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Paul Vs. Sales Tax Officer. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberOriginal Petitions Nos. 3395 & 3497 of 1974
Reported in(1976)5CTR(Ker)31
AppellantPaul
RespondentSales Tax Officer.
Cases ReferredMytheen Kunju vs. State
Excerpt:
.....amount thus specified in the magistrates order shall be recoverable as if it were a fine under the code of criminal procedure clearly indicates that the said amount is not really a fine imposed by way of penalty. ' 9. in the same case (19 stc 475) justice joseph had also observed that 'the fact that it is made recoverable as fine shows that the court is not really imposing a sentence of fine when it specifies the amount of tax which the person convicted has failed to pay s. it that had been the intention of the legislature, it would have been very easy to have made this section perfectly clear. such consideration will arise in many an administrative or ministerial function in england :although the issue of a warrant for non-payment of rates is usually said to be a ministerial act, the..........by the government pleader in that matter that his powers are not limited by any provisions of the code of criminal procedure, the court said that the act does not provide the mode and manner of recovery for which one will have to look into the provisions of the code of criminal procedure. the act only says that the application shall be made to a magistrate who shall recover the tax as if it were a fine imposed by him. therefore, it was held by the mysore high court that the power to recover the fine is, circumscribed by the limits of the power to impose a fine. the court held that by magistrate designated under s. 13(3)(b) of the act, in the absence of any other prescribed under s. 32 of the code of criminal procedure.4. apart from this mysore decision it is also contended on behalf of.....
Judgment:

T. Chandrasekhara Menon - In both these cases the question that has been raised for consideration of the court is whether under S. 23 (2) (b) of the Kerala General Sales Tax Act, 1963 (shortly stated the Act) an Executive Magistrate will have jurisdiction to proceed with the recovery of the tax on application made to him S. 23(2) may be usefully extracted below :

'(2) Any tax assessed or any other amount due under this Act from a dealer or other person may, without prejudice to any other mode of recovery, be recovered -

(a) x x x x

(b) On application to any Magistrate, by such Magistrate, as if it were a fine imposed by him.'

2. The contentions that are taken up by petitioners in these cases are that Executive Magistrate has no jurisdiction to proceed against the petitioner for recovery of tax as if it were a fine imposed by him for the simple reason that he has no power to impose a fine on the petitioners. It is contended that after the advent of the new Criminal Procedure Code a clear line is drawn between the powers exercisable by an Executive Magistrate and Judicial Magistrate. Only Judicial Magistrates have got the power to impose a fine on the citizens. Therefore, for this reason the proceedings initiated against the petitioners for recovery of tax is vitiated. It is urged that the 'Magistrate' referred to in S. 23(2) (b) of the Act can only mean a Judicial Magistrate in the light of S. 3 clause (4) of the Criminal Procedure Code, 1973, S. 3(4) reads :

'Where, under any law, other than this code, the functions exercisable by a Magistrate relate to matters -

(a) Which involve the appreciation or shifting of evidence or the formulation of any decision which expose any person to any punishment or penalty or detention in custody pending investigation inquiry or would have the effect of sending him for trial before any court, they shall subject to the provisions of this code, be exercisable by a Judicial Magistrate; or

(b) which are administrative or executive in nature such as, the granting of a licence, the suspension or cancellation of a licence, sanctioning a prosecution or withdrawing from the prosecution, they shall, subject as aforesaid, be exercisable by an Executive Magistrate.'

It is also contended that in any view the Magistrate cannot recover an amount which exceeds the pecuniary jurisdiction of his in regard to the imposition of fine.

3. In support of the contention learned counsel for the petitioners placed reliance no the decision of a Division Bench of the Mysore High Court in Mohanlal Premchand vs. Commercial Tax Officer, Bagalkot (28 STC 492). In that case S. 13 (3) of S. 13(3) of the Mysore Act says that any tax assessed, or any other amount due under this Act from a dealer, may without prejudice to any other mode of collection, be recovered on application to any Magistrate, by such Magistrate as if it were a fine imposed by him. The Mysore High Court said that looking at S. 1(3)(b), it is clear that the application can be made to any Magistrate. The Magistrate entertains the application because he is an authority designated for the purpose. It was held that the Magistrate acting under the proviso is not a court but a persona designata. But then with regard to the contention that had been raised by the Government Pleader in that matter that his powers are not limited by any provisions of the Code of Criminal Procedure, the court said that the Act does not provide the mode and manner of recovery for which one will have to look into the provisions of the Code of Criminal Procedure. The act only says that the application shall be made to a Magistrate who shall recover the tax as if it were a fine imposed by him. Therefore, it was held by the Mysore High Court that the power to recover the fine is, circumscribed by the limits of the power to impose a fine. The court held that by Magistrate designated under S. 13(3)(b) of the Act, in the absence of any other prescribed under S. 32 of the Code of Criminal Procedure.

4. Apart from this Mysore decision it is also contended on behalf of the petitioners that under S. 3(4) of the Code of Criminal Procedure, 1973, where under any law, other than the Code, the functions exercisable by a Magistrate relate to matters which involve the appreciation or shifting of evidence or the formulation of any decision which exposes any person to any punishment or penalty or detention in custody pending investigation, such functions should be exercised only by a Judicial Magistrate, It was pointed out that the question of appreciation or shifting of evidence or formulation of any decision may become necessary in particular cases for recovery of tax for example if there is a dispute regarding the payment of the whole or any portion of the tax.

5. On the other hand, it is strongly urged by the learned Government Pleader that by giving emphasis on the particular provision of the new Code of Criminal Procedure itself it would be clear that recovery can be made by application to any Magistrate, whether he is Judicial Magistrate, or Executive Magistrate. He placed reliance on the decision of the Supreme Court in Dargah Committee, Ajmer vs. State of Rajasthan (AIR 1962 SC, 574 1962-2 SCR. 265). There considering the recovery [procedure prescribed by S. 234 of the Ajmer-Merwara Municipalities Regulation, 1925, Justice Gajendragadkar, as he then was, speaking for the court said :

'Now looking at S. 234 it is clear that the proceedings initiated before a Magistrate are no more than recovery proceedings. All questions which may legitimately be raised against the validity of the notice served under Section 153 or against the validity of the claim made by the committee under S. 222 can and ought to be raised in an appeal under S. 93(1) and if no appeal is preferred or an appeal is preferred and is dismissed then all those points are concluded and can no more be raised in proceedings under S. 234. That is why the nature of the enquiry contemplated By S. 234 is very limited and it prima facie partakes of the character of ministerial enquiry rather than judicial enquiry. In any event it is difficult to hold that the Magistrate who entertains the application is an inferior criminal court. The claim made before him is for the recovery of a tax and the order prayed for is for recovery of the tax by distress and sale of the movable property of the defaulter. If at all, this would at best be a proceeding of a civil nature and not criminal. That is why, whatever may be the character of the proceedings, whether it is purely ministerial or judicial or quasi-judicial the Magistrate who entertains the application and holds the enquiry does so because he is designated in that behalf and so he must be treated as a persona designata and not as a Magistrate functioning and exercise his authority under the Code of Criminal Procedure. He cannot therefore be regarded as an inferior criminal court. That is the view taken by the High Court and we see no reason to differ from it. In the present appeal it is unnecessary to consider what would be the character of the proceedings before a competent civil court contemplated by the proviso. Prima facie such proceedings can be no more than execution proceedings'.

6. Based on this decision the Mysore High Court itself in State vs. Udyawar (14 S.T.C. 628) dealing with S. 13 (3) (b) of the Mysore Sales Tax Act said :

'The power of the Magistrate to take proceedings for recovery of any tax assessed or any other amount due under the Act from a dealer as if it were a fine imposed by him, accrues to the Magistrate by virtue of S. 13(3)(b) of the Act and not under any provisions of the Code of Criminal Procedure. Such proceedings are mere recovery proceedings and the Magistrate does not function or exercise his authority under the Code of Criminal Procedure. Though the procedure for the recovery of such amount may be the same as for the recovery of any fine imposed by him, he is competent to recover the amount of tax, only because he is designated under the Act to recover the same. An order passed in exercise of that power conferred under the Act cannot be said to be an order passed by an inferior criminal court under the Criminal Procedure Code. When no provision has been made in the Act for revision of such an order, Ss. 435, 436 and 439 of the Criminal Procedure Code cannot be resorted to for interfering with that order.'

After observing thus the learned Judges referred to the decision of the Supreme Court in AIR 1962 SC 574 and after quoting the statements which I have myself extracted earlier it was said that the above statement of Supreme Court would equally applicable to a Magistrate functioning under S. 13 (3)(b) of the Act; he can not be regarded either as an inferior criminal court or as functioning or exercising authority under the Code of Criminal Procedure. That being so no revision to the District Magistrate was maintainable and the reference which has been made by him is incompetent.

7. Another decision in which the learned Government Pleader relied is the decision of the Madras High Court in Habibunnissa vs. State of Madras (15 S.T.C. 271), where Justice Veeraswami, as he then was, held that the foundation of the Sales Tax Act, 1959 itself and not the Criminal Procedure Code, 1898 and therefore the pecuniary limit of fine prescribed by the Criminal Procedure Code cannot be applied to the Magistrate when he acts under S. 24(2) (b) of the Madras General Sales Tax Act, 1959. It was, therefore, held that the fact that the tax to be covered far exceeds the fine which the Magistrate is competent to impose under the Criminal Procedure Code will not prevent the Magistrate from entertaining an application under S. 24 (2) (b) of the Madras General Sales tax Act.

8. A Division Bench of this court in Muhammed vs. Collector of Palghat (19 STC 475) considered the meaning of the word 'as if it were a fine' occurring in S. 15(h) of the Madras General Sales Tax Act, as it stood on the relevant date. That had provided that any person who wilfully acts in contravention of any of the provisions of the Act, shall, on conviction by a Presidency Magistrate or a Magistrate of the first class, be liable to a fine which may extend to one thousand rupees, and in the case of a conviction under clause (b), (d), (f) or (g) the Magistrate shall specify in the order the tax, fee or other amount, which the person convicted has failed or evaded to pay or has wrongfully collected, and the tax, fee or amount so specified shall be recoverable as if it were a fine. There the learned Judges referred to an earlier decision of this Court in Mytheen Kunju vs. State (1959 K.L.T. 698) where Sankaran, C.J., had observed in regard to similar provisions in S. 19 (h) of the Travancore-Cochin General Sales Tax Act that :

'The direction contained in S. 19 that the amount thus specified in the Magistrates order shall be recoverable as if it were a fine under the Code of Criminal Procedure clearly indicates that the said amount is not really a fine imposed by way of penalty. The legislative sanction for the recovery of such amount as if it were a fine cannot have the effect of placing it in the category of fine imposed as a penal liability. The expression as if it were a fine necessarily means that it is not a fine, as understood in law. In respect of the amount specified in the Magistrates order as recoverable from the defaulter under the provision of the General, Sales Tax Act, the direction in S. 19 goes only to the extent of adopting the procedure prescribed by the Code of Criminal Procedure for the recovery of a fine.'

9. In the same case (19 STC 475) Justice Joseph had also observed that 'the fact that it is made recoverable as fine shows that the court is not really imposing a sentence of fine when it specifies the amount of tax which the person convicted has failed to pay S. 19 thus only enables the court to set in motion the machinery for realisation of fines for collecting the arrears of fines for collecting the arrears of tax by specifying the amount.'

10. Following these observations this court said in 19 STC 475 (cited supra) that :

'The expression as if it were a fine is not a deeming provision. On the other hand, the use of such expression shoes that 'tax, fee or amount so specified is not to be treated as a fine. The language of the section is not sufficient to construe the same as a deeming provision. It that had been the intention of the legislature, it would have been very easy to have made this section perfectly clear. IF the legislature had said that 'tax, fee, or amount so specified' was to be deemed 'fine' the position would have been different. In statutes the expression 'deemed' is commonly used for the purpose of creating a legal fiction. The expression 'deemed' is used a great deal in modern statutes and for many purposes. Even if the expression as if it were a fine is construed to be a deeming provision the court has to ascertain the purposes for which legal fiction has to be resorted to by a reference to S. 15 (h) of the Madras Act, 1939. The statutory fiction is only for its recovery and not for anything else. The Supreme Court provision is contained in S. 386(1) of the Criminal Procedure Code.'

11. The question that this court will have to consider its as to whole is the Magistrate referred to in S. 23(2)(b) of the Act. For finding out this we will have to take into account S. 3(4) of the Code of Criminal Procedure, 1973., which says that if the functions exercisable by a Magistrate involve the appreciation or shifting of evidence or the formulation of any decision which exposes any person to any punishment such functions shall be exercisable by a judicial Magistrate. Otherwise, it can be exercised by an Executive Magistrate also in view of the expression any Magistrate in S. 23(2)(b) of the Act. As the Supreme Court has stated in 1962-2 S.C.R. 265 (cited supra) in regard to analogous provision, the enquiry contemplated really partakes of the character of a ministerial enquiry rather than judicial enquiry. The Magistrate is not functioning or exercising his authority under the Code of Criminal Procedure. Really no question of any appreciation or shifting of evidence or the formulation of any decision arises as such. He has to take the assessment as such. He cannot revise or review the assessment. It is true that if a question comes whether there has been a full or part payment towards the tax assessed, the Magistrate will have to consider that, being a jurisdictional factor in the matter of recovery. Such consideration will arise in many an administrative or ministerial function in England :-

'Although the issue of a warrant for non-payment of rates is usually said to be a ministerial act, the justices must first be satisfied that the rate was properly made, published and demanded, that it has not been paid, and that the person on whom it was made was in truth the person rateable; but once satisfied on these points they have no discretion to extend the time for payment. The issue of a warrant for the non-payment of taxes has been held to be a ministerial act (and therefore not reviewable by certiorari) although the officer issuing the warrant had discretionary power to take proceedings in the courts for the recovery of the taxes. Again, where an authority has erroneously declined jurisdiction over a matter or has failed to exercise a discretion according to proper legal principles, the issue of a mandamus, to it has sometimes been represented as a remedy for breach of a ministerial duty, although the determination of such questions may be far from a mechanical operation.' (Vide Judicial Review of Administrative Action,. 3rd Edn. by S. A. De. Smith P. 59).

Though if the dispute is raised regarding the jurisdictional factor that will have to be considered, the function as such in the matter of recovery exercised by the Magistrate is really ministerial or executive. It might be noted a every exercise of authority is of a composite nature. The distinction between ministerial and other functions is basically a matter of degree, ministerial functions are segregated by establishing that the questions involved are so clear that reasonable men will not reach divergent opinions. Border cases will arise as they always do.

12. As this court said in 19 STC 475 (cited supra) the statutory fiction in S. 23(2) (b) contained in the words 'as if it were a fine imposed by him' is nonly for its recovery and not for anything else. The Magistrates jurisdiction to recover tax is in the Sales Tax Act and not in the Code of Criminal Procedure. In view of the fact that what he has to exercise is only a ministerial or executive function we need not have to look into the provisions of the Criminal Procedure Code as to whether the Magistrate has particular jurisdiction to impose the fine concerned. The provision makes any Magistrate competent to entertain application and direct the recovery of the tax. As long as that function does not involve the appreciation or shifting of evidence or the formulation of any decisions any Executive Magistrate will have also jurisdiction in the matter.

13. In view of this the original petitions have only to be dismissed. The original petitions are dismissed; but I make no order as to costs.


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