P. Chandra Reddy, C.J.
1. These appeals are filed by the State against the acquittal of the respondent and involve the construction of Section 15(b) of the Madras General Sales Tax Act of 1939. The respondent who is a master weaver of Kosagi (Kurnool District) was assessed to sales-tax for the years 1949-50 and 1950-51. The assessments were confirmed by the Sale-tax Appellate Tribunal on appeal. The respondent paid only a portion of the tax and defaulted in payment of the balance.
This led the assessing authority to prosecute him before the S.D.M. Adoni. By way of defence, the respondent pleaded that assessment made by the Deputy Commercial Tax Officer was not correct. The S.D.M. upheld the objections of the respondent and acquitted him Originally this came on for hearing before a simple Judge who referred it to a Bench having regard to the importance of the matter and the Bench in its turn has placed it before the Full Bench for the same reason.
2. The questions that are referred to the Pall Bench are:
(1) Whether, in a prosecution under Section 15(b) of the Madras General Sales Tax Act, it is open to question the validity of the assessment made under the Act?
(2) Whether. In a prosecution under Section 15(b) of the Madras General Sales Tax Act, the Criminal Court has jurisdiction to adjudicate upon the correctness of the amount of tax assessed under the Act? As the controversy centres round the interpretation of Section 15(b), it is useful to extract the terms thereof, omitting the unnecessary portion :
'Any person who
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(b) falls to pay within the time allowed, any tax assessed On him or any penalty levied or any
fee due from him under this Act,
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Shali, on conviction by a Magistrate of the first class, be liable to be punished with simple imprisonment which may extend to six months or with fine which may extend to one thousand rupees, or with both and in the case of conviction under Clause (b) or (d) the Magistrate shall 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.'
3. We will here notice Section 15-b as it stood prior to its amendment and the legislative changes that occurred in the year 1948. Section 15 prior to its amendment read as 'fails to pay the tax due from him within the time allowed'. It is not necessary for us to refer to other change in that Section, The words 'any tax assessed on mm' were substituted for die words 'tax due from him' by Section 11(1) of the Madras General Sales Tax (Amendment) Act 1947 (XXV of 1947). By the same Act Section 16-A was added. It is in these words :
'The validity of the assessment of any tax, or of the levy of any fee or other amount, made under this Act, or the liability of any person to pay any tax, fee or other amount so assessed or levied shall not be questioned in any Criminal Court in any prosecution or other proceedings, whether under this Act or otherwise.'
4. It may be mentioned here that the Andhra Legislature deleted Section 16-A on 24-6-1954 and the Andhra Pradesh Legislature reenacted it in the shape of Section 36 in the Andhra Pradesh General Sales Tax Act, 1957 in a different form. Section 36 recites r
'Save as otherwise expressly provided in this Act, no Court shall entertain any suit, or other proceeding to set aside or modify, or question the validity or any assessment, order or decision made or passed by any officer or authority under this Act or any rules made thereunder, or in respect of any other matter falling within its or his scope.'
Section 15(b) is recast in this enactment and finds place in Section 30(1)(a). The punishment provided in this section is also slightly different from that in Section 15.
5. Before we discuss the terms of Section 15, it is convenient to refer to a judgment of the Madras High Court which is adverted to in the order of reference. In Ramaswami Iyengar v. Sivalcasi Municipality. 1936 M WN 1337: AIR 1937 Mad 291 which formed the basis of some decisions of single Judges, the facts were as follows :-- The manager of the estate of a lunatic who was also his guardian was required to submit a return of the income of that estate by the Municipal Council, Sivakasi, for the purpose of levying the profession tax.
The return sent by him stated that the estate was not leviable to profession tax. The objection was overruled and profession tax was levied. As the tax was not paid, fie was prosecuted. The accused raised a plea that he was not liable to pay the tax. This defence was not accepted with the result that he was convicted and this was confirmed in appeal. The matter was brought up to the High, Court in revision. In quashing the conviction, Justice Venkataramana Rao who delivered the opinion of the Bench remarked:
'We are therefore clearly of the opinion that it is incumbent upon the prosecution to establish affirmatively that the profession tax was legally leviable from the accused and it is also open to the accused to plead and Drove that he is not liable to pay the tax and therefore he is not liable to be prosecuted under Rule 30, Clause 2 of Schedule 4 of the District Municipalities Act.'
Discussing the applicability of Rule 28 of Schedule 4 of the District Municipalities Act, which stated that the assessment or demand of any tax where no appeal is made as therein before provided, and when such appeal was made the adjudication o the Council thereon shall be final, the learned Judge bserved that the finality was only for the purpose of the Act and did not prevent the accused from questioning the legality or validity of the assessment in a civil Court.
6. We may here point out that the language of Rule 30 of schedule 4 of the Act is analogous to that of Section 15(b) as it stood before its amendment in that it says 'if the amount due on account of any ' tax' etc., and cannot therefore furnish any parallel here. That apart, as pointed out by the Madras High Court in Public Prosecutor v. Ramalingam Pillai. 1958 2 M. L.J. 243: AIR 1958 Mad. 544 the earlier decisions of that court were not brought to the notice of the learned Judges.
7. The earliest reported case in that regard is Kamayya v. Leman, ILR 2 Mad. 37, in which it was ruled that a civil court has no jurisdiction to adjudicate upon the legality of a profession tax imposed by a municipality. In that case, the correctness of a profession tax imposed by the Municipality of Guntur was brought in issue in a suit on the file of the District Munsif, Guntur. On a reference by the Munsif, it was ruled by the High Court that the civil court had no jurisdiction to adjudicate on the question whether the tax was lawfully imposed by the Municipal Commissioner.
8. A judgment of another Bench of that court in Veera Raghavulu v. President, Corporation of Madras ILR 34 Mad. 130 is more illuminating. That dealt with the provisions of the Madras City Municipal Act of 1904. The question that arose for consideration there was whether it was open to the Presidency Magistrate to consider whether the accused exercised any profession in the city for 60 days during the particular half year making him liable for payment of profession tax. The defence of the accused did not find favour with the Magistrate and it ended in conviction. On appeal, a Bench consisting of Wallis and Krishnaswamv JJ., confirmed the conviction with these remarks which are pertinent to this enquiry:
'Was the Magistrate right in declining to enquire into the plea of non-exercise of the profession The question thus raised is one of 'some difficulty but I have come to the conclusion that he was right. Section 172 of Madras Act III of 1904 provides 'that all complaints against and all applications for revision of classification in respect of any tax or toll leviable under Part IV shall be heard and decided by the President and two Commissioners. Section 175 provides an appeal against the order of the President and two Commissioners to Magistrates. Section 176 authorises a reference by the Magistrates to the High Court. Section 177 declares the finality of the decision of the respective authorities in the following terms: The assessment, revision or demand of any tax or toll, when no complaint, application or objection is made as herein before provided, and the adjudication of an appeal by the Magistrate shall be final.' It will be noticed that the declaration of finality is not merely with reference to the decision of Magistrate or of the President and Commissioners, in case no complaint or objection is made, with reference also to the original assessment.'
This statement embodied in that decision has some bearing on this enquiry as the Madras General Sales Tax Act devises a machinery similar to that contained in the Act that fell to be considered by the learned Judges there. There are a number of other cases which fall in line with these two ruling^ and it is unnecessary to allude to all of them.
9. Following 1936 M WN 1337 : AIR 1937 Mad 291 Kuppuswamy Ayyar, J. in Public Prosecutor v. Khader Khan, 1946 M W.N. 762: AIR 1947 Mad 321, decided that in a prosecution under Section 15(b) it has to be affirmatively established that the accused was liable to pay the tax.
10. We may next turn to the judgment of the Supreme Court in Poppatlal Shah v. State of Madras : 1953CriLJ1105 . In that case, the accused was charged under Section 15(b) for failure to pay the tax for the period from 1-4-47 to 31-12-47. The accused took the plea that the sale transactions in question were not liable to be taxed under the Madras General Sales Tax Act as there was no sale within the ambit of Section 2(h) as it stood then.
Effect was not given to this plea both by the Magistrate and the High Court on appeal. But when the matter eventually went up to the Supreme Court they reversed the judgment of the High Court on the ground that the mere fact that the contract for sale was entered into within the province of Madras did not make the transaction, which was completed admittedly within another province, where the property in the goods passed, a sale within the province of Madras according to the provisions of the Madras General Sales Tax Act, and consequently no tax could be levied upon such a transaction under the provisions of the Act.
It should be noted that these transactions took place prior to the amendment introduced by Act XXV of 1947 i.e., when Section 15(b) read as 'tax as due' from him. The wording of the present section is different. Further, the question whether an alternative jurisdiction could be utilised to canvass the validity and correctness of an assessment was not raised there.
11. In Appa Rao, In re. : (1948)2MLJ572 , Justice Rajagopalan who expressed the opinion that a criminal Court could investigate into the liability of the accused prosecuted under Section 15(b) of the Madras General Sales Tax Act pointed out the difference between the old section and the one as amended in 1947. The learned Judge stated that the words 'tax due' would only mean lawfully due. Therefore, the doctrine of these cases would not govern the language of the present section.
12. Section 15(b) as amended and Section 16-A were construed by a Bench of the Madras High Court in Guraviah Naidu, In re., ILR 1955 Mad 184 : AIR 1954 Mad 833. There, sales-tax was levied on some dealers in hides and skins. As they failed to comply widi the demand for payment of the impost they were prosecuted. The defence was that the assessment levied on them was invalid and therefore they were not liable to pay tax. It was argued on behalf of the prosecution that it was not open to the accused to put forward such a plea in view of Section 16-A of the Act.
The contention of the prosecution prevailedresulting in the conviction of theaccused. On appeal a Bench of the MadrasHigh Court took the view that Section 16-Awas ultra vires the Constitution of India and repugnant to the provisions of the Criminal ProcedureCode as it deprived the accused of the benefit ofthe ordinary rules of Criminal Jurisprudence. Itwas this decision perhaps that was responsible forthe acquittal under appeal now.
13. This case is in conflict with Syed Mohammad and Co. v. State of Madras : AIR1953Mad105 . There, some tanners were assessed under the Madras General Sales Tax Act and no appeal having been filed against it, it became final. However, the assessees did not pay the tax and consequently they were prosecuted under Section 15(b) of the Act by the Department. While proceedings were pending before the Magistrate the assessee took put a writ petition to quash the proceedings contesting the validity inter alia of Section 16-A of the Act.
Chief Justice Rajamannar and Justice Venka-trama Ayyar who heard the petition negatived the contention that Section 16-A was void for the reason that it was opposed to principles of natural justice in that it prevented the accused from showing that they were not liable to be taxed under the Act. The ratio of the ruling is contained in the following remarks :
'There would have been substance in this objection, if the petitioners had been denied an opportunity of contesting the claim before an order of assessment was made. But where, as here, the tax is determined after notice to the assessees, it is not repugnant to 'rules of natural justice' to provide that the validity of assessment shall not be questioned at the stage of realisation of the tax. The provision is analogous to the rule which precludes judgment-debtors from putting forward at the stage of execution of a decree defences that were open to them in the suit itself.'
The law as contained in Rottschaefer's Constitutional Law was extracted in that judgment:
'The general rule is that due process requires that the tax-payer be accorded an opportunity to be heard at some stage in the proceedings before his liability is irrevocably fixed with respect to all matters the ascertainment of which involves the exercise of such administrative or quasi-judicial functions, so far as those matters affect the existence or extent of his liability,'
The learned Judges were also influenced by the thought that the determination of the amount of tax was made after notice to the assessee and it was open to appeal and even to revision,
14. In our opinion, this represents the correct law. We are unable to agree with the line of thought pursued in ILR 1955 Mad 184: AIR 1954 Mad 833. It may be mentioned here that the latter case was reversed by the Supreme Court in State of Madras v. Naidu and Co. Ltd., (S) : 1956CriLJ331 . There was no occasion for the Supreme Court to express any opinion on the constitutionality of Section 16-A of die Act as it set aside the judgment on the ground that the assessee had not made out his case of exemption under Article 286 of the Constitution.
15. We may here mention that a Full Bench of the Madras High Court in 1958 2 M. L. J, 243 AIR 1958 Mad 544, overruled ILR 1955 Mad 184: AIR 1954 Mad 833 and approved of : AIR1953Mad105 .
The learned Judges enunciated the principle that when a person was prosecuted under Section 15 (b) of the Madras Sales Tax Act it was not open to him to raise any objection which could have been raised before the authorities set up under the General Sales Tax Act, the only objections which may be raised being those which the authorities were precluded from entertaining, such as that the Act or any particular provision was ultra vires.
He could also show that he was not the person who could he assessed or that the tax levied had been paid. The Full Bench reviewed exhaustively the case-law on the topic. It was stated that the Act had set up a hierarchy of tribunals and courts before which persons sought to be assessed could place their objections and the assessee had ample opportunities of contesting the correctness and legality of the assessment before the various authorities mentioned therein. It also pointed out the anamolies resulting from the assessee being permitted to question the correctness of the assessment in the following words :
'The assessee may have gone up with his objections to the Board of Revenue or the Appellate Tribunal and finally come to this Court. In fact, he might have gone to the Supreme Court. After the amount payable has been ascertained at so high a level and when thereafter the amount is sought to be recovered from him by prosecuting him before a Magistrate, to say that he can be allowed to plead that he is not liable or that he is liable only in a different amount, is tantamount to calling upon the Magistrate to adjudicate on questions which have been settled by the higher Courts in the land. That would be a very anomalous state of thing indeed. And that will not be the end of the matter. For should the Magistrate overrule him and convict him, he can go up in appeal and again in revision. In other words, the matter which one would have supposed to have been finally adjudicated upon and settled is reopened and set at large.'
16. The conclusion that could be derived From this judgment is that it is not competent for the criminal court? to entertain pleas regarding the validity and correctness of an assessment. Before we proceed to refer to a few of the pronouncements of the Privy Council which afford us considerable guidance in the decision of this question,, it is advantageous to notice the main features of the Act in so far as it is relevant to this enquiry.
17. Section 9 prescribes the procedure to be followed by the officers entrusted with the duty of making the impost on dealers. Section 11 gives a right of appeal to an assessee objecting to the assessment. Section 12 authorises the Commercial Tax Officer, Deputy Commissioners and the Board of Revenue to exercise certain powers of revision. Section 12-A confers on the assessee right of further appeal to the Appellate Tribunal.
Under Section 12-B, revisional jurisdiction is vested in the High Court while Section 12-C enables an assessee to appeal to the High Court in certain circumstances. Thus, there is a comprehensive set of provisions in the Act enabling the assessee to question the tax levied on him and to establish that there is no liability on his part to pay any tax or that his business warrants payment of a smaller amount of tax.
When once the tax is finally determined, there is an obligation on his part to pay it. Section 10 (1) says that the tax assessed under this Act shall be paid 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, and in default of such payment the whole of the amount then remaining due may be recovered from him as if it were an arrear of land revenue.'
18. It is plain that by reason of Section 10(1) there arises a duty to pay the tax demanded on the basis of the assessment. If the demand is not complied with, different courses are open to the Revenue authorities, one is to collect it as if it were an arrear of land revenue as contemplated by Section 10' itself; and the other is to prosecute him under Section 15(b). Such being the situation, the question for consideration is whether the assesses could be permitted to call in question the assessment either with regard to its legality or correctness, when the latter course is pursued by the Department.
19. We may at this stage turn to the pronouncement of the Privy Council in Ralejgh Investment Company Ltd. v. Governor-General in Council, AIR 1947 P.C. 78. What happened there was this. Raleigh Investment Co., Ltd. laid an action on the original side of the High Court of Calcutta claiming repayment of a large sum of money paid under an assessment to income-tax made upon it, alleging that in computing the assessable income, effect was given to the provision of the Income-tax Act which was ultra vires the Indian Legislature and therefore the assessment was illegal, wrongful etc. The suit was decreed by the High Court, but this was reversed by the Federal Court on appeal. The decision of the Federal Court was confirmed by the Privy Council. The conclusion of their Lordships is founded mainly on Section 67 of the Indian Income Tax Act, 1922 which runs as follows ;
'No suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act, and no prosecution, suit or proceeding shall lie against any officer of the Government for anything in good faith done or intended to be done under this Act.'
20. The reason of the rule is contained in the following passage;
'In construing the section it is pertinent in their Lordships' opinion, to ascertain whether the Act contains machinery which enables an assessee affectively to raise in the Courts the question whether a particular provision of the Income-tax Act bearing on the assessment made is or is not ultra vires. The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to enquire into the same subject-matter. The absence of such machinery would greatly assist the appellant an the question of construction and, indeed, it may be added that, if there were no such machinery and if the section affected to preclude the High Court in its ordinary civil jurisdiction from considering a point of ultra vires, there would be serious question whether the opening part of the section, so far as it debarred the question of ultra vires being debated, fell within the competence of the legislature.
In their Lordships' view it is clear that the In-some-tax Act, 1922, as it stood at the relevant date, did give the assessee the right effectively to raise in relation to an assessment made upon him the question whether or not a provision in the Act was ultra vires. Under Section 30, an assessee whose only ground of complaint was that effect had been given in the assessment to a provision which he contended was ultra vires might appeal against the assessment.
If he were dissatisfied with the decision on appeal -- the details relating to the procedure are immaterial -- the assessee could ask for a case to he stated on any question of law Tor the opinion of the High Court and if his request were refused, he might apply to the High Court for an order requiring a case to be stated and to be referred to the High Court (see Section 30 and Secy, of State v. Meyyappa Chettiar : 4ITR341(Mad) . It cannot be doubted that included in the questions of law which might be raised by a case stated is any question as to the validity of any taxing provision in the Income-tax Act to which effect has been given in the assessment under review. Any decision of the High Court upon that question of law can be reviewed on appeal. Effective and appropriate machinery is therefore provided by the Act itself for the review on grounds of law of any assessment. It is in that setting that Section 67 has to be construed.'
In the concluding paragraph of the judgment their Lordships added;
'The only doubt, indeed, in their Lordships' mind, is whether an express provision was necessary in order to exclude jurisdiction in a civil court to, set aside or modify an assessment.'
21. This last sentence is very significant in that it makes it plain that it is not competent to courts to take cognisance of proceedings for setting aside or modifying an assessment, even independent of provisions excluding the jurisdiction in that behalf. That result seems to flow from the fact that a duty is cast on an assessee to pay the tax demanded of him.
22. This principle is reiterated by the Privy Council in Commissioner of Income-tax, West Punjab v. Tribune Trust, Lahore, . Their Lordships stated in the course of the judgment :
'They have reviewed the Code of Income-tax law for the purpose of showing that it exhaustively defines the obligations and remedies of the tax-payer. It would be wholly incompatible with this that he should have a collateral right, necessarily vague and ill-defined, founded on the principle of equity and good conscience. Their Lordships are of opinion that the only remedies open to the tax-payer, whether in regard to appeal against assessment or to claim for refund, are to be found within the four corners of the Act. This view of his rights harmonises with the provisions of Section 67 to which reference has already been made, that no suit shall be brought in any Civil Court to set aside or modify any assessment made under the Act. It is the Act which prescribes both the remedy and the manner in which it may be enforced.'
23. We may lastly cite another pronouncement of the Judicial Committee in Secretary of State v. Mask & Co. . That lays down that where a liability not existing in law is created by statute and at the same time it gives a special and particular remedy for enforcing it the party must adopt the form of remedy given by the statute.
24. What follows from the above authorities is that when a statute creates an obligation to pay a tax and also provided remedies to the assessees, the aggrieved party must avail himself of those remedies and cannot resort to another jurisdiction to question the assessment.
25. Cases which enunciate the principle that before an accused could be convicted for non-payment of taxes, one of the essential ingredients of the offence, namely, the liability to pay should be made out, turn on the language of the enactment, namely, 'Taxes due'. That expression lends itself to the interpretation taxes lawfully due and payable. The import of the words 'tax assessed under the Act' is different.
They only connote that an assessment in fact has been made. There is no warrant for importing the words 'lawfully or legally assessed'. We are of opinion that the clause 'any tax assessed on him..... under this Act' in Section 15(b) Cannot have that implication. In this context, we cannot do better than quote the words of Lord Uthwatt in AIR 1947 P.C. 78. Construing a similar expression in the Indian Income-tax Act, this is what his Lordship says ;
'The obvious meaning, and in their Lordships' opinion the correct meaning of the phrase 'assessment made under the Act', is an assessment finding its origin in an activity of the assessing officer acting as such.'
Thus, it is clear that these words convey only the idea that the assessment was in fact made by an officer of the Department purporting to act under the Act, and not that the impost was warranted by the terms of the Act. That Section does not contemplate the whole process relating to the validity and the correctness of the assessment being gone through once again. The very object of that section, namely the speedy realisation of the taxes would be defeated if the assessment could be impeached before the Magistrate.
26. We have already shown that the levy would be determined only after notice to the dealer and the order of the assessing authority is open to appeal and even revision. The Act contains an exclusive code for the determination of the assessment and for its enforcement. There is a hierarchy of tribunals and courts before which the validity and the correctness of an assessment could be challenged. Every opportunity is afforded to the assesses to question the assessment in all its aspects at every stage.
He could raise all questions of law before the Hight Court in a revision petition under Section 12-B of the Act and by invoking Article 227 of the Constitution if need be. When once the impost has been finally determined as laid down in the Act, it is not competent for any tribunal or court to re-open that question in any proceeding. Any mode of questioning the assessment, otherwise than by the use of the machinery set up in the Act appears to be inconsistent with the intention of the legislature.
What is sought to be realised by resorting to Section 15(b) is the tax that is finally determined. It is the failure to meet the liability created by Section 10 that is made an offence. The purpose of Section 15(b) is to enforce payment through the agency of criminal Courts and deter non-payment of tax. Thus, what is entrusted to the criminal court is the function of collecting it. The payment of taxes has to be enforced by summary and stringent methods,
The legislature evidently thought that it is only by means of this coercive process the proper authority could recover taxes, fees and other legitimate dues as expeditiously as possible. It is well within the competence of the State legislature to enact laws for levy of taxes on sales and purchases by virtue of entry 54 of the State list. It is equally competent for the legislature to provide for the method of collection which is incidental to the power of imposing taxes.
It is only in exercise of this authority that Section 15 was inserted, and its constitutionality cannot in any way be attacked. Therefore, it is not permissible for a criminal Court, or for the matter of that, any other tribunal to travel beyond the scope of that section. All that Section 15(b) renuires to be proved is that the assessment on the dealer was made under the Act and that it remained unpaid within the time allowed. No other inquiry is warranted by the language of that section. Only the two elements mentioned above need be established to enable the prosecution to succeed.
27. Finally, our answers to the two questions are :
(1) In a prosecution under Section 15(b) of the Madras General Sales-Tax Act, it is not open to question the validity of the assessment made under the Act.
(2) In such a prosecution, the criminal court] has no jurisdiction to adjudicate upon the correct-! ness of the amount taxed under the Act.
28. C.A. No. 167 of 1956: The respondents in this appeal urge that on the date on which default was committed Section 16-A was deleted by the Andhra Legislature and it was only much later that a similar provision was introduced in the Act and consequently it was open to the accused to plead that he was not liable to pay any tax. We do not think we can give effect to this contention.
We have already pointed out that the absence of Section 16-A would not make any difference as to the jurisdiction of the criminal court to take cognizance of such a plea. Even without that section, the scheme of the Act is complete and it precludes the tribunals from entertaining these objections except in the matter provided by the Act. Hence this contention fails and is rejected. Our answers set out above govern this case also.
29. As there is nothing further to be done in these cases, no useful purpose will be served by remitting them to the Bench. The respondents have to he convicted since there is no dispute as to the factum of assessments and also admittedly the taxes demanded were not paid within time.
30. The respondents in all the cases are therefore convicted and each of them is sentenced to Rs.25/-. In addition the taxes due from them, (viz., Rs.1080/- for the year 1949-50 and Rs. 401-3-0 for theyear 1950-51 from the respondent in C. As. 118and 119 of 1955 and Rs. 519-6-0 for the year 1953-54 from the respondents in C.A. No. 167 of 1956)will be collected as fine.