1. The facts in this case are shortly as follows: The petitioner is Durga Prosad Khaitan. On or about 28-8-1954 an application was made to the Commercial Tax Officer, Canning Street, District II, Charge, Calcutta, for registration of the firm of Durga Prosad Shyamsundar, of which the petitioner is stated to be the proprietor, under the Bengal Finance (Sales Tax) Act, 1941. In the said application it was declared that the said firm was importer of goods from places outside Bengal and that the sales effected exceeded the taxable quantum on 13-8-1954. This application was received by the said Commercial Tax Officer on 2-9-1954. It has been subsequently found that the petitioner had exceeded the taxable quantum not on the date mentioned above, but on 20-7-1954. On 20-10-1854, the petitionter sont areminder to the Commercial Tax Officer complaining that the absence of registration was causing him great inconvenience. It was stated that the firm had made huge imports amounting to over Rs. 3 lakhs, of which Rs. 2 lakhs were already sold in the local market. It was further stated that not only were huge stocks in hand, but goods worth nearly one and half lakhs which were in transit, would arrive in Calcutta shortly. The first hearing was fixed on 21-10-1954, but for some reason or other, the case was not taken up on that date. A further reminder was given on 23-10-1954. It appears that the authorities upon receiving the application caused an Inspector of the Commercial Tax Department; by the name of Dilip Kumar Sarkar, to inspect the business place of Durga Prosad Shyamsundar, and to submit his report to the Commercial Tax Officer. He called at 188 Cross Street, the address furnished in the application, and fount that the firm was situate in a room on the second floor of premises No. 188 Cross Street There he met Durga Prosad Khaitan, who represented himself to be the sole proprietor of the said firm. The Inspector inspected the vouchers, cash-memos etc. and the results are incorporated in a report dated 4-11-1954 a copy whereof is annexed to the affidavit of Dilip Kumar Sarkar, affirmed on 8-3-1956. This report shows that the petitioner was a tenant of Birdhichand Jambar. He had come to Calcutta six months previously and had started business on 2-7-1954. The report further shows that several books of account were inspected. This report has been countersigned by Durga Prosad Khaitan himself. This fact will be found to be of some importance presently. Thereafter, dates were fixed for the hearing. But the notices fixing the dates could not be delivered as the shop room was found closed during business hours. The investigation of the books showed that while the purchases of the petitioner exceeded Rs. 3,92,000/- he had a capital of no more than Rs. l,000/-. With regard to the shop room, what has subsequently transpired is that the petitioner took the room on rent on or about 29-6-1954 and paid rent up to 3-12-1954 after which he defaulted in paying the rent and the landlord filed a rent suit and obtained possession on or about 28-7-1955. All the belongings of the petitioner in the room were attached and subsequently sold in auction.
2. Upon receiving the report of the Inspector and the result of the inspection of the books, the Commercial Tax Officer recommended to the Commissioner Commercial Taxes, through the Assistant Commissioner of Commercial Taxes, Calcutta, Central, that security should be demanded from the petitioner of Rs. 10,000/- under Section 7(4a), Bengal Finance (Sales Tax) Act, 1941. The Commissioner, however, reduced the sum to Rs. 5,000/- and on 28-12-1954 notice was given to the petitioner that the Commissioner had directed that he should pay a cash security of Rs. 5,000/- under Section 7(4a) of the Act. The petitioner did not comply with it, and some time in January, 1955 he was informed that his application for registration, dated 28-8-1954, had been rejected. In the original petition as filed, the petitioner did not make any mention of the enquiries made on behalf of the respondents. In the affidavit-in-opposition, affirmed by Nirmalandu Basu dated 24-3-1955 it was mentioned that such enquiries had been made, although the details of the enquiries were not set out. The petitioner amended his petition and added the following statement in para 10 of the petition:
'In fact, after the Rule nisi was issued herein, your petitioner came to know for the first time from the affidavit-in-opposition filed by and on behalf of the respondents that prior to the passing of the said order they had ever made certain enquiries behind the back and in the absence of your petitioner. Your petitioner was completely in the dark about the said alleged enquiry. The said order is opposed on the rules of natural justice.'
3. This statement is entirely false, as will appear from the facts stated above. Not only was the petitioner fully aware of the enquiry but he was present at the enquiry on 4-11-1954 and actually signed the report himself.
4. This Rule was issued on 11-2-1955 upon the respondents to show cause why an order in the nature of a writ of mandamus should not be made directing the respondent Commercial Tax Officer to issue the registration certificate to the petitioner without security being demanded, and for other reliefs.
5. Mr. Mitra appearing on behalf of the petitioner has taken the following points:
(1) Section 7(4a), Bengal Finance (Sales Tax) Act, 1941 is void as infringing the provisions of Article 19(l)(g) of the Constitution and the restrictions , imposed by it are unreasonable restrictions;
(2) That the security that can be demanded is only for the payment of tax 'payable' by the dealer under the Act. Tax is only payable after it has been assessed and demand notice served and can never be so at the time of the application for registration. Consequently, the section is unworkable. In any event, on the facts and circumstances of this case the stage had not arrived for demanding security;
(3) Rule 6, Bengal Sales Tax Rules, 1941, is bad as it contravenes the rules of natural justice.
6. It will be convenient to take up the secondpoint first, since if the section is unworkable, thenit is useless to consider whether it is ultra vires ornot. The relevant portion of impugned Section 7(4a) runsas follows: '
'The Commissioner may, for good or sufficient reasons, demand from a registered dealer or from a person who has applied for registration under this Act,
(i) reasonable security for the proper payment of tax payable by him under this Act;'
Mr. Mitra in support of this point principally relies on the case of - 'In the Matter of Recols (India) Ltd.', 57 Cal WN 468 (A). The facts in that case are shortly as follows: In May 1950, certain creditors of a private limited company called Messrs. Recols (India) Ltd. applied for its liquidation. The application was admitted and a provisional Liquidator was appointed. In July, 1950 a winding up order was passed. The Liquidator settled the list of creditors and at that stage a demand was made for payment of a sum of Rs. 760/10/9, stated to be arrears of sales tax due from the company for four quarters ending on 31-3-1948. On behalf of the Sales Tar Authorities, priority of payment was claimed under Section 230(1), Indian Companies Act which provides that in the winding up, there shall be paid in priority to all other debts, taxes due from the company which were due and payable within 12 months next before the date of the winding up order. It was held that the tax became due and payable after assessment and service of notice of demand, Mr. Mitra argues that if this be so, then reasonable security can only be asked for after there has been an assessment of tax and after notice of demand has been served. This of course is impossible at the stage contemplated by Section 7(4a). Consequently, if Mr. Mitra's argument is accepted, the section becomes unworkable. Before I deal with this point further, I shall enumerate how an application for registration comes to be made. Section 4 of the Act lays down the point of time when the liability to pay sale tax commences. At that point of time, the dealer must have reached the taxable quantum. Roughly speaking, taxable quantum means, in relation to any dealer who imports for sale any goods into West Bengal or manufactures or produces any goods for sale, Rs. 10,000/-; or in relation to any other dealer Rs. 50,000/-. Under Section 7, no dealer shall while being liable to pay tax under Section 4 of the Act, carry on business as a dealer unless he has been registered and possesses a registration certificate. Every dealer, wishing to be registered shall make an application in such behalf, in the prescribed manner to the prescribed authority. If the said authority is satisfied that the application for registration is in order, he shall register the applicant in accordance with such rules as may be prescribed. Such rules have been prescribed in exercise of the power conferred by. sub-s. (1) of Section 26 of the said. Act. Rule 5 lays down what should be the contents of an application for registration. Rule 6 is important and is set out below:
'When the Commercial Tax Officer, after making any inquiry that he may think necessary, is satisfied that the applicant has correctly given all the requisite information and that the application is in order, he shall register the dealer and shall issue a certificate of registration in Form IIA or IIB........'
7. In order to appreciate some of the difficulties that have arisen in this case, it will be necessary to examine the provisions of Section 4 a little more closely. The relevant provisions which we have to examine are as follows:
'4(1) With effect from such date as the State Government may, by notification in the Official Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded the taxable quantum shall be liable to pay tax under this Act on all sales effected after the date so notified;
(2) Every dealer to whom Sub-section (1) does not apply, shall, if his gross turnover calculated from the commencement of any year exceeds the taxable quantum at any time within such year, be liable to pay tax under this Act, on the expiry of two months from the date on which such gross turnover first exceeds the taxable quantum, on all sales effected after such expiry.'
8. Sub-section (2) quoted above has come by way of amendment, having been substituted for the original sub-section by Section 3(b), Bengal Finance (Sales Tax) (West Bengal Amendment) Act, 1950. The original sub-section was as follows:
'Every dealer to whom Sub-section (1) does not apply shall be liable to pay tax under this Act with effect from three months after the commencement of the year immediately following that during which his gross turnover first exceeds the taxable quantum.'
9. It will thus be seen that the point of time when liability to pay tax arises under this sub-section has been considerably altered. In the previous sub-section the liability to pay the tax commenced from three months after the commencement of the year immediately following that during which the gross turnover first exceeds the taxable quantum. In other words, he could wait for the whole year during which his gross turnover exceeded the taxable quantum and also three months after the commencement of the following year. But under the new sub-section, if his gross turnover from the commencement of a year exceeds the taxable quantum, then even within that year he has only two months' grace from the point of time when it so exceeds the taxable quantum, after which he becomes liable to pay the tax. Rule 5, which prescribes the contents of the application for registration was framed before the -amendment. The result is that under the rule, what has to be stated in the application form is the gross turnover of the business for the preceding year and not the turnover from the commencement of the year during which the liability arose. In other words, the rule has remained as before, and has not been brought in line with the present requirements under the amended sub-section. The learned Standing Counsel admits that this is an oversight and calls for an immediate rectification. Fortunately however, the form itself has been suitably altered and requires the gross turnover to be given from the commencement of the current year to the date of the application. It is in this form that the petitioner had made his application for registration.
10. The original Act did not contain Section 7(4a), that is to say, there was no provision for demanding any security from an applicant for registration. Both Section 7(4a) and Section l1(4a) were introduced by the Bengal Finance (Sales Tax) (Amendment) Act, 1954 (West Bengal Act 19 of 1954). It is instructive to compare the wordings of these two sub-sections which have been so introduced. In Section 7(4a)(i) the words used are 'payment of tax payable by him under this Act', whereas under Section l1(4a) the words are
'payment of tax payable under this Act after the assessment of such tax has been made and the date for the payment thereof has expired.'
The argument that the word ' payable' as used in Section 7(4a) should be construed as meaning payable after assessment and service of notice, might look plausible in the first instance, but will not bear scrutiny. It is true that in the case mentioned above of 'Recols (India) Ltd. (A)' it was held that sales tax is due and payable after assessment and service of demand notice, but it is plain that it was so construed upon the facts of that case. Really speaking the Court was construing not the provisions of the Sales Tax Act but the provisions of Section 230, Indian Companies Act read with the Sales Tax Act. If we are to take the word 'payable' literally, then it must necessarily mean that the amount has become legally payable and that can only happen after assessment and service of notice, and in this respect Sales Tax Act is no different from Income-tax. But the same word may be used in different senses at different places of the same Act. Odgers in his Construction on Deeds and Statutes, Second Edition, p. 176 says as follows:
'It is said to be a presumption in construction that the same words arc used in the same meaning in the same statute and that consequently its change of language is some indication of the change of intention on the part of the Legislature..... The presumption is however the slightest and there are very many instances where the application of this rule is impossible or would result in injustice or absurdity. . some words may often receive a different interpretation in different parts of the same Act, for 'words used with reference to one set of circumstances may convey an intention quite different from what the self-same set of words used with reference to another set of circumstances would or might have produced (per Lord Blackburn in - 'Edinburgh Street Tramways v. Torbain', (1877) 3 App Gas 58 at p. 68 (B).'
11. It is another well-known rule of Interpretion of Statutes that it should not be so construed as to make the meaning absurd or unworkable. It ,' is but evident that the word 'payable' in Section 7(4a)(i) : cannot be construed as meaning a point of time when assessment has been completed and notice of demand has been served. The point of time which is contemplated is when a dealer who has arrived at the taxable quantum applies for registration. At that time, there can be no assessment, not to speak of a notice of demand. Consequently, the word 'payable' must mean 'that will become payable.' This meaning becomes quite clear if we compare it with Section l1(4a) where it has been clearly stated that the point of time contemplated there is after assessment of tax and the expiry of the date of payment. There is, therefore, no substance in this point.
12. Coming now to the 6rst point, Mr. Mitra has argued that the Commissioner has been given an unfettered power without any limitation and without any indication in the Act and the Rules as to the mode of its exercise. He says that supposing that the Commissioner does not like a dealer, he, might order that the dealer must give security for a lakh of rupees, which means nothing less than putting him out of business altogether. This, Mr. Mitra argues, is entirely against the spirit and tenor of Article 19(1)(g) of the Constitution. He has cited the case of - 'Dwarka Prasad v. The State of Uttar Pradesh', : 1SCR803 (C) for the proposition that the grant of a power which is without limit and which might be used arbitrarily, is void. In my Opinion, this point also is without substance. As Section 7 (4a) has been enacted, there are two limitations expressly mentioned therein. First of all, the Commissioner can only demand security 'for good or sufficient reasons.' It is not what is good or sufficient reason in his opinion. That is to say, it is not subjective but objective. In other words, the reason must be good or sufficient objectively and the matter is justiciable. I think that the Legislature would have done well to have provided that the reasons should be recorded in writing, in line with many other enactments of this description. However, if challenged he has to disclose the reasons which will be examined by the Court. The second limitation is that it must be 'reasonable security'. This again means that if there is a good or sufficient reason, then the security demanded must be compatible with the reason. If the security is arbitrary, or unconnected with the reason which has impelled the Commissioner to demand security or disproportionately large, then it will be bad. Take the facts in the present case. If we calculate the taxable turnover which the petitioner had from the beginning of the year up to the date of making the application, and calculate the probable liability on that footing, then it will be found' that his liability would be in the neighbourhood of Rs. 16,000/-. The Commercial Tax Officer originally recommended that a security of Rs. 10,000/- be required, but the Commissioner has scaled it down to Rs. 5000/-. Next comes the question whether there was good or sufficient reason for demanding security. The petitioner's books show a very large turnover. According to himself, he had only come six months before to Calcutta, but he had completed transactions worth about Rs, 3 lakhs and another one and half lakhs or so was in the offing. In spite of this enormous turnover, the books showed a capital of Rs. 1000/-. Whether such a way of doing business is within the region of possibility or not, it is unnecessary to consider. The authorities, however, decided very rightly to be on their guard, and the further circumstances disclosed were not calculated to allay their anxiety. The shop of the petitioner turns to be elusive. It is only open for a short while during the day, and ultimately it has disappeared altogether. At the hearing, Mr. Roy who followed Mr. Mitra, argued that his client was still in his old shop and all these statements on behalf of the authorities were reckless. I therefore gave him an opportunity of showing me the rent receipts. That opportunity was not availed of, and it seems to me for obvious reasons. The authorities are therefore justified in treating this meteoric intruder into the world of business in Calcutta with a degree of suspicion, and the circumstances in my opinion fully Justify the imposition of a security. Taking all the facts and circumstances of this case the security is by no means unreasonable. For the reasons stated above, I hold that Section 7 (4a) of the Act does not confer unfettered and arbitrary power upon the Commissioner and that the restrictions imposed by it are reasonable restrictions and do not contravene the provisions of Article 19(l)(g) of the Constitution. It is not ultravires. After all, the Legislature has the power of imposing taxation and it is no good saying that the taxation is oppressive. That is not a matter which concerns the Court. - 'Anantha Krishnan v. State of Madras', : AIR1952Mad395 (D). The power to levy a tax would include the power to impose reasonable safeguards in collecting it.
13. Next comes the question of Rule 6. It is argued that under Rule 6, the enquiry that has to be made is ex parte and therefore it violates the rules of natural justice. Of course the rule says that the Commercial Tax Officer can make 'any enquiry that he may think necessary.' But that does not necessarily mean that the rules of natural justice are to be violated. The petitioner has to give certain information in his application. If the authorities are to act on such information, then necessarily they must verify it. I do not think that verification or the checking of information given by the dealer himself, has to be done in accordance with the rules of a judicial trial. After all, this kind of thing happens every- ' where. Supposing a student applies for admission to a school. The particulars given in his application are checked, but nobody can urge that there should be a judicial enquiry. However it has been urged that the provisions of law restricting the fundamental rights of the petitioner, should be put on a different and a stricter footing. Undoubtedly, the enquiry must be done in a way that does not take away that right or make a mockery of it. The learned Standing Counsel concedes that so far as the enquiry contemplated in Rule 6 is concerned, although it would not be possible to give notice to the dealer at every stage of the enquiry, still, the dealer must have every opportunity of answering any facts that emerge upon enquiry, and are to be used against him. In other words, if the authorities find from enquiry that any information given by him is not correct, then they would be bound to acquaint him with this, and give him an opportunity of explaining the same. Thus construed, I do not think that the rule is violative of the rules of natural justice, or arbitrary or unjust. In the facts and circumstances of the present case, the petitioner was given an opportunityof being present when the enquiry, or at least the most important part of the enquiry was made. Upon this point he has come to Court with a false statement and that alone might have been a reason for throwing out his application. However, it is not necessary to do so. The case fails on the merits.
14. For the reasons stated above, all the points taken on behalf of the petitioner have failed and this application must be dismissed. The Rule is discharged, all interim orders vacated. There will be no order as to costs.