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TMI Blog1989 (7) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... ner to pay the amount within the date specified therein. The petitioner preferred an appeal against the said order of assessment before the Assistant Commissioner of Taxes and prayed for stay of realisation of the demand pending disposal of the appeal. The Assistant Commissioner of Taxes directed the petitioner to deposit 65 per cent of the amount due as per the impugned order of assessment by March 22, 1984. In the meantime the Superintendent of Taxes issued a notice of demand under section 26A of the Act dated April 6, 1984, to the Executive Engineer, Ambassa Division, North Tripura, directing him not to pay the amount due from him to the petitioner but to pay the same in the Government treasury in liquidation of the arrears of tax due from the petitioner. The above notice was issued in prescribed form, namely, form XIX and a copy of the same was forwarded to the petitioner. Aggrieved by the aforesaid notice issued under section 26A, the petitioner has filed the present writ petition challenging, inter alia, the constitutional validity of section 26A as well as the exercise of power under the said section by the Superintendent of Taxes under the facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised return. Sub-section (4), which is relevant for the present case, lays down the manner of payment in cases where amount due under the provisions of the Act is in excess of the amount paid under sub-section (2) or (3) or where no payment has been made by the dealer. In such cases the dealer is required by sub-section (4) to pay the tax by such date as may be specified in the notice of demand and where no such date is specified within 30 days from the date of service of the notice. Section 26 of the Act deals with the mode of recovery in cases where a dealer makes default in payment of tax due under the Act. It reads: "26. Mode of recovery.-(1) If the demand in respect of any dues under this Act is not paid on or before the date specified as aforesaid, the dealer shall be deemed to be in default: Provided that the Commissioner may, in respect of any particular dealer and for reasons to be recorded in writing, extend the date of payment of the dues or allow such dealer to pay the same by instalments and in that case the dealer shall not be deemed to be in default till the date as extended or the last date of payment by instalment is over. (2) Where a dealer is in def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n who holds or may subsequently hold money on account of such dealer, to deposit in the treasury, either forthwith upon the money becoming due or being held or within the time specified in the first mentioned notice (but not before the money becomes due or is held as aforesaid) so much of the money as is sufficient to pay the amount due from the dealer in respect of the tax and penalty under this Act, or the whole of the money when it is equal to or less than that amount. Explanation.-For the purpose of this sub-section, the amount of money due to a dealer from, or money held for on account of a dealer by any person, shall be calculated by the Commissioner after deducting therefrom such claims (if any) lawfully subsisting, as may have fallen due for payment by such dealer to such persons. (2) Any person discharging any liability to the dealer after receipt of the notice referred to in this section, shall be personally liable to the Commissioner to the extent of the liability discharged or to the extent of the liability of the dealer for tax and penalty, whichever is less. (3) Save as otherwise provided in this section, every person to whom a notice is issued under this se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving any guidance as to when either of the two procedures should be resorted. It has been pointed out that the mode of recovery provided under section 26A is much harsher than the one provided in section 26 of the Act and there are no safeguards embodied in the said section against arbitrary or discriminatory exercise of powers under the said section. It has been left entirely to the discretion of the authority concerned without any guidance and, as such, section 26A is violative of article 14 of the Constitution. We have heard Mr. B. Das, the learned counsel for the petitioners, and Mr. S. Barman Roy, the learned Advocate-General for the respondents. It was contended by the learned Advocate-General that section 26A was enacted with a view to providing the State a speedy and easy process of making realisation from the defaulting dealers and such a provision cannot be challenged on the ground of violation of article 19 of the Constitution. According to him such a provision for speedy recovery of arrears of tax from defaulting dealers contained in section 26A cannot, by any stretch of imagination, be held to be unreasonable restriction on the right of a dealer to carry on trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Article 19 of the Constitution guarantees certain rights to a citizen. One of the rights enumerated there in clause (1)(g) is right "to practise any profession, or to carry on any occupation, trade or business" The State has, however, been given power to impose reasonable restrictions on the exercise of any of the rights conferred by article 19 in the interest of general public. Levy of tax in exercise of power conferred under the Constitution per se does not amount to any restriction on the right to carry on trade or business. It may infringe the right guaranteed under article 19(1)(g) only if it is without legal authority or in contravention of the limitation imposed by the Constitution. Sales tax is levied by a State in exercise of its constitutional power under articles 245 and 246 of the Constitution and item 54 of List II of the Seventh Schedule to the Constitution. The provisions relating to recovery are ancillary to the exercise of power to levy tax. In the instant case section 26A does not levy any tax. It only provides an additional mode of recovery of taxes from dealers who are liable to pay tax but failed to pay the same. There are some modes of recovery already p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have considered the submissions of both the parties. From a perusal of the scheme of the Act it is clear that speedy and easy method of recovery of tax dues from defaulting dealers has been provided by section 26A. Whether such a law will be hit by article 14 of the Constitution is the point at issue. In other words, the question is if there are more than one mode of recovery provided in the Act one being more onerous than the other without giving any guidance as to the circumstances in which either of the procedures should be adopted, whether such a law can be said to be arbitrary, discriminatory and violative of article 14 of the Constitution. An identical question came up for consideration before this Court (then Assam High Court) in Murlidhar Jalan v. Income-tax Officer [1961] 41 ITR 80, wherein the validity of the provisions of section 46(5A) of the Indian Income-tax Act, 1922, which invested the Income-tax Officer with discretion to direct third persons to pay up amounts due from them to the assessee towards discharge of latter's tax liability, was challenged on the ground of violation of articles 14, 19 and 31 of the Constitution. It was held that the said provision did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the exclusion of the other. The two remedies in the aforesaid case were, one by collection of the amount as arrear of land revenue and the other by resorting to prosecution before the criminal court. It was held that neither of the remedies was destructive of the other. In Maganlal Chhagganlal (P) Ltd. v. Municipal Corporation of Greater Bombay [1974] 2 SCC 402, two procedures were available to the Corporation for eviction of the unauthorised occupants, one by way of a suit under the ordinary law and the other under either of the two Acts, namely, Bombay Municipal Corporation Act and the Bombay Government Premises (Eviction) Act, which was more drastic and onerous. The question for determination was whether the latter was hit by article 14 of the Constitution in the absence of any guidelines as to which procedure might be adopted. It was held by the Supreme Court: "In is rather interesting that this attack based on article 14 of the Constitution should have led to the apparently more onerous and harsher procedure becoming the rule, the resort to the ordinary Civil Court being taken away altogether. It is difficult to imagine who benefits by resort to the ordinary Civil Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there was no guidance provided to the Commissioner as to which of the procedures he should adopt in a given case. The Supreme Court observed that guidance will have to be inferred from the policy of the law itself, that is, if on particular facts of a case the Commissioner who is an officer of high standing, in exercise of his discretion comes to the conclusion that more drastic remedy should be taken, the exercise of the option cannot be termed as unconstitutional. It was held: "In considering the validity of a statute the presumption is in favour of its constitutionality and the burden is upon him who attacks it to show that there has been a clear transgression of constitutional principles. For sustaining the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived. It must always be presumed that the legislature understands and correctly appreciates the need of its own people and that discrimination, if any, is based on adequate grounds. It is well-settled that courts will be justified in giving a liberal interpretation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is evident from the statement of objects and reasons, is "to provide special provision for making realisation from defaulting dealers in a speedy and easy process". As such, the question of resorting to the same against dealers who are not defaulters does not arise. The learned Advocate-General submitted that if in any case any action has been wrongly taken by any authority contrary to the aforesaid scheme they were prepared to review such action. We find considerable force in the submission of the learned Advocate-General. Both sections 26 and 26A deal with modes of recovery. The question of recovery, as fairly conceded by the learned Advocate-General, comes in only when the amount is not paid within the due dates either originally fixed or later extended. In other words, question of taking resort to coercive modes of recovery including garnishee proceeding under section 26A, will arise only when a dealer is a defaulter or is deemed to be in default. This position is also borne out from the statement of objects and reasons. The learned Advocate-General also submitted that power under section 26A has been delegated to the Superintendent of Taxes, who is a responsible officer an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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