# The Commissioner of Income-tax, Bombay v. The Provident Investment Co., Ltd. S. K,Das]

- **Citation:** [1957] 1 S.C.R. 1151
- **Court:** Supreme Court of India
- **Decided:** 1957
- **Bench:** S. R.- DAS c. J, Jafer Imam, s. K. DAS, GovrNDA MENON, A. K. Sarkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-commissioner-of-income-tax-bombay-v-the-provident-investment-co-ltd-s-k-das-1325
- **Pages:** 10

## Headnote

·sea Customs-Import without licence-Confiscation of goodsValidity of Order-Discretion of Customs-authorities-Validity of
Enactment-Sea Customs Act, 1878 (Vlll of 1878), ss. 167(8), 183Imports and Exports (Control) Act .. 1947 (XVIII of 1947), s. 3(1)
(2)-Constitution of India, Art. 14.
Section 167, item 8, of the Sea Customs Act, 1878, provides
that if any goods the importation of which is for the time being
prohibited or restricted by or under Ch. IV of the Act, which
Chapter includes s. 19, be imported into India contrary to such
prohibition or restriction, such goods shall be liable to confiscation
and any person concerned in such importation shall be liable to a·
penalty not exceeding three times the value of the goods or not
exceeding one thousand
rupees.
By s. 183 of this Act . it is
provided:
"Whenever confiscation is authorised by this Act, the
officer adjudging it shall give the owner of the goods an option to
pay in lieu of confiscation such fines as the officer thinks fit". The
Imports and Exports (Control) Act, 1947, by s. 3(1) empowers the
Central Government by an order to make provision for prohibiting, restricting,
or . otherwise
controlling,
the
import,
export,
carriage coast-wise . or shipment as ships' stores of goods of any
specified description.
Sub-section (2) of that section provides that
all . goods to which any order under sub-s. ( 1) applies, shall be
deemed to be goods of which the import or export has
been
prohibited or restricted under s. 19 0£ the Sea Customs Act, 1878,
and all the provisions of that Act shall have effect accordingly,
1957
The Commissioner
of Income-tax,
Bombay
v.
The Provident
Investment Co., Ltd.
S. K,Das].
1957
May 16.
1957
F.N.Roy
v.
Collector of
Customs.
Calcutta
Sor/;,11r ].
1152
SUPREME COURT REPORTS
[1957]
except that s. 183 thereof shall have effect as if
for the word
'shall' the word 'may' are substituted.
The petitioner imported certain goods the import of which
had been prohibited by the Central Government under s. 3( I) of
the Imports and Exports (Control) Act.
By an order oL the
Collector of Customs, made under s. 167, item 8, of the Sea
Custoins Act, these goods were confiscated and a penalty
of
Rs.
1,000, was
imposed
on
the petitioner.
The
petitioner
challenged the validity of this order.
Held: (!) Section 3(2) of the Imports and Exports (Control)
Act, 1947, docs not offend
Art.
14 of the Constitution.
It does
not by its own force give any discretion to the Customs-authorities
at all, an<l its only effect is to apply the Sea Customs Act, 1878,
to' certain cases.
(2) Section 183 of the Sea Customs Act,
1878,
does
not
authorise confiscation of goods.
It
assun1es
that a power
to
confiscate under other provisions of the Act exists.
It is not a
statutory provision in two parts with regard to \Vhici': i.t may be
sai<l that one part offends Art. 14 while the other part does not.
1~he section contains only one statutory provision.
(3) Section 167, item 8, of the Sea Customs Act, 1878, does
not of1end Art. 14 of the Canstitution .
ORIGINAL JURISDICTION : Petition No. 438 of
1955.
Petition under Article 32 of the Constitution of India
for enforcement of Fundamental Rights.
H. /. Umrigar and N. H. Hingorani, for the petitioner.
Porus A. Mehta, R. Ganapati Iyer and R. H. Dhebar,
·for the respondents.
1957. May 16. The Judgment of the Court was
delivered by
SARKAR J.-By a notification dated March 16,
1953,
the Government of India gave general
permission
to
all persons to import into India from certain countries
any guods of anv of the descriptions specified in the
schedule annexed to the notification. Among the goods
specified in the Schedule were the following :
Iron and steel chains of all sorts assessable under
item 63(28) of the Indian Customs Tariff, excluding
chains for automobiles and cycles whether cut to length
or in rolls.
•
-'
S.C.R.
SUPREME COURT REPORTS
1153
The petitioner is
an importer of goods. He states
that relying on the notification _mentioned above he
place

## Text

.-
S.C.R.
SUPREME COURT REPORTS
1151
the facts and circumstances as
stated
in the
agreed
statement of the case.
We are of opinion that the
answer was correctly
given by the High Court of
Bombay. The transaction
in its· true legal character was a relinquishment of the
managing agency and was neither a sale nor a transfer
thereof. Therefore, the High Court correctly answered
the question in the negative.
In .the result, the appeal fails and is dismissed
with
costs.
Appeal dismissed.
F. N. ROY
'V.
COLLECTOR OF CUSTOMS, CALCUTT A.
(S. R.- DAS c. J., JAFER IMAM, s. K. DAS,
GovrNDA MENON and A. K. SARKAR JJ.)
·sea Customs-Import without licence-Confiscation of goodsValidity of Order-Discretion of Customs-authorities-Validity of
Enactment-Sea Customs Act, 1878 (Vlll of 1878), ss. 167(8), 183Imports and Exports (Control) Act .. 1947 (XVIII of 1947), s. 3(1)
(2)-Constitution of India, Art. 14.
Section 167, item 8, of the Sea Customs Act, 1878, provides
that if any goods the importation of which is for the time being
prohibited or restricted by or under Ch. IV of the Act, which
Chapter includes s. 19, be imported into India contrary to such
prohibition or restriction, such goods shall be liable to confiscation
and any person concerned in such importation shall be liable to a·
penalty not exceeding three times the value of the goods or not
exceeding one thousand
rupees.
By s. 183 of this Act . it is
provided:
"Whenever confiscation is authorised by this Act, the
officer adjudging it shall give the owner of the goods an option to
pay in lieu of confiscation such fines as the officer thinks fit". The
Imports and Exports (Control) Act, 1947, by s. 3(1) empowers the
Central Government by an order to make provision for prohibiting, restricting,
or . otherwise
controlling,
the
import,
export,
carriage coast-wise . or shipment as ships' stores of goods of any
specified description.
Sub-section (2) of that section provides that
all . goods to which any order under sub-s. ( 1) applies, shall be
deemed to be goods of which the import or export has
been
prohibited or restricted under s. 19 0£ the Sea Customs Act, 1878,
and all the provisions of that Act shall have effect accordingly,
1957
The Commissioner
of Income-tax,
Bombay
v.
The Provident
Investment Co., Ltd.
S. K,Das].
1957
May 16.
1957
F.N.Roy
v.
Collector of
Customs.
Calcutta
Sor/;,11r ].
1152
SUPREME COURT REPORTS
[1957]
except that s. 183 thereof shall have effect as if
for the word
'shall' the word 'may' are substituted.
The petitioner imported certain goods the import of which
had been prohibited by the Central Government under s. 3( I) of
the Imports and Exports (Control) Act.
By an order oL the
Collector of Customs, made under s. 167, item 8, of the Sea
Custoins Act, these goods were confiscated and a penalty
of
Rs.
1,000, was
imposed
on
the petitioner.
The
petitioner
challenged the validity of this order.
Held: (!) Section 3(2) of the Imports and Exports (Control)
Act, 1947, docs not offend
Art.
14 of the Constitution.
It does
not by its own force give any discretion to the Customs-authorities
at all, an<l its only effect is to apply the Sea Customs Act, 1878,
to' certain cases.
(2) Section 183 of the Sea Customs Act,
1878,
does
not
authorise confiscation of goods.
It
assun1es
that a power
to
confiscate under other provisions of the Act exists.
It is not a
statutory provision in two parts with regard to \Vhici': i.t may be
sai<l that one part offends Art. 14 while the other part does not.
1~he section contains only one statutory provision.
(3) Section 167, item 8, of the Sea Customs Act, 1878, does
not of1end Art. 14 of the Canstitution .
ORIGINAL JURISDICTION : Petition No. 438 of
1955.
Petition under Article 32 of the Constitution of India
for enforcement of Fundamental Rights.
H. /. Umrigar and N. H. Hingorani, for the petitioner.
Porus A. Mehta, R. Ganapati Iyer and R. H. Dhebar,
·for the respondents.
1957. May 16. The Judgment of the Court was
delivered by
SARKAR J.-By a notification dated March 16,
1953,
the Government of India gave general
permission
to
all persons to import into India from certain countries
any guods of anv of the descriptions specified in the
schedule annexed to the notification. Among the goods
specified in the Schedule were the following :
Iron and steel chains of all sorts assessable under
item 63(28) of the Indian Customs Tariff, excluding
chains for automobiles and cycles whether cut to length
or in rolls.
•
-'
S.C.R.
SUPREME COURT REPORTS
1153
The petitioner is
an importer of goods. He states
that relying on the notification _mentioned above he
placed an order with
a company in
Japan sometime
in August, 1953, for the supply of certain goods called
in the trade, Zip Chains. The goods arrived in
the
port of Calcutta in due course and the petitioner's bank
paid the price of the goods amounting to Rs. 11,051-4-0.
Before the goods could be
cleared from the port of
Calcutta, the petitioner received
a communication from
the Assistant Collector of
Customs
for
Appraisement,
Calcutta, dated November 19, 1953, in which it was
stated that it had been found ·that the
petitioner did
· not possess valid import licence for
the goods
and
requiring him to show cause why the goods should not
be confiscated and action taken against the petitioner
under s. 167, item 8, of the Sea Customs Act.
The
communication also enquired if the petitioner wanted
to be heard in
person.
The petitioner submitted
in
answer
a written
explanation
stating
that
the
Zip
Chains imported by him were chains of the kind free
import of which had been permitted by the notification
of March 16, 1953, and
therefore no licence
to import
them was necessarv.
He
was
thereafter
again
asked
by
the
Customs-authorities
whether
he
wanted
a
personal hearing to which he replied
that he did not.
Thereafter on
December 25,
1953, the. Collector of
Customs made
an
order confiscating
the goods
and
imposing a penalty of Rs.
1,000 on the
petitioner.
This
order
bore
an endorsement
that
it had
been
despatched to the petitioner on
February 1, 1954.
It
reached him on February 3, 1954.
The order stated
that an appeal
would
lie
against
it to the
Central
Board of Revenue, New Delhi,
within
three months
from the date of its
despatch
as
noted on it. The
petitioner preferred an appeal and posted the memorandum of appeal on Mav 4,
1954. The memorandum
reached the Central Board of Revenue on ~,,fay 6, 1954,
and was dismissed on the ground that it .had been
preferred after the expiry of the time limited for the
purpose. The petitioner then
made
an application
to
the Government of India
for revision of the order of
the Central Board of Revenue but this application was
'
1957
F.N. RoY
v.
Collector of
CwtomJ, Calcutta
Sarkar].
1957
F.N. Ro7
v.
Collector of
Cu.·;toms, Calcutta
Sarkar],
1154
SUPREME COURT REPORTS
(19571
rejected. The petitioner
thereafter
applied
to
the
High Court of Punjab under Art. 226 of the Constitution for an appropriate writ to quash the order
confiscating his goods and imposing the fine on him
but this application too was dismissed.
The petitioner has now applied to this Court under
Art. 32 of the Constitution challenging the
validity of
the order made against tiim.
Learned counsel for
the
petitioner did
not
challenge
the
decision
of
the
Customs-authorities
that
the
goods were
not covered
by the notification
of
March
16, 1953.
He conceded
· that he could not do so in this application. Nor did
he challenge the Customs-authorities' power to confiscate the goods. Learned counsel however challenged
the order of confiscation
because it did not give tbe
petitioner an option to pay a fine
in lieu of confiscation.
This contention was based on s. 183 of the Sea Customs
Act which provides as follows :
Whenever confiscation is authorised
by
this
Act,
the officer adjudging it shall give
the owner of the
goods an option to pav in lieu of confiscation such fine
as the officer thinks fit.
This section undoubtedly requires an option to pay
a fine in lieu of confiscation, to be given and this was
not done. A difficulty howe,·cr
is caused in the way
of this argument by s. 3 of the
Imports
and
Exports
(Control) Act, 1947. The reb·ant portion of s. 3 is set
out below:
3. ( 1) The Centro!
Government
mav,
by
order
published in the
official
Gazette,
make provision
for
prohibiting. restricting or otherwise controlling, in all
cases or in
specified
classes of cases.
and subject ro
such exceptions, if any, as may be made by
or under
the order,-
(a) the
import,
export,
carriage
coastwise
or
shipment as ship' stores
of
goods
of
any specified
description ;
(b) ........ " .... " ....
(2) All goods to which any order under subsection (I) applies shall be deemed to be goods of which
the import or export has
been prohibited
or. restricted
under section
19 of the
Sea Customs Act, 1878 (VIII
\
S.C.R.
SUPREME COURT REPORTS
1155
of 1878), and all the provisions of that Act shall
have
effect accordingly, except that section 183 thereof shall
have
effect as
if for
the word "shall"
therein the
word "may" were substituted.
It is admitted that the Imports and Exports (Control)
Act applies to the goods with which we are concerned
and in th,is case
the action that
was
taken . was by
virtue of this Act. That being so, s. 183 of the Sea
Customs Act became applicable because of the Imports
and Exports (Control) Act and it could hence be applied
only
as modified . by the
latter Act. So applied the
section
did not make it obligatory
on the Customsauthorities
when
ordering confiscation,
to give
an
option to the o\vner to pay a fine in lieu of confiscation·
but gave them a discretion
whether
to do so or not.
The order of confiscation was not therefore bad even
though it had not given the petitioner an option to pay
a fine in lieu of confiscation. Learned Counsel for the
petitio~er then contended that portion of s. 3(2) of
the Act of 1947
which
read "except that section 183
thereof shaU have effect
as
if for the
word
"shall"
therein the
word "may" were
suhstituted'',
left
an
uncontrolled · discretion in the
Customs-authorities to
give or not to give an option to pay a fine in lieu of
compensation and consequently offended Art. 14 of the
Constitution. He therefore said that this
portion
of
the section
should be struck out of it. ·He said
that
after the offending portion was
deleted from s. 3(2) of
the Act . of 1947 it would require s. 183 of the Sea
Customs Act to be applied without any
modification
at all . and therefore it would be obligatory on the
Cu<toms-authorities
when making
an order of confiscation to gi\'.e an option to the petitioner to pay a fine
in lieu
of compensation
e\·en where the Act of 1947
applied.
Learned
counsel
said that as
this
had not
been done, the order of confiscation made in
this case
was bad.
This argument is based
on the contention
that a
portion of s. 3(2) of the Act of 1947 offends Art. 14 and
has therefore to be deleted.
This contemion is wrong.
Bv its own force
. no part of s. 3(2) purports to give
any discretion to the Custom:r-authorities at all.
There ·
1957
F.N. Roy
v.
Collector of
Customs, (!akuJI r
Sarkar J . ..
1957
F. }f. Ro,J
v.
Collector of
Customs, Calcutta
Sarkar J.
1156
SUPREME COURT REPORTS
[1957)
is nothing
in it therefore to offend Art. 14. The only
effect of s. 3(2) is to apply the Sea Customs Act to
certain
cases.
It is impossible to say
that a statute-~
which only makes another statute applicable to certain
cases, offends Art.
14. Such a statute has obviously
nothing to do with Art. 14. It is true that s. 3(2) of
the Act of 1947 makes s. 183 of
the Sea Customs Act
applicable with a modification. It
was said that s. 183
so modified offends Art.
14.
Assume that s.
183 as
modified infringes Art. 14. What then?
Clearly on
this assumption s. 183 as modified becomes ultra vires
and illegal and it goes out
of the statute book.
But
that does not affect the question before us at all. It
does not make the order of confiscation
without an L
option to pay a fine in lieu thereof bad. The confisca- T
tion
is not made under s.
183. It is made under
another section of the Sea Customs Act, namely, s. 167,
item 8, which so far as is relevant is in these terms :
167. The offences mentioned in the first
column.
of the
following
schedule shall be punishable to the
extent mentioned in the third column of the same with
reference to such offences respectively :
Offences
Sections of the Act to
which offence has
reference
Penalties
8. If any good~, the
importation or exportation of which is for
the time being prohibited or
restrict~d by
vr under Chapter IV of
this Act, be imported
into or exported from
India contrary to such
prohrbition or restriction.
18 & 19
Such goods shall be
liable to confiscation;;---.
and any person con.{
cerned
in
anv such
offence shall be lia11le
to a penaltynotexce-ed ..
ing thre ~ t mes the
_value of the goods, or
not execeding one thousand rupees.
Chapter IV of the Sea Customs Act contains s. 19.
It has to be remembered that s. 3(2) of the Act of
1947 states that all goods to which any order under
sub-s. (1) applies shall be deemed to be goods of which
the import has been prohibited under s. 19 of the Sea
Customs Act. Admittedly sub-s. ( 1) of s. 3 of the Act
of 1947 applies to the goods with which this case is
concerned.
Under s. 3(2) of the Act of 1947 the import
.. _}
\
S.C.R.
SUPREME COURT REPORTS
1157
of these goods is to be deemed to have been prohibited
under s. 19 of the Sea Customs Act. It follows that
action under s.
167, item 8, of the Sea Customs Act
can be taken in respect of these goods and they can be
confiscated and the person
concerned
in the
illegal
import made liable to a penalty. Resort to s. 183 of
the Sea Customs Act is not necessary to justify the
order of confiscation made in this case at all. Indeed
s. 183 does not authorise confiscation. It assumes a
confisc:ition authorised by other provisions of the Sea
Customs Act and provides that on a confiscation being
adjudged, an option to pay a tine in lieu of it shall be
given. It cannot therefore be said, even on the assumption that learned counsel was right in his contention
that s. 183 as modified offends Art. 14 that the order
of confiscation is bad.
As to whether the contention
of learned counsel is right or not we decide nothing as
it is not necessary to do so.
It was then contended that the effect of Art. 14 of
the Constitution on s. 183 of the Sea Customs Act, as
rnoLlifie<l by the Act of 1947, was not to make the
entire s. 183 i!legal but to invalidate the amendment
in it as it was this amendment alone which offended
Art. 14. so that s. 183 as' it stands in the Sea Customs
Act had to be applied to this case and therefore again
it was obligatory on the Customs-authorities to give
an option to the petitioner to pay a fine in lieu of
confmation. To accept this argument we would have
to say that s. 3(2) of the Act of 1947 itself offends
Art. 14, and it cannot
modifv s.
183
of the
Sea
Customs Act as it purports to do.
Vole are unable to
say this.
In order to say that a statutory
provision
offends Art. 14, we have to examine that
provision.
\Ve have here two statutory provisions. One is s. 3(2)
of the Act of 1947 and that does not offend Art. 14.
The reasons for this view we have stated earlier. The
other is s. 183 of the Sea Customs Act as modified by
the Act of 1947. As so modified we have for the
present purpose assumed that it offends Art. 14. If it
docs it goes out as a whole. It is not really a statutory
provision in two parts with regard to which it might
have been possible to say that one part offends Art. 14
1957
F. N. Ro7
v.
Collector of
Cwtoms, Calcutta
Sarkar].
1957
F. N. Hoy
v.
Collector of
Customs, Calcutta
•
1158
SUPREME COURT REPORTS
[1957]
while the otl)er part. does not. Section 183 with or
without the modification really contains one statutory
provision and therefore it must go out of the statute
book as a whole or not at all. This contention on
behalf of the petitioner must therefore fail.
Learned counsel said that s. 183 was bad also for the
reason that it left it to the uncontrolled discretion of
the Customs-authorities to decide the quantum of the
fine to be imposed in lieu of confiscation. On the facts
of this case, it is an academic argument. Even if it
was right the entire s. 183 would have to be ignored
but that would not have the effect of making the order
of confiscation passed in this case invalid. All that the
petitioner is concerned with is to show that the order
of confiscation was bad.
The present argument
does
not touch that point and therefore it is not necessary
to consider it at all. Another similar argument was
that s. 167, item 8, of the Sea Customs Act itself
offended Art. 14 in that it left to . the
uncontrolled
discretion of the Customs-authorities
to
decide
the
amount of the penalty to he
imposed. The section
makes it clear that the maximum penalty that might
be imposed under it is Rs. 1,000. The discretion that
the section gives must be exercised within the limit so
fixed.
This is
not an ·uncontrolled or unreasonable
discretion.
Furthermore, ·the discretion
is
vested
in
high Customs officers and there are appeals from their
order.
The imposition of the fine is really a quasijuclicial act and the test of the quantum of it is in the
gravity of the offence. The object of the Act is to
prevent
unauthorised
importation of goods
and
the
discretion has to be exercised with that object in view.
Learned counsel then contended that the order of
confiscation
hac!
been made ma/a fide.
It was
said
that it had been pa<Sed ex parte. This is not correct
for the petitioner had been asked before the order was
made whether he wanted a personal hearing and he
had stated in reply that he did not and had ample
confidence in the authorities. It is not therefore open
to the petitioner to contend that he had no opportunity of being heard before the order against him was
S.C.R.
SUPREME COURT REPORTS
1159
passed. He had been given an opportUnity and had
not availed himself of it. It was also stated that in
deciding not to give the petitioner an option to pay a
fine in lieu of confiscation the Customs-authority
had
gone into certain
other
transactions
without ·giving
any notice to the petitioner that this would be done.
It., was said
that the petitioner was not given an
opportunity of being heard in respect of these transactions.
The
notice
which
the
Customs-authorities
gave to the petitioner to show cause 'why the goods
should not be confiscated also informed him necessarily
that an order for confiscation might be made without
an option to pay a fine in lieu of confiscation being
given and therefore it was his fault if he did not
appear at the hearing and showed cause why the order
of confiscation should not be absolute but should give
him an option to pay a fine. It was also said tint he
had been deprived of the option because of the differences
that
existed
between
him
and
the
Public
Relations
Officer.
of
the
Customs
Department
in
Calcutta. This point of view was sought to be supported by citing the cases of two other persons who
had imported similar goods at or about the same time,
and who had been given the option.
The facts of these
other
cases
were
however
substantially
different.
There was nothing to show in these that goods had
been imported in deliberate violation of the order of
the Government while in the case of the petitioner
there are materials on which such a view could he
formed. It appe:irs th:it the petitioner as the Manager
oi a firm called Federal Clearing Agency had received
a communication
from
the
Customs-authorities
on
July 30, 1953, th:it Zip Chains were not covered by the
notification of March 16, 1953, and within a fortnight
of that communication he had placed the orders for
identical goods which he now claims to be within the
notification. It was not unreasonable for the Customsauthorities to think that the petitioner had deliberately
imported the goods in breach of the order . of the
Government
and without
specific
licence for
that
purpose, and on that ground to think it proper not to
give him the option.
This would be so even if it was
1957
F. N. Ruy
....
Collector of
Customs, Calcutta
Sarkar j.
1957
F. N. Ro:J
v.
Collector of
Cwtoms, Calcutta
Sarkar J.
1160
SUPREME COURT REPORTS
[1957]
assumed that in the dispute with the Public Relations
Officer the petitioner was in the right.
. It was then stated that the petitioner had not been
given personal hearing of the appeal that he preferred
to the Central Board of Revenue and the application
in revision to the Government. But there is no rule of
natural justice that at every stage a person is entitled
to a personal hearing.
Furthermore, the appeal was
out of time. The memorandum of appeal to the Central
Board of Revenue was posted on May 4, 1954. The
time to file the appeal, however, expired on May 1,
1954, so that even if the ~ate of the posting is taken as
the date of the appeal the petitioner was out of time.
The petitioner states that he received the order of
confiscation on February 3, 1954. Even so, on May 4,
1954, he would not be within time. The memorandum
of appeal however was received by the Central Board
of Revenue on May 6, 1954. That must be taken to be
the date when the appeal •.vas filed, and that being so
the appeal must be taken to have been filed clearly out
of time.
The petitioner stated
that the Customsauthorities
wrongfully and rnaliciously procured
his
arrest on May I, 1954, and he obtained his release
on May 2, 1954. It was suggested that this arrest was
procured in order to prevent him from filing his appeal
in time. This contention is entirely idle. Admittedly,
the petitioner had time
from
February 3, 1954, till
May I, 1954, to file his appeal but he did not take
advantage of this long period. He waited till the end
for filing the appeal. There is nothing to show that
the arrest was wrongful or that at the date of the
arrest the Customs-authorities had any knowledge that
the petitioner had not filed his appeal. The contentions
that the order complained of was mala fide or that the
appeal had not been filed out of time are entirely
untenable.
The result is that this application fails and it 1s
dismissed with costs.
Petition dismissed.
•