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TMI Blog1986 (2) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter, the Commercial Tax Officer, II Circle, Hubli, Dharwar District (hereinafter referred to as the C.T.O.) served demand notices on the firm demanding payment of a sum of Rs. 1,22,529.56 which included taxes due and payable and the penalty levied under section 13(2) of the KST Act. Payments not having been made by the firm, he issued recovery certificate to the Tahsildar, Savanur, who attached the properties of the petitioners by his order, exhibit A, made on 22nd February, 1973, and notified the sale of the attached properties (exhibits B and C). The petitioners have challenged in these writ petitions exhibits A, B and C. 3.. Sri W.K. Joshi, learned Advocate, appearing for the petitioners, submitted that a partner is not liable to pay pre-dissolution liability of the firm relying on Ganesha Narayana Hegde's case [1977] 40 STC 400 (Kar); (1977) 2 Kar LJ 508. In any event, he argued the payment demanded includes penalty levied and the petitioners cannot be made liable to pay penalty. 4.. Sri S. Rajendra Babu, learned Government Advocate, appearing for the revenue argued to sustain the action taken by the authorities as according to him partners are jointly and severally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld "that such a power could not be gathered by necessary implication from the provisions of the Act" and by reason of the language and sections of the Punjab Act, a dissolved firm could not be assessed. Jullundur Vegetables Syndicate's case [1966] 17 STC 326 (SC); AIR 1966 SC 1295 is therefore an authority only for the proposition that a dissolved firm cannot be assessed to sales tax unless the statute under which the assessment is made authorises the assessment either expressly or by necessary implication. 9.. The other decision relied on in Ganesha Narayana Hegde's case [1977] 40 STC 400 (Kar); (1977) 2 Kar LJ 508 is Ali Koya Haji v. Assistant Commissioner of Sales Tax [1976] 37 STC 618 (Ker). Ali Koya was a partner of a firm, namely, M/s. V.V. Alikoya Haji, running a flourishing business and was a dealer registered under the Kerala General Sales Tax Act, 1963. The sales tax department had to recover from this firm a sum of Rs. 2,34,448.77 for the years 1963-64, 1964-65 and 1965-66 by way of sales tax and surcharge. The sales tax authorities issued a notice to the firm M/s. Kanji Morarji-with whom the petitioner, Alikoya, was working as a clerk on a salary of Rs. 150 per month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership carrying on a separate and distinct business are there two distinct partnership firms in whose hands the turnover of the two businesses falls to be respectively assessed or is there in law only a single partnership firm liable to assessment on the turnover of both businesses. The Court held thus: "It is permissible to say that a partnership agreement creates and defines the relation of partnership and therefore identifies the firm. If that conclusion be right, it is only a further step to hold that each partnership agreement may constitute a distinct and separate partnership and therefore distinct and separate firms. That is not to say that a firm is a corporate entity or enjoys a juristic personality in that sense. The firm name is only a collective name for the individual partners. But each partnership is a distinct relationship. Thepartners may be different and yet the nature of the business may be the same, the business may be different and yet the partners may be the same. An agreement between the partners to carry on a business and share its profits may be followed by a separate agreement between the same partners to carry on another business and share the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on such business. Section 10 deals with registration of dealers, commission agents under the Act, section 10A deals with the procedure for registration under section 10. Section 11 deals with the licensing of agents. Sections 10 and 11 are in Chapter IV under the heading "Registration and grant of licences". 16.. Section 12 deals with the filing of returns by the dealers and assessment to be made by the assessing authority. Section 13 deals with the payment and recovery of taxes, section 14 deals with the recovery of tax from certain other persons, section 15 deals with the tax payable on transfer of business, partition of a joint family liable to pay tax, etc., section 16 deals with the assessment of the legal representatives on the death of a dealer and section 17 deals with the composition of tax. Sections 13 to 19 are in Chapter V under the heading "Returns, Assessment, Payment, Recovery, Composition and Collection of Tax". Chapter VI deals with appeal and revision. Chapter VI-A deals with levy of tax on purchase of sugarcane and miscellaneous provisions are in Chapter VII. 17.. There are three stages in the imposition of tax. The first stage is the declaration of liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 79 that "a machinery section should be so construed as to effectuate the charging sections" and the observation in Whitney v. Commissioners of Inland Revenue (1925) 10 Tax Cas 88 (HL) that "a statute is designed to be workable, and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable" and held that a dissolved firm can be assessed on its pre-dissolution turnover to give meaning and content to the charging sections and to prevent the use of the resourcefulness and ingenuity which go into well-timed dissolution of firms a convenient instrument of tax evasion. 20.. The principle governing the interpretation of a machinery provision therefore is that that interpretation or construction which makes the machinery workable should be followed and the machinery provisions should be so construed as to effectuate the charging provisions. Let us now apply these principles and examine the provisions of the KST Act. 21.. The word "firm" is a short collective name for the individuals who constitute the partners and the name under which they trade is their firm name. The firm name is not the name of a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm. They are the agents of the firm for the business of the firm and sureties for liquidation of the liabilities of the firm. In other words what is called the properties of the firm and what are called the liabilities of the firm are the debts and liabilities of the partners. The Supreme Court in Malabar Fisheries Co. v. Commissioner of Income-tax, Kerala [1979] 120 ITR 49 (SC); AIR 1980 SC 176, has held that a partnership firm under the Partnership Act, 1932, is not a distinct legal entity apart from the partners constituting it and equally in law the firm as such has no separate rights of its own in the partnership assets and when one talks of the firm's property or firm's assets all that is meant is property or assets in which all partners have a joint or common interest. 24.. The KST Act recognises a firm as a distinct assessable entity and the firm is liable to pay tax on its turnover under section 5 and is assessed to tax. The partnership in question was assessed to tax. The partners, dissolved the firm in the year 1972 even before the tax assessed and penalty levied was paid by or recovered from the firm. Mr. Joshi's argument is that after dissolution of the firm, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndra Babu argued that sub-section (2) of section 15 is not a charging section but a machinery provision providing for the recovery apart from being retrospective and, therefore, the petitioners are liable to pay the amounts payable by the firm and relied on R C Hiremath v Judicial Magistrate [1981] 47 STC 38 (Kar); (1980) 2 Kar L J 297. 29.. Sub-section (2) of section 15 authorises the assessment of a dissolved firm on its pre-dissolution turnover and also makes every person who was a partner on the date of dissolution liable jointly and severally to pay the tax assessed or penalty imposed on the firm. Section 15(2) does not by itself create a charge for the tax. This provision only provides for the recovery and collection of the tax assessed and the penalty imposed on the firm. This provision provides a machinery for making the charge levied effective. The provisions of a taxing statute providing for assessment of liability and providing for payment, collection, recovery, etc., are not charging provisions, but are machinery provisions for effectuating the charging provisions is indisputable in view of the decision of the Supreme Court in Murarilal Mahabir Prasad's case [1976] 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the tax under this Act; and the person or persons liable to pay the tax under this Act shall pay a penalty specified therein. In G.V. Mensinakai v. Additional Commercial Tax Officer, III Circle, Hubli (W.P. No. 972 of 1974 decided on 27th May, 1975) [1976] 37 STC 236 (Kar) on which strong reliance is placed by Sri Joshi. The facts are these: The petitioner was a firm. After dissolution of the firm it was assessed in respect of the pre-dissolution transactions and on default in paying the tax the assessee became liable to pay penalty. In view of the decision of this Court in S.S. Navalgi v. Commercial Tax Officer, Jamkhandi [1971] 28 STC 580 it was assumed by all that no tax or penalty was recoverable. Act 5 of 1972 passed by the State Legislature provided for validation of all assessments made after the dissolution of the firm. Thereafter, the Tahsildar having jurisdiction proceeded to recover the tax and the penalty from the petitioner. The competence of the authorities to recover penalty payable under section 13(2) was challenged by the petitioner on the ground that the validating provisions do not validate the penalty payable by the petitioner. Venkataramiah, J., as he the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interest on the amount remaining unpaid at the rates specified therein. The petitioners cannot therefore escape their liability to pay the statutorily payable interest-though called as penalty on default having been committed in paying the tax levied. 34.. From the above discussion, it is clear that the decision in Ganesha Narayana Hegde's case [1977] 40 STC 400 (Kar); (1977) 2 Kar LJ 508 does not lay down the law correctly and we therefore overrule the same. 35.. In the result, these writ petitions fail and are accordingly dismissed and the rule issued is discharged with no order as to costs. petitions dismissed. Appendix I [The judgment of the Division Bench of the Karnataka High Court consisting of M.N. VENKATACHALIAH and M. RAMA JOIS, JJ., in Patel Volkart (P.) Ltd. v. Commissioner of Commercial Taxes in Karnataka, Bangalore (S.T.R.P. No. 64 of 1981 decided on 29th January, 1982) is printed below: ] PATEL VOLKART (P.) LTD. V. COMMISSIONER OF COMMERCIAL TAXES The order of the Court was made by RAMA JOIS, J.-In this revision petition presented under section 23 of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as "the Act"), the following question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authority. The second appeal preferred to the Tribunal also failed vides order dated 31st March, 1977, in S.T.A. No. 422 of 1975. (vi) After the dismissal of the second appeal, the petitioner paid the tax due on 23rd May, 1977. Thus the petitioner had withheld the payment for a period of 19 months. Thereafter the Assistant Commissioner computed the penalty payable by the petitioner on the amount withheld at the rates prescribed in section 13(2) of the Act which came to Rs. 46,180.34 and by a notice dated 1st August, 1977 (exhibit A), called upon the petitioner to pay that amount. (vii) It is against that notice, the petitioner preferred an appeal to the Deputy Commissioner (Appeals), Hubli. He dismissed the appeal as not maintainable, by his order dated 23rd March, 1978 (exhibit B), and that order was affirmed by the Tribunal by its order dated 23rd July, 1978, in second appeal (exhibit C). (viii) Aggrieved by these orders, the petitioner has presented this revision petition. 3.. Relevant part of section 20 of the Act reads "20 Appeals.-(1) Any person objecting to an order affecting him passed under the provisions of this Act by- (i) an Assistant Commercial Tax Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact no order was made. All that was done was that the assessee was asked to pay the penalty for the period commencing from the date of default, till the date of payment of tax calculated in terms of section 13(2) on the basis of the amount of tax in respect of which it was a defaulter. That being the position, there was no appealable order at all. 6.. The learned counsel for the petitioner, however, contends that the notice by which he was called upon to pay the penalty was an order made under section 13(2) of the Act and, therefore, appeal was maintainable under section 20 of the Act. 7.. The question, whether section 13(2) of the Act contemplates the passing of an order or not is not res integra. In the case of Sterling Construction Trading Co. v. Commercial Tax Officer [1973] 32 STC 235 (Mys) the petitioner therein, in a writ petition presented before this Court, prayed for quashing the demand for payment of penalty under section 13(2) of the Act on the ground that no opportunity had been given before calling upon it to pay the same. Rejecting the contention the court said: "...Where the discretion is given to an authority to fix the amount of fine, it necessarily fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility under section 13(2) of the Act. The said submission is also untenable in view of the aforesaid decision of the Supreme Court as also the decision of this Court in Sterling Construction Trading Co.'s case [1973] 32 STC 235. The only difference between Haji Lal's case [1973] 32 STC 496 (SC) and the present case is that section 8(1-A) of the U.P. Act provided for payment of interest at the prescribed rate during the period of default and under section 13 of the Act, the defaulting assessee is required to pay what is described as penalty at the rates prescribed. Except that the U.P. Act preferred to describe the amount of additional liability imposed for making default in payment of tax, as interest and the Act describes it as penalty, there is no difference. As held by the Supreme Court, the liability to pay interest as required under section 8(1-A) of the U.P. Act was automatic. So also liability to pay penalty under section 13(2) of the Act is automatic. The quantum of penalty is also fixed under section 13(2) of the Act and the Act does not empower any authority to reduce or waive the penalty payable under the said provision under any specified circumstances. Therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. 11.. All the aforesaid three questions stand answered, as shown earlier, by the two later Division Bench decisions of the Court, the one in the case of Sterling Construction Company [1973] 32 STC 235 and another in the case of Gopinath (Sales Tax Revision Petition No. 65 of 1978 decided on 7th March, 1980) in which the questions directly arose. As the two bases: (i) That there was an order under section 13(2) and (ii) That penalty was imposed by such an order, on which the decision proceeded do not really exist, the said decision is of no help to this case. 12.. Learned counsel for the petitioner, however, placed strong reliance on the ratio of the decision of the Supreme Court in the case of Khemka Co. v. State of Maharashtra [1975] 35 STC 571 (SC), in which it has an occasion to consider the language of section 13(2) of the Act itself. In that case, the validity of the levy of penalty under section 13(2) of the Act and section 16(4) of the Bombay Sales Tax Act, which was similar to the former, on a defaulter in payment of Central sales tax, invoking section 9(2) of the Central Sales Tax Act, was considered by the Supreme Court. The court pointed out that section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 963] 48 ITR 34 (SC) is clearly inapplicable to this case. 13.. When the rate of penalty is quantified by the section itself and no power is given to the original or appellate authorities, we fail to see the purpose which an appeal could serve, except perhaps, it might help to procrastinate. 14.. Before concluding, we should point out, that if a person is called upon to pay penalty under section 13(2) of the Act and recovery proceedings are instituted against him and if such person claims that he was not a defaulter or that the computation of the amount was wrong, it is open to him to resist the recovery before the recovery authority on those bases. This is made clear by this Court in Sterling Construction Company's case [1973] 32 STC 235. Relevant portion of the judgment reads: "If the penalty incurred under section 13(2) of the Act is not paid, the authorities constituted under the Act have to take recovery proceedings in the manner provided under the Act. When such proceedings are initiated against the alleged defaulting assessee, it is open to him to contend that he is not a defaulter or that the amount of penalty sought to be recovered is excessive. If the assessee cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, to 12th November, 1966, the ACCT by his rectification order made under section 25A of the Act on 1st March, 1969, held that the purchase turnover of Rs. 21,47,000 of the petitioner on cotton and groundnuts was exigible to a sum of Rs. 42,940 as purchase tax under the Act, the validity of which was challenged by him in Writ Petition No. 352 of 1975. On 30th July, 1975, Venkataramiah, J. (as His Lordship then was), rejected the same, which was challenged by it in Writ Appeal No. 555 of 1975. On 29th September, 1975, a Division Bench of this Court admitted the said writ appeal and thereafter on 10th November, 1975, stayed the recovery on terms. On 9th June, 1978, a Division Bench of this Court dismissed the said writ appeal during which period the petitioner had the benefit of the said stay order. 3.. On the termination of the proceedings before this Court, the ACCT issued notice No. 401/B/77-78 dated 20th July, 1978 (exhibit A), to the petitioner to show cause as to why proceedings should not be instituted against it for recovery of taxes outstanding and a penalty of Rs. 36,713.70 thereon that had accrued thereto on the same under the Act. On its failure to show cause or pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstrue the same as providing for automatic levy of interest as held by a Division Bench of this Court in Patel Volkart (P.) Limited v. Commissioner of Commercial Taxes in Karnataka (S.T.R.P. No. 64 of 1981 decided on 29th January, 1982) (hereafter referred to as Volkart's case) (printed at page 411 supra) and the same requires reconsideration by a larger Bench. 9.. Sri Babu has urged that there were no grounds to doubt the correctness of the ruling rendered by this Court in Volkart's case (printed at page 411 supra) and refer it to a larger Bench. 10.. In order to appreciate this and the other points also, we consider it useful to briefly notice the scheme of the Act and its material provisions at the threshold. 11.. As on 1st November, 1956, on which day the new State of Mysore now called as Karnataka comprising of the areas specified in section 7 of the States Reorganisation Act of 1956 (SR Act) came into being, there were various sales tax enactments referred to in section 40 of the Act regulating the levy and collection of sales tax in the several integrating areas of the State which continued to be in force in the respective areas by operation of section 119 of the SR Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1), (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax under this Act; and (ii) the person or persons liable to pay the tax under this Act shall pay a penalty equal to- (a) one per cent of the amount of tax remaining unpaid for each month for the first three months, after the expiry of the time prescribed under sub-section (1), and (b) two and one-half per cent of such amount for each month subsequent to the first three months as aforesaid. Explanation.-For purposes of clause (ii), the penalty payable for a part of a month shall be proportionately determined. (2A) Notwithstanding anything contained in sub-section (2), the State Government may, subject to such conditions as may be prescribed, remit the whole or any part of the penalty payable in respect of any period by any person or class of persons." The scope and ambit of section 13 of the Act has been examined by this Court on more than one occasion. Even otherwise, it is necessary to notice and ascertain the same for a proper appreciation of the challenge made against the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame." In Mutha Manickchand v. Commercial Tax Officer, Gangavathi [Writ Petitions Nos. 504 and 505 of 1966 decided on 13th March, 1967 (Mys)] to which we will make a detailed reference at a later stage, a Division Bench of this Court consisting of Narayana Pai, J. (as His Lordship then was), and Venkataswamy, J., upholding the validity of section 13(2) of the Act as it stood then, without reference to the ruling in Sha Jayantilal Khetsi's case (1966) 2 Mys LJ 614 on the scope of that provision expressed thus: "It is clear from the section that the penalty is a consequence which flows directly from the statute itself without the necessity of any authority making a specific order imposing or directing payment of penalty. But, all the penalty that accrues is penalty for default in making payment in accordance with subsection (1) of the section-the payment required under sub-section (1) is of 'the tax under this Act'-the mandate of the section being that the said tax shall be paid in such manner and in such instalments, if any, and within such time, as may be prescribed." In Sterling Construction Trading Company v. Commercial Tax Officer, X Circle, Seshadripuram, Bangalore [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on behalf of the assessee was that the default, if any, was not a wilful default and, therefore, the assessee had not incurred any liability to pay penalty. Hegde, J., (as he then was), who delivered the judgment of this Court stated: 'What section 13(2) of the Act provides is that whenever an assessee makes default in making payment in accordance with sub-section (1), he is statutorily liable to pay the penalty prescribed therein. In a case like the one before us, the question whether the assessee had defaulted wilfully or not does not arise for consideration. What is relevant is the factum of the default and not the reason for the same.' " In Volkart's case (printed at page 411 supra), a Division Bench of this Court consisting of Venkatachaliah and Rama Jois, JJ., following the earlier cases of this Court in particular in Sterling's case [1973] 32 STC 235 and the ruling of the Supreme Court in Haji Lal Mohd. Biri Works v. State of U.P. [1973] 32 STC 496 (SC) which interpreted section 8(1) and (M) of the U.P. Sales Tax Act providing for automatic levy of interest in cases of defaults as in section 13 of the Act expressed thus: "Thus the amount payable by a defaulter is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard Law School, Chapter 13, para 13/7.1 and 7.2 at pages 391 and 392 and Taxation in the United States published by Harvard Law School, Chapter 13, para 13/7.1 at page 1262]. The object is to deter a dilatory assessee, as the very petitioner, to make prompt payment of taxes found due to the State to meet the ever growing and almost insatiable demands and in default to make compensation for delayed payments. When one examines the same in that context, as that should be, applying the progressive rule of construction of statutes that has now come to stay, which has been very felicitously expressed by Lord Denning in Seaford Court Estates Limited v. Asher [1949] 2 All ER 155 at page 164 approved by our Supreme Court in State of Karnataka v. Hansa Corporation AIR 1981 SC 463 and K.P. Varghese v. Income-tax Officer, Ernakulam [1981] 131 ITR 597 (SC) and a Full Bench of this Court in C. Arunachalam v. Commissioner of Income-tax ILR (1984) 2 Kar 1387, we are of the view that what is provided in section 13(2) of the Act is only interest and not penalty. 18.. Sri Srinivasan has urged that section 13(2) of the Act that does not provide for refund of interest in conformity with the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Act with effect from 1st August, 1979. With the deletion of that article the petitioner cannot sustain his challenge to section 13(2) with reference to this article. Even assuming that that article should be treated as part of our Constitution, for purposes of this case, then also that article did not guarantee immunity from taxes, levy of penalties or interests for non-payment of taxes. We are, therefore, of the view that the challenge of the petitioner based on article 19(1)(f) of the Constitution has no merit. We, therefore, reject this challenge of the petitioner. 25.. In Mutha Manickchand's case [W.P. Nos. 504 and 505 of 1966 decided on 13th March, 1967 (Mys)] the Division Bench dealing with the very challenge noticing the ruling of the Supreme Court in Kunnathat Thathunni Moopil Nair v. State of Kerala AIR 1961 SC 552 on which Sri Srinivasan has again placed strong reliance, has rejected the same, in these words: "6. The challenge to the constitutionality of section 13(2) is based solely upon the principles stated by their Lordships of the Supreme Court in the case of Moopil Nair reported in AIR 1961 SC 552. The exact principle stated by their Lordships of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is liable to be rejected. 26.. An assessee that does not make payment of taxes due by him under the Act on or before the date specified in the notice of demand indisputably becomes a defaulter of the moneys legitimately due to the State. In order to deter him not to commit such default and compensate the State for the deprivation of such moneys by such defaulter, the Act can undoubtedly make a suitable provision to meet both the situations. Section 13(2) uniformly provides for a lower rate of interest for the first period of three months and for a higher rate of interest thereafter till payment is made by the defaulting assessee. Section 13(2) that treats the defaulting assessee uniformly cannot, therefore, be condemned as violative of article 14 of the Constitution. 27.. What should be the rates of interest to be paid during the first period of three months and thereafter is essentially for the legislature to decide. At any rate, the rates of interest stipulated in section 13(2) of the Act when one has regard to the rates of interest prevailing in the country cannot be characterised as disproportionate, excessive or arbitrary to justify its condemnation under article 14 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with dealers in other States. This argument wholly overlooks the very basis of the scheme of distribution of legislative power contained in our Constitution. Our Constitution is federal in its structure and a salient feature of a federal policy is distribution of legislative and administrative powers between the federated unit and the federating units, that is, between the Federal Government and the State Governments. Thus, matters in respect of which our Constitution-makers felt that there should be uniformity of law throughout the country have been placed by them in the Union List (List I in the Seventh Schedule to the Constitution) conferring exclusive power upon Parliament to make laws with respect thereto, while matters which they felt were of local concern and may require laws to be made having regard to the particular needs and peculiar problems of each State have been assigned to the State Legislatures by placing them in List II of the Seventh Schedule, that is, the State List. InterState trade and commerce is a matter which affects all the States in India and thus the whole country. It is for this reason that in the Seventh Schedule to the Constitution the subject of taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of interest in case of delayed payment of tax is a method usually adopted in fiscal legislation to ensure that the amount of tax which is due is paid by the prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing statute. It is for the State to provide by what means payment of tax is to be enforced and a person who does not pay the amount of tax lawfully and admittedly due by him can hardly complain of the measures adopted by the State to compel him to pay such amount. It neither lies in the defaulter's mouth to protest against the rate of interest charged to him nor is it open to him to dictate to the State the methods which it should adopt for recovering the amount of tax due by him. In this connection, it is pertinent to note that under section 10-B of the Act, where as a result of an order made in appeal or revision, a refund has become due to the dealer or any other person on account of tax or penalty found to have been paid in excess, the State Government is required to pay to such dealer or person simple interest at the rate of 12 per cent per annum on the amount of such refund from the date such payment was made up to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has urged that section 13(2A) of the Act conferring power on Government to remit the whole or any part of penalty/interest without any guidance and control suffers from the vice of excessive delegation and was violative of article 14 of the Constitution. In support of his contention Sri Srinivasan has strongly relied on a Division Bench ruling of this Court in P. Bhuvaneswariah v. Stage of Mysore (1964) 2 Mys LJ 470; AIR 1965 Mys 170. 34.. Sri Babu has urged that section 13(2A) that confers discretionary power on the executive Government, the highest executive authority, under the Constitution, subject to the rules to be made and to be laid before the legislature does not suffer from the vice of excessive delegation. In support of his contention Sri Babu has strongly relied on the ruling of the Supreme Court in Chinta Lingam v. Government of India AIR 1971 SC 474. 35.. In Mutha Manickchand's case (W.P. Nos. 504 and 505 of 1966 decided on 13th March, 1967) this Court in examining the validity of section 13(2) of the Act has also noticed the insertion of section 13(2A) by Karnataka Act 3 of 1966 and has upheld section 13 though its validity as such had not been expressly challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the conclusion that the provision does not suffer from the vice of excessive delegation in the light of the principles enunciated by the Supreme Court. When that is so, we consider it unnecessary to examine the correctness of this decision and express our opinion on the same. In any event these principles do not really bear on the validity of section 13(2A) of the Act that is not in pari materia with section 3(2) of the Mysore Buildings Tax Act, 1962. 40.. On the above discussion, we hold that section 13(2A.) of the Act does not suffer from the vice of excessive delegation and is not violative of Article 14 of the Constitution. Re: Point No. IV 41. Sri Srinivasan has urged that if this Court were to strike down section 13(2A) of the Act on the ground it suffers from the vice of excessive delegation, then this Court has no choice except to strike down section 13(2) of the Act, which is inextricably woven into the same and was, therefore, not severable. 42.. We have earlier found that section 13(2A) of the Act does not suffer from the vice of excessive delegation and was not violative of article 14 of the Constitution. From this it necessarily follows that point No. IV do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y artificial; but whether they are essentially and inseparably connected in substance. If, when the unconstitutional portion is stricken out, that which remains is complete in itself, and capable of being executed in accordance with the apparent legislative intent, wholly independent of that which was rejected, it must be sustained.' " Bearing these principles it is necessary to examine point No. IV. 44.. We have reproduced section 13(2A) of the Act earlier in its entirety. A close examination of section 13(2A) of the Act shows that it is an independent and separate provision conferring power on Government and is not woven into or bound with section 13(2) of the Act. Section 13(2A) of the Act is not inextricably woven into section 13(2) of the Act. Even assuming that we strike down section 13(2A) of the Act, then also section 13(2) of the Act without any doubt can remain on the statute book and enforced. We are, therefore, of the view that there is no merit in this contention of Sri Srinivasan and we reject the same. 46.. Before parting with this case, we deem it necessary to point out on the desirability to amend section 13 of the Act. 46.. We have earlier found that the term ..... X X X X Extracts X X X X X X X X Extracts X X X X
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