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Banwari Lal Parshotam Dass Vs. the Union of India (Uoi) and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Petition No. 8072 of 1976
Judge
Reported in[1980]45STC480(P& H)
AppellantBanwari Lal Parshotam Dass
RespondentThe Union of India (Uoi) and anr.
Appellant Advocate R.P. Sawhney, Adv.
Respondent Advocate H.S. Gill, Additional Adv.-General
DispositionPetition dismissed
Cases Referred(Mangal Chand Phool Chand v. State of Haryana
Excerpt:
.....of, or in relation to, the imposition or collection of such penalties, before the commencement of this act shall, for all purposes, be deemed to be and to have always been imposed, taken or done as validly and effectively as if the provisions of sub-section (1) had been in force when such penalties were imposed or proceedings or acts or things were taken or done and, accordingly, (a) no suit or other proceedings shall be maintained or continued in or before any court or any tribunal or other authority for the refund of any amount received or realised by way of such penalty;.....inflicted in connection with an offence. it would thus be seen that if the validation clause has imposed the penalty retrospectively which is leviable in connection with the offence, in that case the said provision is ultra vires article 20(1) of the constitution but the plain reading of the validation clause would show that such a provision has not been made in the said clause. the provisions of section 9(2a) as amended by the amending act are prospective and make all the provisions relating to the offences and penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in sections 10 and 10a) of the general sales tax law of each.....
Judgment:

B.S. Dhillon, J.

1. The petitioner is a firm and is a duly registered assessee under the Punjab General Sales Tax Act, 1948, now the Haryana General Sales Tax Act, 1973 (hereinafter referred to as the State Act), as well as under the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act).

2. Proceedings of assessment for the year 1972-73 under the State Act were completed and a penalty was also imposed upon the petitioner under the State Act. The Assessing Authority also finalised the assessment case of the petitioner-firm for the year 1972-73 under the Central Act and a show cause notice for imposing penalty under Section 9(2) of the Central Act, read with Section 10(7) of the State Act, was issued to the petitioner. This notice is sought to be challenged in this writ petition mainly on the ground that the provisions of Section 9 of the Central Sales Tax (Amendment) Act, 1976. are ultra vires Article 20(1) of the Constitution of India inasmuch as the said provision purported to impose the penalties relating to the offences with retrospective effect.

3. It may be pointed out that their Lordships of the Supreme Court in Khemka and Co. (Agencies) Pvt. Ltd. v. State of Maharashtra [1975] 35 S.T.C. 571 (S.C.), held as under:

There is no provision in the Central Sales Tax Act, 1956, for imposition of penalty for delay or default in payment of tax and the provision in the State Sales Tax Act imposing penalty for non-payment of tax within the prescribed time is not attracted to impose penalty on dealers under the Central Act in respect of tax payable under the Central Act. Consequently, it is not permissible for the authorities to invoke the provisions of Section 16(4) of the Bombay Sales Tax Act, 1953, for imposing penalty for failure by the dealer to pay sales tax payable under the Central Act within the prescribed time.

4. The abovementioned decision of their Lordships of the Supreme Court necessitated the amendment of the Central Act and thus the Parliament by enacting the Central Sales Tax (Amendment) Act, 1976 (Act No. 103 of 1976), removed the lacuna in the existing provisions of the Central Act. The amending Act amended Section 9 of the Central Act and inserted Sub-section (2A) after Sub-Section (2) of Section 9 of the Central Act, which is in the following terms:

(2A) All the provisions relating to offences and penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in Sections 10 and 10A) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, reassessment, collection and the enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, reassessment, collection or enforcement of payment as if the tax under this Act were a tax under such sales tax law.

5. The amending Act further added Section 9, which is as follows:

9. Validation. -- (1) The provisions of Section 9 of the principal Act shall have effect, and shall be deemed always to have had effect, in relation to the period commencing on the 5th day of January, 1957, and ending with the date immediately preceding the date of commencement of this Act, as if that section also provided --

(a) that all the provisions relating to penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment on conviction for an offence but excluding the provisions relating to matters provided for in Sections 10 and 10A of the principal Act and the provisions relating to offences) of the general sales tax law of each State shall, with necessary modifications, apply, in relation to....

(2) Notwithstanding anything contained in any judgment, decree or order of any court or tribunal or other authority, all penalties under the general sales tax law of any State imposed or purporting to have been imposed in pursuance of the provisions of Section 9 of the principal Act, and all proceedings, acts or things taken or done for the purpose of, or in relation to, the imposition or collection of such penalties, before the commencement of this Act shall, for all purposes, be deemed to be and to have always been imposed, taken or done as validly and effectively as if the provisions of Sub-section (1) had been in force when such penalties were imposed or proceedings or acts or things were taken or done and, accordingly, --

(a) no suit or other proceedings shall be maintained or continued in or before any court or any tribunal or other authority for the refund of any amount received or realised by way of such penalty;

(b) no court, tribunal or other authority shall enforce any decree or order directing the refund of any amount received or realised by way of such penalty;

(c) where any amount which had been received or realised by way of such penalty had been refunded before the commencement of this Act and such refund would not have been allowed if the provisions of Sub-section (1) had been in force on the date on which the order for such refund was passed, the amount so refunded may be recovered as an arrear of tax under the principal Act;

(d) any proceeding, act or thing which could have been validly taken, continued or done for the imposition of such penalty at any time before the commencement of this Act if the provisions of Sub-section (1) had then been in force but which had not been taken, continued or done, may after such commencement be taken, continued or done....

6. The provisions of the validation clauses are retrospective and the same have been made applicable with effect from 5th January, 1957. The only argument to assail the provisions of the validation clause referred to above is that the said provisions violate Article 20(1) of the Constitution inasmuch as the penalties which could not be imposed under the existing law before the amending Act was enacted could not be imposed retrospectively with effect from 5th January, 1957. The provisions of Article 20(1) of the Constitution are as follows:

20. Protection in respect of conviction for offences. -- (1) No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the Act charged as an offence nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.

7. The main contention of the learned counsel for the petitioner is that Article 20(1) of the Constitution be interpreted to mean that no penalty irrespective of the fact whether it is in connection with an offence or otherwise, can be imposed retrospectively. It has thus been contended that since the validation clause has made the provisions of Section 9(1)(c) operative retrospectively and thus since the penalties are leviable for the period before the Act was enacted, therefore, the said provisions are violative of Article 20(1) of the Constitution. This argument is fallacious at the face of it. The provisions of Article 20(1) of the Constitution cannot be interpreted in the manner as suggested by the learned counsel for the petitioner. The plain language of the said article would show that the mandate of the Constitution is that no person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. The provisions are categorical that the penalty as visualised in this provision has to be in relation to the commission of the offence and not independently of the offence. This would necessarily mean that a penalty in connection with the commission of the offence, which was not in force at the time of the commission of the offence, could not be imposed retrospectively. The word 'penalty' used in this provision has not been used independently of the offence but the same has been used in relation to it being inflicted in connection with an offence. It would thus be seen that if the validation clause has imposed the penalty retrospectively which is leviable in connection with the offence, in that case the said provision is ultra vires Article 20(1) of the Constitution but the plain reading of the validation clause would show that such a provision has not been made in the said clause. The provisions of Section 9(2A) as amended by the amending Act are prospective and make all the provisions relating to the offences and penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in Sections 10 and 10A) of the general sales tax law of each State, with necessary modifications, applicable, whereas the validation clause, which is retrospective in nature, excludes the application of the provisions of the Act relating to the offences with retrospective effect. It is important to note that even though Section 9(2A), which is prospective in nature, does not exclude the provisions relating to offence being made applicable but the validation clause, which is retrospective in nature, specifically excludes the application of the provisions relating to offences. It would thus be seen that the plain reading of the validation clause would suggest that the Parliament did not enforce the provisions relating to offences retrospectively, even though the penalties which are levied without any reference to the offences, have been imposed retrospectively. As already observed, the provisions of Article 20(1) of the Constitution prohibit the imposition of penalties retrospectively with relation to an offence which has been specifically excluded by the validation clause. The contention of the learned counsel for the petitioner is, therefore, without any merit.

8. It was next contended by the learned counsel for the petitioner that the penalty proceedings are quasi-criminal in nature as has been held by their Lordships of the Supreme Court in Commissioner of Income-tax, West Bengal v. Anwar Ali [1970] 76 I.T.R. 696(S.C.), and thus the penalty is in reference to an offence. On the other hand, Shri H.S. Gill, the learned counsel appearing for the State, contends that the penalty proceedings under the Sales Tax Act are not in connection with an offence in the true sense and the levy of penalty is only charging of additional tax.

9. The word 'offence' used in Article 20(1) of the Constitution has been defined in the General Clauses Act, 1897, in the following words:

3. (38) 'Offence' shall mean any act or omission made punishable by any law for the time being in force.

10. Similar is the definition of the word 'offence' in the Code of Criminal Procedure, 1973. The word 'offence' has not been defined in the Constitution. Article 367 of the Constitution, which provides that the General Clauses Act, 1897, shall apply for the interpretation of the Constitution. The word 'offence' used in the clauses of Article 20 must be understood to convey the meaning given to it in Section 3(38) of the General Clauses Act. This section defines an 'offence' to mean an act or omission made punishable by any law for the time being in force. For interpreting the provisions of Article 20(1) of the Constitution, the provisions of Sub-article (2) of Article 20 may also be taken into consideration. It appears that when an offence is provided for under any law, an offender is sought to be prosecuted and if the prosecution succeeds in proving its case, the prosecution ultimately culminates into punishment. The provisions of Sub-article (2) of Article 20 of the Constitution were the subject-matter of interpretation by their Lordships of the Supreme Court in Thomas Dana v. State of Punjab A.T.R. 1959 S.C. 375, wherein their Lordships held that the word 'prosecution' means a proceeding either by way of indictment or information in the criminal courts in order to put an offender upon his trial. It was held that proceedings before the sea customs authorities under Section 167(8) of the Sea Customs Act are not prosecution within the meaning of Article 20(2) of the Constitution. Therefore, it was held that the fact that in such proceedings the customs authorities have both confiscated the goods and also inflicted the penalty on a person, does not bring into operation the provisions of Article 20(2) of the Constitution so as to prevent his prosecution and imprisonment under Section 167(8) of the Sea Customs Act read with Sections 23 and 23B of the Foreign Exchange Regulation Act and under Section 120B of the Indian Penal Code. It would thus be seen that keeping in view the nature of the provisions of a particular enactment, two types of penalties can be imposed. In one proceeding, the penalty may be imposed in connection with the commission of the offence, whereas, in the other proceeding, the penalty may be imposed otherwise than in connection with the commission of an offence. As far as the Central Act is concerned, it may be pointed out that Section 10 of the said Act makes provision for penalties to be imposed in connection with an offence. A person contravening Clauses (a) to (f) of Section 10 of the Central Act has been made liable to punishment with simple imprisonment which may extend to six months, or with fine, or with both, and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues. As already observed, the legislature while enacting the validation clause, advisedly excluded the penalties in connection with the offences from being imposed retrospectively and thus there is no violation of Article 20(1) of the Constitution. The Assessing Authority while imposing the penalty on a defaulting assessee for non-payment of tax can by no stretch of imagination be deemed to be prosecuting such an assessee for the commission of a criminal offence and imposition of such penalty cannot be held to have been imposed in connection with the commission of an ofience. Similar challenge was repelled in a Division Bench decision of this Court in C.W.P. No. 1177 of 1976 [Fairdeal Agencies (Regd.), Ambala Cantt. v. State of Haryana [1979] 44 S.T.C. 231] decided on 8th August, 1978, by a Division Bench consisting of S.S. Sandhawalia, C.J., and S.S. Dewan, J., and also in a single Bench decision in C.W.P. No. 2487 of 1977 (Mangal Chand Phool Chand v. State of Haryana [1980] 45 S.T.C. 477) decided on 19th December, 1978, by M.R. Sharma, J.

11. For the reasons recorded above, there is no merit in this petition and the same is hereby dismissed with costs.


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