S HAMSA KOYA Vs. STATE

JUDGEMENT

(1.) THIS is a reference made by the Additional First Class magistrate of Ernakulam under S. 432 (1) of the Code of Criminal Procedure. The reference arises out of a prosecution of an assessee by the Salestax Department for his failure to pay a provisional assessment to salestax.

(2.) S. 3 (1) (a) of the Travancore-Cochin General Salestax act, XI of 1125, provides that "every dealer shall pay for each year a tax on his total turnover for such year". By the rules made by the Government under sub-ss. (4) and (5) of S. 3 and S. 24 of the Act this tax was allowed to be realised in certain cases by two assessments - a provisional assessment and a final assessment. R. 9,10 and 11 relate to provisional assessments and R. 14 to final assessments. The provisional assessment under R. 9,10 and 11 is to be made shortly after the commencement of the financial year on the basis of the estimated turnover for the whole year and subject to the final assessment and adjustment consequent thereon, and the final assessment under R. 14 is to be made after the close of the year and on the basis of the actual turnover for the whole year. R. 12 and 13 provide for the issue of a notice to the dealer about the provisional assessment and for payment of the tax provisionally fixed in monthly instalments. R. 15 provides for the adjustment after the final assessment. If the final assessment is lower than the provisional assessment the dealer has the option either to get a refund of the excess tax paid by him under the provisional assessment or to have the excess credited against the next year's tax, and if the final assessment is higher than the provisional assessment the dealer has to pay the difference.

(3.) ACCORDING to S. 3 (1) (a), the charging section, tax can be levied only on the total turn over, i. e. , the aggregate amount for which sale or purchase has been effected. The rules referred to above provides for fixing the tax on estimated turnover provisionally at the commencement of the year. ACCORDING to the defence counsel these rules are inconsistent with and repugnant to S. 3 of the Act. " Since the decision upon this contention involves a pronouncement as to the validity or otherwise of R. 10 and 11 and since it is provided by S. 24 (5) of the Act that all rules made under the said section shall be published in the Gazette and upon such publication shall have effect as if enacted in the Act, the learned Magistrate considered that a reference to this court was necessary under S. 432 (1) of the Code of Criminal Procedure and has made the reference accordingly. 4. Two points arise for decision in the reference, namely, (i) whether the Magistrate was competent to decide himself the validity or otherwise of R. 10 and 11 or whether he was bound to make a reference to this court under S. 432 (1) of the Code of Criminal Procedure for deciding that question, and (ii) whether R. 10 and 11 are repugnant to S. 3 of the Act and ultra vires of the powers of the rule-making authority. 5. S. 432 (1) of the Code of Criminal Procedure reads as follows: "where any court is satisfied that a case pending before it involves a question as to the validity of any Act, Ordinance or regulation, or of any provision contained in an Act, Ordinance or Regulation the determination of which is necessary for the disposal of the case, and is of opinion that such Act, Ordinance, Regulation or provision is invalid or inoperative, but has not been so declared by the High Court to which that Court is subordinate or by the Supreme Court, the Court shall state a case setting out its opinion and the reasons therefor and refer the same for the decision of the High Court. In view of this section until the Supreme Court or the high Court to which he is subordinate has made a definite pronouncement on the subject it is not competent for a Magistrate to hold any particular provision in a statute to be invalid or ultra vires. S. 24 (5) of the Travancore-Cochin general Salestax Act specifically enacts 'all rules made under this section shall be published in the Gazette and upon such publication shall have effect as if enacted in this Act'. The effect of S. 24 (5) of the Act is that the rules in question have to be treated for all purposes of construction or obligation exactly as if they were provisions in the Act itself, that is to say, they also must be considered as provisions enacted in the Act itself and as part of the act and Courts of law must treat them in the same manner as provisions in the act itself. One of the consequences of a particular provision being enacted in a statute or Act is that the said provision will attract S. 432 of the Code of criminal Procedure and the consequence of that attraction is that it will not be open to a magistrate to pronounce the particular provision to be invalid or inoperative until and unless the Supreme Court or the High Court to which he is subordinate has declared it to be so. No doubt, by the mere enactment in the act that the rules shall have effect as if enacted in the Act the rules will not be rendered valid and Courts of law are competent, notwithstanding such a provision, to consider whether the rules have been validly made under the Act and are intra vires of the rule-making authority. In the case of M. P. Kumaraswami Raja, AIR 1955 Madras 326, the Madras High Court has quoted with approval the following statement of law from Halsbury's laws of England. "statutory rules, orders and bye-laws differ from statutes in that they may be open to the judiciary to question their validity, to examine if they have complied with conditions precedent, or if they are inconsistent with the statute under which they are made and in the case of bye-laws to consider if they are reasonable. If they fail to comply with such conditions, the Court may quash them or treat them as unenforceable. The Court is not precluded from inquiring into the validity of an order because the statute authorising the making of the order provides that it shall have effect as if it were enacted in the statute. " and observed that there is abundant authority in decisions of the Courts in India for this position. While this is the general law, the matter stands on a slightly different footing so far as subordinate criminal courts are concerned, by reason of S. 432 (1) of the Code of Criminal procedure. When the validity of a particular rule made under a provision in the act which says that the rules made thereunder shall have effect as if enacted in the Act is challenged if the Court decides that the particular rule is valid that rule will have to be treated as part of the Act. The challenge is in effect about the validity of a provision which has to be treated as part of the act. In such a case on account of S. 432 (1) of the Code of Criminal Procedure a subordinate criminal Court is incompetent to pronounce the rule to be invalid or inoperative until the Supreme Court or the High Court to which that Court is subordinate has declared it to be so. The question of the validity of R. 10 and 11, which by virtue of S. 24 have to be considered as part of the General salestax Act itself and as embodied in that very Act, having been raised before him and there being no previous pronouncement by the Supreme Court or by this high Court as to their validity in view of S. 432 (1) of the Code of Criminal procedure, the learned Magistrate had no alternative but to make this reference.