M. Seetharamaswami and Co. Vs. Commercial Tax Officer, Elluru - Court Judgment

Excerpt:
sales tax - validity of penalty - articles 226 and 20 (2) of constitution of india and sections 30, 30 (1), 30 (3) and 16 (5) of andhra pradesh general sales tax act, 1957 - validity of tax officer's action under act of 1957 challenged - held, levy of penalty and launching of prosecution are not exclusive and penalty under section 16 (3) and prosecution under section 30 (1) or 30 (3) not violative of article 20 (2) - classification under sections 30 (1) and 30 (3) reasonable. - all india services act, 1951.sections 8 & 11 & a.p. buildings (lease, rent and eviction) control rules, 1961, rule 5: [v.v.s. rao, g. yethirajulu & g. bhavani prasad, jj] refusal by landlord to receive rent - deposit of rent in court - held, a tenant has the option to take recourse to section 8 in case of.....orderseshachalapathi, j.1. this is an application under article 226 of the constitution of india for the issue of a writ of prohibition restraining the commercial tax officer, elluru, from taking further proceedings in pursuance of the notice b1.2022 of 1957-58 dated 8-8-1958.2. the petitioner is a partner of sri sitaramanjeneya rice mill and a dealer, within the meaning of section 2 (e) of the andhra pradesh general sales tax act, 1957, and. an assessee under provisions of that act. the petitioner-firm had opted to be assessed on the basis of monthly returns under section 15 of the andhra pradesh general sales tax act read with rule 17 sub-rules 2 to 7. for the month of october 1957 the petitioner submitted a return showing a net turn-over of rs. 40,323-87 np., but he did not submit the.....

Judgment:
ORDER

Seshachalapathi, J.

1. This is an application under Article 226 of the Constitution of India for the issue of a Writ of Prohibition restraining the Commercial Tax Officer, Elluru, from taking further proceedings in pursuance of the notice B1.2022 of 1957-58 dated 8-8-1958.

2. The petitioner is a partner of Sri Sitaramanjeneya Rice Mill and a dealer, within the meaning of Section 2 (e) of the Andhra Pradesh General Sales Tax Act, 1957, and. an assessee under provisions of that Act. The petitioner-firm had opted to be assessed on the basis of monthly returns under Section 15 of the Andhra Pradesh General Sales Tax Act read with Rule 17 Sub-rules 2 to 7. For the month of October 1957 the petitioner submitted a return showing a net turn-over of Rs. 40,323-87 Np., but he did not submit the treasury receipt from the Government Treasury or a cross-cheque in favour of the assessing authority for the tax due.

3. By a notice dated 3-8-1958 the respondent called upon the petitioner to pay the sum of Rs. 1,209-75 Np. at once and to produce the treasury challan on 7-8-1958. The notice further stated as follows:

'You are hereby informed that failing to enclose the treasury receipt for the tax due, you have committed an offence punishable under Section 30 (3)(b) read with Rule 17 (2) of the A. P. G. S. T. Act and you are liable for prosecution under Section 30 (1) (a) of the Act. Before launching prosecution against you. for the said offence, I wish to give you an offer of composition of the offence in a sum of Rs. 200 under Section 32 of the Act In addition to the penalty leviable under Section 16 (3) of the A. P. G. S. T. Act and you are hereby required to state within 3 days of receipt of this notice whether or not you are willing to have the offence compounded. If no reply is received within the time allowed or if you are not willing to have the offence compounded, please take notice that a prosecution will be filed against you before the Judicial First Class Magistrate without further notice.'

It is this notice and the proceedings contemplated therein which are sought to be interdicted by the issue of a Writ of Prohibition prayed for in this petition.

4. The Writ of Prohibition is a prerogative writ directed to an inferior Court, which forbids such Court to continue proceedings therein in excess of its jurisdiction or in contravention of the laws of the land. The petitioner, therefore, bas to make out that the proceedings impugned are manifestly beyond the scope of the jurisdiction of the respondent or clearly opposed to any law or statutory provision.

5. The proceedings initiated by the respondent are attacked by the learned counsel for the petitioner on three main grounds: (i) that the procedure for launching a prosecution under Section 30 (1) (a) and 30 (3) (a) for the non-payment of the tax due can only be an alternative to the levy of penalty under Section 16(3) of the Act and that one sanction excludes the other and that they are mutually inconsistent; (ii) that Section 30 of the General Sales Tax Act is violative of Article 14 of the Constitution; and (iii) the levying of penalty under Section 16(3) and also the launching of prosecution under Section 30(1) (a) offends Article 20(2) of the Constitution. It would be necessary to extract the two relevant sections.

6. Section 16 of the Act providing for the payment of tax and other dues payable under the Actis as follows:

'Section 18 (1):

1. The tax assessed under this Act and the penalty levied under Sub-sections (2), (3) and (4) of Section 14 shall be paid by the dealer in such manner, and within such time, not being less than fifteen days from the date of service of the notice of assessment or of the levy of penalty, as may be specified in such notice.

2. The Board of Revenue may, by general or special order, permit the payment of any tax or penalty or both, assessed or levied under this Act in two or more instalments within such interval as may be specified in the said order.

3. If the tax assessed under this Act or any instalment thereof is not paid by any dealer within the time specified therefor in the notice of assessment or in the order permitting payment in instalments, the deafer shall pay by way of penalty, in addition, to the amount of such tax or instalment, a sum equal to:

(a) half a per cent of such amount, for each month or part thereof for the first three months after the date specified for its payment;

(b) one per cent of such amount, for each month or part thereof subsequent to the first three months aforesaid.

4. If the tax assessed or the penalty levied under this Act or any instalment thereof, and the fees payable towards licence or registration, are not paid by a dealer within the time specified therefor, the whole of the amount then remaining unpaid, may be recovered from him as if it were an arrear of land revenue.

5. The penalty levied under this Act shall be without prejudice to the institution of any proceeding for an offence under this Act, or for the recovery of the entire amount remaining unpaid under Sub-section (4).'

Section 30 is in these terms: '30(1). Any person who:

(a) fails to pay within the time allowed, any tax assessed on him or any penalty levied, or any fee due from him, under this Act; or

(b) being a person obliged to register himself as a dealer under this Act, does not get himself so registered; or

(c) wilfully acts in contravention of the provisions of this Act or the rules made thereunder, shall, on conviction, be liable to be punished with fine which may extend to two thousand rupees.

2. Any person who -

(a) prevents or obstructs inspection, entry, search or seizure by an officer authorised under Section 28, in contravention of the terms thereof; or

(b) prevents or obstructs inspection of any goods vehicle or boat carrying goods, by an officer in charge of check post or barrier or any officer empowered under Section 29, shall, on conviction, be liable to be punished with simple imprisonment which may extend to six months, or with fine which may extend to two thousand rupees, or with both.

3. Any person who -

(a) wilfully submits an untrue return or fails to submit a return as required by the provisions of this Act, or the rules made thereunder; or

(b) fraudulently evades the payment of any tax. fee or other amount due from him under this Act shall, on conviction, be liable to be punished, if it is a first offence with fine which may extend to two thousand rupees, and if it is a second or subsequent offence with simple imprisonment which may extend to six months, or with fine which may extend to two thousand rupees, or with both.'

7. The argument of the learned counsel that the levy of penalty and the launching of prosecution are mutually exclusive is wholly untenable both in principle and on authority. The levy of penalty and the launching of prosecution are two distinct sanctions. But they are by no means mutually exclusive. A defaulting assesses may be liable to penalty as well as to criminal prosecution, Sub-section (5) of Section 16 clearly states that the penalty levied under the Act shall be without prejudice to the institution of any proceeding for an offence under this Act. It is open therefore, to the Department both to levy the penalty and also to initiate prosecution.

8. In Peddireddi Sesha Reddy V. Excise Superintendent Nalgonda 1959-2 Andh WR 426 at p. 432, a case under the Hyderabad Akbari Act, the learned Chief Justice and Krishna Rao J., had to deal with a similar contention. Rule 9 (6) of the rules framed under the Act provides for the levy of penalty. Sections 31 and 33 provide for criminal prosecution The learned Judges observed as follows:

'While Sections 31 and 33 enact criminal sanction, Rule 9(6) contains a different kind of sanction, namely, impost of penalty. They are two separate and distinct remedies. The objectives of the two sanctions are different, While Section 10 aims at purnishing the culprit and vindicting public justice, the object of the other is to protect the revenue and to reimburse the Government for tile expenditure involved in the investigation of the loss resulting from the fraud of the licensees. Both the sanctions are imposed to ensure compliance with the statutory rules and conditions and to discourage fraudulent attempts at evasion of taxes and duties by making it unremiunerative. They are independent remedies and both of them can be availed in respect of the same act, there can be both a criminal, civil or fiscal sanction. The subsistence of a penal provision does not stand in the way of a parallel provision for the levy of a penalty. This seems to be the general feature of fiscal enactments. The two sets of remedies are essential to work out the Act and they are not mutually exclusive. The Department is not put to option to choose either of the two alternatives. The two sets of proceedings may be started simultaneously. In our opinion, there is no principle known to law which renders existence of such concurrent sanction obnoxious.' Following the principle enunciated in the above passage, I hold that the penalty and the prosecution are not mutually exclusive.

9. In the view I have taken that the imposition of penalty and the launching of the prosecution are not mutually exclusive in the sense that the levy of the penalty excludes the launching of the prosecution or vice versa and that both may be resorted to. it is not necessary to consider the contention of the learned counsel that the legislature has vested arbitrary and unguided discretion in the Commercial Tax Officer to choose one or the other remedy.

10. The second contention that Section 30 is opposed to Article 14 of the Constitution of India is without any substance. Article 14 states :

'The State shall not deny to any person equality before the law or the equal protection of the law within the territory of India.'

11. The meaning and scope of this Article has been the subject of exposition by the Supreme Court of India from time to time (vide Charanjit Lal Choudhury v. Union of India, : [1950]1SCR869 , State of Bombay v. F.N. Balsara, 1951 SCJ 478: (AIR 1951 SC 318), State of West Bengal v. Anwar Ali, : 1952CriLJ510 and other cases). In Budhan Choudhury v. State of Bihar : 1955CriLJ374 Das, J., held as follows:

'It is now well established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure.' It is from this perspective that the provisions of Section 30 have to be examined.

12. The main contention of the petitioner's counsel is that Section 30(1) and Section 30(3) deal with the same situation, namely, the contravention of the provisions of the Act. But while under Section 30 (1) the punishment is only a fine, under Sub-section (3) of Section 30 there is also the punishment of imprisonment. It is argued that there is no guiding test or principle to determine when a case would fall under Section 30 (1) or Section 30 (3). This, it is argued, violates the equality before the law and also the equal protection of law. This argument appears to me to be wholly unsustainable. In the Madras General Sales-tax Act which was replaced by the Andhra Pradesh General Sales-tax Act 1957, Section 15 was in these terms:

'15 : Any person who:

(a) wilfully submits an untrue return or fails to submit a return as required by the provisions of this Act, or the rules made thereunder, or

(b) fails to pay within the time allowed, any tax assessed on him (or ant penalty levied) or any fee due from him under this Act, or

(c) prevents or obstructs inspection or entry by any officer authorised under Section 14, in contravention of the terms thereof, or

(d) fraudulently evades the payment of (any tax assessed on him, or any fee due from him, under this Act) or

(e) fails to submit an application for registration as required by Section 8-A, or

(f) wilfully acts in contravention of any of the provisions of this Act shall, on conviction by a Magistrate of the 1st class (be liable to be punished with simple imprisonment which may extend to six months or with a fine which may extend to one thousand rupees or with both) and in the case of a conviction under clause (b), or (d) the Magistrate Khali specify in the order the tax, (penalty) fee or other amount, which the person convicted has failed or evaded to pay, and the tax, (penalty) fee or amount so specified shall be recoverable as if it were a fine.'

13. It will be seen that for offences falling within Clauses (a) to (f) a prosecution was permissible and the offences could be punished with simple imprisonment which may extend to six months and fine of Rs. 1,000/- or with both. The present section makes a distinction between the cases where fine would suffice and cases which could be punished with imprisonment. It will also be seen that the contingencies and the situations contemplated in Section 30 (1) and 30 (3) are not the same. In cases of failure to pay the tax, penalty, fee within the time or to obtain the registration ,or wilfully contravening the provisions of the Act, on conviction, only fine is payable.

But in the case of wilful submission of untrue, returns or wilful failure to submit a return or fraudulent evasion of payment of tax, fee or other amount due under the Act, the punishment is not exactly the same. If it is a case of first offence, on conviction, the defaulting assessee is liable to fine. If it is a second or subsequent offence, on conviction. the defaulting assessee is liable to sentence of simple imprisonment which may extend to Six months or fine, or with both. It is, therefore, meaningless to argue that for the wilful contravention of the provision of the Act, in one case fine is provided and in another imprisonment.

There is absolutely no merit in die contention put forward at the bar that there is no guiding test in which case fine alone is to be paid and in which case simple imprisonment is to be imposed. The class to which imprisonment is provided is a distinct and different class from the one to which only fine is contemplated. This is clearly founded on an intelligible principle, namely, to discourage and put down persistent evasion of the payment of tax or the wilful contravention of the provisions of the Act. In the case of 1st offence, a lesser punishment is provided, and in the case of second offence a higher punishment is permissible. This is a circumstance which bears a rational relation to the main intendment and purpose of the Act, which in addition to the levy of assessment, are designed to see that the tax is realised quickly and with expedition and persistent default and evasion are discouraged by the imposition of a more severe punishment.

14. The last argument of the learned counsel that the levying of penalty and a possible prosecution is violative of the doctrine of double jeopardy enshrined in Article 20(2) of the Constitution is wholly untenable.

'14-A Article 20(2) of the Constitution states: No person shall be prosecuted and punished for the same offence more than once.' Levy of penalty is not a prosecution and Article 20(2) can, therefore, have no application at all.

15. In Venkataraman v. Union of India, : 1954CriLJ993 it was held by the Supreme Court that in order to enable a citizen to invoke the protection of Clause (2) of Article 20 of the Constitution, there must have been prosecution and punishment in respect of the same offence. The words 'prosecuted and punished' are to be taken not distributively so as to mean prosecuted or punished. Both factors must co-exist in order that the operation of the clause may be attracted. In that case departmental action was taken against a public servant under the Public Servants (Inquiries) Act of 1850. That was held not to be a prosecution and a subsequent prosecution for offences under Sections 161 and 165 I. P. C., and other acts would not be barred under Article 20(2).

Similarly, in this case it could by no stretch of imagination be argued that the levy of penalty partakes of the character of prosecution. In Maqbool Hussain v. State of Bombay : 1983ECR1598D(SC) the action taken by the custom authorities under Section 161 Clause 8 of the Sea Customs Act 1878, and the confiscation in pursuance thereof, was held not to bar a prosecution and Article 20(2) of the Constitution was not attracted.

16. In Leo Roy Frey v. Superintendent, Dt. Jail Amritsar : 1958CriLJ260 The Supreme Court reiterated that proceedings under the Sea Customs Act could not be bar to Subsequent prosecution. In Thomas Dana v. State of Punjab : 1959CriLJ392 the majority of the Supreme Court again took the view that:

'Proceedings before the Sea Customs Authorities under Section 167(8) of the Sea Customs Act (adjudging pf confiscation, increased rate of duty or penalty in respect of smuggled foreign currency or other articles) were not 'Prosecution' within the meaning of Article 20(2) of the Constitution of India and (will not bar a criminal prosecution under Section 167 (8) of the Sea Customs Act in respect of such smuggling.'

In view of the foregoing authorities, there is no substance whatever in the contention that the provision for the levy of the penalty under Section 16 (3) and the starting of the prosecution under Section 30 (1) or Section 80 (3), as the case may he is violative of the guarantee given under Article 20(2) of the Constitution. I have no doubt in my mind that in this case the petitioner has failed to prove that there has been any excess of jurisdiction in what the respondent has done. The terms of the notice which is impugned in this writ petition are clearly within the scope and ambit of the statutory jurisdiction of the respondent. No case whatever has been made out why a Writ of Prohibition should be issued.

17. In the result, the petition fails and is dismissed with costs. Advocate's fee Rs. 100/-.