Basheer Ahmed Sayeed, J.
1. In Crl. R. C. Nos. 88 and 89 of 1953, the accused have been convicted under Section 15(b), Madras General Sales Tax Act, and each of them has been sentenced to pay a fine of Rs. 25, in default to undergo simple imprisonment for fifteen clays. The sales tax amounts of Rs. 3125-4-0 and Rs. 4000-6-6 respectively have been directed, to be recovered from them as if they were fines. In Crl. R. C. Nos. 90 and 91 of 1953, the accused have been convicted under the same section and each of them sentenced to pay a fine of Rs. 75, in default to undergo simple imprisonment for fifteen days. In addition, the sales tax amounts due, viz., Rs. 3577-6-0 and Rs. 1522-7-3 respectively have been directed to be recovered from them as if they were fines.
2. The facts in each of these cases are the same and accordingly the order of the learned Magistrate in each of these cases is also, in substance, the same. The witnesses examined for the prosecution are also the same and the defence raised before the learned Magistrate in each of the cases was also the same. These revision cases against the said orders of the learned Magistrate have been posted together before this Bench for being dealt with in a batch for the reason that they raise common grounds onwhich the accused seek to set aside the ordersof the learned Magistrate.
3. The accused are merchants dealing in hides and skins in Salem. Their business consists in the purchase of skins and hides and exporting the same to foreign countries. In Crl. R. C. No. 88 of 1953, the accused were called upon to pay sales tax in the sum of Rs. 3126-4-0 which represented the balance payable out of the sum of Rs. 5519-13-0 to which the accused were assessed lor the year 1950-51. This assessment is said to have been made on the purchases of skins made by the accused in pursuance of orders placed with them by the foreign companies for the supply of the same.
In Crl. R. C. No. 89 of 1953, the same accused as in Crl. R. C. No. 83 of 1953 were assessed to sales tax for the months of April to September 1951 by the Assistant Commercial Tax Officer, Salem, in the total sum of Rs. 4000-6-6 said to be due from the company on the skins purchased by them. In Crl. R. C. No. 90 of 1953 there has been a provisional assessment against the accused for the months of May to September 1951 in respect of sales tax due for the skins purchased by them. Similarly in Crl. R. C. No. 91 of 1953, the accused was assessed by the Assistant Commercial Tax Officer, Salem Town, to an aggregate sum of Rs. 2632-5-9 for the year 1950-51. The prosecution in this case, is in respect of the sum of Rs. 1522-7-3 representing the balance of the assessment due and payable by the accused.
4. The charge against all these accused is that they, having been legally assessed to sales tax, failed to pay either the whole or part of the said tax, in spite of an order of assessment having been served on them, as also a notice of demand calling upon them to make payment of the tax due within the stipulated period of time and that such failure on the part of the accused brings them within the scope of Section 15(b). Madras General Sales Tax Act.
Section 15(b) is to the effect that any person who fails to pay within the time allowed any tax assessed on him or any fee due from him under the Act shall, on conviction by a Presidency Magistrate or a Magistrate of the First Class, be liable to a line which may extend to Rs. 1000 and, in the case of conviction under Clauses 15(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 as specified shall be recoverable as if it were a fine. It is not disputed in these cases that there was a tax assessed on the accused in each of the cases, that a time was prescribed within which the tax was to be paid and that the accused failed to pay the tax so assessed and demanded.
5. In the lower court, all the accused raised a single legal defence, viz., that, the skins or hides were purchased by them in the course of their export out or the territory of India and, that under the provisions of Article 286(1)(b) of the Constitution of India, the State is not empowered to impose a tax on goods so purchased in the course of export out of the territory of India, that the sales and purchases in question were not liable to any tax, that the assessment levied by the Commercial Tax authorities was invalid and therefore the accused were not liable to pay the sales tax so assessed. The prosecution, however, contended that it was not open to the accused to raise any question as to the validity of the assessment levied by the Commercial Tax authorities under the Act in a prosecution laid against them for non-payment of the tax assessed and that Section 16-A, Madras General Sales Tax Act, was a bar against the raising of any such question.
The learned Magistrate, relying upon the decision of Panchapakesa Aiyar J. in -- 'In re Gigina Pasha Sahib', 1950 Mad WN Cri 57 (A) and also of Ramaswami J. in -- 'Hajee Meeran v. The Public Prosecutor', Cri' RP No. 11 of 1952 (Mad) (B) to the effect that Section 16-A is not 'ultra vires' of the Constitution, decided against the accused, holding that it was not open to the accused to question before a criminal Court the validity of the assessment made by the Commercial Tax authorities and overruling the objection of the accused that Section 16-A, Madras General Sales Tax Act, was invalid as it was opposed to Article 286(1)(b) of the Constitution of India, the same having been enacted before the Constitution. The learned Magistrate, therefore, declined to go into the question of the validity or otherwise of the assessments in respect of which the accused were prosecuted in the light of Article 286(1)(b) or other Articles of the Constitution.
6. In view of the arguments advanced before us by Mr. K. S. Jayarama Aiyar appearing on behalf of the petitioners and by the learned Advocate General appearing for the State, it seems to be necessary that we should bear in mind the scheme of the Act, before we could consider the various points raised by the learned counsel for the petitioners on the question of the validity of the convictions. Section 3 of the Madras General Sales Tax Act (Act 9 of 1939) is the section that seems to levy sales tax on sale of goods. It enacts that subject to the provisions of the Act, (a) every dealer shall pay for each year a tax on his total turnover for each year; and (b) the tax shall be calculated at the rate of three pies for every rupee in such turnover. There is a proviso to Sub-clause (b) which it is not necessary to extract here, as it is not strictly relevant to the case before us.
Sub-clause (2) of the same section provides that subject as aforesaid, the sale of any of the goods mentioned in the various items given under this sub-clause shall be subject to a tax at the rate specified in respect thereof, at such single point in the series of sales by successive dealers as may be prescribed; and the tax shall be paid by the dealer concerned on his turnover in each year relating to such goods, and shall be in addition to the tax to which he is liable under Sub-section (1) on his total turnover for the year. Sub-section (3) of Section 3 provides :
'A dealer whose total turnover in any year is less than ten thousand rupees shall not be liable to pay any tax for that year under Sub-section (1) or Sub-section (2)'.
Sub-section (4) says that the turnover shall bedetermined in accordance with such rules as maybe prescribed, and Sub-section (5) provides that the-taxes under Sub-sections (1) and (2) shall be assessed,levied and collected in such manner and in suchinstalments, if any, as may be prescribed. Thereare two provisios to this Sub-section (5) which set outthat either the buyer or the seller in respect ofthe same transaction of sale shall be taxed andnot both. Proviso (ii) is in the following terms:
'Where a dealer has been taxed in respect of thepurchase of any goods in accordance with therules referred to in clause (i) of this proviso,he shall not be taxed again in respect of anysale of such goods effected by him.'
Sub-section (6) says that subject to such rulesas may be prescribed, the assessing authority mayassess a dealer for any year as if his transactionsin such year had been the same as in the pre-vious year. That this section is the charging section is common ground between the parties. The 'turnover' on which the sales-tax is to be levied has been defined in Section 2 (1) of the Act. It is in the following terms:.
''Turnover' means the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or (or deferred payment or other valuable consideration provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise shall be excluded from his turnover.'
The word 'dealer' has also been defined in Section 2, Sub-clause (b) as meaning any person who carries on the business of buying or selling goods. The important point to be noticed in regard to the definition of the term 'turnover' is that it comprises the aggregate amount for which the goods are either bought by or sold by a dealer, That is to say, the emphasis is on the words 'either bought by or sold by'. It is not necessary to refer to the other sections of the Madras General Sales-tax Act which prescribe the exemptions and reductions in taxes and also the rules which prescribe the method of calculation and the ascertainment of the taxes due from dealers like the petitioners dealing in hides and skins. It is common ground in the cases before us that the petitioners have sent the returns in Form A-4 and also the cheques along with the returns as required by the sections of the Madras General Sales-tax Act and the rules prescribed thereunder. There is no question of their having contravened any of those provisions in the present revision cases.
7. For a complete understanding of the scheme of the Act, it is further necessary that reference should be made to the other sections of the .Act which are relevant also for the consideration of the points raised in these petitions and they are Sections 9, 10, 11, 12, 12-A, 12-B and 12-C. Section 9 deals with the procedure to be followed by the assessing authority in the case of dealers whose turnover is ten thousand rupees or more in a year and the obligation on the dealer to submit his return relating to his turnover in the manner prescribed by the rules made under the Act. Section 10 provides for the payment and recovery of tax assessed, for prescribing the time for payment and how the tax could be recovered. Sections 12,12-A, 12-B and 12-C provide for appeals and revisions being preferred by the assessee objecting to the assessment made on him under the sections of the Act for revision of the orders of the authorities 'suo motu' where no appeals are allowed under the conditions set out in the said sections.
8. It will be noticed that the above sections provide the machinery that has been devised for enabling any dealer who is assessed to sales-tax to vindicate his rights so far as the assessment levied against him in respect of his dealings is concerned. The most material sections that have still to be considered in this connection are Sections 15 and 16-A of the Act. Section 15 deals with offences and penalties and it Is enacted in the following terms:
'Any person who (a) wilfully submits an untrue return or fails to submit a return as required by the provisions of this Act, or the rules made thereunder, or (b) fails to pay within the time allowed, any tax assessed on him, or any fee due from him, under this Act or (c) prevents or obstructs inspection or entry by any officer authorised under Section 14, in contravention of the terms thereof, or (d), fraudulently evades the payment of any tax assessed on him, or any fee due from him, under this Act, or (e) fails to submit an application for registration as required by Section 8-A Sub-section (1), or (f) collects any amount by way of tax under the Act, in contravention' of the provisions of Section 8-B, Sub-section (1), or (g) fails to pay the amounts specified in Section 8-B, Sub-section (2), within the prescribed time, or (h) wilfully acts in contravention of any of the provisions of this 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.'
9. Under the Sales-tax Act, as in the District Municipalities Act or the Madras City Municipal Act, in addition to the other powers vested in the taxing authorities to collect the taxes due to the Municipalities or the Government, an. agency has also been created and that agency is the Magistracy above a certain grade. The Sales Tax Act vests this power to collect sales tax in a Presidency Magistrate or a Magistrate of the First Class as per Section 15, Madras General Sales Tax. Act. A provision in the taxing Act to this effect is nothing strange nor unusual and the power of the Legislature to enact such a provision whereby the Magistracy is set up as the agency for the collection of taxes due to public authorities and the Government is not liable to be questioned. Actually, such a power is not ques-tioned before us by the learned advocate appearing on behalf of the petitioners.
The scheme of the Act, therefore, seems to be that, if an assessee is taxed to sales tax and if that tax remains unpaid after notice of demand served upon the assessee, the taxing authorities can make use of the Magistracy to realise or collect the taxes due from the assessee. All that the taxing authority has to do in order to realise the unpaid tax is to file a petition before the concerned Magistrate alleging that the tax is due, and to prove that the tax claimed is duo from the assessee, -- he having failed to pay the same, in spite of a notice of demand prescribing a time within which it should have been complied with, and the Magistrate is thereupon empowered to convict the assessee and impose a fine on him to the maximum extent of Rs. 1000. In addition such imposition of flne, the Magistrate is also empowered to specify in the order, the tax, fee or other amount which the person convicted has failed or evaded to pay, and if he does so, the amount so specified by the Magistrate shall be recoverable as if it were a fine.
It is rightly urged by the learned Advocate General that the prosecution in the present case has done nothing beyond what is contemplated under Section 15 of the Act. It may be true that if such a provision is not in existence, it will be found difficult for the Government and the public authorities to realise the taxes and fees due to them and the Legislature has perhaps felt that there should be provided some coercive process by means of which taxes and fees and other legitimate dues to Government should be collected in the interests of the administration of the State. If the Legislature had been content with this, then there would have been no room for the petitioner to take up the stand they have done before us. But the Legislature went further and enacted a further section, viz., Section 16-A. It is to the following effect:
'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 nob be questioned in any Criminal Court in any prosecution or other proceeding, whether under this Act or otherwise.'
It is not denied in these cases that the petitioners, as dealers in skins and hides have been assessed to sales tax in respect of their dealings and these petitioners, some of them, at any rate, have made payments in part and have failed to pay the balance of the assessed tax. Though the taxes in some cases have been finally assessed and in some provisionally assessed, still it is common ground that notices have been served upon all of them, as required by Section 10 of the Act, calling upon them to make the payments within the date prescribed in the said demand notices. It is argued that when once they have failed to pay the taxes assessed on them, the latter part of Section 15 is attracted viz., that, if the assessee fails to pay within the time allowed, any tax assessed on him, or any fee due from him, under this Act, he shall, on conviction, be liable to a fine and the tax which he has failed or evaded to pay shall be recoverable from him as if it were a fine.
10. Before we proceed further, it is essential that one other section bearing on the scheme of the Act should also be noticed, and that is Section 22, Madras General Sales Tax Act, 1939. The Sales Tax Act had been enacted before the coming into force of the Constitution of India in January 1950. In the Constitution, in Part XII relating to Finance, Property, Contracts and Suits, an article laying down restrictions as to the imposition of tax on the sale or purchase of goods was enacted. This is Article 286(1) and is in the following terms:
'No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place -
(a) outside the State; or
(b) in the course of the import of the goods into or export of the goods out of, the territory of India.'
The explanation to this Sub-clause (1) as also Sub-clause (2) together with the proviso thereto as well as Sub-clause (3) may be omitted for purposes of this judgment. After the enactment of this Article, in pursuance, of the Fourth Adaptation Order dated 2-7-1952, a new section, namely, Section 22, became incorporated in the Madras General Sales Tax Act. This new Section 22 is in the following terms:
'Nothing contained in this Act shall be deemed to impose, or authorise the imposition of, a tax on the sale or purchase of any goods, where such sale or purchase takes place --(a) (i) outside the State of Madras, or (ii) in the course of the import of the goods into the territory of India or of the export of the goods out of such territory, or (b) except in so far as Parliament may by law otherwise provide, after the 31st March 1951 in the course of inter-State trade or commerce, and the provisions of this Act shall be read and construed accordingly.'
The Explanation to this section may be omitted, as it has no relevance to the points that arise in the present cases.
11. The first point that has been raised in these revision cases before us by Mr. Jayarama Aiyar appearing on behalf of the petitioners. Is that the petitioners are not liable to sales tax in view of Section 22, Madras General Sales Tax Act, which, in substance, is the same as Article 286(1)(b) of the Constitution. The petitioners' contention is that their purchase and sale of the skins and hides was in the course of export of the goods out of the territory of India and, the imposition of a tax on the sale or purchase of such goods by the State Government is 'ultra vires' of the Constitution. That is to say that the State Government is not entitled, through its taxing officers, to levy any taxes of the kind claimed by it from the petitioners on the transactions in question. This was one of the points raised by the petitioners before the learned Magistrate when the cases were tried by him.
In order to prove that their purchase and sale was in the course of export of the goods out of the territory of India, the petitioners examined some witnesses on their behalf who deposed as to the nature of the transactions which were carried on by the petitioners. The learned Magistrate who heard the evidence, however, did not record any finding as to whether the transactions in respect of which the sales tax was demanded by the taxing authorities came within the scope of Article 286(1)(b) of the Constitution or otherwise. Apart from setting out the contentions raised by the advocates on behalf of the petitioners and the State in that connection, the learned Magistrate did not discuss the evidence on the basis of which the petitioners sought to prove that their transactions were covered by Article 286(1)(b) of the Constitution or Section 22, Madras General Sales Tax Act.
What the learned Magistrate has done is simply to accept the contention of the learned Assistant Public Prosecutor that the validity of the assessment made could not be questioned as being opposed to the provisions of Article 286(1)(b) of the Constitution, in view of B. 16-A of the Madras General Sales Tax Act, and to dismiss, as being untenable, the contention of the petitioners that that provision of the Madras General Sales Tax Act was invalid inasmuch as it was enacted before the Constitution. Holding that Section 16-A of the Madras General Sales Tax Act was not shown to be contrary to Article 286(1)(b) of the Constitution or any other Article thereof, the learned Magistrate convicted and sentenced the petitioners as stated above. In the absence of any proper enquiry into the question as to whether the petitioners have purchased or sold the goods in question in the course of the export of the goods outside the territory of India and in the absence of any discussion of the evidence on this point, it is rather difficult for us to come to any conclusion as to whether or not the transactions are really exempt from sales tax and whether the assessment order is 'ultra vires' of Article 286(1)(b) or Section 22 of the Act.
Though Mr. Jayarama Aiyar wanted us to go into the question of the validity of the tax imposed on the petitioners, we do not think it proper to enter upon any enquiry on this question, which it was the duty of the lower court to do, and especially, when the lower court has not given any findings on this aspect of the case. Mr. Jayarama Aiyar then argued that the petitioners should at least have been given an opportunity to prove and argue that the tax levied on them in respect of the transactions carried on by them was not legal and that it offended against Section 22 of the Act and Article 286(1)(b) of the Constitution.
There is, no doubt, force in this contention. How far such an opportunity should have been given and how far the Magistrate was bound to decide the question of the validity or otherwise of the tax levied on the petitioners would necessarily depend upon the question as to how far Section 16-A which is said to debar the petitioners from claiming any such right is valid and 'intra vires' of the Constitution, and that is the question before us.
12. It has been, however, argued by the learned Advocate-General on behalf of the State that, even assuming that the petitioners had the right to question the validity of the tax imposed on them, still, on the evidence recorded by the learned Magistrate, in view of the recent decisions of the Supreme Court in -- 'State of Tra-vancore Cochin v. Bombay Co. Ltd.', AIR 1952 SC 366 (C) and -- 'State of T. C. v. S. V. C. Factory, Quilon' : 1SCR53 (D) the transactions in question were not entitled to exemption either under Section 22, Madras General Bales Tax Act, or under Article 286(1)(b) of the Constitution. It is true that the Supreme Court has held in. AIR 1952 SC 366 (C) as follows :
'Whatever else may or may not fall within Article 286(1)(b), sales and purchases which themselves occasion the export or the import of the goods, as the case may be, out of or into the territory of India come within the exemption and that is enough to dispose of these appeals.'
The Supreme Court has further observed at pp. 367-368 as follows :
'We (the learned Judges) are clearly of opinion that the sales here in question, when occasioned the export in each case, fall within the scope of the exemption under Article 236(1)(b). Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export. A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. Such a sale cannot be disassociated from the export without which it cannot be effectuated, and the sale and resultant export form parts of a single transaction. Of these two integrated activities, which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other. Assuming without deciding that the property in the goods in the present cases passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey as found by the sales tax authorities, the sales must, nevertheless, be regarded as having taken place in the course of the export and are, therefore, exempt under Article 286(1)(b). That clause, indeed, assumes that the sale had taken place within the limits of the State and exempts it if it took place in the course of the export of the goods concerned.'
In : 1SCR53 (D), these observations were sought to be taken advantage of and it was argued that the last purchase of goods made by the exporter for the purpose of exporting them to implement orders already received from a foreign buyer or expected to be received subsequently in the course of business, and the first sale by the importer to fulfil orders pursuant to which the goods were imported or orders expected to be received after the import would also fall within the scope of the exemption provided under Article 286(1)(b) of the Constitution. The majority of the learned Judges of the SupremeCourt, however, discountenanced this argument in their observations at page 336. These observations explain what exactly was intended by the observations made in the previous decision already referred to. At page 338, while summing up the conclusions, the majority of the learned Judges observed that :
'(1) Sales by export and purchase by import fall within the exemption under Article 286(1)(b).
(2) Purchases in the State by the exporter for the purpose of export as well as sales in the State by the importer after the goods have crossed the customs frontier are not within the exemption, and
(3) Sales in the State by the exporter or importer by transfer of shipping documents while the goods are beyond the customs frontier are within the exemption, assuming that the State-power of taxation extends to such transaction.'
With respect we have to observe that these decisions of the Supreme Court, leave no room for holding that the last purchases made by the dealers can be brought within the scope of the exemption contemplated by Article 286(1)(b) of the Constitution. It is made clear that only the last sales made to the foreign buyer would be exempt as they alone would be considered to be in the course of export outside the territory of India.
13. The orders of the Deputy Commercial Tax officer as also that of the Commercial Tax Officer in the present cases disclose that the dealers were liable to pay taxes on the purchase of untanned hides and skins made by them during the concerned period, and that consequently they were assessed to sales-tax in respect of the concerned transactions rejecting the pleas raised by them that they were purchased in the course of export outside the territory of India. If the facts were as set out by the taxing officers, the decisions of the Supreme Court referred to above would apply to the facts of the case and Article 286(1)(b) would not be applicable to the purchases made by the petitioners so as to enable them to claim the benefit of the exemption from payment of sales lax.
But the grievance of the petitioners is that they have not been permitted to raise this question of the validity of the assessment in the light of this Article and plead the same in defence. There is foundation for the grievance. For, when the constitutionality of the very assessment order was raised, the petitioners should not have been shut out from raising that point before the court, though it was only a criminal court. It would have then become incumbent Upon the prosecution to prove that the claim of the State was valid, constitutional and therefore enforceable against the petitioners.
14. This raises the important question as to burden of proof. The contention on behalf of the State seems to be that the mere existence and proof of an assessment order by the prosecution should be a sufficient discharge of the burden that lay on the prosecution and that it would not be necessary on the part of the prosecution further to prove that the tax claimed from the assessee was validly levied, that it was legitimately due under the Act and that the assessee was bound and liable to pay the same. Reliance in this connection has been placed upon the decision of one of us in -- 'In re Narasimga-muthu Chettiar', AIR. 1949 Mad 116 (E), in support of the contention advanced on behalf of the State.
In that decision, the dealer was prosecuted for failure to submit the A-return as required by rule 11(1), Madras General Sales Tax (Turnover and Assessment) rules, 1939, which was an offence punishable under Sections 15(a) and (c) of the General Sales Tax Act and was fined a sum of Rs. 200, in default to suffer simple imprisonment for a period of six months. The question there was whether the assessee prosecuted was a dealer within the meaning of the term as defined in the General Sales Tax Act. It was observed, in the course of the decision, that the question as to burden of proof had become a matter of importance and also whether proceedings under the provisions of the General Sales Tax Act for the recovery of the penalties for non-compliance with the provisions of the statute by the assessee were purely criminal in nature had also to be determined. After elaborately examining the scope of the previous decisions both in the Indian courts and in the courts in the United Kingdom, it was held that:
'The standard of proof required from the prosecution in offences under the Indian Penal Code, or other enactments of a similar kind, was a rigid and rigorous one quite distinct from what was ordinarily expected from a plaintiff in a civil action where the burden of proof is on the plaintiff.' and that, 'when a criminal court was approached by the revenue, local and public authorities for the enforcement of a penalty for non-payment of a tax or tithe, the proceedings were not purely of a criminal nature but were quasi-criminal.'
Reference was also made to Sections 145 and 488, Crl. P. C. as also to Sections 10 and 16 of the Madras General Sales Tax Act to illustrate the opinion that the proceedings under the Madras General Sales Tax Act were not entirely criminal. It must, however, be remembered that this decision was not based upon the consideration of the validity of Section 16-A, Madras General Sales Tax Act, which is the main question that has to be considered in the present cases. Further, apart from the question of the burden of proof that arose in that decision, various other points, such as the right of the accused to be given an opportunity to explain the circumstances against him, the right of the Magistrate to question ths accused in that connection under Section 342, Cr. P. C. and the question of the revisional jurisdiction of the courts in what are called quasi-criminal proceedings and whether the accused was entitled to give evidence himself as a witness, etc., did not arise for consideration in that case. In this view, therefore, we do not think that this decision is of any great assistance to the learned Advocate-General in his arguments against the points raised by the learned counsel for the petitioners.
15. The substantial point that has' been argued by the learned counsel for the petitioners is that Section 16-A, Madras General Sales Tax Act, is 'ultra vires' of the Constitution. Section 16-A is as much a part of the General Sales Tax Act as Section 22 is itself part of the Act. In so far as Section 22 of the Act says that nothing in this Act shall be deemed to impose,- or authorise the imposition of a tax on the sale or purchase of any goods, where such a sale or purchase takes place in the course of the import of the goods into the territory of India or of the export of the goods out of such territory, it is urged that the application of 8. 16-A must be limited only to cases which do not come under Section 22 of the Act. The contention is that when the validity of the tax under Section 22was itself questioned, Section 16-A cannot be availed of to deprive the petitioners of their right to test the justness or otherwise of the claim to sales tax. That is to say, if the tax claimed is not leviable under Section 22 of the Act, then the tax imposed upon the petitioners cannot be said to be one imposed under the Act. On the other hand, it must be considered to be an assessment 'de hors' the Act and as such, the imposition is outside the scope of the General Sales Tax Act and it should be open to the assessee to question the validity of the assessment.
Mr. Jayarama Aiyar further argued that, even if Section 16-A is considered to be a valid section, what cannot be questioned in a criminal court is the tax that has been validly imposed under the provisions of the Act and not taxes which are invalid under the law and which happen to be contrary to Section 22 of the Act itself. According to him, Section 16-A being subject to Section 22, Section 16-A cannot be a bar against the petitioners' raising the question of the validity of the assessment against them by the taxing authorities. Emphasis is laid on the terms 'under this Act' and that the assessment should be properly made 'under this Act' and that the liability of any person to pay the tax should also arise 'under the Act', counsel's contention being that the tax now in question is not leviable in view of Section 22, Madras General Sales Tax Act.
The real point sought to be made out is that both the validity of the assessment as also the liability of the person to pay the tax could be raised 'in the criminal court, when the petitioners are called upon to show cause why they should not be punished for failure to pay a tax which is not imposed under the Act.
Mr. Jayarama Aiyar has Invited our attention to a series of decisions of this court which have arisen in connection with the levy of municipal and income taxes. In -- 'Fischer v. Twing', 21 Mad 367 (F), it has been held that an imposition expressly prohibited by law cannot be deemed to be made 'under the Act. In -- 'Municipal Council, Coconada v. The Standard Life Assurance Co.', 24 Mad 205 (G), it has been ruled that there is no difference in principle between the exaction of a tax which has not been legally imposed and the exaction of a tax from a person who is not taxable under the Act. In -- 'Municipal Council, Cuddalore v. Krishnan Nambiar' : AIR1927Mad968 , it has been held that a suit to recover the tax is barred only if the provisions of the taxing law have been in substance and effect complied with.
In 'Sethupathi Avergal v. Secy, of State', AIR 1929 Mad 179 (I), it has been held that Section 52, Income Tax Act, bars a suit for refund of Income tax paid, only in cases where the tax is legally payable in respect of the income and not where the income is exempt from assessment. In -- 'Secy, of State v. Meyappa Chettiar' : AIR1937Mad241 , this Court has held that the assessing officer (income tax) had power to determine the question of the plaintiff's residence in British India and the consequent receipt of the profits in question in British India and that, a suit to set aside the assessment in such circumstances would be barred by Section 67, Income Tax Act. In -- 'Public Prosecutor v. Kondappa', AIR 1947 Mad 397 (K), it was held that :
'In a prosecution under Rule 33 (2) of the rules in Sen. IV to the Madras Local Boards Act, for non-payment of profession tax, it is open to the accused to question the legality of the assessment, notwithstanding Rule 31. The finality referred to in Rule 31 is only for the purpose of the Act and where the legality of the assessment is questioned, whether in a civil suit or in a criminal proceeding, there will be no bar arising under the rule or under Section 238, of the Act. In -- -- 'Raleigh Investment Co. v. Governor-General in Council', AIR 1947 PC 78 (L), which was a case which arose under the Income-tax Act, the term 'assessment made under this Act' occurring in Section 67 has been denned to be 'an assessment finding its origin in an activity of the assessing officer acting as such and the circumstance that lie had taken into account an 'ultra vires' provision of the Act was in that view immaterial in determining whether the assessment was 'made under the Act'. The phrase described the provenance of the assessment;- it did not relate to its accuracy in point of law.'
(16) Relying on these cases, Mr. Jayarama Aiyar's contention is that Section 16A of the Act could not be operative in so far as neither the claim for sales-tax from the petitioners was valid, nor were they liable to pay the tax under the Act and that the petitioners in such circumstances were entitled to question both the validity of the assessment and their liability to pay the same before the criminal Court. This argument could hold good, in our view, for the simple reason that not merely the applicability of Section 22 of the Act but also the constitutional provision of Article 286(1)(b) has been raised and are required to be gone into before a decision could be made in regard to the prosecution for non-payment of the tax claimed.
17. It is true that, before 1-1-1948, when Section 16-A of the Madras General Sales-tax Act took effect, everything under the Act itself was liable to be questioned before a criminal Court or civil Court. But, after Section 16-A was enacted, it appears as though the assessment made under the Act, or the liability to pay such assessment made under the Act, was not open to question. That is to say, according to the terms of Section 16-A, the assessment and the liability which have been determined so far as they are within the scope of the Act or under the provisions of the Act. they cannot be subject to any legal scrutiny before any criminal Court or other proceeding, whether under the General Sales-tax Act or otherwise. In the present cases, as we have already held, it is difficult to say that the levy of tax has been under the Act or otherwise, unless that question is gone into and the petitioners are enabled to put their case before the criminal Court.
18. It has, however, been argued by the learned Advocate-Genrral that the prosecution for nonpayment of the sales-tax is not really in the nature- of a prosecution for a criminal offence, it is more akin to the execution of a decree against a debtor and the debtor appearing on notice before the civil Court and showing cause as to why the decree against him should not be executed. In other words, the criminal Court has been constituted to be a mere collecting agency on behalf of the State; and when once there is an order of assessment fixing the time for payment of the assessment and if default is committed the prosecution -is launched for the collection of the defaulted amount of tax, the assessee could not have any right to question the validity of the assessment, or the liability to pay the tax, claimed from, him before that Court.
Just as the executing Court cannot go behind the validity of the decree or otherwise, even so before the criminal Court, the assessee cannot raise any defence as to the validity or otherwise of the assessment. In such cases, all that the prosecution has to prove under Section 15 (b) is that there has been an assessment made against the assessee that the tax was due from the assessee and that it had not been paid. The offence for which the present petitioners are prosecuted being only the default in payment of the assessed tax, it was not necessary for the prosecution to prove anything beyond these facts and it was therefore not open to the criminal Court to go into the question of the validity or otherwise of the tax or the liability of the petitioners to pay the same. For, it is only the stage of collection that is before the criminal Court and at that stage, the assessee cannot be allowed to have the right to question the validity of the assessment itself and therefore it is that the provision in Section 16-A of the Madras General Sales-tax Act which is intended only to facilitate collection of the tax levied, cannot be considered to be, 'ultra vires' of the powers of the legislature or the Constitution of India, as contended for by the learned counsel for the petitioners. It is also contended by the learned Advocate-General that the method of collection of a tax is incidental to the levy of the tax by the State and the right of the Legislature to make the default an offence and its right to devise a machinery to collect the defaulted tax cannot be questioned before the very collecting agency constituted by the legislature. To allow this, it is argued, would defeat the very object intended by the Legislature, viz., easy collection of the defaulted taxes.
19. The levy of the sales tax on sale or purchase of goods is provided for by the Constitution in item 54 of the State List, Schedule VII, and it ia intelligible that when that power has been exercised by the Legislature, it is only incidental to that power that the Legislature should also provide for the method of collection. We agree that it is only the method of collection that has been provided for in Section 15 of the Madras General Sales Tax Act and the function of collection is entrusted to the criminal Court which seeks to enforce the assessment order made by the taxing authorities. But the matter is not left there. On the other hand, in the matter of such enforcement of the order, it has been provided that, when once the order has been made it shall not be open to the assessee from, whom the tax has become due to question the validity of the order of assessment or the liability imposed upon the person to pay the tax and that is Section 16-A, Madras General Sales-tax Act.
The argument of the learned Advocate-General is that, even without Section 16-A, the scheme of the Act would be complete in so far as it has given tho power to the criminal Court to enforce the assessment order that has been made against the assessee and under which the tax has become due from him. It is true that the language of the different clauses of Section 15 of the Act does enable the Criminal Court when once it is moved under that section, to enforce the order and impose the fine prescribed on conviction. But this argument entirely misses the point as to how any person could be precluded from raising the issue that the order sought to be enforced is a wrong order and that it does not exist in law so as to impose any liability on the person against whom it is directed, especially when he is sought to be punished, whatever might be the form or nature of punishment; and this is what is sought to be achieved by the enactment of Section 16-A.
20. It is pointed out further by the learned Advocate-General that the Madras General sales-tax Act has provided all the necessary processes to enable the assessee to question the validity of the tax at any stage when it is sought to be levied, and if those processes are gone through and when the tax had become due under the Act, it will 110 more be open to the assessee to go behind the finality of the tax levied and question it when it conies to a stage of collecting the same. The machinery provided to enable the assessce to question the legality of the tax, or his liability to pay the same, is contained in Sections 11 to 12C of the Act which have already been referred to in the earlier part of this judgment and the question now is whether, in the case of such machinery having been provided, for affording the fullest opportunity to the assessee to agitate the question of the validity of the levy of tax from stage to stage, commencing from the proceedings before the Assistant Commercial tax Officer right upto the High Court in appeal or revision, it will still be open to the assessee to question the validity of the assessment, or his liability to pay the same, as the case may be, before a criminal Court which is concerned only with the collection of the tax by the enforcement of the order of assessment passed by the taxing authorities.
It is argued that ifc has been uniformly held by this Court that, when a statute provides a complete machinery which enables the assessee to seek all the remedies by way of an appeal, a revision and so forth, to obtain a final decision on the validity of any imposition of a tax or his liability to pay the same, it is not open to him to seek any further remedies outside the four corners of the special statute, unless there is gross injustice or the taxing authorities act without jurisdiction.
It is pointed out that cases may arise where the assessee has availed of all the remedies so provided in the special statute, and there may be also other cases where the assessee might not have chosen to take advantage of all the remedies provided for him to vindicate his rights in respect of the. tax claimed from him. In former set of cases, when an order of assessment has become final in terms, of the statute, it will not be open to the assessee to object to the tax when it comes to the stage of collection. Even if ho has failed to take advantage of all the remedies provided for in the taxing statute, even then it cannot be said that his failure to take such advantage of the remedies should entitle' him to toe heard once again by the Court or authority which seeks to enforce the assessment order in the process of collecting the tax. The contention is that the assessee cannot be allowed to take advantage. In such cases, of his own failure to resort to the remedies made available to him by the very statute under which he is sought to be taxed.
It may be noted, however, that in the present cases, the records do not show that the petitioners have taken any advantage of the various remedies that have been made available to them under the Madras General Sales-tax Act before the order of assessment to sales-tax became final. Whether they have done so or not, it is argued, they cannot be heard before the criminal Court to say that the tax has not been validly or properly levied against them, or that they are not liable to pay the same. This argument, in our opinion, appears to be sound only so far as the objections to the assessment order have reference to the provisions of the Act under which the taxing authority claims to have acted in levying the tax but it cannot betenable when the assessee raises the question as to the propriety of the assessment order itself with reference to provisions of law under which the taxing measure itself has come into existence, and more especially when the very basis of the power to levy the tax is assailed for want of jurisdiction or as being in derogation of constitutional rights.
When such questions as the propriety Of the order, or the legality of the section which shuts out any legitimate defence being put forth, are raised, then simply because matter arises before the criminal Court, the assessee cannot be denied the right which is available to him ordinarily as an accused person. It is, however, urged that the very object of providing the elaborate remedies contained in the Act will be defeated if a criminal Court or a civil Court is to traverse once again the same ground as has been traversed by the various special Tribunals set up. under the taxing statute to decide the question of the liability or the validity of the tax claimed by the taxing au then ties.
It is also pointed out as to how absurd the situation would be if an assessment order, which has become final after it has passed through all the stages contemplated under the several sections of the General Sales-tax Act, were to be questioned on the ground of its validity or on the ground of the liability of the person against whom it is claimed and were to be gone into 'de novo' before a criminal Court invested barely with First-Class Magisterial powers. It is also contended that it is only to avoid such situations, that the legislature enacted that the validity of the tax, or the liability of the person to pay the tax, shall not be questioned in a criminal Court when it had provided all the conceivable remedies that could be open to an assessee to question the decision of the taxing authorities before their order could become final. It is next argued that Section 16-A should be read along with Sections 11 to 12-C and, if that is done, one would fail to see how the assessee can complain that he has been deprived-of his rights to question the validity of the decision of the taxing authority before it is sought to be enforced.
Prom the superficial point of view, the argument sounds well, but on a deeper consideration, it is not possible to say that this argument is free from fallacy. For when the assessee is threatened with a prosecution and a fine on conviction, it does not stand to reason to say that the assessee shall not be entitled to question the validity of the order on grounds other than those that fall within the four corners of the sections of the taxing law, which ho might or might not have availed of. When the assessee is once made subject to criminal jurisdiction for failure to pay the tax or fee levied, it passes comprehension as to why he should not be entitled to resort to all the remedies open to him under the Criminal Procedure Code or Evidence Act to escape from a conviction and consequent fine.
21. It is next urged by Mr. Jayarama Aiyar that under Section 15, General Sales-tax Act, failure to pay the tax assessed is made an offence punishable with a fine on conviction by the Magistrate authorised. The term 'offence' has been defined in Section 40, I. P. C., as denoting a thing made punishable under the Penal Code or under any special or local law. The term 'conviction' is also defined in the Law Lexicon as meaning 'condemnation, etc. of a person in criminal case or matter' -- Vide Ramanatha lyer's Judicial Dictonary pp. 244 and 263. In view of the terminology used in Section 15, Madras General Sales-tax Act, is contended thatthe prosecutions launched against the petitioners in the present cases cannot be said to be merely the enforcement of an order of the taxing authority, or a mere proceeding for the realisation of the tax on the analogy of a civil court, executing a decree, but that it has been made a criminal offence entailing punishment on conviction in the shape of a fine and such fine is recoverable by attachment of the properties of the person fined. So, the prosecution becomes a criminal proceeding both in form and substance.
What the petitioners are tried for is therefore a criminal offence and the punishment for the offence is a fine. From one point of view, the effect of Section 16-A is that once the existence of an assessment order is proved, the burden shifts on to the accused to prove that lie is innocent. That this is so because the prosecutions under taxing laws are merely quasi-criminal proceedings is no answer to a violation of the fundamentals of our jurisprudence that it is the duty of the prosecution to prove that the accused has committed the offence with which he stands charged. It may be conceded that since the accused are tried for an offence not cognizable, the procedure applicable to summons cases should apply to the proceedings under Section 15 General Sales-tax Act.
It is contended by the learned counsel for the petitioners that the enactment of Section 16-A of the same Taxing Act deprives the right given to him to defend himself by disproving the prosecution case by attacking the enforceability by the order or letting in evidence on his point. This section, therefore, nullifies the application of the entire chapter of the Criminal procedure Code which relates to summons cases. For one thing, it leaves no scope whatever to the accused to say that the charge is not tenable in view of its illegality, or want of jurisdiction, or any other valid reason. For another thing, as is contended by the learned counsel, the effect of s. 16-A of the Madras General Sales Tax Act is that it raises a presumption that the assessment order is conclusive and cannot be questioned by the accused. This tantamounts to making an addition to the list of conclusive presumptions already provided for in the Evidence Act.
This provision, therefore, which has the effect of nullifying the application of Sections 241 to 245 Crl. P. C. and making the assessment order conclusive against the accused charged with the offence of having committed default in the payment of the tax, it is argued, is repugnant to the Constitution, both front the point of the Criminal Procedure Code and the Evidence Act, and it must be declared void. This argument of the learned counsel is not without force. For, it is no argument to say that the terms 'prosecution', 'conviction', 'fine' etc. have no doubt been used in S, 15 of the General Sales Tax Act, but that these terms do not have the same connotation in the context of the General Sales Tax Act as they have in the context of the Indian Penal Code or any other criminal statute. Nor is it enough to concede that these terms are used in Section 15 merely because there are no better terms available, and that the mere use of the same terminology as occurs in the Indian Penal Code, or the Criminal Procedure Code, cannot really be said to make the default in the payment of tax to be on a par with a criminal offence involving moral turpitude such as those made punishable under the Indian Penal Code.
It may be true that after all it is only the default in the payment of tax that Is made punish-able and that too by a mere fine which, in effect, really amounts to a penalty, though it is described in relation to the prosecution and the conviction as a fine. It may also be that the statute under which a fine is levied for default of payment of the tax due from the assessee is a special statute for the enforcement of orders in, regard to collection of taxes and that the taxes due to the State have to be collected after they have become legitimately due from the assessees by some process which will enable the State not to lose the same and which process has to take the form of a criminal prosecution. But in our view all these would not make it any the less a prosecution and it is no answer to the contention of the learned counsel for the petitioners that this Section 16-A denies the right to the accused to challenge the right of the State to prosecute him and to defend himself by proving that the State has not acted within the ambit of the Jaw or the Constitution.
We think that this argument is tenable though not in its entirety. For, it can be contended that the offence with which the accused in such cases are charged, is only the non-payment of the tax due from them and nothing more, and' therefore the accused could certainly prove that, as against the charge of non-payment, he has already paid the tax, and that the right to show that the tax has already been paid or/that no tax has been assessed against Him is still open to the assessee. But still, there must be good reason shown to limit the rights of the accused only to particular defences alone and not to avail of other defences which the law allows them. That this should be; so, because the statute under which the accused [ are levied the tax has already given the assessee every opportunity in a series of proceedings to show that the tax is not validly levied against them or that they are not liable to pay the same, cannot be any reason nor justification for a procedure which curtails the rights of the accused charged with an offence involving a punishment, however, small it may be. It is in this context that Section 16-A has to be interpreted, and held as repugnant to the ordinary rights of man facing a trial for an offence.
22. No doubt, Section 15(b) in the operative portion of it gives absolute power to the assessing authority to launch a prosecution, the moment the tax is not paid by the assessee from whom it is due. On this footing, it has been urged by the learned counsel for the petitioners that the absolute power to the taxing authority to launch a prosecution may be exercised even irrespective of the fact that the assessment might still be a matter under agitation by the assessee, though a demand notice might have been served upon him. Under the scheme of the Act, the tax becomes due only when the process set out in the various sections 11 to 12-C of the General Sales Tax Act has already been availed of, or has not been availed of by the assessee, as the case may be. If, however, the prosecution is launched when the assessment is being questioned, the assessee would certainly have a good defence to say that the validity of the tax has yet to be determined before it could be enforced. But 6. 16-A debars the assessee from resorting to even such a good and tenable defence. If such be the case, it cannot be argued that the section is 'intra vires' of the Constitution which guarantees that no person shall be punished unheard, and without a right to defend Himself in conformity with the existing provisions of law. ,
23. It is next argued by the learned counsel for the petitioners that the fine levied by a criminal court cannot be said to be on a par with thelevying of a, penalty under the Income-tax Act, or the recovery of that tax as if it were an arrear of land revenue. The imposition of a fine by a criminal court is on a conviction and it cannot be classified along with penalties under other Acts levied by the taxing authority. A reference to Section 18 of the same Act which provides for composition of offences under the Act makes it quite clear that the failure to pay the tax is made an offence in respect of which a fine could be imposed by the criminal court, notwithstanding the fact that such default is made compoundable, and the section gives the power to the prescribed authority to accept from any person, who has committed the offence, or is even reasonably suspected of having committed the offence against the Act, in addition to the tax so recoverable, a sum of money not exceeding Rs. 1000, or double the amount of tax recoverable, whichever is greater.
A definite provision of this kind in the Act throws a flood of light on what exactly is the nature and character of the offence for which the prosecution has 'been provided for in the Act. It will, therefore, be not incorrect to say that the offence of non-payment of tax is made a criminal offence, so as to attract all the incidence of such criminal offence. No doubt, it may be only of the lesser of the type of offences such as those described in the Indian Penal Code. Such being the case, it does not carry conviction to say that it isafter all a quasi-criminal offence and the proceedings in respect thereof are also quasi-criminal and therefore the assessee shall not defend himself and prove his innocence, as contemplated by Section 16-A of the Special Taxing Statute. Because the standard of proof may be different in quasi-criminal proceedings, it does not necessarily follow that the accused person shall not avail of all or any defence that may be open to him to prove his innocence.
24. Mr. Jayarama Aiyar has, however, drawn our attention to the fact that many offences in the Indian Penal Code are made punishable only by a fine and many are also made compoundable but that does not take away the right of the accusedto defend themselves when they are prosecuted for those offences. Therefore it would not be rea-.sonable to say that this offence of non-payment of tax also being on a par with those offences, the assessee shall not question the validity of the assessment order. The offences of the kind referred to above when tried have to conform to the same procedure as in the case of other offences and it stands to reason that similar should be the case with 'the offence under Section 15(b) of the General Sales Tax Act as well. The fact also remains that there is a conviction on a prosecution and a sentence of fine and such being the case, 'why should not the assessee be entitled to defend himself by raising any defence that may be open to him, so as to prevent his being conviction and fined?
25. The question is also raised whether, if the offence under Section 15 of the General Sales Tax Act is not on a par with any offence under the PenalCode, it is open to the accused prosecuted under Section 15 to enter the witness-box and give evidence in his favour. Certainly, when such a situation is not contemplated, why should the prosecution under Section 15 of the General Sales Tax Act be treated differently from the prosecution under the I. P. C. or any other law? Mr. Jayarama Aiyar also laid stress upon the fact that Section 342, Cr. P. C., which is applicable in the case of ordinary offences under the Penal Code is not made applicable to an offence under Section 15 (b) of the General Sales Tax Act and that this be theeffect of Section 16-A of the General Sales Tax Act, then again, it will offend against the Criminal Procedure Code, and the rights given to the accused thereunder. If the Magistrate is not entitled to put questions to the accused who is charged with the offence of having failed to pay the tax due from him to explain the circumstances appearing against him, whatever they might be, then it would certainly amount, according to the learned counsel, to denying the accused the opportunity to plead his innocence before the Magistrate and incriminating circumstances against him.
The criminal Courts in this country administer justice following the procedure laid down in the Criminal Procedure Code and the various provisions of the Criminal procedure Code also guarantee certain rights to the accused persons when they are tried before criminal courts whether such trials are quasi criminal ones or involve a mere fine by way of punishment. If Section 16-A has the effect of saying that the accused parson, namely, the assessee, shall not be entitled to say anything in defence to disprove the offence with which he has been charged, more especially if it is not open to him to say that the Act or section under which he is charged is 'ultra vires' of the Constitution, or docs not apply to him, or that the assessment made against him is not made under the Act or that the assessment is not valid or that he is not liable to pay the same as it is not legally due, then such a situation cannot but be deemed to be offending against Arts. 14 and 20 of the Constitution.
In other words, the contention is that, if every other offender under the Penal Code or other Penal Statutes is given the right to defend himself and he can also be questioned by the magistrate under Section 342, Cr. P. C. to explain facts against him, why should the offender under the Sales-tax Act alone be denied these rights which form the essential feature of the trial in criminal cases? Article 14 says that the State shall not deny to any person equality before the law, or the equal protection of the laws within the territory of India and the enactment of 16-A in the General Sales-tax Act, when it denies that protection to the assessee under the General Sales-tax Act which is ordinarily available to offenders under the Penal Code or other Penal Statute what also would be the result than that it is a negation of that right?
We, are of the opinion that Section 16-A, General Sales-tax Act, in so far as it brings about this result must be held to be repugnant to Article 14 of the Constitution. Even taking into consideration the limited scope of the offence for which the assessee is made liable to pay a fine, on conviction, under Section 15(b) of the General Sales-tax Act, so long as the section bars the right of the Magistrate to put Questions to the accused as to whether he has or has not paid the tax or whether he is liable or not to pay the same and so forth, and in so far as it is not open to the accused even within the limited scope of the taxing law, to disprove_ the offence of the non-payment of the tax by showing adequate grounds for such non-payment or failure, it cannot be said that the protection afforded to other accused in other criminal cases is available to him.
Once again though what Section 16-A contemplates Is to prevent only the reopening of the question of the validity of the tax, or the liability of the person to pay the same, before the criminal court find even though the scope of the magistrate's jurisdiction is limited to decide upon the simple issue whether the tax due has been paid or not still so long as the enquiry before the magistrate is in the nature of criminal trial, quasi or other-wise, the accused cannot be deprived of the elementary rights which the Criminal Procedure Code . and the Evidence Act guarantee him.
It may, however, be argued that even in this trial it is open to the accused to show that the notice under Section 10 is defective, or that the time within which the payment shall be made had not expired, so that when the scope of the prosecution itself is limited, it cannot be said that, if the scope of the defence is also correspondingly limited there is any repugnancy between the Articles of the Constitution which give equality before the law to all citizens; and Section 16-A of the General Sales-tax Act, which merely aims at preventing the throwing open of the entire question of the validity of the tax or the liability of the person to pay the same before a court of limited jurisdiction, like the Magistrate of the First Class or the Presidency Magistrate who is to decide only the question of default. We do not think that because of these circumstances, the assessee could be treated differently from the other offenders, so as to justify the validity of Section 16-A as not being repugnant to Article 14 of the Constitution.
26. Mr. Jayarama Aiyar has further argued that, under Article 372 of the Constitution, the Criminal Procedure Code, which was the law in force immediately before the commencement of the Constitution has been declared to continue to be in force until altered, repealed or amended by competent legislature or other competent authority and that Section 16-A which is enacted in exercise of the powers of the State Government to legislate in respect Of Entry No. 54 in List II of the Seventh Schedule, again offends against the sections of Cr. P. C. in so far as it is repugnant to Section 5 of that Code. Section 5, Criminal P. C. is in the following terms:
'(1) AH offences under the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the provisions hereinafter contained.
(2) All offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, taut subject to any enactment, for the time being In force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences.'
According to Sub-clause (2) of the section the offence, under the taxing law, like the General Sales Tax Act, should also be investigated, inquired into, tried and otherwise dealt with only according to the provisions of the Criminal Procedure Code. This section also states that such investigation, inquiry, trial etc., should be subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. Mr. Jayarama Aiyar's contention is that, in so far as the effect of Section 1S-A of the General Sales-tax Act is that the acctised assessee shall not be entitled to question the validity of the assessment against him or his liability to pay the same, because all that the prosecution has to prove against him is the existence of an assessment order which has been validly served on him specifying a time within which he has to pay, the right given to the accused to claim a trial according to the provisions of Criminal Procedure Code is taken away. So far as the limitation imposed under Section 5(2) is concerned, it is argued that it has reference only to the manner or place of investigating, inquiring into. or trying and it will not be correct to say that it warrants the depriving of all the other rights available to the accused to a prosecution, namely, to defend himself by disproving the validity of the claim against him or by putting forth a defence that there is no liability which can be enforced against him, for the default of which he could be punished and so forth. In the Full Bench decision of this court in -- Thiruvengada-sami v. Municipal Health Officer, Karaikudi', AIR 1949 Mad 547 (M) to which one of us was a party, the concluding observations of the discussion on page 557 are as follows:
'The law of procedure is not different in the trial of cases under the Indian Penal Code and those under other statutes according to Section 5 of the Criminal Procedure Code except that in the case of offences under other laws the procedure laid down by the Criminal Procedure Code is subject to any enactment for the time for regulating the manner of place of investigation, enquiry or trial.'
In the light of these observations, it is contended by the learned counsel for the petitioners that, in so far as Section 16-A of the Madras General Sales-Tax Act purports to take away the rights vested in the accused under Section 5(2), Cr. P. C., it should be considered repugnant to the Criminal Procedure Code, which has been declared to be the existing law in accordance with Arts. 13 and 372 of the Constitution. We see considerable force in this contention. The learned Advocate-General has, however, invited our attention to Section 1, Sub-clause (2), Criminal P. C., which provides as follows:
'It extends to the whole of India except the States of Jammu and Kashmir and Manipur; but, in the absence of any specific provision to the contrary, nothing herein contained shall affect any special or local law now in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force, or shall apply to-
(a) the Commissioners of Police in the towns of Calcutta, Madras and Bombay, or the police in the towns of Calcutta and Bombay;
(b) heads of villages in the state of Madras; or
(c) village police officers in the State of Bombay.'
The learned Advocate-General emphasises the phrase occurring in the Sub-section, viz., 'or any special form of procedure prescribed by any other Jaw for the time being in force' and contends that, if this sub-section is read along with Sub-section (2) of Section 5 of the same Code, it cannot be argued that Section 16-A of the General Sales-tax Act is in any way repugnant to the Criminal Procedure Code or that it takes away the rights vested in the accused, who is tried for an offence under the special taxing statute, like the General Sales-tax Act. It is further urged by him that the scope of the Full Bench decision in -- 'AIR 1949 Mad 547 (M)' is not what the learned advocate for the petitioners contends, but that it only has the effect of declaring that the previous decisions in -- 'Public Prosecutor v. Khader Khan', AIR 1947 Mad 321 (N) and -- 'AIR 1947 Mad 397 (K)' were wrongly decided and they turned upon the interpretation of the word 'due' as meaning 'legally due'.
We regret, it is not possible for us to agree with the learned Advocate-General that Section 16-A General Sales-tax Act does not take away the rights that are vested in the accused under Section 5(2), Cr. P. C., when he is tried under Section 15 Sub-clause (b) of the said Act. Section 1, Sub-clause (2), Cr. P. C. does not, in our opinion, have the effect of enacting anything in derogation of Section 5(2). It only relates to the extent of the application of the Code of Criminal Procedure in the matter of territorial and other jurisdiction etc., and by no means mull-fies the effect of Section 5(2).
Even granting that all that Section 16-A says is that, when once the special statute has provided all the remedies and reliefs by which an assessee is entitled to question the validity or the legality of the assessment order, or his liability to pay any assessment claimed by the assessing authorities, it should not be open to the assessee once again to seek the aid of the Criminal Court, which is charged with the duty of enforcing the assessment order, still it cannot be validly argued that when the assessee prosecuted seeks to defend himself against the imposition of a fine by attempting to knock out the very basis of the prosecution by asking the court to declare the assessment as illegal or 'ultra vires' of the Constitution, the criminal Court cannot be allowed to shut him out from raising such a defence by the mere enactment of Section 16-A of the General Bales-tax Act.
The validity of Section 16-A may be tested also by the following illustration. Suppose the assessment orders sought to be enforced have been passed without jurisdiction, or that the entire procedure resorted to by the assessing authorities in bringing into existence the assessment orders against the assessee had not actually been followed by the assessing authorities or that the assessee himself has been kept completely in the dark as to what, has taken place behind his back without any opportunity to be heard or to assail its validity even within four corners, of the Act. In such a situation, should it or should it not be open to the assessee, who is prosecuted, for not complying with such an order, to defend himself on the grounds indicated above? Obviously Section 16-A does not leave any scope for the assessee to do this before the criminal court.
If the effect of Section 16-A is that even if the order of the assessing authorities sought to be enforced is one which has been obtained in fraud of the powers vested in the assessing authorities, it is not open to the assessee to question the validity of the order, or his liability to pay the assessment claimed in the order, surely such a provision could hardly be uphold to be in accordance with either the Constitution, or the Criminal Procedure Code which has been declared to be a valid law under the Constitution.
Though the learned Advocate General would still contend that Section 16-A is a bar against the assessee questioning the validity of even such orders, as in the illustration above we do not think that we can agree with him. It will be nothing of a travesty of justice if we are to acquiesce in such a position. For, in such a situation, as described above, in our view, it should be open to the assessee to contend before the Criminal court that the assessment has not taken place, that he has not been made aware of it or that it has not been heard before it was passed that the order itself has come into existence behind his back, that it is the result of the exercise of fraud upon the powers vested in the assessing authorities or that the order has been passed without jurisdiction and as such not enforceable against him. If the assessee is not entitled to do all this, we do not think that Section 1S-A of the Act which is only a complete negation of the rights of the assesee given to him under the Criminal procedure Code can be held to be consistent with the Constitution or the existing law regulating criminal justice.
In -- 'Syed Mohamed & Co. v. State of Madras' : AIR1953Mad105 (O) relied on by the learned Advocate-General, a Bench of this Court has held that Section 16-A of the General Sales Tax Act is valid and it cannot be said to be opposed to natural justice or repugnant to the Constitution, in view of the elaborate procedure that has been made available to the assessee to question the validity of the order at a stage prior to the attempt by the State for the realisation of the same. In that decision, the matter arose in a writ and the whole Act was contended to be 'ultra vires' and it was held that the plea that the Act was 'ultra vires' could not be raised before the Tribunal which owes its very existence to the Act. With respect, we do not think that the reasoning contained in this decision applies to the present cases for the important reason that none of the points now raised before us had been raised, nor considered in that decision. It is not the case in these petitions that the assessee availed of the entire machinery provided for in the Act before the order in question became final.
27. It is next argued by the learned counsel for the petitioners that Section 16-A of the General Sales-tax Act takes away the right of the revisional jurisdiction of the Sessions Court or the, High Court vested in it under Sections 435 and 439, Cr. P. C. and in so far as this enactment, namely, the General Sales-tax Act has not been reserved under Section 107 of the Government of India Act, 1935, for the assent of the Governor-General which now corresponds to Article 254 of the Constitution, Section 16-A of the Act must be held to be 'ultra vires' of the State Legislature. The Criminal Procedure Code has been declared to be the existing law, as already observed, in pursuance of Article 372 of the Constitution, and criminal justice is an item included in the Concurrent List of the seventh schedule-The State Legislature, no doubt, has the right to legislate on the subject of criminal justice, but the argument is that, in so far as Section 16-A takes away the revisionsl jurisdiction of the Sessions Court or the High Court, as the case may be, by enacting that the validity of the assessment order, or the liability of the assessee to pay the same, shall not be questioned in any criminal court, it is a provision repugnant to the provisions of the Criminal Procedure Code and must be held to be void on account of repugnancy.
In order that it should be held valid, it should have been reserved for the consideration of the President and his assent should have been obtained before it became law to prevail in the State. There is nothing before us to show that Section 16-A, General Sales-tax Act, has been, at any time, reserved for the assent of the Governor-General under Section 107 of the Government of India Act, 1935, then in force or under Article 254 of the Constitution at anv subsequent date. It cannot be disputed that actually Section 16-A of the General Sales-tax Act affects the jurisdiction of the Sessions Court or the High Court, for, if that section of the Act is to be taken as operative, the accused assessee will not be entitled to prefer any revision against the order of the Magistrate under Section 15(b).
But as Sections 435 and 439, Criminal P. C. stand, even in quasi-criminal proceedings, the accused has the right, to take up the matter before the Sessions Court or the High Court as the case may be and no valid reason is shown as to why such a valuable right should be denied to the assesses when he is convicted and fined under Section 15(b) of the Act, Therefore, in our view, inasmuch as Section 16-A has the effect of depriving the accused of his right under these sections of the Criminal Procedure Code, it must be held to be repugnant to the existing law, viz., the Criminal Procedure Code.
28. If it was the idea of the Legislature that a subordinate tribunal employed by the Act for purposes of enforcing the assessment orders of taxing authorities should not be charged with the oner-ous duty of deciding constitutional questions or the validity of enactments in relation to constitutional rights, then it was open to the legislature to have enacted a section in the Act to the effect that when such questions were raised by the asses-sees, they should be referred to the Court of highest jurisdiction in the State for decision. Such a provision exists in the Criminal Procedure Code itself, (viz., Section 432) for enabling the Subordinate courts of criminal jurisdiction to make reference to the High Court when necessity arises and if there had been no section like Section 16-A in the General Sales-tax Act, possibly, the criminal courts would be entitled to resort to that section of the Criminal Procedure Code, when questions of the kind now in controversy arise. But the existence of Section 16-A bars the courts from acting under Section 15 (b) from resorting to the procedure for reference and to that extent also we have to hold the enactment of S, 16-A of the Act should be consider-ed to be repugnant and void, as it hits against the rights of the accused under the Criminal Procedure Code and against the fundamental principles of criminal justice.
29. For all these reasons set forth in the foregoing paragraphs of this judgment, we are of theopinion that Section 16-A, Madras General sales-taxAct, is 'ultra vires' of the Constitution and of theprovisions of the Criminal Procedure Code. Suchbeing the case, the convictions of the petitionerswill have to be held as illegal. The convictionsand sentences of the petitioners are accordinglyset aside.