Subba Rao, J.
1. The accused is one T.N.K. Govindarajulu Chetty, Managing Director of T.N.K. Govindarajulu Chetty and Co. He was convicted by the Fourth Presidency Magistrate Madras, under Section 15(a) of the Madras General Sales Tax Act and sentenced to pay a fine of Rs. 500 or in default to undergo simple imprisonment for three months.
2. The facts are not in dispute and may briefly be stated. T.N.K. Govindarajulu Chetty & Co. are the managing agents of Messrs. Indian Metal and Metallurgical Corporation, having their head office at 498, Mint Street, Madras. T.N.K. Govindarajulu Chetty is the managing director of that company. For the year 1947-48 they sent a return showing a turnover of Rs. 7,67,641. Though the company purchased from Bombay 4 feet by 4 feet brass sheets of the value of Rs. 6,82,017-5-0 and sold them to customers, this amount was not shown in the return but instead, Rs. 1,15,620-8-3 was shown as manufacturing charges in respect whereof they claimed exemption under the Sales Tax Act. When the Deputy Commercial Tax Officer, Park Town, issued a notice on 26.2.1949 under Rule 9 of the Madras General Sales Tax (Turnover and Assessment) Rules to the company pointing out that the entire sale price of the sheets should be Included in the turnover, the company agreed to have that amount also included in the turnover. They explained the basis of their return in the following manner. They had received from their customers ingots for converting them into sheets. The ingots supplied to them were partly from goods purchased from them and partly from goods purchased outside. Under pressure of heavy work and strike at their works, they could not convert those ingots into sheets and supply them promptly. The customers began to threaten them for damages for late delivery. Pursuant to an arrangement entered into between them, the purchased the then available 4' by 4' sheets from the market and supplied them to their customers. As the ingots were the property of the customers and as they had to get only the manufacturing charges according to the contract they billed them only for the manufacturing charges in conformity with the terms of the contract. As they had already billed for the value of the ingots and as the difference between the value of the ingots and the price at which the sheets were later supplied to the customers represent manufacturing costs, in the second bill, the manufacturing costs were shown. In view of the contract for conversion of ingots into sheets against the supply of raw materials, it was not possible for them to treat the supply of sheets as sale of sheets as they could recover from the customers only the manufacturing costs. In the circumstances, they could not possibly include the entire value of sheets in their turnover when they had in their custody the ingots supplied by the parties. The ingots supplied by the customers were later converted into sheets and sold in the market as sheets for which they had paid the sales-tax entirely on the value of sheets according to the bills. After making the aforesaid statement, the company stated that even if the contention of the Sales Tax Officer was correct the submission of the false return was only due to a bona fide mistake and they also agreed for the inclusion of the sum omitted without prejudice to their rights. On those facts the learned Presidency Magistrate held that the omission of Rs. 1,15,620-8-3 in the turnover was not due to inadvertence or mistake but was done consciously and deliberately and the accused must be deemed to have willfully mad a submission of an untrue return within the meaning of Section 15(a) of the Madras Sales Tax Act and therefore committed the offence of contravening that provision.
3. Learned Counsel for the accused contended that when the accused omitted the aforesaid figure from the turnover he did it with the bona fide belief that he was entitled to do so and therefore he could not be said to have willfully made a submission of an untrue return within the meaning of Section 15 (a). The learned State Prosecutor did not dispute the correctness of the aforesaid facts nor did he suggest that the company resorted to a subterfuge to evade payment of the tax. But he contended that as the appellant did not omit the aforesaid amount by inadvertence or oversight or mistake, but because of his impression that the amount was not taxable, his omission would be a willful submission of an untrue return within the meaning of the aforesaid section.
4. The relevant provisions of the Madras Sales Tax Act and the rules framed thereunder read as follows:
Section 9(1): Every dealer whose turnover is ten thousand rupees or more in a year shall submit such return or returns of his turnover, in such manner, and within such periods as may be prescribed.
(2)(a): If the assessing authority is satisfied that any return submitted under Sub-section (1) is correct and complete, he shall assess the dealer on the basis thereof.
(b) If no return is submitted by the dealer under Sub-section (1) before the date prescribed or specified in that behalf or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall assess him to the beat of his judgment.
Provided that before taking action under this clause, the dealer shall be given a reasonable opportunity of proving the correctness and completeness of any return submitted by him.Section 15. Any person who.
(a) willfully submits an untrue return or fails to submit a return as required by the provisions of this Act or the rules made thereunder, 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.
Rule 4(1) of the Madras General Sales Tax (Turnover and Assessment) Rules:
Save as provided in Sub-rule (2) the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are sold by him.(3) For the purposes of Sub-rule (1) the amount for which goods are sold by a dealer shall, in relation to a work contract, be deemed to be the amount payable to the dealer for carrying out such contract less a sum not exceeding such percentage of the amount payable as may be fixed by the Board of Revenue, from time to time for different areas, representing the usual proportion in such areas of the cost of labour to the cost of materials used in carrying out such contract.
5. It is not disputed that if the accused converted the ingots supplied by the customers into brass sheets, he would be entitled to exclude the manufacturing charges from his total turnover. The main question, therefore, which arises in the appeal, is as to whether the exclusion of the manufacturing cost, which represents the difference between the sale price of the ingots and the finished sheets was willful.
6. The word 'willful' has not been defined under the Act. Learned Counsel appearing for the accused and the State therefore cited before me a number of cases to help me to ascertain the meaning of the word having regard to the context in which it was used.
7. In Smith v. Barnham (1876) 1 Ex 419, the question was whether the appellant in that case in discharging the refuse in the course of his business, willfully threw it into the stream within the meaning of 14 Geo. 3, C. 96. Bramwell, B., defines the word as follows:
'Wilfully' appears to me in this section to mean 'wantonly' or 'causelessly.'
In 'In re THE POSTMASTER-GENERAL AND COLGAN'S CONTRACT' (1906) 1 Ir R 287, Barton, J., says:
The words 'default' and 'wilful' axe relative terms. Each case must depend upon its own circumstances. A concise summary of their meaning is given by Sirling, L.J., in Bennett v. Stone (1903) 1 Ch 509:
According to the rule laid down in 'YOUNG & HARSTON'S CONTRACT', (1886) 31 Ch D 168, a vendor commits a default if he fails to do something which he ought reasonably to do, regard being had to the terms of the contract which he has entered into with the purchaser, and is guilty of wilful default if he so fails when be is a free agent and knows what he is doing and intends to do what he does.
To this may be added as an obvious corollary that an honest mistake, the result of oversight or inadvertence, is not wilful unless persisted in after the attention of the vendor has been called to it.
In Reg v. Senior (1899) 1 QB 283, Lord Russell of Killowen, C.J., in a different context, explains 'wulfully' to mean:
that the acts if done deliberately and intentionally not by accident or inadvertence, but so that the mind of the person who does the acts goes with it.
The meaning of the word was also considered in various decisions in connection with wilful misconduct, wilful default, wilful neglect, occurring in disorient statutes. In 'In re YOUNG AND HARS-TON'S CONTRACT' (1886) 31 Ch D 168, Bowen, L.J., explained the word 'wilful' which has been accepted and applied in subsequent cases, as follows:
It (i.e., the word 'wilful') generally, as used In Courts of law, implies nothing blamable, but merely that the person of whose action or default the expression it used, is a free agent, and that what has been done arises from the spontaneous action of his will. It amounts to nothing more than this, that he knows what he is doing and intends to do what he is doing, and is free agent.
In 'In re LORD MAYOR OF LONDON AND TUBES CONTRACT' (1894) 2 Ch 524, Lindley, L.J., says:
I confess that I am more disposed to concur with Lord Bramwell's observations on the term 'wilful misconduct' in Lewis v. G.W. Rly CO. (1878) 3 Q.B.D. 195 at p. 206: They are, in my opinion, quite consistent with Lord Bowen's observations in 'In re YOUNG AND HARSTON'S CONTRACT' (1886) 31 Ch D 168, if it be borne in mind that Lord Bowen presupposed knowledge of what was done, and intention to do it, and was not addressing himself to a case of an honest mistake or oversight.
In Forder v. G.W. Rly. CO. (1905) 2 KB 532, Lord Alverstone defines wilful misconduct with lucidity in the following passage:
Wilful misconduct in such a special condition means misconduct to which the will is party as contradistinguished from accident, and is far beyond any negligence, even gross or culpable negligence, and involves that a person wilfully misconducts himself who knows and appreciates that it is wrong conduct on his part in the existing circumstances to do or to fail or omit to do (as the case may be), a particular thing, and yet intentionally does, or falls or omits to do it, or persists in the act, failure or omission regardless of consequences...or acts with reckless carelessness, not caring what the results of his carelessness may be.
In 'In re LORD MAYOR OF LONDON AND TUBBS' CONTRACT' (1894) 2 Ch 524, Lopes, L.J., says:
It is difficult to lay down any general definition of wilful. The word is relative, and each case must depend on its own particular circumstances.
In 'In re CITY EQUITABLE FIRE INSURANCE CO., LTD' (1925) 1 Ch 407, an interesting discussion explaining the meaning of the word 'wilful' is found. On a misfeasance summons under Section 215 of the Companies (Consolidation) Act, 1908, the Official Receiver as liquidator sought to make the respondent directors, all of whom (except the managing director) had admittedly acted honestly throughout, liable for negligence in respect of losses occasioned by invescaitnts and loans, and of payment of dividends out of capital. In determining, the question of the liability of the directors, the meaning of the words 'wilful neglect or default' in Article 150 of the Company's Articles of Association fell to ke considered, and elucidated. The learned Judges accepted and followed the definition of wilful misconduct given by Lord Alverstone in Forder v. G.W. Rly. CO. (1905) 2 KB 532.
8. Coming to the Indian decisions, in E.I. Rly. Co. v. Ahmed Ali Mohammad AIR 1921 Nag 34, the question was whether a railway company was guilty of willful neglect. The learned Judge says.
that the term willful neglect implies an intentional and purposeful omission to do a certain act and, it is an even more extreme term than gross and culpable negligence.
Implying that an individual deliberately refrains with his eyes open from doing an act or taking a step which it is his duty to take. The Judicial Committee in Ardeshir Bhicaji v. G.I.P. Rly. Co. 52 Bom 169, had to consider the meaning of the words 'wilful neglect' in connection with the omission by a railway administration to provide efficient means for extinguishing a fire. They held that the words meant that the act was done deliberately and intentionally and not by accident or inadvertence, but so that the mind of the person who does the act goes with it. Govinda Menon J. in Jayarama Chettiar v. Emperor 1948 MWN 29, had occasion to deal with the meaning of the words 'wilful submission' in Section 15(a) of the General Sales Tax Act. There, the petitioner who was a dealer in silver and gold jewels in Kumbakonam town and an assessee under the General Sales Tax Act furnished a return on 15th April 1946 which did not include the value of 15,322 1/8 tolas weight of silver relating to the silver articles sold by him. The justification for the non-inclusion of that weight of silver, according' to the petitioners, was the practice followed by him, to sell the articles, not for proper money consideration but only after getting back the equivalent weight of silver from the customers for the precise quantity of the silver utilized in the manufacture of the article or articles. The cash received, as making or manufacturing charges was brought into the account and the quantity of silver was omitted from the account and from the return. The learned Judge after considering the case law on the subject expressed his view in the following words:
If the petitioner by inadvertence or oversight or mistake omitted to include these amounts in the 'A' return, then it is not a wilful act. But, on the other hand, under the impression that this amount is not taxable and therefore need not be included in the return, he omits to make mention of it in the A return with the full knowledge of his having omitted the same, in my opinion, he has wilfully omitted it. It need not necessarily be that in making such omission he should know that it was improper or criminal. The word 'wilfully' has been inserted m Section 15 to exclude cases of inadvertence or mistake but not cases; where the omission was due to a wrong view of the law or ignorance of the law.
I am not concerned in this case with the correctness of the conclusion arrived at by the learned Judge on the facts of that case. If the petitioner in that case practiced a fraud on the Sales Tax authorities by adopting a procedure to evade payment, perhaps it may be said that the petitioner therein made a wilful submission of an untrue return. But with great respect to the learned Judge I cannot agree with the aforesaid observations as in my view they are far too wide and if accepted, would make the use of the word 'wilful' by the legislature nugatory. In Hudson v. Official Liquidator, Dehradun Massorje Electric Tramway Co. : AIR1929All826 , the learned Judges considered the meaning of the words wilful acts of defaults occurring in Article 118 of the Company's Articles of Association which dealt with the conduct of the company's business. The article provided that the officers of the company would be entitled to an indemnity out of the funds of the company except in regard to their own wilful acts or defaults. After noticing the various English decisions cited before them, the learned Judges summarized their view in the following swords:
The adjective 'wilful' in 'wilful acts or defaults' has evidently been used as a description and not as a definition. The idea intended to be conveyed is that the default is occasioned by the exercise of volition or as the result of the non-exercise of will due to supine indifference, although the defaulter knew or was in a position to know that loss or harm was likely to result. The word does not necessarily suggest the idea of moral turpitude. We have also to eliminate the elements off accident or inadvertence or honest error of judgment. The default must be the result of deliberation or intent or be the consequence of reckless omission. 'Wilful default' therefore is indicative of some misconduct in the transaction of business or in the this charge of duty by omit-thing to do something either deliberately or by a reckless disregard of the fact whether the act or omission was or was not a breach of duty.
I am inclined to accept the aforesaid definition.
9. Having regard to the aforesaid discussion of the case law and the meaning attributed by the different judges to the word 'wilful' the law on the subject may be stated as follows. As a general rule a guilty mind is an essential ingredient; to crime. This mental element is ordinarily expressed in statutes by the use of the words such as 'maliciously', 'fraudulently', 'negligently', 'knowingly' etc. It is true that the rule is not inflexible and in some statutes particularly in the realm of municipal law an act is made an offence without an intention on the part of the accused; but in construing such statutes, the following rule of construction given in Broom's Legal Maxims may be borne in mind:
Whether a statute should be construed in that sense or is subject to an implied Qualification that there must be a guilty mind depends not entirely upon its language but also upon its subject matter and the various circumstances that make the one construction or the other reasonable including the nature of the punishment imposed for its infringement.
In the instant case the legislature designedly used the word 'wilful' to express the mental element necessary to constitute the offence. The word 'wilful' excludes bona fides in respect of the return. An honest and reasonable but a mistaken belief in the existence of circumstances which, if true, would have made the act lawful is a good defence. Wilful is a word of description. It describes the act constituting an offence viz., submission of a false return. A submission of a false return cannot be a wilful submission unless the dealer has deliberately made the return with the knowledge that he was excluding a taxable item. Otherwise, every submission of a return omitting a particular taxable item, though the assessee bona fide believed as one exempt from taxation, would become an offence. So construed, the word 'wilful' becomes nugatory for, except in the case of arithmetical mistakes or omissions, a submission of a return omitting to include an item held subsequently by the taxing authorities, to be taxable, differing from the view of the assessee, will be an offence.
10. In my view, this construction which leads to startling results should not be accepted unless the words in the statute are clear and unambiguous. Not only I do not see any such words but to my mind the word wilful used in the section was intended only to hit at intentional omissions of an assessee with full knowledge that the item omitted is a taxable one.
11. In the present case, on the facts admitted and found it is obvious that the assessee bona fide believed that his act of accommodation to his customers in keeping up to the terms of the contract entered into with them would not change the real nature of the transaction. If he was able to convert the ingots entrusted to him into brass sheets he would have got exemption in regard to his manufacturing charges. Indeed, as the evidence discloses and as the accounts show, he later on sold away the ingots entrusted to him after converting them into sheets paying sales tax. He might have been wrong in the view but I cannot say that he omitted the item deliberately with the idea of evading tax. The fact that immediately it was pointed out to him he was ready to make good the defect, is really indicative of his bona fides. I therefore hold on the evidence adduced in the case that the appellant did not wilfully submit an untrue return. The conviction and sentence are therefore set aside and the appeal is allowed.