1. By this writ petition the petitioner sought to challenge the virus of certain provisions of the Delhi Sales Tax Act, 1975. The petitioner being a 'registered dealer' for the purpose of the Delhi Sales Tax Act has been directed to pay an amount of Rs. 44,776.82 as interest under section 27(1) of the Act. It may be mentioned that the said amount of interest is due as simple interest in case a registered dealer fails to make the payment required by section 21(3) of the Act. There is no dispute in the present case about the facts of the case, i.e., we are concerned with the quantification of the interest, but with the validity of the provision.
2. It will be convenient here to refer to section 21 which states that tax has to be paid in the manner prescribed and sub-section (2) provides that every registered dealer and every other dealer who is furnished a notice to file a return of turnover, have to file their returns. It is then that sub-section (3) comes into operation and this provision may conveniently be reproduced. It states :
'Every registered dealer required to furnish returns under sub-section (2) shall pay into a Government treasury or the Reserve Bank of India or in such other manner as may be prescribed, the full amount of tax due from him under this Act according to such return, and shall, where such payment is made into a Government treasury or the Reserve Bank of India, furnish along with the return a receipt from such treasury or bank showing the payment of such amount.'
3. It is this amount which the petitioner failed to pay and it is on this account that interest has been imposed. The provisions of sub-section (1) of section 27 show that interest has to be calculated at the rate of one per cent per month for the first month and one and a half per cent per month for the period during which the default continues, and this interest is continued either till the payment is made or till the assessment is completed under section 23 whichever is earlier. If we read these two sections together, there is a clear provision that a registered dealer, who fails to pay tax according to his return, has to pay interest as calculated by the section. On the other hand, there is no provision requiring non-registered dealers to pay interest. It may be recalled that there is a similar provision regarding payment of interest to be found in the Income-tax Act, 1961, in respect of tax payable according to a return. For example, section 140A requires payment to be made and interest is provided in section 139(8). The provision regarding interest imposed on registered dealers under the Delhi Sales Tax Act seems to be similar.
4. The question which is raised before us is that the provision is ultra virus because it extends only to registered dealers and does not apply to other dealers. For this purpose, it is again convenient to set out section 21(2) which reads :
'Every registered dealer and every other dealer who may be required so to do by the Commissioner by notice served in the prescribed manner shall furnish such returns of turnover by such dates and to such authority as may be prescribed.'
5. It is contended before us that sub-section (2) equates registered dealers with other dealers who may be required by the Commissioner to file returns. These two sets of persons have to file returns. However, sub-section (3) states that the tax, or rather what may be conveniently called advance tax, is to be paid only by registered dealers and not by those other dealers whom the Commissioner by notice has asked to furnish returns. The learned counsel for the department states that for those persons there is a rule, but for the purpose of this contention we disregard that rule, because it is the virus of the section which is in question.
6. It appears to us that there is a great difference between a registered dealer and an unregistered dealer under this Act. For instance, a registered dealer has certain advantages which make it obligatory on him to file a return. Those advantages are that he is able to purchase goods without payment of any sales tax, but he is able to sell those goods on collecting the sales tax from the purchasers. The scheme of the Act is that sales by a registered dealer to a registered dealer and from that registered dealer to other registered dealers are all free of sales tax, but the first sale by a registered dealer to any other person attracts the application of sales tax. This means that the sale by a registered dealer to a non-registered dealer or to an ordinary customer enables that registered dealer to collect the sales tax from the public. It is the registered dealer who acts for this purpose as a tax collector from the public. So, the advantage to a registered dealer is that he does not have to pay any sales tax when buying and he is able to collect sales tax when selling, but that sales tax has to be paid to the Government. It is for this purpose that it has been made mandatory under section 21(2) for the registered dealer to file the return and he has then to pay tax according to that return. This is provided by sub-section (3).
7. On the other hand, the unregistered dealer has to buy goods from other dealers after payment of sales tax and he is not obliged to pay that sales tax to the State. He is not a collector of the sales tax in any sense but, for the purpose of ascertaining his turnover, a return is necessary in some cases. This is the reason why section 21(2) enables the Commissioner to get a return from other dealers also. The question of their taxability is quit a different matter from the taxability of a registered dealer. There is, thereforee, a clear distinction between the two sets of persons which illustrates why the payment of tax is made compulsory only for registered dealers and not for others.
8. However, the challenge to the virus of the Act is based on the contention that there is no reasonable nexus between the classification made by sub-section (3) of section 21 and the object of the Act. It is submitted that the purpose of the Act is to collect tax, and thereforee, everybody should pay interest and failure to ask non-registered dealers to pay interest makes the Act ultra vires. We fail to understand this argument. It is for the legislature to decide who is to pay interest and if the classification is clear, i.e., between a registered dealer and a non-registered dealer, the Act does not make any discrimination, but treats two classes which are quite separate in a different way. Many of the other provisions of the Act would show that registered dealers are dealt with quite differently from unregistered dealers. The above analysis regarding what a registered dealers does in practice is only indicative of various provisions contained in the Act regarding the advantages and disadvantages of a registered dealer. At the same time, there are other provisions which would show that a dealer who is not registered may suffer penalty for failure to get registered and so on. The provisions of the Act also show which dealer has got to be registered, and which need not get registered, and so on. There is, thereforee, a clear and distinct classification by the Act between these sets of dealers. The application of the Sales Tax Act being one which is attracted to most sales of commodities creates problems in the matter of realisations. That is why, dealers with a fairly large turnover are treated as registered dealers, whereas other dealers are treated as unregistered dealers. The enormous number of daily transactions in commodities and other articles which are sold and bought require that the number of dealers to whom the Act applies should be limited, otherwise, it will be almost impossible to administer the Act.
9. There is, thereforee, a reason for the classification between a registered dealer and an unregistered dealer. The necessity in practice for the existence of registered dealers and other dealers make it also necessary for their being two sets of provisions in the Act dealing with registered dealers on the one hand and with unregistered dealers on the other. The case now before us indicates one such case of separate treatment of the two classes. It is clearly connected with the practical application of the Sales Tax Act because the registered dealer as mentioned above, is the tax collector, whereas the non-registered dealer is paying tax only on his own behalf. thereforee, there has to be a distinction between the two.
10. It is for the legislature to decide as to what penalty should be imposed and on whom. It cannot be for the court to determine what should be the penalty for a particular default. The legislature has seen that the default in the case of a registered dealer is that he is holding up amounts he has collected on behalf of the State on account of the advantages given to registered dealers, but that is not so in the case of an unregistered dealer. As the unregistered dealer is not obliged to collect or pay tax under the Act, there is no default by him and hence, it would be unreasonable to impose interest on him. On the other hand, a registered dealer is an agency of the Government to collect the tax and hence, he is obliged to furnish a return and pay tax on that return. His default is of an agent of the Government which is to be separately and differently treated. The classification is, thereforee, reasonable.
11. For the record it may be mentioned that the learned counsel for the petitioner relied on the Supreme Court's judgment in Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare, Sales Tax Officer, Nagpur : 1SCR661 , wherein a particular provision of the C.P. and Berar Sales Tax Act, 1947, was found to be ultra vires. In that case, the court found that section 11(4)(a) and section 11A(1) equally applied to the appellant, and the court also found that the limitation period applicable to these two sections was different. Inasmuch as one of them was different from the other, it was found that article 14 of the Constitution was infringed and section 11(4)(a) being discriminatory was struck down. It was also observed in this judgment that the classification made between registered and unregistered dealers had no nexus with the object and was not a reasonable classification.
12. The learned counsel for the petitioner wanted to contend that this judgment showed that the classification between registered and unregistered dealers was also not valid in the present case. It may be said here that the judgment of the Supreme Court was on the application of two separate provisions to the same assessed. There was a choice with the authorities to proceed under either section but the limitation period for one of them was less than the other. The Supreme Court struck down that provision which granted the longer period of limitation. However, one of the arguments raised on behalf of the State was that section 11A applied to all dealers, whereas section 11(4) applied only to registered dealers, but the court did not find this classification to be good. The reason was that section 11A applied to all dealers including registered dealers. In other words, in the case of registered dealers, there was a choice of two periods of limitation whereas in the case of dealers who were not registered, only one period of limitation was applicable. The court did not find this to be reasonable in the circumstances of the case.
13. In the present case, there is no dual application of any section to the same party. This judgment, thereforee, has no application to the present case and must be confined to the peculiar facts of that case where two provisions enacted for the same purpose but differently worded applied to the same assessed in the same circumstances.
14. The learned counsel for the department relied on Subheg Singh Gurbachan Singh v. Sales Tax Commissioner  37 STC 49, wherein there is some discussion regarding the difference between registered and unregistered dealers, and also, a discussion whether they could be separately and distinctly dealt with without infringing article 14 of the Constitution. The court stated at page 60 as follows :
'Alternatively, he contended that even if it is held that the sale by an unregistered dealer is not liable to tax, while the sale by a registered dealer is liable to tax, the doctrine of discrimination would not be attracted as the unregistered dealer and the registered are not similarly situated. Since, in our opinion, the aforesaid alternative contention of the learned Solicitor-General has considerable force, and has to be accepted, we consider that it is not necessary to decide whether an unregistered dealer is not liable to tax ........'
15. At page 61, it was observed :
'Thus, there is a basic distinction between the position of a registered dealer and that of an unregistered dealer under the scheme of the Sales Tax Act. The two are, thereforee, dealt with differently. The registered dealer is enabled to collect tax and pay to the authorities, while the unregistered dealer is prohibited from carrying on the business of selling goods and collecting tax; and if he surreptitiously carries on business he is subjected to penalty.'
16. These observations are similar to the ones made above. There is a clear distinction between a registered and an unregistered dealer and the registered dealer has distinct functions to perform under the Act which an unregistered dealer does not have to do. We do not find any infringment of article 14 of the Constitution or any discrimination involved and we accordingly dismiss the writ petition. No costs.