BURMAH SHELL OIL STORAGE AND DISTRIBUTING CO OF INDIA LTD Vs. SALES TAX OFFICER SPECIAL CIRCLE ERNAKULAM

JUDGEMENT

(1.) A single Judge has referred this writ petition to a Division Bench considering the magnitude of the interest involved. The petitioner is the Burmah-Shell Oil Storage and Distributing Co. of India Limited having its headquarters at Burmah Shell House, Madras; and the respondents are the Sales Tax Officer, Ernakulam, the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam, the Board of Revenue, Trivandrum, and the State of Kerala. The company has a local office; and it received two notices, exhibits P1 and P2, one dated 15th April and the other dated 23rd April, 1969, demanding that the company should pay Rs. 18,211. 84 under exhibit P1 and Rs. 43,790 under exhibit P2 as penalty. The company used to pay advance tax by crossed cheque previously; but, later on it changed over to payment in the Government treasury and producing the chalans. Under the relevant rule, the payments have to be made before the 10th of every month. In 1966-67, the company committed defaults in paying the amounts on the respective dates on four occasions; and in the next year 1967-68, the company committed such defaults on eight occasions. The delay in payments ranged from one day to nine days. The company contested the legality of the notices, exhibits P1 and P2, the revision before the Deputy Commissioner of Agricultural Income-tax and Sales Tax, the second respondent, who rejected the revision petitions under exhibits P24 and P25 respectively. Further revisions were filed before the third respondent, the Board of Revenue, who also rejected the revision petitions by orders exhibits P35 and P36. Thereafter, the present writ petition has been filed by the company to quash the notices and the orders passed by the Deputy Commissioner and the Board of Revenue, viz. , exhibits P1, P2, P24, P25, P35 and P36. Before we go into the merits of the case, we shall just advert to the relevant provisions touching the matter. Section 23 (3) of the Kerala General Sales Tax Act, 1963, is the section under which the notices were issued. The sub-section reads : " (3) If the tax assessed or any other amount due under this Act or an instalment thereof is not paid by any dealer or other person within the time specified therefor in the notice demand or in the order permitting payment in instalments or within the time allowed for its payment by the appellate or revising authority, the dealer or other person shall pay, by way of penalty, in the manner prescribed, in addition to the amount due, a sum equal to - (a) half per cent of such amount for each month or part thereof for the first three months after the date specified for its payment; (b) one per cent of such amount for each month or part thereof subsequent to the first three months aforesaid. " Rule 31 of the Kerala General Sales Tax Rules, 1963, may also be noticed, which reads : " 31. Mode of payments of penalty.- (1) The penalty payable under sub-section (3) of section 23 shall be remitted into the Government treasury or paid by means of crossed cheque or crossed demand draft in favour of the assessing authority concerned either separately or along with the tax. (2) The assessing authority concerned may calculate the penalty payable under sub-section (3) of section 23 from time to time and may issue a notice in form 24. On receipt of the notice the dealer shall pay the penalty due in the manner specified in sub-rule (1 ). Explanation.- The dealer or other person concerned shall however be liable to pay the penalty under sub-section (3) of section 23 whether he receives a notice under this sub-rule or not. " Two forms may also be noted in this connection. The first form is form 11; and the relevant portion of form 11, with which we are concerned reads : ". . . . . . The tax for the current month shall be paid within thirty days from the date of service of this notice of before the 10th day of the succeeding month whichever is later and the tax for each of the remaining months before the 10th day of the succeeding month, by crossed cheque or crossed demand draft in favour of the undersigned or by remittance into the Government treasury at. . . . failing which the amounts towards the tax payable under this notice will be recovered as if they were arrears of land revenue and/or fine imposed by a Magistrate and you will also be liable to pay the penalty prescribed under sub-section (3) of section 23. " The other form is form 24, which is a demand for payment of the penalty under rule 31. It is not necessary to extract this form; its language is similar to the language of form 11. The counsel of the petitioner has raised four or five grounds before us to have the notices and the orders quashed. The first contention raised is a minor one. The counsel has urged that in some cases the delay is only of a day, and if the language of the notice (form 11 notice) is "by the 10th", the question arises whether the 10th of the month will also be included or should be excluded in considering the time. This contention will turn out, on scrutiny, to be of no force, because form 11 does not contain the expression "by the 10th"; what it contains is "before the 10th day of the succeeding month". Evidently, the remittances should have been before the 10th, with the result that there was delay in making these remittance too. The next contention urged by the counsel relates to the cause of the default. It is urged - and this fact is not seriously disputed and cannot be disputed either - that the default in making the remittances was due to causes beyond the control of the company. In some instances the 10th of the month happened to be a Government holiday like Sunday, Sivarathri, etc. In one or two other cases, the State Bank of India, Ernakulam, did not receive the telegraphic transfer of amounts from the Madras branch before the close of the work of the Government treasury for the day, with the result that the telegraphic transfers were received only the next day. In other cases, the delay was due to the strike of the N. G. Os. For these reasons, the counsel of the petitioner has contended, since the remittances were delayed for reasons beyond the control of the company, the penalty should not have been imposed. The facts, stated by us already, have indicated that the company was itself paying advance tax by way of crossed cheque. Form 11 also demands that the advance tax be paid either by crossed cheque or crossed demand draft or by remittances into the Government treasury. It was the choice - voluntary and deliberate - of the company to make the payments into the treasury, though the alternate mode was also available. Having done so, there is no point in complaining that the last day on which the remittance could have been made happened to be a holiday. It may also be noted that what was stated in the notice was that the payment should be made before the 10th day of the succeeding month - not on the 10th day. In view of these circumstances, the argument that the delay was caused for reasons beyond the control of the company has no force whatsoever. It is then contended by the counsel of the petitioner that what has been collected by way of penalty under section 23 (3) is really an additional tax and not anything in the nature of penal interest as has been contended by the State in their counter-affidavit. In support of this contention, the counsel has drawn our attention to decisions like Commissioner of Income-tax, Andhra Pradesh v. Bhikaji Dadabhai & Co. ([1961] 42 I. T. R. 123 (S. C.)), where the Supreme Court has observed, in considering the Hyderabad Income-tax Act, that the penalty imposed under a taxing statute upon a person in view of his dishonest or contumacious conduct is an additional tax. The contention of the State, as we have pointed already, in the counter-affidavit is that what is being collected as penalty under section 23 (3) is not any additional tax, but something in the nature of interest by way of damages. The counsel of the petitioner has argued further that, if it is additional tax, then there is discrimination also under article 14 of the Constitution, since the same difficulty might not arise in the other cases where payment is made by demand draft or crossed cheque. This contention is equally devoid of merit, because the choice of the particular mode of payment was made by the Company itself and it was not something which was thrust on the company. Therefore, no question of discrimination under article 14 also arises. The next argument of the counsel is that, in imposing penalty, there is discretion and the imposition of penalty is a quasi-judicial act, where the discretion should be properly exercised after giving the person an opportunity to be heard. The counsel has cited quite a few decisions on this aspect arising on the relevant provisions of the Indian Income-tax Act of 1922. Two of the decisions brought to our notice are of our own court. They are Devassy v. Commissioner of Income-tax ([1972] 84 I. T. R. 502; I. T. R. (1971) 2 Ker. 351) and M/s. Dawn & Co. , Quilon v. Commissioner of Income-tax, Kerala ([1973] 87 I. T. R. 71; I. L. R. (1971) 2 Ker. 359 ). Two other similar decisions are of the Supreme Court. One of them is M/s. Hindustan Steel Ltd. v. The State of Orissa ([1970] 25 S. T. C. 211 (S. C.); A. I. R. 1970 S. C. 253), where the Supreme Court has held that the mere proof of default was not sufficient for imposing penalty and penalty could be imposed only if the conduct of the assessee was contumacious or dishonest or was in conscious disregard of his obligation. Another decision of the Supreme Court on this aspect is Commissioner of Income-tax, West Bengal v. Anwar Ali ([1970] 76 I. T. R. 696 (S. C.); A. I. R. 1970 S. C. 1782 ). In that case, the Supreme Court has held that imposition of penalty is a penal proceeding, and in such a proceeding, the revenue must establish that the amount not disclosed to the Income-tax Officer was really income; in other words, if the assessee attempted an explanation and the explanation failed, that was not sufficient for holding that the amount was liable to tax. Similar is the decision, again of the Supreme Court, in C. A. Abraham v. Income-tax Officer, Kottayam ([1961] 41 I. T. R. 425 (S. C.) ). There cannot be any dispute regarding this proposition. But, the question for us to consider is whether these decisions can apply to the case before us. The language of section 23 (3) appears to make the payment contemplated by the section an absolute liability on the assessee. If the tax assessed is not paid within the time allowed, whatever be the reason for the non-payment, the dealer or other person shall pay, by way of penalty, in the manner prescribed, in addition to the amount due, a sum equal to half per cent of such amount for each month or part thereof, for the first three months, and one per cent of such amount for each month or part thereof, subsequent to the three months. There is no question of the taxing authority exercising any discretion under the statute; no discretion is contemplated or vested in the authority; the penalty at the particular rate mentioned in the section automatically clinches on the failure to pay the amount within the time mentioned in the section. If there is no discretion left in the assessing authority by the statute itself, there is no question of the exercise of discretion being quasi-judicial and no question of giving notice to the assessee before the exercise of discretion. As we have stated already, the penalty is in the nature of interest by way of damages payable on the defaulted amount at the particular rate mentioned in the section itself. Therefore, the decisions cited by the counsel of the petitioner cannot have any application to the case. Looking at the case, once again, from the angle of natural justice, we would point out that the statutory provision, we mean section 23 (3), excludes the application of the rules of natural justice, and in such cases, we cannot ignore the mandate of the Legislature; the mandate of the Legislature is clear in the language of the section; we cannot read into the concerned provision the rules of natural justice; that will not be consistent with the language of the section : vide Union of India v. J. N. Sinha (A. I. R. 1971 S. C. 40 ). The counsel has also made an attempt to equate the penalty payable under section 23 (3) to criminal liability. He has drawn our attention to cases which hold that, in a criminal offence, mens rea is a necessary ingredient. For instance, the House of Lords has laid down in Sweet v. Parsley ([1969] 2 W. L. R. 470 (H. L.)), that mens rea is an essential ingredient of every offence, unless some reason can be found for holding that it is not necessary, and the court ought not to hold that an offence is an absolute offence unless it appears that that must have been the intention of the Parliament; and our Supreme Court has laid down in State of Gujarat v. Acharya Shri Devendraprasadji Pande (A. I. R. 1971 S. C. 866), that mens rea means some blameworthy mental condition, whether constituted by knowledge or intention or otherwise, that the plain words of the statute are to be read subject to a presumption, which may be rebutted, that the general rule of law is that no crime can be committed unless there is mens rea, and that this presumption can be ousted by the language of the particular enactment, and until such ouster is established, mens rea must be an essential element of every criminal offence. We have already stated that, under section 23 (3), there is no discretion vested in the taxing authority. If so, even if we construe the penalty under the section as a criminal imposition (which, we confess, we are not able to do), still the language of the section makes it abundantly clear that the intention of the Legislature was to make it an absolute liability without any means rea. In other words, the language of the section will make it clear that the presumption that every offence should have the requisite guilty mind is excluded or ousted. We may also point out that, in the Supreme Court decision, Hegde, J. , has pointed out three principal classes of exceptions to the aforesaid rule. The first is a class of acts, which are not criminal in the real sense, but are acts which, in the public interest, are prohibited under a penalty; the second class comprehends some, and perhaps all, public nuisances; the third class of cases are cases in which, although the proceeding is criminal in form, it is really only a summary mode of enforcing a civil right. These three classes are generally the classes of cases, where the presumption of mens rea is ousted. In any view of the matter, the present case will come within the last category, where, though the proceeding is criminal in form, still, it is only a summary mode of enforcing a civil right. We, however, hasten to state that we do not subscribe to the view that the proceeding in this case is criminal in form; we only point out that even if it is so (accepting the position for the sake of argument), even then, the case will be covered by the last category of cases mentioned by Hegde, J. Therefore, this contention cannot also avail. The foregoing discussion will clearly show that the writ petition has no force and the prayer in the writ petition cannot be allowed. The writ petition is dismissed, but, without costs. Petition dismissed. .