1. The applicant in this case is one Bholaram Murlidhar Agarwal, who does business under the name and style 'Bholaram Murlidhar Agarwal' at Gondia in the Bhandara District. The business which he carries on is business in general merchandise. He is a registered dealer within the meaning of the Central Provinces and Berar Sales Tax Act, 1947 (XXI of 1947).
2. As a dealer, he was assessed to sales tax for the period between 1st June, 1947 and 18th October, 1952, and six different notices were issued to him for six different periods. These six periods were : (1) 1st June, 1947, to 12th November, 1947; (2) 13th November, 1947, to 1st November, 1948; (3) 2nd November, 1948, to 21st October, 1949; (4) 22nd October, 1949, to 9th November, 1950; (5) 10th November, 1950, to 30th October, 1951; and (6) 31st October, 1951, to 18th October, 1952. In respect of these six periods, orders of assessment were made respectively on the 11th March, 1949, 30th September, 1950, 29th April, 1951, 4th January, 1953, 4th January, 1953, and 26th February, 1954. The assessment orders are annexed to the petition as A-1, A-2, A-3, A-4, A-5 and A-6 respectively.
3. On the 27th April, 1954, opponent No. 1, who is the Inspector of Sales Tax, Gondia, Madhya Pradesh, visited the shop of the applicant and seized his account books. Opponent No. 2, who is the Sales Tax Officer, Gondia, Madhya Pradesh, thereafter served the applicant with a notice dated the 4th June, 1954, requiring the applicant to appear before him on the 23rd July, 1954, to show cause why the applicant should not be prosecuted under section 24 read with section 28 of the Sales Tax Act. Then, on the 18th June, 1954, opponent No. 2 issued six separate notices in form XII in respect of the aforesaid six periods of assessment, requiring the applicant to appear before him on the 23rd July, 1954, to show cause why he should not be re-assessed, and these six notices are annexures C-1, C-2, C-3, C-4, C-5 and C-6 respectively. Opponent No. 2 then adjourned the proceedings to 18th August, 1954, when the applicant appeared before the said authority and protested, as the petition puts it, against the validity of the notices of the 18th June, 1954. Certain objections were raised by the applicant, and opponent No. 2 overruled those objections in relation to the notices which were issued in form XII, and these orders have been set out as annexures D-1, D-2, D-3, D-4, D-5 and D-6. It appears that the applicant preferred two appeals in respect of the orders made by the Sales Tax Officer in relation to two periods, namely, 10th November, 1950, to 30th October, 1951, and 31st October, 1951, to 18th October, 1952. In appeal, the learned authority came to the conclusion that no appeal would lie against the so-called orders and, accordingly, he dismissed the two appeals. The applicant then went in revision before the Sales Tax Commissioner, Madhya Pradesh, and that authority dismissed the petitioner's application.
4. The applicant filed the present application on the 16th October, 1956, under Article 226 and Article 227 of the Constitution, seeking to obtain various writs as set out in the prayer clause of the petition. He claimed that a writ of certiorari may be issued, quashing the notices issued on the 18th June, 1954, and the 28th May, 1956, and writs were asked for in respect of these notices. He also claimed a writ of mandamus, asking that the opponents be ordered to withdraw all the notices in form XII referred to in prayer clause No. (i). He claimed a further writ in the nature of mandamus, asking that the opponents be ordered to return to the petitioner all his account books, and he also claimed a writ of prohibition, asking that the opponents be permanently prohibited from proceeding any further with proceedings of re-assessment and penalty.
5. Upon this petition, various points have been made by Mr. Thakkar appearing for the applicant. The principal point taken by him is that the notices issued against him in form XII for re-assessment are without jurisdiction. A further point has been taken by him, and that point is that in so far as the first opponent has seized his account books, that action of the first opponent is contrary to Article 20(3) of the Constitution. As supplementary to the second contention, it has been urged that the seizure of the account books is illegal, and the retention or detention of those account books is also illegal. With regard to the point of seizure and retention or detention of the account books, Mr. Thakkar has not pressed these two contentions. It was pointed out to him that the questions raised by him are questions of fact, which would require evidence in order to dispose of these contentions. It was also pointed out to him that he did not apply to the Sales Tax Officer, asking that the books of account seized by the first opponent should be returned, either because the seizures was illegal, or because the detention of these books was also illegal. It is not, therefore, necessary to deal with these two contentions, and we are, therefore, required to deal with the principal contention and the ancillary contention referred to above.
6. Dealing with the first contention, it is necessary to refer to some of the sections of the C.P. and Berar Sales Tax Act, 1947, in order to understand the scheme underlying the Act. There is no dispute that the applicant is a registered dealer, and the expression 'dealer' has been defined in section 2(c), and the expression 'registered dealer' has been defined in section 3(f). As there is no dispute with regard to the applicant being a registered dealer, it is not necessary to refer to these two definitions. Then, the expression 'turnover' is defined in section 2(j). The expression 'year' is defined in section 2(i). The principal section which imposes the tax is section 4, and it provides, by sub-section (1)(a) :
'In Madhya Pradesh excluding the merged territories every dealer whose turnover during the year preceding the commencement of this Act exceeded the limits specified in sub-section (5) shall be liable to pay tax in accordance with the provisions of this Act on all sales effected after the commencement of this Act'.
7. It is clear that the liability of a dealer is in respect of the turnover during the year. Then, there is section 10, which deals with returns and provides by sub-section (1) that : 'every such dealer as may be required so to do by the Commissioner by notice served in the prescribed manner and every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed'. Section 11, by sub-section (1), provides that 'if the Commissioner is satisfied that the returns furnished by a dealer in respect of any period are correct and complete, he shall assess the dealer on them'. This section shows that the power is given to the Commissioner to tax the dealer under section 11. Section 11, sub-section (3), may be referred to, and it provides that 'after hearing the dealer or his agent and examining the evidence produced in compliance with the requirements of clause (ii) or clause (iii) of sub-section (2) and such further evidence as the Commissioner may require, the Commissioner shall assess him to tax'. It is clear that an order of assessment is made pursuant to section 11(3). An important provision is contained in section 11-A, and that is the provision relevant to the consideration of the contention raised in this appeal. Section 11-A(1) provides :
'If in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed in such manner as may be prescribed to reassess or assess, as the case may be, the tax payable on any such turnover; and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount'.
8. Section 11-A (1), therefore, deals with four categories : (i) a category in which a dealer has been under-assessed; (ii) a category in which a dealer has escaped assessment; (iii) a category in which he has been assessed at a lower rate; and (iv) a category in which a deduction has been wrongly made. Another thing to notice in regard to section 11-A(1) is that the authority may proceed to re-assess or assess at any time within three calendar years from the expiry of such period, and the expression 'such period' is to be understood by reference to the expression 'during any period' occurring in the earlier part of the section. Section 11-A(1), therefore, prescribes the period of time during which, it would be open to the Commissioner either to assess or to re-assess a dealer. It is not necessary to refer to all the four categories for the purpose of this case, because here is a case in which the applicant is being re-assessed because he has been under-assessed, and the question for consideration is whether all the notices issued to the applicant in form XII are in order, having regard to the provisions of section 11-A(1).
9. Upon this disputed question, rival contentions are put forward. It is urged on behalf of the applicant that all the six notices are without jurisdiction, because the notices are barred by time. On the other hand, it has been urged by Mr. Sheorey on behalf of the opponents that all the six notices are in order, because they are all in time, an there is no question of any want of jurisdiction in the authorities with regard to the re-assessment of the present applicant. It may be pointed out that in all, eighteen notices were issued to the applicant in relation to the six different assessment orders made against him. Six notices were first issued on the 18th June, 1954; the second batch of notices numbering six were issued on two different occasions, two of these on the 14th may, 1956, and four of them on the 28th May, 1956; and again fresh six notices were issued to the applicant in form XII on the 23rd August, 1956. The present application was filed, as I pointed out at the commencement of this judgment, on the 16th October, 1956, and there would have been an initial difficulty for the application to overcome, had the notices been merely those of the 18th June, 1954, because in that event, it is obvious that the applicant would have been required to come to this Court under Article 226 as quickly as possible after the notices were issued to him. But the question of delay does not arise in this case, because twelve other notices in two batches were subsequently issue to him in the year 1956. There is, therefore, no question of delay, since the contention of the applicant is that all these notices are without jurisdiction. The contention taken by Mr. Thakkar is that on a true construction of section 11-A(1), the second opponent had no jurisdiction to re-assess him, as all these six notices are barred by time. On the other hand, Mr. Sheorey contends that all these notices are within time, and the point of controversy must be decided upon a true interpretation of the two expressions occurring in section 11-A(1), namely, 'during any period', and 'the expiry of such period'. Now, it may be pointed out that the expression 'period' is not defined in the Act. What is defined in the Act is the 'year'. As I have already pointed out, the liability of a dealer to the payment of sales tax arises by virtue of the provisions contained in section 4. In order to appreciate the contention of Mr. Thakkar it may be necessary to re-state the different periods once again. The first period is a period covered by the 1st June, 1947, and the 12th November, 1947; the second period is covered by the 13th November, 1947, and the 1st November, 1948; the third is 2nd November, 1948, to 21st October, 1949; the fourth period is one concerned with the 22nd October, 1949, and the 9th November, 1950; the fifth is the 10th November, 1950, to 30th October, 1951; and the sixth and the last is the 31st October, 1951, to 18th October, 1952. Taking these different dates, it is obvious that according to the true intent and effect of section 11-A(1), the Commissioner has to proceed to reassess within three calendar years from the expiry of such period. Now, in each case, the period expired on the 12th November, 1950, 1st November, 1951, 21st October, 1952, 9th November, 1953, 30th October, 1954, and 18th October, 1955. All the notices given by the second opponent are of the date 18th June, 1954, Now, this date would be within three calendar years from the expiry of the periods which are in reference to the 5th and the 6th notices, i.e., for the periods between the 10th November, 1950, and 30th october, 1951, and the 31st october, 1951, and 18th october, 1952. It is obvious that the expression 'such period' must be understood by reference to 'during any period', and upon that construction which, we think, is the only logical construction, the first four notices would be out of time, and, therefore, the proposals to re-assess the present applicant would be without jurisdiction in reference to the first four notices, and in respect of the remaining two notices, the proposals would be within jurisdiction.
10. But Mr. Sheorey contends that we should construe the expressions 'during any period' and 'from the expiry of such period' as meaning that the period commences from the 1st June, 1947; and he says that the history of the enactment of section 11-A shows that the sections was not on the statute book in the Act of 1947, but it came to be inserted by the amending Act (No. XX of 1953), and it was given retrospective effect as from the 1st June, 1947. If section 11-A is given retrospective effect, it means that section 11-A, though inserted by the amending Act (No. XX of 1953), was really on the statute book as though it was enacted in the year 1947. and Mr. Sheorey's argument is that if that is the effect of section 11-A, we should read the period as meaning the period from the 1st June, 1947, to 18th October, 1952, which are the two termini of the six periods referred to above. Now, in the first place, it is not possible to accept this argument. It is one thing to say that section 11-A is retrospective, and it is quite another to suggest that section 11-A fixes the period as from the 1st June, 1947. That section 11-A is retrospective is clear, because it has been made expressly retrospective. There is, therefore, no question that section 11-A is retrospective. But is it correct to suggest that because section 11-A was made retrospective as from the 1st June, 1947, that section fixes any period We are unable to accept Mr. Sheorey's contention for reasons which I propose to mention presently.
11. Here is a case of, what I have described above, one of re-assessment, which suggests and shows that the applicant had been previously assessed. That the applicant had been previously assessed for six different periods has not been in dispute in this case, and the expression 'reassessment' implies that there was a previous assessment. In order to understand the meaning of the expression 'any period', we must necessarily see the period for which the applicant had been previously assessed, and it is clear, having regard to the dates which I have mentioned above, and having regard to the facts which I have stated in an earlier part of this judgment, that the applicant had been previously assessed in respect of six different periods. In view of this position, there is no difficulty in construing the words 'during any period', because the section says that 'if in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under-assessed', which means that a dealer has first been assessed for a particular period, and the subsequent information shows that the dealer has been under-assessed, and this is precisely the present case. It is not disputed by Mr. Sheorey that the applicant had been previously assessed for six different periods. It is also not disputed by him that there were assessment orders passed against the applicant, and so it is clear that the applicant had been previously assessed for six different periods. Bearing that position in mind, and construing section 11-A in the light of what I have said above, it is clear that the only notices which would, therefore, be in order, would be the two notices issued to the applicant in relation to the periods (i) 10th November, 1950, to 30th October, 1951, and (ii) 31st October, 1951, to 18th October, 1952.
12. Even apart from this, there is another difficulty in Mr. Sheorey's way. This is a taxing statute, and a taxing statute must be strictly construed in favour of the taxpayer. If a provision is susceptible of two constructions, the one which is favourable to the taxpayer must be adopted to the exclusion of the other which is in favour of the State. Here, the argument of Mr. Sheorey is that the period from the 1st June, 1947, to 18th October, 1952, if a whole period for purposes of section 11-A. This is an argument which we are unable to accept, both because previously assessment has been made in respect of six different periods, and also having regard to section 4 of the Act, the liability is in respect of a 'year'. If that is the true position, it is not possible to accept the contention urged on behalf of the State. Even quite apart from this, it may be pointed out, as a circumstance in favour of the applicant, that the opponents have proceeded to deal with the applicant in the matter of assessment for six different periods, and that is an additional reason for saying that it is not possible to accept the contention of Mr. Sheorey that the period referred to in section 11-A is the whole of the period commencing on the 1st June, 1947, and ending on the 18th October, 1952.
13. There is another reason why this construction cannot be accepted. There are four different categories mentioned in section 11-A. It may well be that in respect of one particular period, it may be a case of under-assessment; it may well be that in respect of another period, it may be a case of assessment having escaped; it may well be that in respect of a third period, it may be a case of assessment done at a lower rate; and, finally, it may also well be that in respect of a fourth period, it may be that the deduction from the assessment has been wrongly made. It is obvious, therefore, that the periods may be different, because different categories will arise in different assessments and re-assessments, and that is an additional reason for saying that the construction suggested by Mr. Sheorey cannot be accepted in this case. The learned Advocate appearing for the applicant has refereed us to a decision of this Court in S. C. Prashar v. Vasantsen Dwarkadas : 29ITR857(Bom) , in which a point similar to the point which has been raised on this petition was decided in the sense in which we have decided it above, and following with respect, the principle laid down in that case, we must hold that the first four notices issued by the second opponent would be without jurisdiction, but the remaining two, i.e., the 5th and the 6th, would be in order and would be within jurisdiction.
14. Another contention raised by Mr. Thakkar is that having regard to Article 20(3) of the Constitution, it is not open to the assessing authorities to re-assess the applicant, because he says that his fundamental right has been invaded. Article 20(3) says that 'no person accused of any offence shall be compelled to be a witness against himself.' Mr. Thakkar says that the first opponent has seized his account books and has retained them, or detained them, and the consequence is that, in effect, there is a violation of Article 20(3), because these account books constitute evidence against the applicant, and then he urges that this is a testimonial compulsion. In addition he points out that simultaneously with the notices issued to him, he has also issued a notice against the applicant to show cause why he should not be prosecuted, having regard to section 24 and section 28 of the Act. Now, when an argument is advanced upon the footing of a fundamental right, one must examine it a little more closely. As often happens, an argument based upon the invasion of a fundamental right is attractive, but in some cases, it is without substance. Now, what has happened in this case is that according to the taxing authorities, the turnover of the applicant has been under-assessed. If that contention is right, then, of course, it is open to the taxing authorities to re-assess the applicant. In order to re-assess the applicant, it is necessary for the taxing authorities to have the account books of the applicant, in order to enable them to properly re-assess him. But, then, the argument is that in so far as the books of account of the applicant are seized and retained, what the taxing authorities are, in effect, doing is that they are using the evidence furnished by the books of account for the purpose of re-assessing the applicant. Now, speaking for myself, I fail to see how a dealer can be re-assessed in the absence of materials and relevant evidence. What the turnover of the applicant is, is not within the knowledge of the taxing authorities. It is solely within the knowledge of the applicant. And to suggest that for the purpose of re-assessment, the books of account of the applicant should not be considered, because that would constitute testimonial compulsion is carrying the argument, I think, a little too far. A re-assessment proceeding is one thing, and the prosecution of the applicant for a breach of the provisions of the Sales Tax Act is quite another. Mr. Thakkar may be right that a person accused of an offence cannot be compelled to give evidence against himself, which would amount to testimonial compulsion. This principle is laid down by the highest authority, and that is to be found in M. P. Sharma and Others v. Satish Chandra District Magistrate, Delhi and Others : 1978(2)ELT287(SC) . But I cannot accept the argument that in a re-assessment proceeding, it would not be open to the taxing authorities to refer to and to rely upon the books of account of the applicant, in order to properly re-assess him, if the previous assessment has not been in order. It may be that in a prosecution, if one is launched against the applicant, he would be able to contend that it would be testimonial compulsion if the books of account are used against him, and upon that, we express no opinion. But I cannot understand the argument that these notices are not in order because the books of account of the applicant have been seized, and there has been in this case testimonial compulsion, and violation of Article 20(3) of the Constitution is the result. In our view, there is no substance in this contention.
15. It was also argued by Mr. Thakkar that the notices issued against the applicant on the 18th June, 1954, were superseded by the subsequent notices issued either on the 14th May, 1956, or the 28th May, 1956, and the 23rd August, 1956. We have seen these notices, and there is nothing to suggest that the later notices superseded the previous notices. Reference was made to paragraph 10 of the petition to that effect, and it was pointed out that in the return this allegation was not specifically denied. It was contended which, speaking for myself, is a curious argument that what was stated in the petition must, therefore, be taken to be admitted. Now, the question whether the notices were in fact superseded must be determined by the contents of the notices themselves. If the notices say that the previous notices were superseded, there is an end of the matter; but to suggest that because the applicant chose to say that there was supersession of the previous notices, and this allegation was not specifically denied, there was an admission in the return, is, I think, taking the argument a little too far. In my view, there is no substance in this contention.
16. For all these reasons, we must come to the conclusion that the first four notices dated the 18th June, 1954, in relation to the first four periods which I have set out above, would be without jurisdiction. But we also come to the conclusion that the last two notices which have reference to the periods 10th November, 1950, to 30th October, 1951, and 31st October, 1951, to 18th October, 1952, are in order and are within jurisdiction, and regarding these two notices, the applicant is not entitled to any writ. We will, therefore, partially allow this application, and make an order in the sense in which it was made in S. C. Prashar v. Vasantsen Dwarkadas : 29ITR857(Bom) , referred to above.
17. There will, therefore, be a writ prohibiting opponents Nos. 2,3 and 4 from taking any action or proceeding in pursuance of the show cause notices for re-assessment dated the 18th June, 1954, in respect of the periods (1) 1st June, 1947, to 12th November, 1947; (2) 13th November, 1947, to 1st November, 1948; (3) 2nd November, 1948, to 21st October, 1949; and (4) 22nd October, 1949, to 9th November, 1950. As the applicant has partially succeeded and partially failed, there will be no order as to costs. The amount of the security deposit made by the applicant may be refunded to him after deducting the costs payable by him.
18. Ordered accordingly.