K. Veeraswami, J.
1. These two petitions for certiorari involve the interpretation of the true scope and ambit of the Madras Entertainments Tax (Amendment) Act, 1966, more especially Sections 2 and 7 of the Act. For deciding this question, it will suffice to notice the facts in W.P. No. 2408 of 1966.
2. The petitioner in that case is the Managing Partner of a cinema theatre styled as 'The K.M.S. Theatre' at Mettupalayam in Coimbatore district. The other partners of the firm are his two brothers, one of whom is a minor. On 7th November, 1965, the Commercial Tax Officer, Erode, made a surprise inspection of the theatre and found the booking clerk actually selling unauthorised tickets with a forged seal 'Commercial Tax Officer, Mettupalayam '. The Officer seized the forged seal of the Commercial Tax Officer, Mettupalayam, the connected machines, materials, and the incriminating records including the bogus tickets with and without numbers. The department claimed that the records so recovered revealed sale of spurious tickets from 1962 till the date of inspection. On 14th March and 1st June, 1966, the petitioner was served with two pairs of 159 notices requiring him to file objections to a proposal to bring to tax the escaped payments for admission by tickets to the theatre during the period under the Madras Entertainments Tax Act, 1939, and to levy surcharge on the payments for admission under the Madras Local Authorities Finance Act, 1961. The petitioner preferred various objections which were all overruled by the Deputy Commercial Tax Officer, Mettupalayam. This Officer then, in the light of the actual suppression of the entertainments tax and surcharge as per records during a part of the period, applied his best judgment, and, by order dated 10th August, 1966, taking a week as the Unit during the period since 1962, to the date of inspection, levied entertainments tax and surcharge, which, according to the Officer, had escaped assessment. The petition is to quash the re-assessment.
3. The petitioner's grounds span a wide range, but we have heard argument on only one of them as the decision on that will be decisive on these petitions. The ground is that neither the Entertainments Tax Act nor the Local Authorities Finance Act conferred upon the Deputy Commercial Tax Officer power of re-assessment to bring to charge that which had escaped assessment. As to this, there is no dispute. In fact Venkatadri, J., in R. Sundararaju Naidu v. The Entertainments Tax Officer W.P. No. 513 of 1963 held that there was no power of re-assessment of what had escaped assessment under either of these Acts. Apparently, the State accepted this judgment but enacted the Madras Entertainments Tax (Amendment) Act, 1966, which received the assent of the Governor on 25th November, 1966, and came into effect on 20th November, 1966, when the Act was published in the Fort St. George Gazette. The object of this Act is to make provision in the Entertainments Tax Act for power to reassess what has escaped assessment under the Act and to validate the re-assessments made between the date of the principal Act and the date of the publication of the Amending Act in the Fort St. George Gazette. The contention before us is that the power to re-assess under Section 7-B introduced by the Amending Act is incomplete and not exercisable, in the absence of prescription as to limitation contemplated by the section, and that, in view of this, Section 7 of the Amending Act fails to validate the re-assessments in question.
4. In our opinion, the contention is of substance and merits careful examination. The Madras Entertainments Tax Act, 1939, provides for levy by the State Government of taxes on entertainments and for payment of compensation to local authorities. Section 4(1) is the charging section and, as provided by it, entertainments tax is levied and collected by inclusion of the same in the fee for payment to any entertainment. The section also provides for three tiers of rates. The manner of payment of tax is indicated by Section 7. It says the tax shall be levied in respect of each person admitted on payment and shall be calculated and paid on the number of admission. The liability to pay tax is on the proprietor from whom it can be recovered. Section 7-A which was introduced for the first time with effect from 1st April, 1958, requires the proprietor of an entertainment to file returns relating to payments for admission in such manner and within such period as may be prescribed. The same section further provides for power to assess by best judgment, in case of. no return or incomplete or incorrect return. A week is the unit prescribed for purposes of assessment. Ten per cent. of the proceeds of the tax collected under Section 4 every year in respect of entertainments held within the jurisdiction of any local authority is required by Section 13(1) to be credited to the State Government and the balance of ninety per cent. should be paid to the local authority. Section 16 confers upon the State Government the rule-making power on various matters. As we mentioned, neither under the Act nor under the Rules was there any provision made for power to reopen the assessments and re-assess bringing to tax payments on admission to entertainment which had escaped charge under Section 4 of the Act. Nevertheless, the re-assessments in question were made by re-opening the earlier assessments. The Amending Act introducing Section 7-B in the Parent Act has made it retroactive and to have force from 1st April, 1960. The rest of the sections took effect from 3oth November, 1966, the date of publication of the Amending Act. Section 7-B (1), as introduced by the amendment, reads:
Where, for any reason-
(i) any payment for admission to any entertainment has escaped assessment to tax under Section 4; or
(ii) any cinematograph exhibition has escaped assessment to tax under Section 4-A, the authority prescribed under Sub-section (1) of Section 7-A may, subject to the provisions of Sub-section (3) and at any time within such period as may be prescribed, assess to the best of its judgment the tax due or such payment or exhibition under Section 4 or 4-A, as the case may be, after making such enquiry as it may consider necessary and after giving the proprietor a reasonable opportunity to show cause against such assessment.
While filling up the lacuna in the Parent Act, Section 7-B gives power to the authority prescribed under Section 7-A (1) to bring to tax any payment for admission to entertainment which had escaped assessment under Section 4. We are not, at the moment, concerned with Section 4-A. But the exercise of this power is subject to two conditions. Firstly, the power to re-assess is subject to the provisions of Sub-section (3). Though it is worded in that manner, the language does not operate as a limitation on the scope of the power to re-assess escaped payments. Sub-section (3) of Section 7-B is an additional power to levy penalty, subject of course to the terms mentioned in the sub-section. The second condition with which we are immediately concerned, is that the power can be exercised only at any time within such period as may be prescribed. The term 'prescribed' as defined in the Parent Act means prescribed by Rules made in the Act. Learned Special Government Pleader informs us that till date no such Rules prescribing time-limit for exercise of the power under Section 7-B (1) have been framed by the State Government. We do not, for present purposes, have to notice the other sub-sections of Section 7-B or the other sections of the Amending Act, except Section 7 which relates to validation of assessment and collection of certain taxes. This section is as follows:
Notwithstanding anything contained in this Act or in the Principal Act or in any judgment, decree or order of any Court, no assessment or re-assessment or collection of any tax due on any payment for admission to any entertainment or any cinematograph exhibition which has escaped assessment to tax, or which has been assessed at a rate lower than the rate at which it is assessable, under Section 4 or 4-A of the Principal Act, made at any time after the date of the commencement of the Principal Act and before the date of the publication of this Act in the Fort St. George Gazette shall be deemed to be invalid or ever to have been invalid on the ground only that such assessment or reassessment or collection was not in accordance with law and such tax assessed or re-assessed or collected or purporting to have been assessed or re-assessed or collected shall, for all purposes, be deemed to be and to have always been validly assessed or reassessed or collected, and accordingly-
(a) all acts, proceedings or things done or taken by the State Government or by any officer of the State Government or by any other authority in connection with the assessment or re-assessment or collection of such tax shall, for all purposes be deemed to be, and to have always been done or taken in accordance with law;
(b) no suit or other proceeding shall be maintained or continued in any Court against the State Government or any person or authority whatsoever for the refund of any tax so paid; and
(c) no Court shall enforce any decree or order directing the refund of any tax so paid.
The body of the section is in two parts. It opens with a non obstante clause giving Section 7 the effect of overriding anything contained in the Amending Act or in the Principal Act or in any judgment, decree or order of any Court. The first part is a deeming provision under which no re-assessment of payment on admission to entertainment which had escaped charge made between the date of commencement of the Principal Act and the date of the publication of the Amending Act shall be deemed to be invalid or ever to have been invalid on the ground only that such assessment or re-assessment or collection was not in accordance with law. What this part, in effect, says is that, though the re-assessment was not in accordance with law as and when it was made, it should not be regarded as invalid only on that ground. The second part of the main body of the section is couched in positive terms that the tax assessed or re-assessed or collected or purporting to have been assessed or re-assessed or collected shall, for all purposes, be deemed to be and to have always been validly assessed or re-assessed or collected. To put it differently, though the re-assessment was not in accordance with law, nevertheless, tax assessed or collected should be deemed to be valid. Certain consequences follow from these savings which are to be found in Clauses (a) to (c). Clause (a), again a deeming clause, directs that all acts, proceedings, things done or taken by the State Government in connection with the re-assessment or collection of tax should be deemed to be, and to have always been done or taken in accordance with law. Clause (b) puts a ban on any suit or other proceeding for refund of tax collected as due under re-assessments thus validated. Lastly, Clause (c) says that no Court shall direct refund of any tax so paid.
5. The scheme of the Amending Act appears to be, firstly, to confer power to re-assess and bring to tax payment on admission which had escaped charge; secondly to make the power available retrospectively from 1st April, 1960, as if the power was always there from then on; and thirdly, in view of the jurisdiction so made available, to validate on its footing re-assessments made between the two dates mentioned by Section 7 and provided in the rest of the sections.
6. In construing a taxing statute, certain principles should always be kept in view, which we had better state in the words of that eminent Tax Judge, Rowlatt, J., in Cape Brandy Syndicate v. Inland Revenue Commissioners L.R. (1921) 1 K.B. 64:
In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.
What should guide the Court is the expressed intention in a fiscal Act. In finding the scope of the Amending Act, Lord Coke's formula is of much assistance, to wit, (1) what was the law before the Act was passed; (2) what was the mischief or defect for which the law had not provided; (3) what remedy Parliament has appointed; and (4) the reason of the remedy. We have already mentioned that the Parent Act did not contain the power to re-assess payments that had escaped charge. It is this defect which the Amending Act supplied. But the Legislature, while making the Amending Act also knew that re-assessments had been made under the Parent Act without the power therefor. It, therefore, while supplying the power, made it retrospective, in order, as we think, to provide the foundation for validating such reassessments.
7. The question is whether the Amending Act has succeeded in achieving its purpose, in so far as it related to the impugned re-assessments. Quite obviously, if the prescription as to limitation required to be made under Section 7-B had been made, the power to make the re-assessment would be there from 1st April, 1960, and Section 7 would then validate the re-assessments. If a provision of law is made and brought into force with retrospective effect and the Legislature directs that the power shall be deemed to have come into existence from an anterior date, in construing and giving effect to it, one must take it as if it was factually there from such date In such a case, it is not open to the Court to boggle with its imagination and conjure up things, in the light of the putative state of affairs and try to find solution in respect of it. Let us then take it that the power of re-assessment was available from 1st April, 1960. But then it was subject to a condition; viz., that it could be exercised only within the period prescribed by the Rules. Where power is given by a legislative provision in terms that it can be exercised only within the time to be prescribed, it clearly follows, in our opinion, that unless the limits of time are drawn, the power itself cannot be exercised. This is because the intention of the Legislature is that the power is not available for exercise at any time but only within the prescribed time. In the absence of prescription by Rules, therefore, the intention of the Legislature is not fully effectuated, and the power is incomplete and cannot be exercised. The necessary consequence of this is that, when the impugned re-assessments were made, they were without jurisdiction, and, therefore, without authority.
8. Does Section 7 of the Amending Act validate such re-assessments? The answer will depend on our interpretation of Section 7. In approaching the scope of the section, as we have already indicated, the entire scheme of the Amending Act has to be borne in mind, and that has, if it is permissible to repeat, provided for jurisdiction to re-assess with retrospective effect and make it the foundation for validation of re-assessments made without jurisdiction. Even if this is not so, on the terms of Section 7 itself, there are difficulties in the way of upholding the validity of the reassessments. The non obstante clause with which Section 7 opens, we take it, will be applicable to override the provisions in the Amending or Principal Act which are inconsistent with Section 7 of the Amending Act. If there is nothing in the enactment standing in the way of validation, the non obstante clause will have no occasion to apply. To attract the non obstante clause, there must be something which will militate against validation, and for validation it should be got over. That this is the import of the non obstante clause, as we consider, is well brought out by reference to 'judgment, decree or order of any Court'. What the non obstante clause in the context means is that, although the Court by judgment, decree or order has held the re-assessment to be invalid; nevertheless, it shall be deemed to be valid. What is there in Section 7-B in the context of the non obstante clause in Section 7? Section 7-B, far from being incomplete or inconsistent with Section 7, is an enabling provision, and is in consonance with and in aid of Section 7. Section 7-B creates jurisdiction and its retrospective operation will be a basis for validation. But if Section 7-B is incomplete without prescription as to time, it is reasonable to suppose that the jurisdiction conferred by that section with retrospective effect is complete. As we understand Section 7, the language used by it is not appropriate to avoid the consequences flowing from failure to make prescription as to time under Section 7-B. It does not appear to us to be the intention of Section 7 to validate re-assessments not founded on jurisdiction given with retrospective effect. The opening words of Section 7, as we think, do not cure that defect.
9. The first part of Section 7, as we mentioned, only directs that a re-assessment order within its scope shall not be deemed to be invalid only on the ground that it is not in accordance with law. What does this mean? Does it refer to the position before the Amending Act? It seems to us that the reference is to that position. Re-assessment orders shall not be regarded as not being in accordance with law, because Section 7-B furnishes jurisdiction with retrospective effect to re-assess. Therefore it is that Section 7 says that the re-assessment shall not be deemed to be not being in accordance with law. We are unable to construe Section 7 as validating assessments which were not in accordance with law, except by providing for the necessary jurisdiction with retrospective effect and thus laying the foundation for validation. Article 265 of the Constitution says that no tax shall be levied except with the authority of law. It is, therefore, not open to the Legislature to say that, though the tax is without authority, it shall nevertheless be deemed to be valid. It can only validate by providing the authority of law and making it the basis for validation. And that is what, as we think, Section 7 does. The second part of the main body of Section 7 will have to be construed in consonance with the scope and intendment of the second part therein.
10. Learned Special Government Pleader contends that the failure to make prescription and rules in Section 7-B will not invalidate the exercise of the power in that section, and has referred us to Collector of Customs v. Gokuldas (1955) 1 M.L.J. 422 : I.L.R. (1955) Mad. 1248. We do not think the decision is of any assistance to Counsel, and on the contention itself, we have said enough in the earlier part of the judgment to show that it cannot be accepted. As we said, where power is given and the intention is indicated that it should be exercised within the time-limit to be prescribed, until the prescription is made, the power is not available for exercise. The power and the limit of power go together.
11. It is next said that Section 7 itself contains the prescription, or, at any rate, it prescribes its own time-limit. But 'prescribed 'in the Principal Act means' prescribed by Rules made' in exercise of the rule-making power of the Government. We may concede that the re-assessments validated by Section 7 are those which were made within the two dates mentioned therein. But the basis of validation is the source of power to re-assess, and under Section 7-B, it is incomplete without the prescribed time-limit. We are unable to construe Section 7 as containing any prescription as to time-limit for purposes of Section 7-B. It is only where under Section 7-B a time-limit is prescribed and it is in consonance with the time mentioned in Section 7 that the latter will prevail over the former. Where there is no prescription at all in Section 7-B, no question arises of Section 7 prevailing over Section 7-B, by reason of the non obstante clause. The whole point is, which we have borne in mind throughout this judgment, that the scheme of validation under Section 7 is that jurisdiction to assess with retrospective effect is given and on that foundation validation of re-assessments is made.
12. The result is the re-assessments in question in W.P.No. 2408 of 1966 are invalid. The same principle should govern the other writ petition too. Both the petitions are allowed with costs, one set to be equally divided between the petitioners. Counsel's fee Rs. 250.