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TMI Blog1970 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... of Commercial Taxes, Purnea, who is respondent No. 1 and an officer of the State of Bihar, respondent No. 2, claiming to realise the sales tax dues, presumably due under the Central Sales Tax Act, issued a notice dated the 3rd of January, 1969, a copy of which is annexure 1, to the Agents of the Central Bank of India, Punjab National Bank and State Bank of India, Katihar, under section 21 of the Act. Respondent No. 1 directed the Agents of the three banks, out of whom the Agent, Central Bank of India, and the Agent, Punjab National Bank, are respectively respondents Nos. 4 and 5, to pay into the Government Treasury at Katihar any amount due from them to the dealer, namely, the petitioner-company stating in the notice (annexure 1) that a sum of Rs. 1,18,313.75 is due from the dealer on account of tax assessed under the Act. It appears that on receipt of a copy of the notice, as such copy has got to be sent to the dealer under section 21(1) of the Act, the petitioner-company filed an objection before respondent No. 1, a copy of which is annexure 2; it is dated the 6th of March, 1969. In paragraph 4 of the objection petition, the figures of the tax assessed and the amounts paid were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 345 of 1969 as the two previous ones stood withdrawn and superseded. 4.. Mr. S.B. Sanyal, learned Advocate for the petitioners, has challenged the validity of the notice under section 21 of the Act on two grounds-(i) that section 21 of the Act is constitutionally invalid as it infringes article 14 of the Constitution, and (ii) that in any view of the matter respondent No. 1 has arbitrarily exercised his power under section 21 of the Act without mentioning in any of his order and without letting the petitioner-company know as to how any sum of money under the Act is said to be due from the petitioner-company. Arbitrarily, without any basis, different figures have been mentioned in the different notices and not only that, the last figure mentioned in the notice dated 1st April, 1969, varies substantially from the figure mentioned in the order of that date (annexure 5). 5.. The submission made by the learned counsel for the petitioners to attack the vires of section 21 of the Act is that over and above the procedure prescribed under section 20(8)(a) which again, in its turn, is without any prejudice to any other mode of recovery of the amount of tax together with penalty due unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any guide-line or principle engrafted in the Act for adoption of the one mode or the other. The various provisions of the Public Demands Recovery Act and section 386 of the Code of Criminal Procedure were compared and contrasted. It was held that the protection and safeguards which were available to a dealer against whom a proceeding is started under the Public Demands Recovery Act for recovery of the amount of tax or penalty due under the Act are not to be found when the procedure of realising the amount as if it were a fine imposed by a Magistrate is resorted to. The vital and major distinction apart from some minor ones as pointed out by the Bench in Vishwakarma's case' is the one to be found in section 9 of the Public Demands Recovery Act. There a dealer gets an opportunity of denying his liability either in whole or in part. The matter is judicially determined by the various authorities, by the certificate officer in the first instance, and thereafter, in appeal and revision. But no such procedure is to be found under section 386 of the Code of Criminal Procedure. If an application were made to any Magistrate for recovery of any amount said to be due from a dealer und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng for recovery has been initiated is not due from him or it is wrong. When a suit is filed, he has ample opportunity in a civil court. He has adequate opportunity when a proceeding for recovery of the amount is started under the Public Demands Recovery Act. He has got this opportunity not only before the Certificate Officer but he can also agitate the matter in appeal as well as in revision and, finally, undoubtedly, before the High Court under article 226 of the Constitution. If such an opportunity were to be denied to a dealer when the special mode of recovery is resorted to, it is plain that it would have given an arbitrary handle to the prescribed authority to adopt one mode or the other against dealers placed under equal circumstances, that is to say, dealers who have got debtors. But in the case of one the attachment is made under the Public Demands Recovery Act (1) Criminal Revisions 837,839 and 841 of 1965 decided on 16th December, 1966. and in the case of the other at the arbitrary will of the prescribed authority a notice under section 21 of the Act would have been sufficient for realising the money from the dealer's debtor. In the former case the dealer, if aggrieved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery of the Public Demands Recovery Act or directly by the prescribed authority under section 21 of the Act, it makes no difference to the dealer. If the amount is due from him, for the protection of the interest of the State and its exchequer, the amount must be recovered as quickly as possible. The special mode of recovery provided under section 21, undoubtedly, in many cases will be speedier and more effective from the point of view of the State without putting the dealer to any extra disadvantage. I shall illustrate any point. Suppose a sum of Rs. 50,000 is due under the Act from a dealer. He has got to his credit in his current account with a bank a sum of Rs. 50,000. The prescribed authority under the Act gets an information that the dealer is about to withdraw the said amount and go away. He can at once issue notice under section 21 of the Act to the bank and prevent it from handing over the money to the dealer. If the prescribed authority is obliged only to file a suit or to take recourse to the provisions of the Public Demands Recovery Act for realising the amount, the delay will frustrate the object of the Act. Money due to the State must be allowed to be recovered in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised. The power of arrest was held not to be discriminatory on the principle laid down in the case of Purshottam Govindji Halai. In Vishwakarma's caseCriminal Revisions 837, 839 and 841 of 1965 decided on 16th December, 1966., two decisions of the Supreme Court were referred to: one in Jagannath Prasad v. State of Uttar PradeshA.I.R. 1961, S.C. 1245. and the other in State of Orissa v. Dhirendranath DasA.I.R. 1961 S.C. 1715. The latter case had been decided earlier with reference to two sets of Orissa rules, one being more drastic and prejudicial to the citizens; therefore, the former was knocked down as being unconstitutional. In the former case decided later, the Orissa case was distinguished and two sets of rules prevalent in Uttar Pradesh found to be substantially of the same character were upheld. In Kashiram Agarwalla v. Collector of 24-ParganasA.I.R. 1958 Cal. 524; 33 I.T.R. 800., the law seems to have been laid down in paragraph 6 of the judgment a bit too widely, if I may say so with respect. It has been stated that "where the law is the same for all, the provision of alternative procedure making it possible for the relevant authority to apply one procedure in some cases a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged before a Bench of the Assam High Court consisting of C.P. Sinha, C.J., and Mehrotra, J., as he then was. The latter delivering the judgment on behalf of the court upheld the constitutional validity. The case is reported in Murlidhar Jalan v. Income-tax Officer, Dibrugarh[1961] 41 I.T.R. 80; A.I.R. 1960 Assam 76. The same kind of argument as the one advanced before this court was advanced before the Assam High Court that the Income-tax Officer had been given naked and arbitrary power to single out any defaulting assessee to subject him to stricter and more effective mode of recovery as provided under sub-section (5A) than the one provided for under sub-section (2) of section 46 of the said Act. After elaborate consideration of the various authorities with reference to article 14 of the Constitution, Mehrotra, J., said at page 110: "If the tax has been validly imposed, there is a liability to pay up the tax. If the debtors of the assessee are directed to pay up the tax dues they are only asked to discharge the liability of the assessee. Whether the liability is discharged by attachment or other modes of recovery provided under the Land Revenue Act or by simply issuing dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass of debtors or loanees to whom State loan was given from time to time could be dealt with by the State Government which had two options for recovery of the amount-(i) to file a suit in the civil court and the other through a certificate proceeding under the Bihar and Orissa Public Demands Recovery Act. On a careful consideration of the various authorities on the point, Tarkeshwar Nath, J., with whom B.P. Sinha, J., agreed, held that the procedure prescribed in section 13 of the Industries Act could not be said to be more onerous, stringent or prejudicial to the debtor and, therefore, could not be struck down as being violative of article 14 of the Constitution. The earlier Bench decision of this court in Vishwakarma's caseCriminal Revisions 837, 839 and 841 of 1965 decided on 16th December, 1966. was distinguished on that ground. 13.. Apparently there seems to be one thing in section 21 of the Act which may indicate that the provisions contained therein are more onerous and stringent. If recourse is taken to the remedy of certificate proceedings, such moneys as are not attachable under section 18 of the Bihar and Orissa Public Demands Recovery Act will not be attached and reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the counter-affidavit filed on behalf of the State, this thing has not been explained as to how the amount of rupees seven lacs and odd was said to be due from the petitioner-company. On the second occasion when that company filed a petition, respondent No. 1 passed a cryptic order merely stating that the record showed that a sum of rupees three lacs and odd were due from the petitioner-company; he did not give any facts and figures to indicate as to how the said sum was arrived at. To crown all, it is not explained as to how the notice issued in pursuance of the said order was for a sum of rupees five lacs and odd. Even this matter has not been explained in the counter-affidavit. It is, therefore, clear that on the facts and in the circumstances of this particular case the order dated 1st April, 1969, passed by the Superintendent of Commercial Taxes as contained in annexure 5 must be quashed. C.W.J.C. 345 of 1969 is accordingly allowed and the said order is quashed. The case is remitted back to the Superintendent, Commercial Taxes, Purnea, for rehearing of the objection filed by the petitioner-company and for deciding it afresh in accordance with law in the light of this judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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