Full Judgment Text
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PETITIONER:
STATE OF TAMIL NADU
Vs.
RESPONDENT:
KODAIANAL MOTOR UNION (P) LTD.
DATE OF JUDGMENT01/05/1986
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
PATHAK, R.S.
CITATION:
1986 AIR 1973 1986 SCR (2) 927
1986 SCC (3) 91 1986 SCALE (1)922
CITATOR INFO :
RF 1988 SC1737 (48)
ACT:
Central Sales Tax Act, 1956 - s. 10A - Penalty - Levy
of - Quantum of Penalty - Determination of.
Interpretation of Statutes - Legislative intent -
Ascertainment of - Duty of court.
HEADNOTE:
The assessee had purchased motor spare parts on the
basis of ’C’ form certificates issued to them under the
Central Sales Tax Act, 1956, for sale, but instead of
selling, the assessees used them for their own consumption.
The Revenue proceeded on the basis that since the goods
purchased had not been used for the purpose specified in
s.8(3)(b) and as recorded in the ’C’ form certificates, the
assessees had committed offences under s. 10(d) of the Act
and therefore, were liable to pay penalty as well. This view
was affirmed by all the authorities including the Tribunal.
On the question of quantum of penalty, the Tribunal
held that the penalty leviable under s. 10A should be one-
and-a-half times the concessional rate of tax and not one-
and-a-half the tax which would have been leviable if no ’C’
form certificate had been produced.
The Revenue challenged before the High Court the
correctness of the view taken by the Tribunal. The High
Court following its earlier decision in the State of Madras
v. Prem Industrial Corporation (24 S.T.C. 507) approved the
view taken by the Tribunal.
Allowing the Appeals of the Revenue to this Court,
^
HELD: 1. Sub-section (1) of s. 10A of the Central Sales
Tax Act, 1956 makes it clear that penalty should be worked
out
928
at the rate of tax which would have been levied if the
offence had not been committed. In other words the question
is what tax would have been levied under the Act if the
offence had not been committed. The assessee would not have
committed any offence only if he had carried out the
undertaking given by it in its declaration in form ’C’ or if
he purchased the goods without giving any declaration
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thereby incurring liability to pay normal rate of tax as
contemplated by sub-s. (2) of s.8. One who commits defaults
cannot be said to have carried out the undertaking given by
him. [939 C-E]
2. The use of the expression "if" in the phrase "if the
offence had not been committed" was meant to indicate a
condition, the condition being that at the time of assessing
the penalty, that situation should be visualised wherein
there was no scope of committing any offence. Such a
situation could arise only if the tax liability fell under
sub-s. (2) of s.8 of the Act. The scheme of s.8 indicated
the concessional rates contemplated by sub-s. (1) thereof
would be available only with reference to those goods which
are covered by the declarations in form ’C’. The moment it
is found that in respect of particular quantity of goods the
undertaking given by the assessee in form ’C’ declaration
has not been carried out, the goods were presumed to be such
in respect of which no undertaking was existing. Such goods
would be liable to normal tax contemplated under sub-section
(2) of s.8. Therefore, the penalty should be worked out only
on the basis of the normal rates prescribed under sub-s. (2)
of s.8. [939 F-H; 940 A-B]
M.Pais & Sons and Another v. The State of Mysore, 17
S.T.C. 161, Bisra Limestone Company Ltd. v. Sales Tax
Officer, Rourkela Circle, Uditnagar, and Others, 27 S.T.C.
531, The Assessing Authority and another v. Jammu Metal
Rolling Mills, [1971] Tax Law Report 1861, Kottayam
Electricals Private Limited v. The State of Kerala, 32
S.T.C. 535 and The Gaekwar Mills Ltd. v. The State of
Gujarat, 37 S.T.C. 129, approved.
The State of Madras v. Prem Industrial Corporation, 24,
S.T.C. 507 and Deputy Commissioner of Commercial taxes,
Madurai Division, Madurai v. Kodaikanal Motor Union Private
Limited, 31 S.T.C. 1, overruled.
3. Section 10A was introduced for imposition of penalty
in lieu of prosecution, that is to visit the person guilty
929
with certain penalty in place of prosecution. He cannot be
placed in a better position than one who would have complied
with the provisions of the Act. [940 B-C]
4. The Court must always seek to find out the intention
of the legislature. This can be done from the language used
in the statute. But the court need not always cling to
literalness and should seek to endeavour to avoid an unjust
or absurd result. To make sense out of an unhappily worded
provision, where purpose is apparent the judicial eye ’some’
voilence to language is permissible. The purpose of the Act
and the object of a particular section has to be borne in
mind. [938 F-H]
Seaford Court Estates v. Asher, [1949] 2 All E.R. 155
at 164, K.P. Varghese v. Income-tax Officer, Ernakulam and
another, 131 I.T.R. 597 at 604 to 606 and Luke v. Inland
Revenue Commissioners, 54 I.T.R. 692, relied upon.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1121-
1124 (NT) of 1974.
From the Judgment and Order dated 4th April, 1972 of
the Madras High Court in T.C. Nos. 158 to 161 of 1966.
S. Padmanabhan, A.V. Rangam and V.C. Nagaraj for the
appellant.
Nemo for the Respondent.
The Judgment of the Court was delivered by
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SABYASACHI MUKHARJI, J. These appeals by certificate
arise from the decision of the Madras High Court dated 4th
April, 1972 in Tax Cases Nos. 158-161 of 1966. These are in
respect of assessment under Central Sales Tax Act, 1956. The
assessees in the four tax cases were assessed under Central
Sales Tax Act, 1956 (hereinafter called the ’Act’). The
assessment years involved are 1958-59 to 1961-62. It was
found that the assessees had purchased motor spare parts on
the basis of the ’C’ form certificates issued to them under
the provisions of the said Act for sale, but instead of
selling those, the assessees had used those for their own
consumption.
930
The revenue proceeded on the basis that since the goods
purchased had not been used for the purposes specified in
section 8(3)(b) of the Act and as recorded in the ’C’ form
certificates, the assessees had committed offences under
section 10(d) of the Act inasmuch as they had used the goods
purchased by them on the basis of ’C’ form certificate for
the purpose other than the one mentioned in the certificates
and therefore were liable to pay penalty as well. All the
authorities including the Tribunal had found that the
assessees had actually committed the offences under section
10(d) of the Act in using the goods for the purposes other
than the one mentioned in ’C’ form certificates. Being a
finding of fact, the High Court proceeded on the basis that
the assessees had committed the offence. The question that
was posed before the High Court was what was the quantum of
penalty that had to be levied under section 10-A of the Act.
Section 10-A of the Act deal with penalties. Section 10-A is
a provision for imposition of penalty in lieu of
prosectuion. This section was initially added by section 8
of the Amendment Act 31 of 1958 with effect from 1st
October, 1958. This section has undergone several
amendments. On 9th June, 1969 with retrospective effect the
section was amended. The section was again amended with
effect from 1st April, 1973. Sub-section (1) of section 10A
which is material for our present purpose at the relevant
time was as follows :
"10A. (1) If any person purchasing goods is guilty
of an offence under clause (b) or clause (c) or
clause (d) of section 10, the authority who
granted to him, or as the case may be, is
competent to grant to him a certificate of
registration under this Act may after giving him a
reasonable opportunity of being heard, by order in
writing, impose upon him by way of penalty a sum
not exceeding one-and-a-half times the tax which
would have been levied under this Act in respect
of the sale to him of the goods, if the offence
had not been committed;
Provided that no prosecution for an offence under
section 10 shall be instituted in respect of the
same facts on which a penalty has been imposed
under this section."
931
Sub-section (1) of section 10A provided that if any A
person purchasing goods is guilty of an offence under clause
(b) or clause (c) or clause (d) of section 10, the authority
who granted to him or, as the case may be, is competent to
grant to him a certificate of registration under the Act,
may, after giving him a reasonable opportunity of being
heard, by an order in writing, impose upon him by way of
penalty sum not exceeding one-and-a-half times the tax which
would have been levied at the relevant time in respect of
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sale of goods if the offence had not been committed. The
only question that was under consideration was the quantum
of penalty that had to be levied under section 10A of the
Act.
It may be mentioned that section 10 imposes penalty if
any person, inter alia, under clause (d) of section 10 after
purchasing any goods for the purpose specified in clause (b)
or clause (c) or clause (d) of sub-section (3) of section 8,
fails without reasonable excuse to make use of the goods for
the purposes mentioned in the certificates. Section 8 deals
with the rates of tax on sales in the course of inter-State
trade or commerce. it stipulates that every dealer, who in
the course of inter-State trade or commerce, inter alia,
sells to a registered dealer other than the Government goods
of the description referred to in sub-section (3) shall be
liable to pay tax under the Act, which shall be four per
cent now and at the relevant time prior to 1975 was three
per cent of the turnover. Sub-section (3) of section 8 deals
with the goods referred to in clause (b) of sub-section (1)
of section 8.
The Tribunal as mentioned hereinbefore accepted the
contention that the penalty liable under section 10A in this
case should be one-and-a-half times the concessional rate of
tax and not one-and-a half times the tax which would have
been leviable if no ’C’ form certificate had been produced.
The Revenue challenged before the High Court the correctness
of the view taken by the Tribunal.
The High Court followed the decision of the Madras High
Court in the State of Madras v. Prem Industrial Corporation,
24 S.T.C. 507. Another view was expressed by the Mysore High
Court in M. Pais & Sons and another v. The State of Mysore,
17 S.T.C. 161 and the Orissa High Court in Bisra Limestone
Company Ltd. v. Sales Tax Officer, Rourkela Circle,
uditnagar, & Ors., 27 S.T.C. 531 took a different view. It
also appears H
932
that in Bisra Limestone Company Ltd., the decision of the
Madras High Court in The State of Madras v. Prem Industrial
corporation, (supra) was specifically referred to but was
not accepted as laying down the correct principle.
In the impugned judgment, the Madras High Court was of
the view that these decisions apart from the decision of the
Madras High Court in The State of Madras v. Prem Industrial
Corporation had proceeded on the basis that if the offence
had been committed under section 10A, it should be taken
that the concerned assessee never applied for and obtained
any valid certificate in form ’C’ which would have entitled
him to have the beneficial rate of tax and that therefore
the penalty leviable under section 10A could only be 1-1/2
times the normal tax i.e. 1-1/2 times the tax that the
dealer would have been liable to pay if he had not taken ’C’
form certificate. The Madras High Court was on the view that
if the principle on which the learned judges of the Mysore
and Orissa High Courts in the above-mentioned decisions had
proceeded was correct, then there was no question of any
offence being committed by the assessee in not taking ’C’
form certificate, though the assessee might be thrown open
to a larger and normal rate of tax in place of concessional
rate of tax. The Madras High Court in the judgment under
appeal was unable to accept the principle laid down by the
two decisions of the Mysore High Court and the Orissa High
Court respectively. In that view of the matter, the
challenge of the Revenue to the decision of the Tribunal
failed.
Aggrieved by the impugned decision and in view of the
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conflict of decisions between different High Courts, the
Revenue has come up in these appeals.
In M. Pais & Sons & Anr. v. The State of Mysore,
(supra), Hegde, J. as the learned judge then was in the
Mysore High Court held that as the goods purchased by the
petitioner in that case were not covered by any valid ’C’
form, sales tax was leviable at 7 per cent, and therefore
the penalty that was leviable 10-1/2 per cent of the
turnover. The petitioner, in another case, had manufactured
soap and he had included the following goods in his
application for certificate of registration under section 8:
coconut oil, perfumes, silicate, caustic soda, nails,
colours, strappings, papers and rosin.
933
During the relevant year the petitioner purchased maroti oil
A and groundnut oil by using some of the ’C’ forms. The
question was whether he was guilty of the offence under
section 10(b) of the Act. The last contention urged in that
case as appears from page 169 of the report was that on a
true interpretation of section 10A it was clear that the
assessee should have been levied penalty only at 1-1/2 per
cent of the disputed turnover and not at the rate of 10-1/2
per cent as was done by the authorities below. This
contention did not appears to the High Court to be correct.
All the sales of goods validly covered by ’C’ forms were
liable to be taxed at 1 per cent of the turnover. Such of
the goods which were not validly covered by ’C’ forms were
liable to be taxed at 7 per cent of the turnover. The
penalty provided by section 10A was 1-1/2 times the tax
leviable. It was found in that case that the goods with
which the Court was concerned were not covered by any valid
’C’ forms and, therefore, sales tax was leviable on them at
7 per cent of the turnover. If that was so, then the penalty
on that turnover was leviable at 10-1/2 per cent of the
turnover.
The Madras High Court in The State of Madras v. Prem
Industrial Corporation, (supra) had occasion to consider
this question and it was upon this decision that the Madras
High Court in the judgment under appeal relied. There it was
held that for an offence committed within the scope of
section 10(b) of the Act by the misuse of ’C’ forms, the
penalty at one and a half times should be calculated on the
concessional rate of tax that would have been applicable of
the offence had not been committed, that is, if the ’C’
forms had been properly used, and not on the basis OF the
rate for sales not covered by the ’C’ forms. The attention
of the Madras High Court was drawn to the judgment of the
Mysore High Court in the case of M. Pai & Sons. v. The State
of Mysore, (supra). The Madras High Court, however, felt
that the decision did not take into account the concluding
words ’if the offence had not been committed’ In section
10A. In that case before the Madras High Court, the revenue
sought to revise and order of the Sales-tax Appellate
Tribunal by which it modified the penalty imposed. It was
not in controversy in that case as in the instant cases
before us that ’C’ forms had been misused and thereby an
offence was committed within the scope of section 10(b) of
the Act. The department had levied penalty at 10-1/2 per
cent on the view that in the circumstances, the
934
concessional rate would not be available and that the
assessee would be liable to tax at 7 per cent under section
8(2) of the Act. The Tribunal reduced the penalty to one and
a half times the tax, as, in its opinion, for purposes of
levying penalty, the rate of tax should be taken as that
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which would have been applicable if the offence had not been
committed. The Madras High Court accepted this view.
According to the Madras High Court, the department’s
contention did not give effect to the concluding words of
section 10A ’if the offence had not been committed’. The
High Court was of the view that the offence under the
provision was that a person being a registered dealer,
falsely represented when purchasing any class of goods that
goods of such class were covered by his certificate of
registration. The words ’if the offence had not been
committed’ clearly pointed to the result that the tax for
purposes of assessing one and a half times thereof was not
that which would have been levied on the basis that the ’C’
forms had not been complied with or had been misused, but,
as n if they had been used in a proper way. It is this view
which found favour in the impugned judgment before us.
The question again cropped up before the Orissa High
Court in Bisra Limestone Company Ltd. v. Sales Tax Officer,
(supra). There the Orissa High Court was of the view that
the question of penalty would arise only when the goods were
not mentioned In the certificate of registration and
purchase of the same was made on a false representation made
by the purchasing dealer that these were so mentioned. If
the normal rate had been paid for the goods, without making
any false representation, no offence under section 10(b)
would be committed. It was only to such cases that the
expression "if the offence had not been committed" had
application and therefore the penalty payable under section
10A would be one and a half times the normal rate and not
the concessional rate. Based on the language of section
10A(1), a contention was raised before the High Court that
penalty should bot exceed one-and-a-half times the tax which
would have been levied under this act in respect of the sale
to him of the goods, if the offence had not been committed’.
According to the contention if the goods were purchased on
concessional rate on false representation that these were
covered under the registration, the penalty that imposed
should not exceed one and a
935
half times the concessional rate and not the normal rate.
The contention was held not to be sound. The Orissa High
Court was of the view that if the goods mentioned in the
certificate of registration and the goods purchased at
concessional rate as purchasing dealer committed no offence
under section 10(b) of the Act the question of imposing
penalty did not arise. The question of penalty would arise
only when goods were not mentioned in the certificate of
registration and purchase of the same is made on a false
representation by the purchasing dealer that they were so
mentioned. If the normal rate had been paid for the goods
without making any false representation, no offence under
section 10(b) would be committed. It was only to such cases
that the expression ’if the offence had not been committed’
had application and the penalty payable would be one and a
half times the normal rate.
The question was again considered by the Full Bench of
Jammu & Kashmir High Court in the case of The assessing
Authority and another v. Jammu Metal Rolling Mills, [1971]
Tax Law Report 1861. There Jaswant Singh, J. as the learned
judge then was of the Jammu & Kashmir High Court, had
occasion to consider the concluding words of section 10A
i.e. ’impose upon him by way of penalty a sum not exceeding
one and a half times the tax which would have been levied
under this Act in respect of the sale to him of the goods if
the offence had not been committed’ and it was interpreted
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as not to mean that the penalty should be calculated at one
and a half times the concessional rate of tax. All that the
aforesaid words, according to the J & K High Court, meant
was that the person committing the offence specified in
section 10(d) would be liable to penalty which would extend
to one and a half times the tax payable by a person who
purchased goods for the purpose covered by the certificate
of registration or the penalty would be upto one and a half
times the tax which an honest dealer would have normally to
pay while purchasing the goods of similar description for
similar use. Any other interpretation according to the said
High Court, would have the effect of putting a premium on
the misuse of certificate of registration by unscrupulous
dealers. The said High Court relied on the observations of
the Orissa High Court in Bisra Limestone Co. Ltd., (supra)
and also the Mysore High Court’s view mentioned
hereinbefore. The J & K High Court was unable to agree with
the views of the Madras High Court in The State of Madras v.
Prem Industrial Corporation (supra).
936
The question again came to be considered by the Kerala
High Court in the case of Kottayam Electricals Private
Limited v. The State of Kerala, 32 S.T.C. 535. mere the
submission was that the courts should construe the phrase
’if the offence had not been committed’ to mean ’if the
assessee had not misused or misapplied the goods’. The
argument was that if the goods were not misused or
misapplied the tax payable would be at the concessional rate
of 3 per cent under section 8(1)(b) of the Act and that the
maximum penalty that could be imposed could only be one and
a half times the tax calculated at 3 per cent on the
turnover in respect of which the offence had been committed.
After discussing the contentions and acknowledging that
section 10A was not happily worded, the High Court felt that
it was unable to accept the view of the Madras High Court in
State of Madras v. Prem Industrial Corporation, (supra). The
High Court was of the opinion that if the court interpreted
the section to mean that such a person need pay penalty
calculated only at the rate of one-and-a-half times the
’concessional rate’, it would lead to absurd consequences.
It accepted the views of the Orissa as well as the Mysore
High Courts mentioned hereinbefore.
The Gujarat High Court had occasion to consider this
question again in the case of The Gaekwar Mills Ltd. v. The
State of Gujarat, 37 S.T.C. 129. me Gujarat High Court was
of the view that the penalty which was contemplated by
section 10A of the Act, was to be worked out by reference to
the rate of tax provided in section 8(2) of the Act and not
by reference to the concessional rate of tax provided in
section 8(1) of the Act. The Gujarat High Court felt that
the Tribunal was justified in rejecting the contention of
the assessee that the maximum penalty that could be levied
under section 10A was 1-1/2 times the concessional rate of
tax provided in section 8(1). Dealing with the several
authorities noted hereinbefore and the scheme and language
of the section, the Gujarat High Court was of the opinion
that to accept the contention that the true effect of the
words ’if the offence had not been committed’ was to presume
a situation in which the undertaking given by the
declaration was carried out even though in fact the same was
not carried out that would not be a proper presumption
because if such a presumption was raised, it would make the
whole situation highly absurd. The absurdity would be that
for the purpose of penalising the defaulter, a presumption
was to be made that the defaulter was not one who had
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937
Committed any default. The legislature could not be
attributed with any such absurd intention. The High Court
noted that while framing section 10A, the legislature had
not used the expression ’as if’, at the time of using the
words ’if the offence had not been committed’, at choice of
the word ’if’, instead of the expression ’as if’ indicated a
conditional phrase, and not a phrase prescribing a deeming
fiction. The High Court was of the view that the
interpretation canvassed by the assessee obviously
introduced the concept of a fiction which treated the
offender as one who had not offended. Section 10A was a
penal provision which stipulated penalty in lieu of the
prosecution. me High Court expressed the view that one has
yet to come across a penal provision, which created a
fiction that an offender was not an offender, and should,
therefore, be treated as a non-offender. Obviously, by such
a fiction, the very object of the penal provision in
question was frustrated and, therefore, the legislature
could never have intended that by the creation of the above-
referred fiction, the very object of introducing the penal
clause contained in section 10A of the Act should have been
destroyed. The truth of the matter, according to the High
Court, was that the use of the word "if" simpliciter, was
meant to indicate a condition, the condition being that at
the time of assessing the penalty, that situation should be
visualised wherein there was no scope of committing any
offence. Such a situation could arise only if the tax
liability fell within the provisions of sub-section (2) of
section 8 of the Act. The scheme of the section showed that
concessional rates contemplated by sub-section (1) thereof
would be available only with reference to those goods which
were covered by the declaration of form ’C’. This was clear
in the scheme of the section. Further the High Court noted
that if the contention canvassed by the assessee was
accepted, then the person who committed default In carrying
out his solemn undertaking contemplated by form ’C’, would
be in a better position than the assessee, who honestly paid
the tax under sub-section (2) of section 8 without giving
any undertaking contemplated by form ’C ’ .
In the case of Deputy Commissioner of Commercial Taxes,
Madurai Division, Madurai v. Kodaikanal Motor & ion Private
Limited, 31 S.T.C. 1 the Madras High Court agreed with the
view of Veeraswami, C.J. in State of Madras v. Prem
Industrial M Corporation, (supra).
938
The section as it stood at the relevant time permitted
imposition on dealer by way of penalty of a sum not
exceeding one-and-a-half times the tax which would have been
levied under this Act in respect of the sale of goods to him
’if the offence had not been committed’. The section as it
reads today after amendment in 1973 permits imposition by
way of penalty of a sum not exceeding one-and-a-half times
the tax which would have been levied under sub-section (2)
of section 8. Sub-section (2) of section 8 deals with tax in
the course of inter-State sales.
Lord Denning, in Seaford Court Estates v. Asher, [1949]
2 All E.R. 155 at 164 said thus :
".... When a defect appears a Judge cannot simply
fold his hands and blame the draftsman. He must
set to work on the constructive task of finding
the intention of Parliament......... and then he
must supplement the written word so as to give
’force and life’ to the intention of the
legislature....... A Judge should ask himself the
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question how, if the makers of the Act had
themselves come across this ruck in the texture of
it, they would have straightened it out? He must
then do as they would have done. A Judge must not
alter the material of which the Act is woven, but
he can and should iron out the creases."
The courts must always seek to find out the intention
of the legislature. Though the courts must find out the
intention of the statute from the language used, but
language more often than not is an imperfect instrument of
expression of human thought. As Lord Denning said it would
be idle to expect every statutory provision to be drafted
with divine prescience and perfect clarity. As judge Learned
Hand said, we must not make a fortress out of dictionary but
remember that statutes must have some purpose or object,
whose imaginative discovery is judicial craftsmanship. We
need not always cling to literalness and should seek to
endeavor to avoid an unjust or absurd result. We should not
make a mockery of legislation. To make sense out of an
unhappily worded provision, where the purpose is apparent to
the judicial eye ’some’ violence to language is permissible.
(See K. P. Varghese v. Income-Tax
939
Officer, Ernakulam & Anr., 131 I.T.R. 597 at 604 to 606 and
Luke v. Inland Revenue Commissioner, 54 I.T.R. 692.
Bearing the scheme of the Act in perspective we are of
the opinion that the contention of the revenue in this case
has to be accepted. ’If the offence had not been committed’
cannot have the effect that penalty should be levied on the
basis of the rate which would have been levied had no
offence been committed under clause (d) of section 10 of the
Act. For the purpose of imposition of penalty, it could not
be treated that the rate which would govern the question of
penalty was the rate which could be levied on the basis that
the assessee had made no fault. It would lead to putting a
premium on avoidance of the provisions of the Act.
In our opinion sub-section (1) of section 10A makes it
clear that penalty should be worked out at the rate of tax
which would have been levied if the offence had not been
committed. In other words the question is what tax would
have been levied under the Act if the offence had not been
committed. The assessee would not have committed any offence
only if he had carried out the undertaking given by it in
its declaration in form ’C’ or if he purchased the goods
without giving any declaration thereby incurring liability
to pay normal rate of tax as contemplated by sub-section (2)
of section 8. One who commits defaults cannot be said to
have carried out the undertaking given by him. The
presumption canvassed to be raised that the true effect of
the words ’if the offence had not been committed’ was to
presume a situation In which the undertaking given by the
assessee had been carried out even though In fact the same
had not been carried out. That would be an absurd result. In
our opinion the else of the expression ’if’ simpliciter,
Will meant to indicate a condition, the condition being that
at the time of assessing The penalty, that situation should
be visualised wherein there was no scope of committing any
offence. Such a situation could arise only if the tax
liability fell under sub-section (2) of section 8 of the
Act. The scheme of section 8 indicated that concessional
rates contemplated by sub-section (1) thereof would be
available only with reference to those goods which are
covered by the declarations in form ’C’. The moment it Is
found that in respect of particular quantity of goods the
undertaking given by the assessee In form ’C’ declaration
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has
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not been carried out, the goods were presumed to be such in
respect of which no undertaking was existing. Therefore such
goods would be liable to normal tax contemplated under sub-
section (2) of section 8. Therefore, the penalty should be
worked out only on the basis of the normal rates prescribed
under sub-section (2) of section 8. That would make sense.
That is a reasonably possible construction. That would avoid
absurd result.
It is further to be borne in mind that section 10A was
introduced for imposition of penalty in lieu of prosecution,
that is to visit the person guilty with certain penalty in
place of prosecution. He cannot be placed in a better
position than one who would have complied with the
provisions of the Act. In this respect having regard to the
object of the Act, in our opinion, we are in full agreement
with the views expressed by the Gujarat High Court in The
Gaekwar Mills Ltd. v. The State OF Gujarat, (supra). As Lord
Denning has said, the judge has to perform the constructive
task OF finding the intention of Parliament, and he must
supplement the written word so as to give ’force and life’
to the intention of the legislature. Primarily, it is always
the duty to find out the intention of the legislature and if
it can be done without doing much violence to the language
as we Find it can be done in this case, though as we have
noted that when the purpose was writ large in the scheme of
the section "some violence" is permissible, here we are of
the opinion that the construction put by the assessee cannot
be accepted and the contention urged on behalf of the
revenue in this case should be preferred.
We must remember that the provision is a penal
provision. It has further to be borne in mind that the
expression ’if’ is not same as ’as if’ nor does it
contemplate a deeming provision. It has also to be borne in
mind that the provision was introduced for the imposition of
penalty in lieu of prosecution. The purpose of the Act and
the object of a particular section has to be borne in mind.
Having regard to the same, we are in agreement with he views
expressed by the Orissa High Court in Bisra Limestone
Company Ltd. v. Sales Tax Officer, Rourkela Circle,
Uditnagar, and Others, (supra), Jammu & Kashmir High Court
in The Assessing Authority and another v. Jammu Metal
Rolling Mills, (supra), the High Court of Kerala
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in Kottayam Electricals Private Limited v. The State of
Kerala (supra). The High Court of Mysore in M. Paid & Sons
v. The State of Mysore (supra), the High Court of Gujarat in
The Gaekwar Mills Ltd. v. The State of Gujarat (supra) and
with respect we are unable to accept the views of
Veeraswami, C.J. in State of Madras v. Prem Industrial
Corporation (supra), and the other decision of the Madras
High Court in Deputy Commissioner of Commercial Taxes
(supra).
In the premises the dealer’s contention cannot be
accepted and revenue’s stand must be upheld.
The decision under appeal cannot, therefore, be
sustained. The appeals are allowed and the judgment and
order of the High Court of Madras are set aside. The revenue
is entitled to the costs of these appeals.
A.P.J. Appeals allowed.
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