R.L. Dwivedi, J.
1. At the instance of the Commissioner, Sales Tax, the Judge (Revisions) has referred to this court this question :
Whether on the facts and in the circumstances of this case the notice of demand sent along with the assessment order was a valid notice of demand and that the letter of 14/15th July, 1961, sent after the dismissal of the writ petition was a mere reminder ?
2. The assessee, a manufacturer of and dealer in cloth and yarn, was assessed to tax for the assessment year 1956-57. The amount of tax assessed is Rs. 18,46,966.79. It had paid a sum of Rs. 6,96,000 and odd. This left an outstanding of Rs. 11,65,900.55. It filed a writ petition against the order of assessment in this court. The petition challenged the notification of the State Government imposing sales tax on the sale of cloth and yarn at the rate of one anna per rupee. The petition was admitted. The court granted an interim order that no amount in excess of three pies per rupee (the rate admitted by the assessee) should be realised from the assessee during the pendency of the writ petition. The amount already paid by the assessee exceeded the amount which could be realised in accordance with the interim order. So nothing really was to be paid by it during the pendency of the writ petition.
3. During the pendency of the writ petition the department served a notice of demand on the assessee. The notice required the assessee to pay the outstanding amount of Rs. 11,65,900.55. The statement of case shows that in the notice it was stated that the recovery of the demand would remain stayed till the disposal of the writ petition and that the payment of tax should be made in accordance with the order of the court, if any, affecting the amount of tax. The writ petition was dismissed on 10th July, 1961. By letter dated 14/15th July, 1961, the Sales Tax Officer informed the assessee that as the petition had been dismissed, it should pay the entire demand within seven days from the receipt of the letter. The Sales Tax Officer further informed that if the amount was not so paid, penalty proceedings would be initiated. The amount was not paid. Thereafter notice was issued on 27th July, 1961, under Section 15-A of the Sales Tax Act asking the assessee to show cause within three days from the receipt of the notice as to why penalty should not be imposed on it for non-payment of the tax due. On 1st August, 1961, the assessee replied that it had already made a representation to the Government for permission to pay in instalments the outstanding huge amount as it was not possible to pay the entire amount within a short time. There was a prayer for four weeks' adjournment to enable the assessee to obtain an order from the State Government. Time was allowed up to 29th September, 1961. Time expired but no payment was made. Thereafter, after obtaining sanction of the Commissioner, Sales Tax, the Sales Tax Officer imposed a penalty of Rs. 1,16,590. The order imposing penalty was made on 6th January, 1962.
4. One more fact is material. It is admitted by the assessee that it had recovered tax from the purchasers at the rate of one anna per rupee. The assessee further said that the entire amount which it had recovered from the purchasers was utilised by it in its own business during the pendency of the writ petition.
5. It may be noted that the question referred to us is a composite question. The first part of it requires us to answer the point whether the notice of demand sent during the pendency of the writ petition was a valid notice of demand ; the second part requires us to answer whether the letter of 14/15th July, 1961, sent by the Sales Tax Officer to the assessee after the dismissal of the writ petition was a mere reminder. On both the questions, the answer of the Judge (Revisions) was in favour of the assessee.
6. The second question may shortly be answered first. The letter dated 14/15th July, 1961, is, it is admitted by the department, not a notice of demand. It is not drawn up in the prescribed form. Nor does it .give the minimum 15 days' notice as required by law. It cannot, therefore, be treated to be a notice of demand. It was in the nature of a reminder to the assessee to pay up the outstanding amount of tax.
7. Counsel for the assessee has submitted that the notice of demand served on 8th March, 1961, during the pendency of the writ petition, is not a valid notice for two reasons: (1) as the validity of the notification fixing the rate of tax at one anna per rupee was challenged in the writ petition, it could not be said for certain on 8th March, 1961, that the sum due was a crystallised liability; and (2) the time given in the notice to pay the amount is uncertain.
8. It is not possible for us to hold that on account of the rate of tax having been challenged in the writ petition, the amount of tax assessed on the assessee was not a crystallised liability on 8th March, 1961, when the notice of demand was served on it. The assessment crystallised the liability of the assessee for the time being subject, of course, to any decision of this court. A writ proceeding is not in the nature of an appeal or a revision. It is a proceeding independent of the sales tax proceeding. The pendency of a writ petition does not wipe out the assessment order. It exists and the assessed amount remains a liability, definite and certain.
9. It is now to be seen whether the time specified in the notice of demand dated 8th March, 1961, is uncertain. The notice directed the assessee to pay the amount. It also stated that in view of the interim order of the court in the writ petition filed by the assessee, the recovery of demand would remain stayed till the disposal of the writ petition and that the payment of tax should be made in accordance with the order of the court, if any, affecting the amount of tax. The writ petition was dismissed on 10th July, 1961, long after the expiry of 15 days from the date of the receipt of the notice of demand by the assessee. Accordingly it cannot be and is not argued that the notice gave less than 15 days' statutory time to pay. The grievance really is that the notice did not specify the time within which payment was to be made by the assessee.
10. Section 8(1) of the Sales Tax Act provides that the tax shall be paid 'within such time, not being less than fifteen days from the date of service of the notice of assessment and demand, as may be specified in the notice.'
11. Rule 45 of the Sales Tax Rules provides that the Sales Tax Officer shall send to the dealer a notice in form XI and the dealer shall pay the tax assessed 'within the time specified in the notice'. If the tax is not paid within the time fixed, the assessee is liable to pay penalty.
12. How is the notice of demand in the instant case to be construed The principles of construction of a notice to quit under Section 106, Transfer of Property Act, are enunciated by the Privy Council in Harihar Banerji v. Ramsashi Roy A.I.R. 1918 P.C. 102. Those principles are : (1) the notice, though not strictly accurate or consistent in the statements embodied in them, may still be good and effective in law; (2) the test of its sufficiency is not what it would mean to a stranger ignorant of all the facts and circumstances touching the premises to which it refers: but what it would mean to the tenant presumably conversant with all those facts and circumstances; (3) it is to be construed not with a desire to find faults in it which would render it ineffective but to be construed ut res magis valeat quam pereat.
13. In Doe d Huntingtower v. Culliford (1824) 4 Dow. and Ry. (K.B.) 248 Bayley, J., said that the court should look to the intention of the landlord and that general and doubtful words in the notice should be so construed as to make it 'sensible, not insensible'. In Doe d Williams v. Smith (1836) 5 Ad. and E. 350 Littledale, J., said, 'this is certainly a lame and inaccurate notice; but, as such as it is, we must endeavour to give it a rational interpretation.'
14. The object of the notice of demand and of the notice to quit is similar: in the former to give sufficient time to the assessee to pay; and in the latter to give sufficient time to the tenant to quit the premises. So we think that the principles which guide the construction of a notice to quit should also guide the court in the construction of a notice of demand. The impugned notice of demand should, we think, be construed with a view to giving effect to it. So construed, the notice does not suffer from any uncertainty. It asked the assessee to pay tax. in accordance with the order of the court. It is fairly plain that the notice asked the assessee to pay the amount within 16 days or, in any case, within a reasonable time from the date of the order of this court. The Sales Tax Officer made the matter evident when on 14/15th July, 1961, he asked the assessee to pay the amount within seven days. When the assessee did not pay within sixteen days from this court's order on 10th July, 1961, he issued notice under Section 15-A on 29th July, 4961. It is significant to observe that in its reply to that notice the assessee did not plead that it failed to pay the assessed amount as the notice did not clearly specify the time for payment. The plea was that it could not pay the huge amount and had applied to the Government for payment in instalments. So the assessee did not consider at that stage the notice of demand was vague as to the time for payment of tax. The plea is an afterthought invented with a view to escape from penalty.
15. Counsel for the assessee submitted that as the proceeding under Section 15-A is penal in nature, the burden of proof lies on the department. The construction of notice is a question of law, and not a question of fact. So the submission is not relevant.
16. In the result we will answer the question referred to us in this manner :
The notice of demand sent along with the assessment order is a valid notice of demand ; the letter dated 14/15th July, 1961, sent after the dismissal of the writ, petition is a mere reminder and not a notice of demand as contemplated by the Sales Tax Act and the Rules made thereunder.
17. The Commissioner, Sales Tax, shall get costs which we assess at Rs. 100. Counsel's fee is assessed in the same account.