R.
1968 S.C. 565
and Ghansh)·amdas v. Ret?ional Assistant Commissioner of Salts Tax, Nagpur,
A.I.R. 1964 S.C, 766 distinguished.
Civn, APPELLATE JURISDICTION : Civil APPeal Nos. 287-290 of
1972.
From the Judgment and Order dated 8-7-70 of the Gujarat High
Court in S.C.A. Nos. 191168, 1378/68, 1643/69 and 8/70.
AND
CIVIL APPEAL NOS. 2450-2451/72
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(Appeals by Special Leave from the Order/Judgment dated 19-4-72
of the Maharashtra Sales Tax Tribunal in Revision Application Noli.
111 and 112/65.
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GUJARAT v. P. R. DHANBHAI (Sarkaria, J.)
791
AND
CIVIL APPEAL NO. 2529 OF 1972
From the Judgment and Order dated 13-3-1972 of the Gujarat
High Court in Special Civil Application No. 1959/71.
AND
CIVIL APPEAL NO. 303 OF 1974
Appeal by Special Leave from the Judgment and Order dated
4-7-1973 of the Gujarat High Court in Sales Tax Reference No. 10/71.
R. M. Mehta (287-90, 2529 and 303), M. C. Bhandare (2450-51)
V. S. Desai (2450-51) and M. N. Shroff for the Appellants in all tho
matters.
I. N. Shroff for the Respondents in C.A. 287-90/72 .
R. P. Bhatt and B. R. Agarwala for the Respondents 2450-51/72.
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J. Ramamurthi and Miss R. Vaigai for Re'spondent No. 1 in C.A.
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2529(72.
M. N. Shroff for the Intervener in C.A. 2450-51172.
The, Judgment of the Court was delivered by
SARKARIA, J .-This judgment will dispose of two batches of appeals.
The first batch includes Civil Appeals 287 to 290 and 2529 of 1972
and Civil Appeal 303 of 1974 preferred by the State of Gujarat/Sales
Tax Officer on the basis of a certificate granted by the High Court. Of
this batch,, Civil Appeals 287 to 290 of 1972 are directed against
a
common judgment, dated July 8, 1970, of the High Court of Gujarat :
while Civil Appeal 303 of 1974 i's preferred against a judgment, dated
July 4, 1973, of the Gujarat High Court, which follows its earlier decision in Patel Ranjibhai Dh1111bhai & Ors. v. A. S. Tambe, Sales Tax
Officer, Anand.
The Second batch comprises of Civil Appeals 2450 and 2451
of
1972 and {,Jvil Appeals 1260 and 1213 of 1975.
They have been
preferred by the State of Maharashtra after obtaining special leave
under Article 136 of the Constitution. Of these, the first two are directed
against an Order dated April 19, 1972, of the Maharashtra Sales Tax
Tribunal wl11ch, in turn, is based on a judgment, dated October 11/12,
1971, of the Bombay High Court in S.C.A. No. 444 of 1968 (B. M.
Jain v. State of Maharashtra), and the other two are directed against a
judgment dated October 11/12, 1971 of the High Court of Bombay.
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The common question posed for our decision in all these appeals is,
whether any of the provisions in Sections 33(6) and 35 of the Bombay
Sales Tax Act, 1959 (hereinafter referred to as 1959 Act) which are in
pari materia with Sections 14(6) and 15, respectively, of the Bombay
Sales Tax Act, 1953 (hereinafter called the 1953 Act), offend Article
14 of the Constitution and, as snch, are void.
The High Courts[I'ribunal in the concerned appeals have answered this question in affirmative, so far as Section 33(6) of 1959 Act/14(6) of 1953 Act is concerned.
FIRST BATCH
Facts in C.A. 287 /72
The facts in the Writ Petition (S.C.A. No. 191 of 1968), from which
C.A. 287 /72 has arisen, are that writ petitioners 1, 4 and 6 (respondents
herein) were running busine·ss in partnership under the name of 'The
Laxmi Vijay Saw Mill' from November 2, 1955 to October 31, 1959.
From November 1, 1959, writ petitioners 1 to 7 together with one
Patel Muljibhai Bemjibhai, formed another partnership and executed a
deed to that effect on February l, 1960.
This partnership was dissolved on November 10, 1964.
On November 13,. 1964, the Sales
Tax Officer, Anand, was informed about this dissolution.
On November 11, 1965, the Sales Tax Officer issued notices in Form
No. 13 under Section 14 of the 1953 Act, requiring the erstwhile partner's to show-cause why they should not be assessed under sub-section
(6) of Section 14 of the said Act, and why a penalty on account of
their failure to get their firm registered, when they were liable to pay
tax, be not imposed.
These notices covered the period from April 1,
1955 to December 31, 1959.
In reply to the notices, the respondents
contended that since !lie old partnership formed in 1955 and the new
partnership formed on November 1,
1959, had both been dissolved,
the proposed action was illegal, there being no machinery under the
1953 Act to oassess a dissolved firm. A further objection was raised
that the assessment proposed was time-barred.
At this stage, the respondents moved the High Court by a petition
(S.C.A. 191/68) under Article 226 of the Constitution, alleging that
the turn-over of the business during the relevant period, never exceeded
the limit of Rs. 900/- in the past and, therefore, the question of their
incurring liability to get the firm registered as a dealer and to file salestax returns under the 1959 Act, did not arise.
During the pendency of this writ petition, on September 9, 1968,
the Sales Tax Officer assessed the writ-petitioners under Section 33(6)
of the 1959 Act on 'best judgment' basis, and an amount of R's. 9,771.45
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GUJARAT v. P. R. DHANBHAI (Sarkaria, l.)
793
was determined as tax arrears and a further amount of Rs. 10,000/- was
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imposed as penalty.
A notice making demand of both these amounts
was also issued on September 12, 1959.
Facts of C.A. 289 /72.
The writ petitioner, respondent herein, i's carrying on the business of
manufacturing and selling wooden boxes, bamboos, timber etc. under
the name of M/s. Manila! Ranchoddas at Kaloi. On Ju!te 1, 1965, he
was served with a notice under Section 33(6) of the 1959 Act, by the
Sales Tax Officer to show cause why he should not be assessed on bestJudgment basis for the period from January 1,, 1960 to June 31, 1964
and further with penalty on account of his failure to get himself registered.
Thereafter, on August 7, 1965, the Sales Tax Officer completed the
'best-Judgment' assessment.
He further
imposed a penalty nuder
Section 36(2) on the assessee on account of his failure to get the firm
registered as a dealer.
The assessee,'s appeal was partly allowed by
the Assessment Commissi<;mer of Sales Tax on November 10, 1967,
only so far as the question of penalty was concerned.
The assessee's
second appeal was dismissed by the Sales Tax Tribunal ou April
28,
1969.
Facts of C.A. 290/72.
The facts in writ petition (S.C.A. 8/70) giving rise to Civil Appeal
290 of 1972, are that the petitioner did not get itself registered as a
dealer under the 1959 Act. The business of the petitioner consisted of
taki'ng catering contracts from the Railway Administration. The Sales
Tax Officer served a notice in Form No. 27 under Section 33 on March
25, 1969, requiring the writ petitioner to show cause why action be not
taken against him under Section 33(~) of the 1959 Act, as applicable
in the State of Gujarat, for assessing the petitioner oti 'best-Judgment'
basis for the period from March 1, 1960 to February 28, 1969.
The respondent herein sent a reply to this notice denying his liability
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to get himself registered as a dealer.
While the matter was still pendG
ing before the Sales Tax Officer, the respondent moved the High Court
by a petition under Article 226 of the Con·stitution, impugning the action
proposed to be taken or actually taken against him under the provisions
of Sections 33(6) and 36(2) of the 1959 Act.
By a common judgment, dated July 8, 1970, the Gujarat
High
H
Court held that the provisions of Sections 33 ( 6) and 35 overlap each
other" because all cases of escapement of assessment by a dealer can
12-JJOSCI/79
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SUPREME COURT REPORTS
[1979] 3 S.C.R.
be dealt with at the sweetwill of the as'sessing authority under either of
these provisions; that a dealer who is subjected to the procedure provided in Section 33 ( 6) will find it more onerous than the ooo in Section 35 inasmuch as unlike the latter Section, no period of limitation has
been provided for taking action under Section 33 ( 6). No guidelines
have been provided and the choice of one procedure in preference to
the other, is left to the arbitrary whim of the assessing authority. On
this reasoning, the High Court held that Section 33(6) offends Article
14 of the Constitution and as such is void.
In reaching this conclusion,
the High Court relied mainly upon this Court's decision in Anandji Hari
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Das & Co. v. S. P. Kasture & Ors.( 1)
It also drew support from this
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Court's decision in Ghanshyamdas v. Regional Assistant Commissioner-~
of Sales Tax, Nagpur( 2).
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Facts in C.A. 2529 of 1972.
This appeal is directed against a judgment, dated March 13, 1972,
of th~ Gujarat High Court, whereby it, following its earlier decision, dated
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July 8, 1970, in writ petition 1378 of 1968, quashed the assessment
of the respondents herein, for the period, January 1, 1960 to April 5,
1964 on the ground that Section 33(6) under which it was made, was
wiolative of the equality clau5e contained in Article 14 of the Omstitution, and as such, void.
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SECOND BATCH :
Facts in C. As. 2450-2451 of 1972.
In these two cases, the respondent was assessed as an unregistered
dealer under Section 14(6) of the Bombay Sales Ta-.: Act, 1953, for
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the period from 1.11.52 to 31.3.54 and from 1.4.54 to 24.4.56.
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In Revision, the Maharashtra Sale5 Tax Tribunal, following
the
decision, dated October 12, 1971, of the Bombay High Court in S.C.A.
No. 444 of 1968 (Bhikamchand Moolchand Jain v. A. G. Saudagar &
Anr.) held that Section 14(6) is ultra vires the Constitution, and directed that the orders passed by the assessing authorities be set aside and
if the applicant had paid anything in compliance with those orders, the
'same may be refunded.
In Balmokand Jain's case, a Division Bench
of the Bombay High Court, feeling itself bound by the ratio of
this
Court's decision in Anandii's case (ibid), held that Section 14(6) of
the Bombay Act of 1953 was violative of Article 14 of the Constitution, and therefore void.
(I) A.J.R. 1968 SC 565.
(2\ A.I.R. 1%4 SC 766.
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GUJARAT v. p, R. DHANBHAI (Sarkaria, J.)
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Facts in C. As. 1206 and 1213 of 1975.
These appeals by special leave arise out of a writ petition S.C.A.
444 of 1968 and Misc. Petition 330 of 1971, filed in the High Court of
Bombay, which were disposed of by that Court by its judgments, dated
11/12 October, 1971 and October 12, 1971, respectively.
The writ
petitioner/respond•ent herein was not at any time material to the case,
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registered as a dealer either under the 1953 Act or under the 1959 Act.
The relevant periods of assessment are, April 1, 1956 to December 31,
1959, the period being covered by the 1953 Act, and January 1,
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1960 to September 30, 1967, being the period covered by the 1959
"
Act.
On September 19, 1967, a notice under Section 14(6) of the
t'1.953 Act was served on the respondent.
On November 22, 1967, ano,
· ther notice under Section 33(6) of the 1959 Act was served on him.
Thereafter on November 22, 1967,, an order was made against him in
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respect of the first period, levying a tax in the sum of Rs. 13,696.65 and
a penalty under Section 14('7) in the sum of Rs. 4,500/-.
On January
30, 1968,, another assessment order was made which was in respect o~
the second period levying tax in the sum of RS. 17,887/- and a penalty
under Section 36(2) (a) in the sum of Rs. 3001- and under Section
3f;(2)(c) in the sum of Rs. 500/-.
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In his writ pe•ition, the respondent challenged the validity of these
two as'sessment orders, on the ground that Section 14(6) and Section
33(6) of the aforesaid Acts of 1953 and 1959 be.ing violative of Article
14 of the Constitution, were void.
Following the ratio of th.is Court's
decision in Anandji's case, the High Court, accepted the respondent's
contention and quashed the impugned assessments.
Learned counsel for the appellants submits that the Gujarat High
Court was in error in holding that the provisions of Sections 33 ( 6)
{and 35 of the Act of 1959 overlap each other; that it overlooked the
met that upon its very language, Section 33 ( 6) is a special provision
confined to an unregistered dealer who is guilty of committing the
two-fold violation of law indicated in that provision; that the special
provision by inevitable implication excludes the application of the
general provision in Section 35 ( l) to the case of an unregistered
dealer who escapes assessment on account of his failure to get himself registered and failure to file a return.
Counsel
has
further
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submitted that Anandji Haridas is distinguishable inasmuch as that
was a case of a registered dealer. While all the instant cases out of
which these ~ppeals have arisen, are of unregistered dealers of the
category specified in Section 33 ( 6).
It is submitted that putting
unregistered dealers who escape assessment by the modus operandi
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[1979] 3 S.C.R.
mentioned in Section 33(6), in a separate class to be dealt with,
under that provision, rests on rational criteria having a direct nexus
. with the object of preventing tax evasion.
According to Mr. Bhandare,
the
procedure provided in Section 33(6} is not more
onerous than the one prescribed for taking action under Section 35.
Tax-evasion, proceeds the argument, by the modus operandi of the
kind stated in Section 33(6), is of a more sinister kind and may go
on for years an end without detection.
That is
why,
says the
counsel, no limitation is provided for
taking action under Section 33(6).
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On the other hand, learned counsel for the respondents hawC
substantially reiterated the same reasons in support of the judgments ~·
under appeal, which have been given by the High Courts.
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Before dealing with these contentions, it is necessary to notice
the material provisions of the 1959 Act and the 1953 Act.
Subsection (5) of Section 2 of 1959 Act defines an 'unauthorised dealer'
to mean "a registered dealer who holds an Authorisation." 'Authorisation' means an "authorisation granted under Section 24." 'Dealer'
under sub-section ( 6) of the same Section is defined to mean "any
person who carries on the business of selling or buying goods in the
pre-Reorganisation State of Bombay, excluding the transferred territories, whether for commission, remuneration or otherwise and inclndes a State Government which carries on snch business and any
society, club or association which sells goods to or buys goods from
its members".
Then, there is an 'Exception'
appended
to
this
definition which excludes an agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally, from
the definition.
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The definition of 'Dealer' in Section 2(6) of the 1953 Act is".,_
substantially the same.
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Sub-section (i) of Section 22 of the 1959 Act requires that no
dealer shall, while. being liable to pay tax, carry on business as a
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dealer unless he possesses a valid certificate of registration under this
Act.
Sub-sectiort (2) obligates every dealer who is liable to pay tax
to apply for a certificate of registration in the prescribed manner to
the pr68cribe<l nuthority within the prescribed time.
Sections 33(6) and 35 of the 1959 Act read as follows:
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"S. 33(6). If the Commissioner has reason to believe
that a dealer is liable to pay tax in respect of any period,
but has failed to apply for registration within time as re-
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GUJARAT v. P. R. DHANBHAI (Sarkaria, !.)
797
quired by Section 22, the Commissioner shall, after giving
him a reasonable opportunity of being heard, assess, to the
best of his judgment the amount of tax, if any, due from
the dealer in respect of such period; and any period subsequent thereto."
"S. 35 (I). If the Commissioner has reason to
believe
that , any turnover of sales or turnover of purchases of any
goods chargeable to tax under this Act has in respect of
any year escaped assessment, or has been under-assessed
or assessed at a lower rate, or that any deductions have
been wrongly made, then the Commissioner may,
(a) where such turnover has escaped assessment
or
has been under-assessed or assessed at a lower rate by reason of the fact that the provisions of sub-section ( 1) 0f
section 2 of the Bombay Sales Tax (Validating Provision;;)
Act, 1957 were not then enacted, at any time within eight
years,
(b) where be bas reason to believe that the dealer bas
concealed such sales or purchases or any material particular
relating thereto, or bas knowingly furnished incorrect re-- '
turns, at any time within eight years, and
( c) in any other case, at any time within five years of
the end of the year, serve on the dealer liable to pay tax
in respect of such turnover, a notice containing all or any
of the requisitions which may be included in a notice under
sub-section (3) of section 33 and may proceed to assess
or re-assess the amount of the tax due from such dealer;
and accordingly, the other provision of this Act shall apply
as if the notice were a notice served under that sub-section:
Provided that the amount of tax shall be assessed
at
the rates at which it would have been assessed bad there
been no under-assessment or escapement, but after making
deductions, if any, pennitted from time to time by or under
this Act :
Provided further that, where in respect of such turnover
an order has already been passed in appeal or revision
under this Act, the Commissioner shall make a report to
the appropriate appellate or revising authority under this
Act, which shall thereupon after giving the dealer concerned
a reasonable opportunity of being heard pass such order
as it deems fit.
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SUPREME COURT REPORTS
[1979] 3 s.c.R.
(2) Nothing in sub-section (I) shall apply to any proceeding (including any notice issued) under section 33 or
57 or 6;!.
(3) Nothing in section 57 or 62 shall affect a proceeding under this section."
The corresponding provisions of
the
Act of
1953
run as
under:-
"S. 14(6). If upon information which has come into
his poss~ssion, the Collector is satisfied that any dealer has
been liable to pay the tax in respect of any period,
but
has failed to apply for registration, the Collector shall, after
giving the dealer reasonable opportunity of being
heard,
assess to the best of his judgment the amount of tax, if any.
due from the dealer in respect of such period and all subsequent periods."
"S. 15. If in consequence of any information which has
come into his possession the Collector is satisfied that any
turnover in respect of sales or purchase of any goods chargeable to the tax has escaped assessment in any year or has
been under assessed or assessed at a lower rate or any
deductions have been wrongly made therefrom, the Collector may, in any case where he has reason to believe that
the dealer has concealed the particulars of such sales
or
purchases or has knowingly furnished incorrect returns, at
any time within five years, and in any other case, at any
time within three years, of the end of that year, serve on
the dealer liable to pay the tax in respect of such turnover
a notice containing all or any of the requirements which
may be included in a notice under sub-section (3) of section 14 and may proceed to assess or re-assess the amount
of the tax due from such dealer and the provisions of this
·Act shall apply accordingly as if the notice were a notice
served under that sub-section :
Provided that the amount of the tax shall
be
assessed
after
making the deductions permitted from time to time under the Bombay Sales Tax Act, 1946, the Bombay Sales Tax (No. 2) Ordinance,
1952, and this Act, as the case may be, at the rates at which it would
have been as&essed had the turnover n.ot escaped assessment or full
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assessment, as the case may be :
Provided further that where in respect of such turnover or
deduction, as the case may be, an order has already been
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GUJARAT v. P.R. DHANBHAI (Sarkaria, 1.)
799
passed under section 30 or section 31, the Collector shall
make a report to the appropriate appellate or revising authority, as the case may be, which shall thereupon after giving
the dealer concerned a reasonable opportunity of being
heard, pass such order as it deems fit."
An' analysis of Section 33(6) of the 1959 Act (corresponding to
Section 14(6) of the 1953 Act) will show that it applies to that
particular class of dealers, liable to pay tax, who -
(i) fail to apply for registration as required by Jaw
(vide Section 22); and
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(ii) who fail to pay the tax in respect of any period.
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Thus, Section 33(6) is, in terms, restricted in its application to
the case of an unregistered dealer whose modus operandi to evade
tax involves ab initio disregard of the Jaw. It does not apply to i:
registered: dealer who has escaped assessment or has been underassessed or assessed at a lower rate or has been wrongly allowed
any deduction or has concealed any material particulars relating to
sales or purchases or has knowingly furnished incorrect returns. The
case of such a registered dealer will fall under Section 35 and not
under Section 33(6). Section 33(6) is a special provision confined
to a particular class of tax-evaders, namely, unregistered
dealers;
while 'Section 35 is a general provision to deal with cases of escaped
assessment or under assessment.
Generalia specialibus non derogant
is a cardinal principle of interpretation. It means that the general
provisions must always yield to the special provisions.
Construed
in accordance
with this fundaniental principle
the
special
class of unregistered dealers covered by Section 3 3 ( 6)
must
be taken to have been excluded from the purview of the general provisions in Section 35. Thus considered, it is clear that the case of
an unregistered dealer who evades tax by committing the double
default specified in Section 33(6), action can be taken only under
that Section and not under Section 35.
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It is true that no limitation has been prescribed for taking
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action under Section 33 ( 6) against an unregistered dealer falling
thereunder. But, there is rational basis for not putting any restriction as to the length of time within which action can be taken nnder
Section 33 (6). The reason is that tax evasion by the unregistered
dealers in thi§ class because of the clandestine modus operandi
adopted by them, and wholesale disregard of the law, is more contuB
macious in character, more sinister in its effect both on the lawabiding tax-payers and the collection of public revenue,· and more
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SUPREME COURT REPORTS
[1979] 3 S.C.R.
difficult to de,tect than tax-evasion by a registered dealer.
When a
dealer appliei\_ for and obtains a registration certificate under the Act,
he thereby admits his liability to pay tax.
In his case, the Sales-tax
Authorities, have basic information, in pursuance of which, they can,
by the exercise of due vigilence, check and detect any tax-evasion by
him within a reasonable time.
This reasonable time is the period of
limitation fixed by the Legislature, in its wisdom, in Section 3S. But
the case of a tax-evading unregistered dealer is different. Jn his case,
the Authorities have on their record no such basic information such
as the registration record which would supply them a 'lead' to work
upon.
For lack of information, or want of adequate staff, resources
and time at the disposal of the Department, and the secretive nature
of the modus operandi, tax-evading
activities
of an
unregistered
dealer may go on undetected for years on end. That is why for taking
action under Section 33 ( 6) against a tax-evading unregistered dealer,
the Legislature has not fixed any period of limil'ation. Thus, puling the
unregistered dealer who, though liable to pay tax, fails to get himself
registered and does not pay any tax, in a separate class, to be dealt
with under :-ection 33 ( 6), differently from other dealers falling under
Sectic;m 35, rests on intelligible differentia having a rational nexus with
the object of preventing tax-evasion.
The question of limitation apart, it cannot be said that the procedure provided in Section 33 (6) is more onerous than the one specified
in Section 35.
The requirement as to issue of a notice to the defaulter
and giving of an opportunity of being heard, is a common feature of
both the sections. It is true that under Section 33 ( 6), the assessment is made on 'best-judgment basis'.
Nevertheless, it cannot be
made arbitrarily or capriciously. It has to be made after taking into
account all relevant material gathered by the Taxation Officer or pro_ L...
duced before him by the assessee in response to the notice.
If an
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assessment under Section 33(6) is made upon inadequate materials,
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but on honest and fair guess-work, then it will be but due to the deliber-
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ate default of the assessee in supplying the necessary information. The
differential mode of assessment under Section 33 ( 6) is thus founded
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upon rational criteria.
The ratio of Anandji Haridas is not applicable to the facts of the
present cases.
Therein, this Court was dealing with the case of a
registered dealer under the C.P. and Berar Sales Tax Act 194 7. It
was in that context that this Court, by a majority of 3 to 2, held that
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Section 11(4) (a) of that Act was violative of Article 14 of the Constitution. Here we are concerned with the cases of unregistered dealers
under the Bombay Act.
In our opinion, upo'n a proper construction,
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GUJARAT v. P. R. DHANBHAI (Sarkaria, !.)
801
of the two provisions, in juxtaposition to each other, such unregistered
dealers can be proceeded against under Section 33(6) of the Bombay
Act of 1959 or Section 14(6) of the Bombay Act of 1953, as
the
case may be, and not under Section 35 / Section 15 of the said Acts.
There is no overlapping between. these two, because Section 35 cannot
be applied to the case of an unregistered dealer falling within the purview of the special provision in Section 33(6).
This was clear from
sub-section (2) of Section 35, as it stood at the time material to these
cases.
For the foregoing reasons, we. are of opinion that Section 33(6)
o[ the 1959 Act and Section 14(6) of the 1953 Act do not violate
Article 14 of the Constitution, and are valid.
We may mention in passing that the question raised with regard
to the constitutional validity of the aforesaid provisions has become
largely academic because mostly the impugned notices or assessments
were within the period of limitation prescribed for taking action under
Section 35 of the 1959 Act. In such cases, the question of subjecting
the respondents to a more onerous procedure than the one envisaged
in Section 35 in the matter of limitation, docs not arise.
In the result, we allow these appeal~, set aside the judgment of the
High Courts/Maharashtra Sales Tax Tribunal and send the cases back
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to the High Court or the Tribunal concerned, with these directions :
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In matters in which assessment orders have been passed, it will be
open to the respondents to file or refile appeals against the assessment
orders or if the respondents have withdrawn any :ippeal filed by them,
they will be at liberty to file fresh app_eals.
Jn that case, if there is
delay in filing or refiling the appeals, the delay will hopefully be conF1
do'ncd as it is attributed to tbese proceedings.
The matters remitted
to the High Court will be further remitted to the Sales-tax Officer, for
disposal.
Civil Appeals Nos. 2450-2451/72 (Maharashtra appeals) will go
back to tlte Sales Tax Tribunal, for decision or merits.
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As already stated above, Civil Appeals Nos. 1213, 1206175, 10231031/73, 2529172 and 303/74 will also be governed by this judgment in Civil Appeals 287-290 of 1972. In all these cases, the parties arc left to pay and bear their own costs in this Court.
P.B.R.
Appeals allowed.
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