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TMI Blog1978 (10) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax due within the time allowed without reasonable cause. The duty of the Commissioner is, therefore, to be satisfied that the assessee has failed without reasonable cause and without recourse to prosecution under s. 46(1)(c) the tax due cannot be collected. The provisions of s. 22(4A) can be read as being applicable to cases in which the stringent step of prosecution is considered not necessary. The option is with the Commissioner and if he thinks levy of penalty would achieve the purpose of collection of the tax he can have recourse to the provisions of s. 22(4A). Before levying a penalty under s. 22(4-A), the Commissioner shall give reasonable opportunity of being heard as to why the penalty should not be levied. Reading the two provisions harmoniously, we are of the view that the discretion is given to the Commissioner to resort to one of the two remedies as the facts of the case may require. In graver cases, he will be justified in taking the drastic remedy and resorting to prosecution in the criminal court if he is satisfied that such a course is necessary for the collection of the tax expeditiously. On a consideration of the decisions on the point we are satisfied that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm under s. 46(1)(c) of the Act. A challan was filed on 9th December, 1968, and a Criminal Case No. 4344 of 1968 was registered and the respondents were asked to appear on 20th February. 1969. On 17th February, 1969, the respondents filed writ petition out of which the present appeal arises for quashing the order of sanction for criminal prosecution dated 29th April, 1966, given by the Commissioner of Sales Tax and of the proceedings before the criminal court in Criminal Case No. 4344 of 1968. By its judgment dated 16th March, 1971, the High Court allowed the petition and, quashed the sanction for criminal prosecution given by the Commr. of S.T. and the criminal proceedings. The High Court considering the general and legal importance of the question, granted a certificate of fitness to the Commr. of S.T. and the present appeal is thus before this court. Two questions that arise in this appeal are : (i) Whether the three partners can be held liable for the tax assessed against the firm ? (ii) Whether the sanction given by the Commissioner for prosecution under section 46(1)(c) is sustainable in law? Regarding the first question the High Court held that the result of non-p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm being a separate entity under the Act, there was no machinery provided under the Act for assessing a firm after its dissolution in respect of turnover of business before the dissolution. This court held that though under the partnership law a firm is not a legal entity, for the purpose of sales tax under the Act, it is a legal entity and, therefore, on dissolution the firm ceases to be a legal entity and there is no provision in the Act as it stood in 1953 expressly empowering the assessing authority to assess the dissolved firm in respect of the turnover before its dissolution. There was no further scope for assessing the firm which ceases to have legal existence. In Kapurchand Shrimal v. TRO [1969] 1 SCR 691; 72 ITR 623 (SC), a case arising out of the I.T. Act, this court held that the legislature having treated a HUF as a taxable entity distinct from individual members constituting it, proceedings for assessment and recovery of the tax having been taken against the HUF, it was not open to the TRO to initiate proceedings against the manager of the HUF for his arrest and detention. These two cases clearly establish that a firm in a partnership and a HUF are recognised as le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs aforesaid." There had been subsequent amendments by Act 31 of 1975, but they are not relevant for the purposes of this case. Section 22(4-A) was inserted by the M.P. Act 16 of 1965 and was published in the Gazette of 3rd April, 1965, and by a notification dated 9th April, 1965, was brought into force on 15th April, 1965. The notice was given by the Commissioner demanding payment, of the tax and penalty from the firm within 31 days on 4th January, 1965. The period expired on 5th February, 1965. The Sanction for prosecution was given by the Commissioner on 29th April, 1966. Before the High Court as well as before this court both the counsel for the respondents and the State conceded that s. 22(4-A) is retrospective in operation and, therefore, the sub-section is applicable to the facts of the case. The sub-section provides that when the amount due is not paid within the time allowed, the Commissioner may after giving the dealer a reasonable opportunity of being heard direct that such dealer in addition to the amount due pay by way of penalty a sum as specified in sub-cls. (a) and (b) to sub-s. (4-A). The procedure prescribed in s. 274(4-A) for collection of the amount is by levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation of Greater Bombay [1974] 2 SCC 402 ; AIR 1974 SC 2009. It was observed that one finds it difficult to reconcile oneself to the position that the mere possibility of resort to the civil court should ,make invalid a procedure which would otherwise be valid. It can very well be argued that as long as a procedure does not by itself violate either art. 19 or art. 14 and is thus constitutionally valid, the fact that that procedure is more onerous and harsher than the Procedure in the ordinary civil courts, should not make that procedure void merely because the authority competent to take action can resort to that procedure in the case of some and ordinary civil court procedure in the case of others. That a constitutionally valid provision of law should be held to be void because there is a possibility of its being resorted to in the case of some and the ordinary civil court procedure, in the case of others somehow makes one feel uneasy and that has been responsible for the attempts to get round the reasoning which is the basis in the decision in Northern India Caterers (P.) Ltd. v. State of Punjab [1967] 3 SCR 399 ; AIR 1967 SC 1581. It was further held that if from the pream ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covering the amount but for s. 47A. In the case referred in [1961] 12 STC 119 (SC) (State of Kerala v. C. M. Francis & Co.), the two remedies were one by collection of the amount as an arrear of land revenue and the other by resorting to prosecution before the criminal court. In Shanti prasad Jain v. Director of Enforcement [1963] 2 SCR 297 ; 33 Comp Cas 231 AIR 1962 SC 1764, the question arose whether discretion left to the executive to choose between two preliminary procedures was discriminatory. Under s. 23A, the Director of Enforcement may adjudge the matter himself and levy a penalty not exceeding three times the value of the foreign exchange, in respect of which the contravention had taken place or Rs. 5,000 whichever, is more or he may send it on to a court if he considers that a more severe penalty than he can impose is called for whereupon on a conviction by a court, the person is punishable with imprisonment for two years or fine. The court observed that under s 23D the necessary guidance is given in that at any stage of the inquiry the Director of Enforcement is of opinion that having regard to the circumstances of the case the penalty which be is empowered to impose wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of responsibility. It has been held by the Privy Council in Province of Bombay v. Bombay Municipal Corporation [1946] LR 73 IA 271 (PC) that every statute must be supposed to be for public good at least in, intention and, therefore, of few laws can it be said that the law confers unfettered discretionary power since the policy of law offers guidance for the exercise of discretionary power. Applying the principles of this decision to the present case, the 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 that option cannot be termed as unconstitutional. 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 stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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