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TMI Blog1986 (5) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of the revenue in this case should be preferred. - Civil Appeal No. 1121, 1122, 1123, 1124 of 1974, - - - Dated:- 1-5-1986 - PATHAK R.S. AND SABYASACHI MUKHARJI None for the respondent. S. Padmanabhan, Senior Advocate (A.V. Rangam and V.C. Nagaraj, Advocates, with him), for the appellant. -------------------------------------------------- The judgment of the Court was delivered by 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 the Central Sales Tax Act, 1956. The assessees in the four tax cases were assessed under the 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. The revenue proceeded on the basis that since the goods purchased had not been used for the purposes specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity of being heard, by an 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 at the relevant time in respect of 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 sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 conflict of decisions between different High Courts, the revenue has come up in these appeals. In M. Pais Sons v. State of Mysore [1966] 17 STC 161 (Mys), 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 forms, sales tax was leviable at 7 per cent, and therefore the penalty that was leviable was 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. During the relevant year the petitioner purchased maroti oil 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 Reports was that on a true interpretation of section 10A it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf times the tax, as, in its opinion, for purposes of levying penalty, the rate of tax should be taken as that 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-haf 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 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 Co. Ltd. v. Sales Tax Officer [1971] 27 STC 531. There the Orissa High Court was of the view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 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 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 Jammu and Kashmir 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 not covered by the certificate of registration or the penalty would be up to 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. [1971] 27 STC 531 and also the Mysore High Court's view mentioned hereinbefore. The Jammu and Kashmir High Court was unable to agree with the views of the Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 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", and the 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. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must supplement the written word so as to give 'force and life' to the intention of the legislature A Judge should ask himself the 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 endeavour 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 Gaekwar Mills Ltd. v. State of Gujarat [1976] 37 STC 129. As Lord Denning has said, the Judge has to perform the constructive task of finding the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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