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The Vidarbha Co-operative Marketing Society Ltd. Vs. Sales Tax Officer Iii, Ii Division, Nagpur and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Applications Nos. 375 of 1961 and 376 of 1961
Judge
Reported in(1963)65BOMLR238; 1963MhLJ5; [1963]14STC430(Bom)
ActsBerar Sales Tax Act, 1947 - Sections 3, 10(3), 11(5), 11-A, 16 and 22-C
AppellantThe Vidarbha Co-operative Marketing Society Ltd.
RespondentSales Tax Officer Iii, Ii Division, Nagpur and ors.
Appellant AdvocateN.T. Betharia and ;R.N. Jain, Advs.
Respondent AdvocateG.R. Mudholkar, Additional Government Pleader
Excerpt:
.....provinces and berar sales tax act (xxi of 1947), sections 16, 28 - c.p. and berar sales tax rules, rule 67, entry no. 11-a--whether entry no. 11-a under rule 67 ultra vires of proviso to section 16--proviso to section 16 whether can be interpreted to be condition of power to delegate contained in first part of section 16--construction of statute--rule whether can affect provisions of parent act.;entry at serial no. 11-a under rule 67 of the c.p. and berar sales tax rules, 1947, is ultra vires of the proviso to section 16 of the central provinces and berar sales tax act, 1947.;the rules made under a statute cannot take away any part of the powers or affect any of the provisions of the parent act under which the rules are made, unless the act itself permits that to be done.;section 28(2)..........of section 16. 7. no doubt, in that case the justification for the order offered was under the entry at serial no. 7 under the then existing rule 67 of the c.p. and berar sales tax rules, 1947, and we held that the rule could not affect the operation of the proviso to section 16. at that time also the entry at serial no. 11-a was incorporated in rule 67; but the department was not able to invoke it in their favour because the orders with which we were concerned in that case were passed prior to the date by which the entry at serial no. 11-a was brought into force, and rule 67 amended. the amendment which incorporated the entry at serial no. 11-a under rule 67 was made on 17th april, 1958, and therefore it could not govern the imposition of penalties in that case. in the present case,.....
Judgment:

Kotval, J.

1. These are matters which arise under the Central Provinces and Berar Sales Tax Act, 1947 (XXI of 1947). They are both directed against the orders levying a penalty upon the petitioner, the Vidarbha Co-operative Marketing Society Ltd., Nagpur, under section 10(3) of that Act. The facts are not in dispute and briefly stated they are as follows :

2. The petitioner-society is a dealer within the meaning of the Act and was therefore bound to make quarterly returns within one month from the date on which the return for each quarter was due. In S.C.A. No. 375 of 1961 the assessment year is 1st July, 1953 to 30th June, 1954, and in S.C.A. No. 376 of 1961 the assessment year is from 1st July, 1954 to 30th June, 1955. In each of these two years the society was bound to make four returns. For the year 1953-54, we give below the following dates on which the quarters ended and the due dates for the returns :-

------------------------------------------------------------------------ Return for the quarter ending Due date ------------------------------------------------------------------------ 1. 30-9-1953 ... 31-10-19532. 31-12-1953 ... 31-1-19543. 31-3-1954 ... 30-4-1954 4. 30-6-1954 ... 31-7-1954 ------------------------------------------------------------------------

3. The returns were due on the corresponding dates in the next year. For the year 1st July, 1953 to 30th June, 1954, the petitioner made its returns for the first two quarters in time, but for the succeeding two quarters it was late. The return for the third and the fourth quarters were made on 6th September, 1955, and were thus delayed. For the year 1st July, 1954 to 30th June, 1955, the position was worse. There the returns for all the four quarters were delayed. Though the dates of the returns are not given in the petition Mr. Betharia for the petitioner has given us the following dates as the dates on which the four quarterly returns were filed, i.e., on 6th September, 1955, 31st December, 1955, 24th December, 1955, and 25th April, 1956, respectively.

4. For the defaults in making the two returns for the year 1st July, 1953 to 30th June, 1954, the Society was fined Rs. 1,325 which was reduced in appeal to Rs. 1,000. For the year 1st July, 1954 to 30th June, 1955, a penalty of Rs. 7,500 was imposed on the society. It is against these orders imposing penalties that the society has come up in these two special civil applications.

5. The principal point urged on behalf of the petitioner in both the cases is founded upon the provisions of section 16 of the C.P. and Berar Sales Tax Act. Mr. Betharia urged that the penalties were not validly imposed for the reason that the Commissioner of Sales Tax has at no stage applied his mind to the imposition of the penalties, nor has he previously approved of the penalty as required by the proviso to that section. The provisions of that section had come up for consideration before us in Jairam Parmar v. Sales Tax Officer, Nagpur [1962] 13 S.T.C. 477; 1962 N.L.J. 312, and similar penalties levied there had been declared bad for non-observance of the requirements of the proviso to section 16. In that case we had after considering the provisions of section 16 along with section 10(3) held :

'It is clear that the proviso to section 16 governs the exercise of the power under section 10(3). Section 10(3) in its turn dealer with two classes of cases. Firstly, the case where a dealer fails to comply with the requirements of the notice issued under sub-section (1), and secondly, where a registered dealer fails to furnish his return for any period within the prescribed time to the prescribed authority without any sufficient cause. By section 16 the Commissioner has to approve the action to be taken under section 10(3). It may be noticed here that so far as section 16 is concerned it speaks of the Commissioner and no other authority. But the opening words of section 16 permit the Commissioner to delegate any of his powers under the Act, except the powers under section 24(2), to any person appointed under section 3 of the Act to assist him 'subject to such restrictions and conditions as may be prescribed.''

6. In that case the argument on behalf of the petitioner was that the Commissioner had not approved of the imposition of the penalty under section 10(3) and that it was the Assistant Commissioner who gave his approval, and the question that fell to be determined there was whether the approval of the Assistant Commissioner was sufficient compliance with the proviso to section 16. We had in the sequel held that the approval of the Assistant Commissioner was not sufficient compliance with the requirements of section 16.

7. No doubt, in that case the justification for the order offered was under the entry at serial No. 7 under the then existing rule 67 of the C.P. and Berar Sales Tax Rules, 1947, and we held that the rule could not affect the operation of the proviso to section 16. At that time also the entry at serial No. 11-A was incorporated in rule 67; but the department was not able to invoke it in their favour because the orders with which we were concerned in that case were passed prior to the date by which the entry at serial No. 11-A was brought into force, and rule 67 amended. The amendment which incorporated the entry at serial No. 11-A under rule 67 was made on 17th April, 1958, and therefore it could not govern the imposition of penalties in that case. In the present case, however, the orders imposing penalties are all long after the amendment and that has enabled Mr. Mudholkar, on behalf of the respondents, to invoke the entry at serial No. 11-A in his favour.

8. We are unable to see however how even the entry at serial No. 11-A can possibly help the respondents or enable them to get over the plenary provisions of the proviso to section 16. No doubt, the entry at serial No. 11-A appears to have been incorporated in rule 67 with that intention because it reads as follows :

------------------------------------------------------------------------ 'S. No. Section Description Designation of Officer and of power. conditions of delegation. ------------------------------------------------------------------------ II-A Proviso to To give previous Assistant Commissioner in section 16. approval to the the case of imposition of imposition of penalty by an Assistant penalty. Sales Tax Officer or Sales Tax Officer; Deputy Commissioner in the case of imposition of penalty by an Assistant Commissioner.' ------------------------------------------------------------------------

9. It seems to us that when the entry was incorporated by way of amendment in rule 67, little attention was paid to the proviso to section 16, and in spite of our decision in Jairam Parmar v. Sales Tax Officer, Nagpur [1962] 13 S.T.C. 477; 1962 N.L.J. 512, that entry has been allowed to continue.

10. Section 16 of the Act runs as follows :

'Subject to such restrictions and conditions as may be prescribed, the Commissioner may by order in writing, delegate any of his powers under this Act except those under sub-section (2) of section 24 to any person appointed under section 3 to assist him :

Provided that if the power to impose penalty conferred upon the Commissioner by sub-section (3) of section 10, sub-section (5) of section 11, Section 11-A, and section 22-C is delegated by him under this section to any person appointed under section 3 to assist him, such person shall not exercise the power without obtaining the previous approval of the Commissioner.'

11. The proviso to the section clearly indicates that if the power of the Commissioner to impose a penalty under section 10(3) is delegated by him under the first part of section 16 to any person appointed under section 3 to assist him, then 'such person shall not exercise the power without obtaining the previous approval of the Commissioner.' In other words, no doubt, the Commissioner may by order in writing delegate any of his powers, particularly the power under section 10(3) to impose a penalty. But if he does so delegate his power to one of the classes of officers designated under section 3 to assist him, then before such a subordinate officer exercises that power he must obtain the previous approval of the Commissioner. The provisions of the proviso to section 16 are, as we have said, plenary and there is nothing in the other parts of the Act to limit its operation, and we therefore fail to understand an argument such as is advanced before us in this case that by a simple amendment incorporated in a rule made under the provisions of the Act, the provisions of the proviso to section 16 could be set at naught. That in effect is the result sought to be achieved by the incorporation of the entry at serial No. 11-A under rule 67. It is a cardinal rule of construction of statutes that rules made under a statute cannot take away any part of the powers or affect any of the provisions of the parent Act under which the rules are made, unless the Act itself permits that to be done.

12. Mr. Mudholkar at one stage suggested that the rules are themselves framed under the provisions of section 28(2)(n) of the Act, which runs as follows :

'28. (2) In particular and without prejudice to the generality of the foregoing power, the State Government may make rules, prescribing -

* * * *

(n) the conditions subject to which the Commissioner may delegate his powers under section 16; * *'

13. In our opinion, when the sub-section gives the power to the State Government to make rules on the subject of the 'conditions subject to which the Commissioner may delegate his powers under section 16,' the sub-section refers only to the first part of section 16 and not to the proviso. The first part of section 16 is what deals with the delegation of the powers of the Commissioner and the proviso says that if the power to impose penalty is delegated under the first part of section 16, then the person appointed under section 3 to assist the Commissioner to whom that power is delegated shall not exercise the power without obtaining the previous approval of the Commissioner. The proviso postulates that a valid delegation has already taken place and it is only when such delegation has been made that the proviso comes into effect. That shows that the proviso is making provision for a period of time subsequent to the delegation, and the proviso cannot possibly be interpreted to be a condition of the power to delegate contained in the first part of section 16. In fact, in the first part of section 16, the word 'conditions' is used in the clause 'subject to such restrictions and conditions as may be prescribed', that is to say, by the rules. But we cannot regard the proviso to section 16 as a condition to the opening part of section 16. We therefore think that the entry at serial No. 11-A cannot help the department in getting over the plenary provisions of the proviso to section 16. In our opinion, the entry at serial No. 11-A is ultra vires of the proviso to section 16. A rule cannot possibly affect the provisions of the parent Act.

14. In the result, therefore, we must allow these petitions and set aside the penalties imposed. The respondents shall pay one set of costs to the petitioner.

15. Petitions allowed.


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