COMMERCIAL PRODUCE SYNDICATE Vs. STATE OF KERALA

JUDGEMENT

(1.) A partner of the firm,Messrs.Commercial Produce Syndicate,Ltd .,which does business in pepper in Baliapatam is the writ petitioner.The firm had been assessed to sales tax for the assessment year 1958 -59 against which O.P.1444/59 was filed on the complaint that the assessment was illegal.The complaint in the aforesaid petition having been sustained,the assessment was vacated,but the firm was again assessed to sales tax amounting to Rs.11,300.85 for the same assessment year.This was done under a later legislative authorisation,and action to recover the tax was threatened against the firm under section 13 of the General Sales Tax Act,hereafter referred to as the Act.Thereafter,this writ petition was filed,complaining that section 13 of the Act was violative of Article 14,inasmuch as the Act provides two forms of coercive collections,one under section 13 and the other under section 19.The petitioner complains that the first which directs the tax being recovered as if it were arrear of land revenue under the Revenue Recovery Act,is more burdensome than the second,which permits recovery by prosecution of the defaulter and levy of the tax as if it were fine.The writ petitioner further urges that the method of collection by way of fine is far less onerous,because the Court intervenes,more time is obtained,and there is a right of appeal and stay.Also the procedure for recovery of fine is.far less harsh than under the Revenue Recovery Act,under which there is immediate sale by distraint and the Executive Officer functions under the directions of the assessing authority,without any right of appeal.Another complaint is that there is no indication in the statute as to the conditions and considerations governing the officer's discretion when choosing the one as against the other,the power thereby being uncontrolled and therefore,the discrimination inherent in the statute itself.On such argument,section 13 of the Act is urged to be void. The learned counsel,in support of that argument,relies first on S.M.Nowab Ariff v. Corporation of Cal­cutta A.I.R.1960 Calcutta 159,and thereafter on several other cases,which we propose to discuss later.But in order to appreciate the point,it would be better if at this stage we are to give the two sections in some detail. Section 131: Payment and recovery of tax."The tax assessed under this Act shall be paid in such manner,and in such installments,if any,and within such time,as may be specified in the notice of assessment,not being less than fifteen days from the date of service of the notice.In default of such payment,the whole of the amount then remaining due may be recovered as if it were an arrear of land revenue. Section 19: Offences and Penalties."Any person who " (a)wilfully submits an untrue return or fails to submit a return as required by the provisions of this Act or of the rules made thereunder,or (aa)wilfully submits an untrue statement or fails to submit a statement as required by sub -section(2)of section 5 -A;or (b)fails to pay within the time allowed,any tax assessed on him,or any fee due from him,under this Act,or (c)prevents or obstructs inspection or entry by any officer authorized under section 17,in contravention of the terms thereof,or (d)fraudulently evades the payment of any tax assessed on him,or any fee due from him,under this Act,or (e)fails to submit an application for registration as required by section 10,sub -section(1 ),or (f)collects any amount by way of tax under this Act in contravention of the provisions of section 11,sub -section(1 ),or (g)fails to pay the amounts specified in section 11 sub­section(2 ),within the prescribed time,or (h)wilfully acts in contravention of any of the provisions of this Act shall,on conviction by a Magistrate of the First Class,be liable to a fine which may extend to one thousand rupees and in the case of a conviction under clause(b ),( d ),( f ),or(g ),the Magistrate shall specify in the order the tax,fee or other amount,which the person convicted has failed or evaded to pay or has wrongfully collected,and the tax,fee or amount so specified shall be recoverable as if it were fine under the Code of Criminal Procedure for the time being in force. The law on which Article 14 is contravened has been exhaustively dealt in Ram Krishna Dalmia v .Justice Tendolkar A.I.R.1958 S.C.538,where it has been held that while Article 14 forbids class legislation,it does not forbid reasonable classification for the purposes of legislation;and in order to pass the test of permissible classification,two condi­tions must be fulfilled.The conditions given there are: (i)that the classification must be founded on an intelligible differentia,which distinguishes persons or things that are grouped together from others left out of the group, (ii)that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The earlier decisions are then summarised into several propositions;and out of these,the writ petitioner's learned counsel has relied on the third,which reads as follows:&mdash ;. "A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discre­tion of the Government to select and classify persons or things to whom its provisions are to apply.In determining the question of the validity or otherwise of such statute the Court will not strike down the law out of the hand only because no classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government in the matter of the selection or classification.After such scrutiny the court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter or selection or classification,on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discrimi­nate between persons or things similarly situate and that,therefore,the discrimination is inherent in the statute itself.In such a case the Court will strike down both the law as well as the executive action taken under such law,as it did in State of West Bengal v. Anwar Ali Sarkar A.I.R.1952 S.C.75, Dwaraka Prasad v .State of Uttar Pradesh A.I.R.1954 S.C.R.803, and Dhirendra Kumar Mandal v. Superintendent and Remembrancer of Legal Affairs A.I.R.1954 S.C.424." The writ petitioner's learned counsel has,therefore,urged that the Act does not indicate when the executive authority is to take steps against the defaulter under section 13 or proceed under section 19;and,because out of the two provisions one is obviously harsher than the other,the case is covered by the aforesaid proposition and section 13 should be struck down.In further support of this argument,he relies on K.T.Mooppil Nair v .State of Kerala A.I.R.1961 S.C.552,wherein Ram Krishna Dalmia's case has been affirmed,and on Nawab Ariff's case.In the last case,the question arising for decision was whether certain pro­visions of the Calcutta Municipal Act,1951,had contravened the guarantee of equal protection,because the statute had provided in sections,viz .,251,235 and 245,three different forms of proceeding against persons,who had made default in payment of rate.In such conditions,the majority of the learned Judges held that as the enactment had not laid down any principle or policy for the guidance of the exercise of discretion by the authorities in the matter of selection or classification of defaulters in deciding whether any particular defaulter should be proceeded against by way of suit(section 251 ),or by the other modes(sections 237 and 245 ),the discri­mination was inherent in the statute itself.There if considerable force in argument that in the Calcutta case the question of whether the Legislature by providing cumulative methods,some being more burdensome,for realising taxes already assessed would contravene the guarantee never arose for consideration.In any case,there are decisions where cumulative sanctions for reali­sing tax against defaulters have been upheld,some ofwhich cases the petitioner's learned advocate has veryfairly placed before us,and has tried to distinguish.It would be of advantage to deal with the cases first in order to ascertain how they treat the legislations for cumulative sanctions against the defaulting tax -payers.The first of these is Purushotham v. V.M.Desai A.I.R.1956 S.C.20 at o.23,where the proviso to section 46(2)of the Indian Income -tax Act came up for attack on the ground of being violative of Article 14,and the learned Chief Justice rejected the complaint in these words:" The powers that are thus conferred on the Collector by sec­tion 46(2)are unfettered and unguided and enable the Collector,at his will,to discriminate between two defaulters who are similarly situated and thereby violate the behests of the equal protection clause of the Constitution.This argument appears to us to be founded on a mis­apprehension about the true meaning of section 46(2 ).On a proper reading,that sub -section does not prescribe two alternative modes of procedure at all. All that the sub section directs the Collector to do is to proceed to recover the certified amount as if it were an arrear of land revenue,that is to say,he is to adopt the procedure prescribed by the appropriate law of his State for the recovery of land revenue and that in thus proceeding he is,under the proviso,to have all the powers a Civil Court has under the Code.The sub -section does not prescribe two separate procedures ¦ ;.. In our opinion,the proviso does not indicate a different and alternative mode of recovery of the certified amount of tax but only confers additional powers on the Collector for the better and more effective application of the only mode of recovery authorised by the body of sub -section(2)of section 46.Viewed in this light there is no question of the possibility of any discrimination at all.This part of the argument cannot,therefore,be accepted. The proposition was reiterated by Imam,J .,in Collector of Malabar v .E.Ebrahim A.I.R.1957 S.C.688,and therefore,conferring additional power on the officer entrusted with realising arrears of taxes,though such power be more burdensome,is not violative of Article 14.The petitioner's learned counsel has tried to distinguish these authorities by urging that the powers under section 46(2)of the Income -tax Act are vested in the same authority,whereas in the case before us,two different authorities exercise different pro­cedures and therefore,they are alternative.With respect,we think the general proposition established by the aforesaid decisions cannot be banked by such refinement.If the authority,having two powers for enforcing the liability,one of which be harsher than the other,cannot be treated to have been vested with discriminatory powers,it is difficult to see how similar powers in different authorities should not be similarly treated.After all if two instru­ments in the hand of one person be constitutional,they would not be unconstitutional in two hands.The im­portant point is whether the powers under sections be cumulative,and we are fortified in holding them to be such by State of Kerala v .C.M.Francis and Co .A.I.R.1961 S.C.617,where sections 13 and 19 of the Act came to be considered.Hidayathullah,J .,held both sections as laying down the mode of recovery of arrears of tax,one not being more general than the other,because of there being much in common between them and neither being destructive of the other and both can be resorted to at the option of the authority recovering the amount. We would now refer to other decisions as well,where additional powers have been sustained notwithstanding some being unduly harsh.The Hyderabad Abkari Act and Rules were challenged in P.Susha Reddy v. Excise Superintendent (1959)2 A.W.R.426 .,but the learned Chief Justice sustained the provisions and observed at p.432 as follows:" Nor does the rule in any way seek to alter the law underlying the statute.While sections 31 and 33 enact criminal sanction,rule 9(6)contains a different kind of sanction,namely,impost of penalty.They are two separate and distinct remedies.The objective of the two -sanctions are different............ Both the sanctions are imposed to ensure compliance with the statutory rules and conditions and to discourage fraudulent attempts at evasion of taxes and duties by making it unremunerative.They are independent remedies and both of them can be availed of.In respect of the same act,there can be both a criminal,civil or fiscal sanction ;.The Department is not put to option to choose either of the two alternatives.The two sets of proceedings may be started simultaneously.In our opinion,there is no principle known to law which renders existence of such Concurrent sanction obnoxious. In the same year,the complaint of section 35 of the Punjab State Aid to Industries Act,1935,being repugnant to the provisions of Article 14 of the Constitution was rejected in Shri Harish Chand v. Collector of Amritsar A.I.R.1959 Punjab 19,and the learned Judges relying on the two Supreme Court cases referred to above,held that the two modes in the Act before them seemed to be governed by the decision of the Supreme Court as they were cumulative.Seshachalapathi,J .,in M.Seetharamaswami and Co. v .Commercial Tax Officer A.I.R.1960 A.P.451,has held that the levy of penalty and the launching of prosecution in the sales tax before the learned Judge,were two distinct sanctions by no means mutually exclusive,and because it was open to the Department to levy the penalty as well as to initiate prosecution,the provisions were valid.In Murlidhar v .I.T.Officer A.I.R.1960 Assam 76,section 46(5A)of the Income -tax Act was challenged and Mehrotra,J .,rejected the complaint on the ground that,having regard to the income -tax Act,it was fair to provide a special procedure for recovery of the tax dues,and not to leave the authorities to realise the amount of tax dues through the normal procedure of courts.Finally we may refer to P.Krishnan v .State of Kerala S.A.No.114/59,decided on September 22,1960,where S.M.Nawab Ariff's case has not been followed,and the learned Judge has preferred to follow City Corporation,Trivandrum v. Muhammed Haneefa 1958 K.L.J.334,that had sustained two cumulative methods for realisation of arrears of tax under section 409 of the Trivandrum City Municipal Act and rule 31(2 ). The petitioner's learned advocate has tried to dis­tinguish this last decision as well as the Full Bench case on which it rests on the reasoning that the exercise of powers under the Municipal Act was unlike sections 13 and 19 of the Acts before us not absolute but guided.The proposition,however,been again affirmed in Jagannath Prasad v. State of Uttar Pradesh A.I.R.1961 S.C.1245,that equal protection of the laws does not postulate equal treatment of all persons without distinction,it merely guarantees the application of the same laws alike and without dis­crimination to all persons similarly situated.Therefore,the class of persons who have evaded payment of sales tax having become sufficiently marked are not discriminated against,should special provisions applicable to all such defaulters be enacted to realise the tax.In other words such defaulters are sufficiently distinguishable from the rest,and the cumulative methods of realising the tax are reasonable related to the object of the classification.Therefore,the test of rational classification laid in Dalmia's case is fulfilled.Nor is the legislation vitiated by uncontrolled discretionary powers being vested,as cumulative sanctions have become common methods,for enforcing such tax -payer's liability.We are,therefore,of the opinion that the case before us is distinguishable from Bahadur Singh v .Jaswant Raj A.I.R.1953 Rajasthan 158,as well,where the two procedures were alternative. On these grounds,we feel no force in the petition;but at the same time we would place on record our indebtedness to the writ petitioner's learned advocate,who has very fairly and ably argued his client's case.The petition is accordingly dismissed;but in the circum­stances of the case,the parties will bear their costs.