judgement:
Appeal No. 179 of 1985.
From the Judgment and Order dated 13.12.
1984 of the Bombay High Court in Appeal No. 273 of 1979.
WITH Civil Appeal No. 4427 of 1985.
From the Judgment and Order dated 19.4.1985 of the Bombay 356 High Court in Special Civil Appln.
(Writ Petition) No. 186 of 1982.
A. Setalvad, P.H. Parekh, M. Korde and Manohar for the Appellants in C.A. No. 179 of 1985.
Soli J. Sorabjee, A. Vachher, S.K. Mehta, Bomi M. Usgao car, M.K. Dua and Uday U. Lalit for the Appellants in C.A. No. 4427 of 1985.
M.S. Rao, A.S. Rao, C.V. Subba Rao and P. Parmeshwaran for the Respondents.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
The principal questions raised in the two appeals are the same and we are, therefore, dispos ing of both the appeals by a common judgment.
There are, however, some points of difference which we shall mention in the course of the narration of facts.
In Civil Appeal No. 179 of 1985, Chowgule & Co. Private Limited are the appellants.
They carry on the business of exporting iron ore to various countries from India.
It appears that previously iron ore used to be brought to the Mormugao harbour from various mines in the territory of Goa by barges and unloaded in the harbour.
Thereafter, the ore would be loaded on board ocean going ore carriers.
Alter nately, they would be directly unloaded in stream into the ocean going ore carriers.
On account of the shallow draught of the Mormugao harbour which prevented large ocean going ore carrying vessels from entering the harbour or from having iron ore loaded to full capacity on such vessels within the harbour, considerable time was wasted in the loading process resulting in substantial increase of the cost of transporting iron ore from Mormugao.
Therefore, in about 1967, the appellant company conceived the idea of acquiring a 'transhipper ' into which barges could unload iron ore and from which large quantities of iron ore could be loaded into large vessels in open anchorages.
Such a transhipper would have to be specially fitted with special and adequate equipment to carry out those tasks.
The opera tion of loading a vessel in open anchorage by the use of transhippers is described as 'topping up '.
On July 26, 1967, the appellant Company applied to the Government of India, Ministry of Transport and Shipping, for necessary permission for "purchasing a second hand vessel of about 15000 DWT for use as a topping up vessel at Mormugao harbour for iron ore exports.
" By their letter dated January 16, 1968, the Gov ernment of India granted their permission subject to certain con 357 ditions regarding foreign exchange etc.
Thereafter the appellant company acquired a second hand tanker called "The Tropical Grace" and had it converted at the Yokohoma Ship yard in Japan as a transhipper.
"A certificate of Condition" in respect of the vessel was given by BUREAU VERITAS.
Among the main characteristics of the vessel, it was mentioned in the certificate, "The Vessel originally a T 2 Tanker was converted into an ore loading barge at Yokohoma by Nippon, KK, Asano Dockyard from April to September 1969 under the supervision of our society.
" It was further certified as follows: "The vessel will be entered into the Marine Register Book of BUREAU VERITAS with the following class and notation mark: 13 3 Ore Carrier, Small Coasting Trade starting from September 1969, for a period of four years.
The vessel will be mainly employed as an ore loading barge in the Harbour of Goa (India), with the possibility to extend her exploita tion in certain periods of year, as a bulk carrier for small coasting trade.
As a result of the aforesaid surveys for conversion and reclassification, the undersigned believes that S/S "TROPICAL GRACE" is at present time in a position to undertake the self propelled voyage from YOKOHOMA to GOA.
" The vessel arrived in the harbour of Mormugao on or about October 15, 1969.
The Deputy Conservator, Mormugao Goa Port Trust, Mormugao harbour was informed on the same day about the arrival of the vessel and it was stated in the letter, "this is an old 72 Tanker converted and equipped to do the work of topping up of the bulk carriers, after they are loaded at the mechanic plant to the permissible draught." On October 20, 1969, the petitioner company applied to the Government of India for the issue of 'General Licence ' under s.406 of the .
It was stated that the general licence was sought to ply the vessel 'for top ping purpose in stream at Mormugao harbour '.
The name of the ship was also changed to 'Maratha Transhipper '.
Licence was granted by the Government of India for use of the vessel for "topping up purposes in stream at Mormugao, Kandla, Bombay and Madras for a period of five years".
It appears that this licence was later amended and the purposes for which the licence was granted was treated as "(a) for topping up purposes in stream at any Indian Port; (b) for trading on coast; and (c) for a period of five years from March 5, 1970 to March 4, 1975.
" On 358 November 29, 1969, the petitioner company informed the Assistant Collector of Customs, Custom House, Mormugao harbour about the acquisition of the vessel Maratha Tran shipper (earlier Tropical Grace) for "the purpose of up topping large size bulk carrier in stream".
It was stated that they would be operating the ship within the port limits and that she would serve as a sea barge.
It was also stated that normally she would take cargo coming by barges with the help of her own equipment and storing in her own hatches to the extent of 15000 tonnes and thereafter she would go alongside bulk carriers and transfer the ore from her holds into the bulk carriers.
This letter was followed by another letter dated November 29, 1969 in which it was stated that S.S. Maratha Transhipper was registered as a "home trade vessel" and that it was capable of three types of opera tions: (a) load herself in stream in river barges (b) up top another vessel by using the cargo from her own hatches; (c) up top another vessel by using the cargo from barges which go alongside Maratha Transhipper.
We may also add here that 'The Maratha Transhipper ' possess es all the certificates prescribed by the and other Maritime Laws to enable her to ply the oceans.
On December 31, 1969, the Assistant Collector of Cus toms, Mormugao asked the appellant company to file a Bill of Entry for stores on board the vessel, 'Maratha Transhipper '.
This was followed on February 6, 1970 by another letter from the Assistant Collector asking the appellant company to file a Bill of Entry for clearance of the vessel 'Maratha Tran shipper ' for home consumption immediately.
The appellant company by their letter dated February 19, 1970 requested the Assistant Collector to enlighten them as to the relevant provisions of the law under which they were required to fill in the Bill of Entry in respect of the vessel which they said the Customs Department was aware was an ocean going vessel.
The Assistant Collector replieding, "The function of the vessel s.s. 'Maratha Transhipper ' is in the nature of a sea barge operating within the port limits.
Such operations are reserved to the vessels imported for home consumption.
" The company was requested to file the Bill of Entry for home consumption immediately.
Thereafter there was some corre spondence between the company and the Customs.
On April 23, 1970, the Assistant Collector of Customs issued a notice to the appellant company asking them to show cause why the Bill of Entry was not filed in respect of the vessel 359 S.S. 'Maratha Transhipper ' which was imported by the company on October 15, 1969 for the purpose of carrying out topping operations within the port limits.
The company sent a reply to the notice.
A personal hearing was also granted to the company.
Thereafter on May 22, 1970, the Assistant Collector made an order requiring the company to file a Bill of Entry for home consumption in respect of the vessel 'The Maratha Transhipper '.
The order of the Assistant Collector was confirmed by the Appellate Collector on July 23, 1970.
The Orders of the Assistant Collector and the Appellate Collec tor were questioned in a writ petition filed in the High Court of Bombay.
A learned single judge of the High Court allowed the writ petition but on an appeal under the Latter Patent a Division Bench of the High Court holding that a vessel was goods within the meaning of s.46 of the , allowed the appeal and dismissed the writ petition.
The company having obtained special leave of this court under article 136 of the Constitution, the appeal is now before us.
The facts in Civil Appeal No. 4427 of 1985 are some what different.
The vessel in question in this appeal, "Priyamva da" was originally called 'Jagatswamini '.
Jagatswamini was an ocean going merchant vessel engaged in foreign and coast al trade in India, the United Kingdom, the continent, Japan, North America, South America and Australia.
V.S. Dempo & Co. Private Limited, the appellant in Civil Appeal No. 4427 of 1985 acquired the vessel from its previous owner M/s. Dempo Streamship Limited.
The appellant company obtained the permission of the Government to have it converted as a transhipper.
The conversion was effected by M/s. A.G. Weser at a West German Shipyard.
The ship was fitted with added holds on both sides, cranes, conveyors and ship loading equipments designed for transfer operations.
The vessel was surveyed by Germanischer Lloyd and German Maritime.
Interna tional tonnage certificate, Suez Canal Tonnage certificate, cargo ship safety certificate, cargo ship safety.
equipment certificate, international load lines certificate and clas sification certificate were all issued.
The vessel arrived at Mormugao Port on September 26, 1982.
The Customs Authori ties demanded that a Bill of Entry should be filed.
Thereaf ter the.same story followed as in the other case.
The main submissions of Shri Atul Setalvad, the learned counsel for the appellant in Civil Appeal No. 179 of 1985, whose arguments were supplemented by Shri Soli Sorabjee, learned counsel for the appellant in Civil Appeal No. 4427 of 1985, were that the scheme of the show that a vessel was not 'goods ' within the meaning of 360 s.46(1) of the and therefore, it was not neces sary to file a Bill of Entry, that it was also the case of the Government of India that an ocean going vessel was not required to file a Bill of Entry and that the vessel in question was an ocean going vessel notwithstanding that its main purpose was topping up bulk carriers of Iron ore.
It was submitted that the Division Bench of the High Court was wrong in refusing to go into the question whether or not the vessel was an ocean going vessel when that was the very basis of the orders of the Customs Authorities as well as the judgment of the learned single judge.
On the other hand, it was submitted by Shri S.Madhusudan Rao, learned counsel for the Union of India that the definition of the word 'goods ' in the unambiguously included a vessel, leaving no scope for any argument and that, in any case the vessels in question in both the cases were principally transhippers used for topping up operations in Indian terri torial waters and could not claim to be classified as ocean going vessels.
We may now refer to the relevant provisions of the .
Section 2(22) of the defines that unless the context otherwise requires, "goods" includes "(a) vessels, air crafts and vehicles; (b) stores; (c) baggage; (d) currency and negotiable instruments; and (e) any other kind of movable property".
"Import" is defined as meaning "bringing into India from a place outside India".
"India" is defined as including "the territorial waters of India". "Imported goods" are defined to mean "any goods brought into India from a place outside India but not in cluding goods which have been cleared for home consumption".
"Importer" is defined, "in relation to any goods at any time between their importation and the time when they are cleared for home consumption" as "including the owner or any person holding himself out to be the importer".
"Conveyance" is defined to include" a vessel, an aircraft and a vehicle".
"Bill of Entry" is defined to mean a "Bill of Entry referred to in s.46" '.
A "Bill of Export" is defined to mean a "Bill of Export referred to in s.50.
" An "Import Manifest or Import Report" is defined to mean "the manifest or report required to be delivered under s.30".
"Stores" are defined to mean "goods for use in a vessel or aircraft and includes fuel and spare parts and other articles of equipment whether or not for immediate fitting.
" Section 12 provides for the levy of duties of Customs on goods imported or exported from India.
Section 15 provides that the rates of duty and tariff valuation shall be the rate and valuation in force, 361 "(a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section; (b) in the case of goods cleared from a ware house under section 68, on the date on which the goods are actually removed from the ware house; (c) in the case of any other goods, on the date of payment of duty." Chapter VI of the is concerned with "provi sions relating to conveyances carrying imported or export goods", Chapter VII deals with "clearance of imported goods and export goods", Chapter VIII deals with "goods in trans it" and Chapter IX deals with "ware housing".
Section 29 to 43 occur in Chapter VI and sections 44 to 51 occur in Chap ter VII.
Sections 45 to 49 are dealt with under the heading 'clearance of imported goods ' while sections 50 to 51 occur under the heading of 'clearance of export goods '.
Section 29 requires the person in charge of a vessel or an aircraft entering India from any place outside India not to cause or permit the vessel or aircraft to call or land (a) for the first time after arrival in India; or (b) at any time while carrying passengers or cargo brought in that vessel or aircraft, at any place other that a customs port or a cus toms airport, as the case may be.
Section 30 imposes a duty on a person in charge of the conveyance carrying imported goods to deliver to the proper officer, within twenty four hours after arrival, an import manifest in the case of a vessel or aircraft or an import report, in the case of a vehicle, in the prescribed form.
Section 31 prohibits the master of a vessel from permitting the unloading of any imported goods until an order has been given by the proper officer granting 'entry inwards ' to such vessel.
An 'entry inwards ' order is not to be given until an import manifest has been delivered or unless the proper officer is satisfied that there was sufficient cause for not delivering it.
Section 39 prohibits the master of a vessel from permitting the loading of any export goods other than the baggage and mail bags, until an order has been given by the proper officer granting 'entry outwards ' to such vessel.
Section 41 prescribes that an export manifest in the case of a vessel or an aircraft and an export report in the case of a vehicle should be filed by the person in charge of a conveyance before the departure of the conveyance from a customs sta tion.
Section 42 prohibits the departure of a conveyance which has brought any imported goods or has loaded any export goods to depart from that customs station without a written 362 order of the proper officer.
Section 41 provides that the provisions of sections 30, 40 and 42 shall not apply to a vehicle which carries no goods other than the luggage of its occupants.
Chapter VII, as we said, deals with clearance of imported goods and export goods.
We are primarily concerned with s.46 and we consider it necessary to extract the whole of the section.
It is as follows: "46(1).
The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home con sumption or warehousing in the prescribed form: Provided that if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub section, the proper officer may, pending the production of such informa tion, permit him, previous to the entry there of (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a public warehouse appointed under s.57 without warehousing the same.
(2) Save as otherwise permitted by the proper officers, a bill of entry shall include all the goods mentioned in the bill of lading or other receipt given by the carrier to the consignor.
(3) A bill of entry under sub sec tion(1) may be presented at any time after the delivery of the import manifest or import report as the case may be: Provided that the Collector of Cus toms may in any special circumstances permit a bill of entry to be presented before the delivery of such report: Provided further that a bill of entry may be presented even before the delivery of such manifest if the vessel by which the goods have been shipped for importation into India is expected to arrive within a week from the date of such presentation.
(4) The importer while presenting a bill of entry shall at the foot thereof make and subscribe to a declaration as to 363 the truth of the contents of such bill of entry and shall, in support of such declara tion, produce to the proper officer the in voice, if any, relating to the imported goods.
(5) If the proper officer is satis fied that the interests of revenue are not prejudicially affected and that there was no fradulent intention, he may permit substitu tion of a bill of entry for home consumption for a bill of entry for warehousing or vice versa.
" Section 47 deals with clearance of goods for home consump tion and section 49 with storage of imported goods in ware houses pending clearance.
Section 50 requires the exporter of any goods to make an entry thereof by presenting to the proper office, a Shipping bill in the case of goods to be exported in a vessel or aircraft and a bill of export in the case of goods to be exported by land.
Section 53 makes provision for permitting goods to be transmitted without payment of duty if they are 'mentioned in the import manifest as for transmit in the same vessel or aircraft. ' Section 54 provides and prescribe the procedure for transhipment of goods without payment of duty.
Chapter IX deals with 'Warehousing '.
Section 57 provides for ware housing of dutiable goods without payment of duty.
Section 68 provides for clearance of warehoused goods for home consumption on payment of duty.
Section 69 provides for clearance of warehoused goods for exportation without pay ment of import duty if certain conditions are fulfilled.
The only other important provision requiring to be noticed by us is Item No. 76(1) of the First Schedule to the Indian Tariff Act which provides for the levy of 40 per cent ad valorem standard rate of duty on "ships and other vessels for inland and harbour navigation, including steamers, launches, boats and barges imported entire or in sections.
" Along with this entry has to be read the exemption granted by G.S.R. No. 930 which is in the following terms: "In exercise of the powers conferred by sec.23 of the , as in force in India and as applied to the State of Pondi cherry, the Central Government hereby exempts ocean going vessles imported into India or the State of Pondichery, other than vessels im ported to be broken up from, the whole of the duty of customs leviable thereon, provided that any such vessel if subsequently bro 364 ken up shall be chargeable with the duty which would be payable on her if she were imported to be broken up." In regard to the levy of customs duty the scheme of the Act appears to be as follows: Goods which are imported into India, that is, goods which are brought into India from a place outside India, are, on entry into India, broadly classified into (i) goods entered for home consumption under sec.46(1)(ii) goods entered for ware housing also under sec.46(1)(ii); (iii) goods in transit, and (iv) goods for transhipment.
In the case of goods in transit and goods for transhipment duty is not required to be paid subject to fulfilling the conditions prescribed by secs.53 54, 55 and 56.
In the case of these goods there is no need to present a Bill of Entry.
Bill of Entry is necessary and has to be presented in the case of goods for home consumption or warehousing: Goods entered for home consumption are required to be cleared on payment of duty.
Warehoused goods may be cleared either for home consumption or exportation on pay ment of import duty or export duty as the case may be.
Goods entered for home consumption are to be subjected to duty at a rate and tariff valuation as on the date of presentation of a Bill of Entry under sec.46 and goods cleared from a warehouse are to be subjected to duty at a rate and tariff valuation as on the date of actual removal from the ware house.
Other goods, presumably goods not disclosed but discovered to be imported or which have otherwise escaped duty, are to be subjected to duty at a rate and tariff valuation as on the date of payment of duty.
Sec.46(1) which we have extracted earlier requires the importer of any goods for home consumption or warehousing to present to the proper officer a bill of entry in the pre scribed form.
The question, which arises for consideration, therefore, is whether the vessels in the two cases before us are goods brought into India for home consumption? Mixed up with this question is the question whether a transhipper is an ocean going vessel? We will first consider the question whether a vessel is goods so as to attract sec.46(1) of the .
By definition a vessel, aircraft or vehicle is included among goods, vide sec.2(22).
But, according to Shri Setalvad, notwithstanding the definition, the scheme of Chapters VI and VII of the and the context in which the expression 'goods ' is used in sec.46 of the Act require the expression to be interpreted for the purpose of sec.46(1) as excluding a vessel, aircraft or vehicle.
In answer to a direct question by us, Shri Setalvad confessed that if a vessel, aircraft and vehicle are required to be excluded from the meaning of the expression 'goods ' in sec.46(1) of the Act, he was unable to suggest what other purpose was 365 to be served by the inclusive definition of the expression which expressly brought within its shadow 'vessel, aircraft and vehicle '.
He frankly stated that he was unable to point out any provision in the Act into which the inclusive defi nition could be read.
We cannot attribute redundance to the legislature particularly in the case of a definition in a taxing statute.
We must proceed on the basis that such a definition is designed to achieve a result.
Under sec.
12 of the what are dutiable are goods imported into or exported from India and if goods are defined to include vessels, aircrafts and vehicles, we must take it that the object of the inclusive definition was to bring within the net of taxation vessels, aircrafts and vehicles which are imported into India.
It is ' undisputed and indeed it is indisputable that sec.46(1) is a prelude to the levy of duty or a first step in that direction.
It must, therefore, follow as a necessary sequitur that vessels, aircrafts and vehicles are goods for the purpose of sec.46(1).
Any other interpretation may lead to most anomalous results.
Under sec.
15 of the , the rate of duty and tariff valuation in the case of goods entered for home consumption under sec.46 shall be as on the date when the bill of entry is presented, in the case of goods cleared from a warehouse under sec.68 as on the date on which the goods are actually removed from the warehouse and in the case of any other goods as on the date of payment of duty.
Goods which are entered for home consumption under sec.46 and goods which are warehoused are naturally goods which are openly imported into India without concealment.
The expression 'other goods ' mentioned in sec.
15(c) is obviously meant to cover other imported goods such as goods imported clandestinely and goods which have otherwise escaped duty.
Now, if a motorcar is brought by road into India from a place outside India for the purpose of being used in India, what is to be done with it and what is the point of time with reference to which it is to be subjected to the levy of customs duty? Surely, it is not meant to be subjected to duty as on the date of payment of duty as provided by sec.
15(1)(c), ranking with goods not disclosed but discovered to be imported.
It would be unreasonable to subject the car to the levy of duty as on the date of payment of duty instead of on the date prescribed by sec.15(1)(a) of the Act, that is, the date on which a bill of entry is presented under sec.46 as in the case of all other goods entered for home consumption.
Shri Setalvad 's submission was based on what he described as the scheme of Chapters VI and VII of the Act.
The circumstance that in the several provisions contained in Chapter VI, the reference to 'goods ' is to goods which are carried and not the carriers themselves, is not very materi al since the chapter itself deals 366 with 'conveyances carrying imported or exported goods ' and not to goods which are themselves conveyances, that is, which are either vessels, aircrafts or vehicles.
Going to Chapter VII, Shri Setalvad particularly drew our attention to Sec.46(2) which speaks of including in a Bill of Entry the goods mentioned in the bill of lading or other receipts given by the carrier to the consignor and to the unloading of goods referred to in sec.45 and 48 and argued that the reference to 'goods ' here could only be to goods carried and not to the carriers themselves as in Chapter VI.
We do not think that we can accept this contention.
It may be that in sec.46(2) and elsewhere the word 'goods ' is used in such a way as not to include and as contradistinguished from the conveyances in which the goods are carried, depending upon the context.
But that does not mean that despite the defini tion, the word is never to be understood as defined and that it should always be interpreted as never to include vessels, aircrafts and vehicles even when there is nothing in the context justifying their exclusion.
We can see no justifica tion for holding that a vessel is not 'goods ' for the pur pose of sec.46(1).
The further question is whether the vessels which have been converted into transhippers to be used in Indian terri torial waters for topping up bulk carriers, can be said to be vessels for home consumption merely on that account, even though when they entered Indian territorial waters they came under their own power as ocean going vessels and notwith standing that they are still capable of being used as ocean going vessels and are in fact so used during the off season when it is not practicable to do topping up operations and, for that matter, even during the fair season when they have necessarily to go into the open sea to go alongside the bulk carriers in open anchorages.
In both the cases before us there can be no doubt that the vessels are not only capable of being used but are used as cargo ships to carry cargo from one Indian port to another or some times to foreign ports, necessarily going out on the high seas.
They are structural and technically competent to go on the high seas and they have been certified to be so competent by appropri ate maritime authorities.
Instead of remaining idle and getting rusty, during off season, that is when because of inclement monsoon weather topping up operations cannot be done in Mormugao harbour, the vessels do go out into the open sea sometimes from one Indian port to another and at other times to foreign ports.
Of course, even in the course of topping up operations during the fair season, it is necessary for the transhiphers to go into the open sea to reach the bulk carriers.
But, in our view, these operations do not make these vessels ocean going vessels when their primary purpose and the purpose for 367 which they were permitted to be purchased and brought to Indian waters, the primary purpose for which they were licensed and the primary purpose for which they are used is to conduct topping up operations in Indian territorial waters and not to serve as ocean going vessels.
In the very application that Chowgule and Co. Pvt. Ltd. made to the Government of India for purchasing the vessel, it was stated that they wanted to purchase the vessel for use as a topping up vessel at Mormugao harbour for iron ore.
The permission granted was also for that purpose.
The certificate of condi tion issued by Bureau Veritas showed that the vessel was to be mainly employed as an ore loading barge in the harbour of Goa with the possibility of extending her 'exploitation in certain periods of the year as bulk carrier for small coast ing trade. ' Similarly in the case of the other vessel also the application of M/s. V.S. Dempos Company Pvt. Ltd. was for the purpose of the vessel Jagat Swamini for use as a transhipper.
The Government of India also granted its per mission for the conversion of Jagat Swamini for use as a transhipper at Mormugao port.
It is clear from the material placed before us that both the vessels, the Maratha tran shipper and Priyamavadha were originally ocean going ves sels, ,that they were converted as transhippers for the purpose of topping up iron ore at Mormugao harbour and that they traversed the open sea from Yokohoma in Japan and Bremen in Germany respectively to reach Mormugao.
At the time they entered the territorial waters at Mormugao it was distinctly understood and intended that the vessels were to be primarily used for topping up operations at Mormugao.
If ocean journeys were to be undertaken either they were inci dental to the primary purpose of topping up bulk carriers at Mormugao or they were occasionally undertaken when topping up operations were not possible at Mormugao during the inclement monsoon season.
This much is indisputable that though the vessels came on the high seas to reach Mormugao harbour, they were brought to India primarily for the pur pose of topping up operations at Mormugao.
In our view, for the purpose of the levy of Customs Duty, in order to determine whether any imported goods are goods for home consumption ', we have to find out the primary intended use of goods when the goods are brought into Indian Territorial waters.
If the goods are intended to be primari ly used in India, they are goods for home consumption not withstanding that they may also be used for the same or other purposes outside India.
We guard ourselves against saying that the converse may be true.
The question whether goods not intended to be primarily used in India but used occasionally for short periods in India also fail within the meaning of the expression 'goods 368 for home consumption ' has not been examined by us.
We have only considered the question whether goods brought into India for use primarily in India are goods for home consump tion notwithstanding that they are occasionally or inciden tally used outside India.
We are of the view that they are.
The vessels, in these two cases, were brought into India to be used primarily as Transhippers at Mormugao, though used incidentally or occasionally to go into the open sea.
They are, therefore, 'goods for home consumption ' and not ocean going vessels for the purposes of the .
After their conversion they were no longer ocean going vessels, in the full sense of the term that is in the sense that their predominant purpose was use as ships traversing the open seas.
It was, therefore, necessary to present Bills of Entry in respect of both the vessels.
The learned counsel for the appellants argued that it has been the consistent practice of the Customs Authorities not to insist on Bills of Entry in the case of ocean going vessels.
They quoted the statement to that effect from the counter affidavit filed in Civil Appeal No. 4427 of 1985 and cited the example of a number of ocean going vessels which had not been required to present Bills of Entry.
It may be that in the case of ocean going vessels, that is, vessels which are primarily used for traversing the open seas, the Customs Authorities have not been insisting on Bills of Entry being presented.
It may be that the vessels mentioned by the Appellants as having been permitted to enter into Indian Territorial waters without Bills of Entry are not primarily intended to be used in India and that they do answer the description of ocean going vessels.
We do not have precise information about those vessels to conclude that the character of those vessels was the same as the Transhippers with which we are concerned.
In the result, both the appeals are dismissed with the costs.
A.P.J. Appeals dismissed.

summary:
The appellants in Civil Appeal No. 179 of 1985 carry on business of exporting iron ore to various countries.
Previ ously iron ore used to be brought to the harbour from var ious mines by barges and unloaded in the harbour.
Thereaf ter, the iron ore could be loaded on board ocean going ore carriers.
Alternately, they could be directly unloaded in stream into the ocean going ore carriers.
Shallow draught of the harbour prevented large ocean going ore carrying vessels from entering the harbour or from having iron ore loaded to full capacity on such vessels within the harbour and consid erable time was wasted in the loading process resulting in substantial increase of the transporting cost.
The appellant Company, therefore, conceived the idea of acquiring a "Transhipper" into which barges could unload iron are and from which large quantities thereof could be loaded into large vessels in open anchorages, a process described as "topping up".
The appellant Company after obtaining neces sary permission from the Government of India for purchasing a second hand vessel for use as a topping up vessel at Mormngao harbour for iron ore exports, acquired a second hand tanker, had it converted as a transhipper and obtained ' 'A certificate of Condition.
" On the arrival of the vessel in the harbour the Deputy Conservator of the harbour was informed that "this is an old 72 Tanker converted and equipped to do the work of topping up of the bulk carriers after they are loaded at the mechanic plant to the permissi ble draught." The appellant Company then applied to the Government of India for the issue of "General Licence" under s.406 of the stating that the general licence was sought to ply the vessel 'for topping purposes in stream at Mormugao harbour '.
Licence was granted by the Government of India "(a) for topping up purposes in stream at any Indian port; (b) 352 for trading on coast; and (c) for a period of 5 years from March 5, 1970 to March 4, 1975".
The appellant Company also informed the Assistant Collector of Customs about the acqui sition of the vessel 'Maratha Transhipper ' for "the purpose of uptopping large size bulk carrier in stream" stating that they would be operating the ship within the port limits, that she would serve as a sea barge, that normally she would take cargo coming by barges with the help of her own equip ment and storing in her own hatches and thereafter she would go along side bulk carriers and transfer the ore from her holds into the bulk carriers.
Subsequently, it was also informed that transhipper was registered as a "home trade vessel" and it was capable of three types of operations namely, (a) load herseft in stream in river barges; (b) up top another vessel by using the cargo from her own hatches; and (c) up top another vessel by using the cargo from barges which go along side Maratha Transhipper.
Thus, "the Maratha Transhipper" possessed all the certificates prescribed by the and other Maritime Laws to enable her to ply the oceans.
The Assistant Collector of Customs asked the appellant Company to file a Bill of Entry for stores on board the vessel and for dearance of the vessel for home consumption.
On query being made by the appellant Company as to under what provisions of the law they were required to file the Bill of Entry, the Assistant Collector replied stating: "the function of the vessel 'S.S. Maratha Transhipper ' is in the nature of sea barge operating within the .port limits.
Such operations are reserved to the yessics imported for home consumption." The Assistant Collector of Customs issued a mice to the appellant Company to show cause why the Bill of Entry was not filed.
After the reply to the notice was sent and a personal hearing was granted to the Company, the Assistant Collector made an order requiring the company to file a Bill of Entry for home consumption.
This order was confirmed by the Appellate Collector.
The orders of the Assistant Collector and the Appellate Collector were ques tioned in a writ petition.
A Single Judge allowed the peti tion but on appeal a Division Bench set aside the order of the Single Judge and dismissed the petition holding that a vessel was 'goods ' within the meaning of s.46 of the Customs Act.
The vessel in C.A. No. 4427 of 1985 was an ocean going merchant vessel engaged in foreign and coastal trade in India and various foreign countries.
The appellant acquired the vessel from the previous owner and obtained the permis sion of the Government to have it converted as a Tranship per.
After the vessel arrived at Mormugao Port, the Customs Authorities demanded that a Bill of Entry should be filed.
Thereafter the 353 same story followed as in the other case.
In the appeal to this Court on behalf of the appellant it was contended: (1) that the scheme of the Customs Act show that a vessel was not 'goods ' within the meaning of s.46(1) of the Act and therefore, it was not necessary to file a Bill of Entry; (2) that it was also the case of the Government of India that an ocean going vessel was not required to file a Bill of Entry and that the vessels in question were ocean going vessels notwithstanding that their main purpose was topping up bulk carriers; (3) that the Division Bench was wrong in refusing to go into the question whether or not the vessels were ocean going vessels when that was the very basis of the orders of the Customs Author ities as well as the judgment of the Single Judge, and (4) that notwithstanding the definition, the scheme of Chapters VI and VII of the Customs Act and the context in which the expression 'goods ' is used in s.46 of the Act require the expression to be interpreted for the purpose of s.46(1) as excluding the vessel, aircrafts or vehicles.
On behalf of the respondent Union, it was contended that the definition of the word 'goods ' in the Customs Act unam biguously included a vessel, and that in any case the ves sels in question in both the cases were Transhippers used for topping up operations in Indian territorial waters and could not claim to be classified as ocean going vessels.
Dismissing the appeals, HELD: 1.
Section 46(1) of the require the importer of goods for home consumption or warehousing to present to the appropriate officer a Bill of Entry in the prescribed manner.
The question is whether the vessels in the instant cases are goods brought into India for home consumption and whether a transhipper is an ocean going vessel? By definition a vessel, aircraft or vehicle is included among goods vide s.2(22).
[364E G] 2.
If a vessel, aircraft and vehicle are required to be excluded from the meaning of the expression 'goods ' in s.46(1), then what other purpose was to be served by the inclusive definition of the expression which expressly brought within its shadow 'vessel, aircraft and vehicle '.
There is no provision in the Act into which the inclusive definition could be read.
The Court cannot attribute redun dance to the legislature particularly in the case of a definition in a taxing statute.
The Court must proceed on the basis that such a definition is designed to achieve results.
[364H; 365A B] 354 3.
Under s.12 of the what are dutiable are goods imported into or exported from India and if goods are defined to include vessels, aircrafts and vehicles, it must be taken that the object of the inclusive definition was to bring within the net of taxation vessels, aircrafts and vehicles which are imported into India.
Section 46(1) is a prelude to the levy of duty or a rust step in that direc tion.
It must, therefore, follow us a necessary sequitur that vessels, aircrafts and vehicles are 'goods ' for the purpose of s.46(1).
Any other interpretation may lead to most anomalous results.
[365B C] 4.
Under s.15 of the Act the rate of duty and tariff valuation in the case of goods entered for home consumption under s.46 shall be as on the date when the Bill of Entry is presented, in the case of goods cleared from a warehouse under s.68 as on the date on which the goods are actually removed from the warehouse and in the case of any other goods as on the date of payment of duty.
[365D E] 5.
Goods which are entered for home consumption under s.46 and goods which are warehoused are naturally goods which are openly imported into India without concealment.
The expression 'other goods ' mentioned in s.15(c) is obvi ously meant to cover other imported goods such us goods imported clandestinely and goods which have otherwise es caped duty.
[365E] 6.
It may be that in s.46(2) and elsewhere the word 'goods ' is used in such a way as not to include and as contradistinguished from the conveyances in which the goods are carried, depending upon the context.
But that does not mean that despite the definition, the word is never to be understood as defined and that it should always be inter preted as never to include vessels, aircrafts and vehicles even when there is nothing in the context justifying from exclusion.
Therefore, there is no justification for holding that a vessel is not 'goods ' for the purposes of s.46(1).
[366B D] 7.
In both the instant cases, undoubtedly the vessels are not only capable of being used but are used as cargo ships to carry cargo from one Indian port to another or sometimes to foreign ports, necessarily going out on the high seas.
They are structurally and technically competent to go on the high seas and they have been certified to be so competent by appropriate maritime authorities.
When because of inclement monsoon weather topping up operations cannot be done the vessels do go out into the open sea sometimes from one Indian port to another and at other times to foreign ports.
Even in the come of topping up operations during the fair season, the transhippers go into the open sea to reach the bulk 355 carriers.
But these operations do not make these vessels ocean going vessels when their primary purpose is to conduct topping up operations in Indian territorial waters.
[366F H; 367A B] 8.
It is clear from the material placed before the Court that both the vessels, were originally ocean going vessels, that they were converted as transhippers for the purpose of topping up iron ore at Mormugao harbour and that they tra versed the open sea to reach Mormugao.
At the time they entered the territorial waters at Mormugao it was distinctly understood and intended that the vessels were to be primari ly used for topping up operations at Mormugao.
If ocean journeys were to be undertaken either they were incidental to the primary purpose of topping up bulk carriers at Mormu gao or they were occasionally undertaken when topping up operations were not possible during the inclement monsoon season.
[367D F] 9.
For the purpose of levy of Customs Duty, in order to determine whether any imported goods are 'goods for home consumption ' it has to he found out what the primary intend ed use of the goods was when the goods are brought to Indian territorial waters.
If the goods are intended to be primari ly used in India they are "goods for home consumption" notwithstanding that they may also be used for the same or other purposes outside India.
The vessels, in these two cases were brought to India to be used primarily as tran shippers at Mormugao, though used incidentally or occasion ally to go into the open sea.
They are, therefore, "goods for home consumption" and not ocean going vessels for the purpose of .
After their conversion they were no longer ocean going vessels, in the full sense of the term that is in the sense that their predominant purpose was use as ships traversing open seas.
It was, therefore, necessary to present Bills of Entry in respect of both the vessels.
[367G H; 368A C]


judgement:
ION: Criminal Appeal No. 5 of 1957.
Appeal by special leave from the judgment and order dated the 6th September, 1955, of the Madras High Court in Crimi nal Appeal No. 498 of 1954 and Criminal Revision Case No. 257 of 1955, arising out of the judgment and order dated the 12th July, 1954 of the Special Judge, Coimbatore in C. C. No. I of 1952.
H. J. Umrigar, H. R. Khanna and R. H. Dhebar, for the appellants.
Krishnaswamy Iyengar and Sardar Bahadur, for the re spondent.
September 26.
The following Judgment of the Court was delivered by KAPUR J. This is an appeal by the State of Madras from the judgment and order of the High Court of Madras reversing the judgment of the Special Judge of Coimbatore and thereby acquitting the respondent who had been convicted of an offence under section 161 Indian Penal Code and sentenced to six months simple imprisonment.
The respondent, Vaidyanatha Aiyer, was at all material times the Income tax Officer of Coimbatore and it is not disputed that he was there in the beginning 582 of June 1951.
According to the prosecution the respondent in the end of September 1951 demanded from K.S. Narayana Iyer (hereinafter referred to as the complainant) who is a proprietor of a "Coffee Hotel" called Nehru cafe in Coimba tore with another similar hotel at Bhavanisagar a bribe of Rs. 1,000.
The complainant had been assessed to income tax all along since 1942.
During the course of assessment for the year 1950 51 it was discovered that he had failed to pay advance income tax.
A notice was therefore issued to him on March 24.
, 1951 under section 28 read with section 18 A (2) of the Income tax Act.
to show cause why a penalty should not be.
imposed for underestimating his income.
For the assessment year 195152 also the complainant in the usual course filed his return on August 11, 1951 and on a notice being issued to him produced his accounts before the Income tax Officer on September 27, 1951.
He again appeared before him on the 28th and the respondent told him that the " penalty papers had.
not been disposed of and that the accounts of the current year had also not been gone through " and asked the complainant to see him at his house on the following morn ing, which the complainant did.
There he was told by the respondent that if he wanted to have his return accepted and to be helped in the matter of penalty proceedings he should pay the respondent Rs. 1,000 as illegal gratification.
The complainant mentioned this fact to his manager and also that he had been told by the Income tax Officer that his accounts were unsatisfactory.
Because he was asked to do so the complainant saw the respondent at the latter 's house on October 6 or 7 and he asked the complainant if he had brought the money and after some talk about the assessment the respondent asked the complainant to pay half the amount as it was Deepavali time.
There is evidence of a defence witness also to show that towards the end of October 1951, the complainant was seen coming from the house of the re spondent though the prosecution and the defence are not in accord as to the purpose of this visit.
583 The Circle Inspector, Munisami P. W. 12, claims to have received complaints while at Madras about the respondent being corrupt and his " indulging in corrupt practices".
He then came toCoimbatoreandgot into touchwith the complain ant and asked him if he had paid anybribetotherespoiident.
The complainant mentioned to the Inspector about the demand of a bribe by the respondent.
At the instance of the In spector the complainant appeared before the Tehsildar Magis trate who recorded his statement P 17 wherein the whole story of the demand of the bribe has been set out.
The Inspector then gave ten one hundred currency notes to the complainant after their numbers were taken down in exhibit P 17.
The complain ant then went to the office of the accused but no money was accepted on that day because the respondent had received an anonymous letter exhibit P 18 warning, him of the trap which was being laid by the Malayalam people.
The respondent naturally got very annoyed with the complainant and sent him.
The same evening the complainant was told that he was required to go to the house of the respond ent on the following morning which he did at 8 a. m.
The respondent told him that he should take no notice of the anonymous letter which must have been sent by his enemies and asked him to pay some money.
The complainant paid a sum of Rs. 200 which on his return he entered in his kacha account book which the High Court has rejected without sufficient reason.
On the evening of November 15, the complainant again went to the house of the respondent and the latter told him that he would pass final orders and that money should be paid.
The record, P 7 and P 7 (a), shows that an order was dictated on November 13 although there is no proof or even indication that the complainant knew about it.
The complainant was given 8 one hundred rupee notes by the Inspector and the complainant paid them to the respond ent on the morning of November 17 at the latter 's house.
On this occasion the complainant accompanied by his manager P. W. 14 had gone towards the house of the respondent along with the Magistrate and Circle Inspector and Venkates, lyer 584 P. W. 14 in a car which was stopped three or four blocks away from the house of the respondent and only the complain ant and his manager went into the respondent 's house and paid the money.
Two or three minutes later the Inspector P. W. 12 and the Magistrate P. W. 13 and one Sesha Ayyar who had joined the party en route also came into the house on receiving the signal from the complainant.
They disclosed their identity to the respondent and told him that they had information that he had received Rs. 800 from the complain ant as illegal gratification and asked him to produce the money which he had received from the complainant.
The respondent did not say anything and got up from the chair on which he was sitting and tried to go into the house but was prevented from doing so by the Inspector and he then pro duced the money from the folds of his dhoti.
While the mahazar was being prepared the respondent said that he bad received this money as a loan from the complainant who denied this and said it had been paid as a bribe.
A tele gram was then sent to the Superintendent of Special Police Establishment and under his orders a case was registered and the investigation was then taken up by a Deputy Superintend ent of Police who searched the house of the respondent on November 19 but no pronote seems to have been received or taken into possession on that date.
A pronote with four anna stamps affixed was later produced in the court by the respondent on July 17,1952 during the course of his state ment under section 342 Criminal Procedure Code but it was not mentioned to the Magistrate P. W. 13 by the respondent.
The charge against the respondent was that he had obtained from the complainant Rs. 800 as gratification other than legal remuneration as a motive for the reward for showing favour to him in the exercise of official functions and had thereby committeed an offence punishable under section 161 of the Indian Penal Code read with a. 4 of the Prevention of Cor ruption Act (Act II of 47).
The explanation of the respondent was that be men tioned to the complainant about his money difficulties 585 when accidentally he met him on the road towards the end of August or beginning of September 1951.
The complainant offered to lend him Rs 1,000/ .
At that time he was not aware that the complainant had an assessment pending before him.
It was the complainant who told him on November 15 when he met him again that the anonymous letter was the " 'work of his enemies" and promised to advance the loan as previously promised and he also suggested that the respond ent should execute a pronote for Rs. 1,000 which would be attested by Venkatesa Ayyar to which he (the respondent) was agreeable.
The complainant paid Rs. 800 on the morning of November 17 and promised to pay Rs. 200 in the evening.
The respondent had the pronote ready and offered to hand it over in the morning but the complainant said he would take it when " he left the house ".
The learned Special Judge accepted the story of the prosecu tion and after a careful analysis of the evidence found the respondent guilty of the offence charged and sentenced him to six months simple imprisonment.
On appeal being taken to the High Court the learned Single Judge reversed the judgment and acquitted the respondent.
It will be convenient to give here the main findings of the learned judge in his own words: (i)" It is true that at the time when the money was accepted by The accused, the proceedings in relation to assessment of income tax on P. W. 8 were pending before the accused.
Naturally, therefore, if in such circumstances, the accused should receive money from an assessee, the suspicion is readily aroused that the money must have been paid only as an illegal gratification.
On going through the judgment of the learned trial Judge, I formed the impression that he was totally influenced by such suspicion." (ii)" The result is that if the version of P. W. 8 and thatof the accused are balanced, the probability seems totilt the scale in favour of the accused 's version.
In any case, the evidence is not enough to show that the explana tion offered by the accused 586 cannot reasonably be true, and so, the benefit of doubt must go to him." (iii)" But this was not a case of ordinary lendee, but an Income tax Officer whose favour was needed by the lender.
(iv)"Evidence shows that in November, 1951, the accused was in need of a sum of Rs. 1,000 and, for that purpose, has asked P.W. 8 for a loan." (v)" In my view, the evidence does not necessarily make out a case that the accused must have accepted the money only as a bribe. " (vi)" I do not therefore feel certain that the taking of a loan with an obligation to repay it with interest, would fall within the meaning of the term I gratification '.
" The extent of the power of the Supreme Court to interfere with a judgment of acquittal was raised before us by the respondent 's counsel and it was contended that the jurisdic tion exercised by this court under article 136 was the same as that exercised by the Judicial Committee of the Privy Coun cil and reliance was placed on a minority judgment by Venka tarama Aiyar J. in Aher Raja Khima vs The State Of Saurash tra(1) where the learned judge after discussing the various Privy Council judgments and quoting a passage from the judgment of this court in Pritam Singh vs The State(2) observed: " The preceding article referred to in the opening passage is clearly article 134.
Article 134(1) confers a right of appeal to this court in certain cases, in terms unqualified, on questions both of fact and law, and if the scope of an appeal under Article 136 is to be extended likewise to questions of fact, then article 134(1) would become super fluous.
It is obvious that the intention of the Constitu tion in providing for an appeal on facts under Article 134(1)(a) and (b) was to exclude it under Article 136, and it strongly supports the conclusion reached in Pritam Singh vs The State (3)that like the Privy Council this Court would not function as a further court of appeal on facts in crimi nal cases. " (I) [1955]2 S.C.R. 1285, 1301.
(2) ; , 458, 587 The State of Madhya Pradesh vs Ramakrishna Ganpatrao Limsey (1) was also referred to by counsel for the respondent and it was contended that the Supreme Court should not interfere with the order of the High Court merely on the ground that it took a different view of the facts.
That was an appeal which had been brought on a certificate by the High Court and not by Special Leave of this Court.
That judgment was considered by a Constitution Bench in State of Madras vs Gurviah Naidu & Co., Ltd. (2) and section R. Das, Acting C.J., delivering the judgment of the court pointed out that that was a decision of a bench of three judges and not of a Constitution bench and the observation that there was no provision corresponding to section 417 of the Criminal Procedure Code only emphasised that this Court should not in appeal by Special Leave interfere with the order of acquittal passed by the High Court merely for correcting errors of fact or of law.
Gurviah Naidu 's case (2) was an appeal against a judgment of acquittal and this court reversed the judgment saying: " In our view, the High Court erred in holding that the prosecution had failed to establish their case and in ac quitting the accused.
This case negatives the contention that under article 136 interference by this court with findings of High Courts in judgments of acquittal is not intended.
Even in State of Madhya Pradesh vs Ramakrishna Ganpatrao (1) Mahajan J. was of the opinion that the Supreme Court can interfere where the High Court "acts perversely or otherwise improperly or has been deceived by fraud.
" In Pritam Singh vs The State (3) Fazl Ali J. after a careful examination of article 136 along with the preceding articles stated the scope of the appeal under article 136 to be: " Generally speaking, this court will not grant special leave, unless it is shown that exceptional and special circumstances exist, that substantial and grave injustice has been done and that the case in question (i) (2) A.I.R. 1956 S.C. 158, 161. 75 (3) ; 458.
588 presents features of sufficient gravity to warrant a review of the decision appealed against.
Even the Privy Council in laying down the permissible limits for review in criminal matters included things " so irregu lar or so outrageous as to shock the very basis of justice ".
See Mohinder Singh vs The King (1).
An instance of this principle is the decision of the Privy Council in Stephen Seneviratne vs The King (2) which will be discussed later in this judgment and which has been approved of by this court.
Interpreting the following words of section 205 of the Government of India Act, 1935, "any judgment, decree or final order of a court " and " it shall be the duty of every High Court in British India to consider in every case ", Lord Thankerton in King Emperor vs Sibnath Bannerji (3) said : "The purpose of the provision is to confer a right of appeal in every case that involves a substantial question of law as to the interpretation of the Act or of any Order in Council made thereunder.
" One of the questions for decision in that case was whether an appeal lay in cases of habeas corpus.
Lord Thankerton there observed : " In the absence of an express exception of habeas corpus cases, and having in view the terms and purpose of the section, their Lordships are unable to limit tile terms of the section by mere construction so as to exclude these cases from its operation.
" In article 136 the use of the words " Supreme Court may in its discretion grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the terri tory of India " show that in criminal matters no distinction can be made as a matter of construction between a judgment of conviction or acquittal.
In Bhagwan Das vs The State of Rajasthan(4) the following, observation of the Judicial Committee of the Privy Council in Stephen Seneviratne vs The King(2) at p. 299: (1) (I932) L.R. 59 I.A. 233, 235.(3) (1945) L.R. 72 I.A. 241, 255.
(2) ; A.I.R. 1936 P.C. 289.(4) 589 ". . there are here no grounds on the evidence, taken as a whole, upon which any tribunal could properly as a matter of legitimate inference, arrive at a conclusion that the appellant was guilty. . " was quoted with approval and after an examination of all the facts and circumstances of the case the Supreme Court re versed the judgment of conviction by the High Court under article 136.
The question for decision in the present case is whether it falls within the limits laid down in the above mentioned cases.
This court will not readily interfere with the findings of fact given by the High Court but if the High Court acts perversely or otherwise improperly interference will be called for.
The findings of the High Court in the present case are, to say the least, halting, and the approach to the whole ques tion has been such that it falls within what Mr. Justice Mahajan in State of Madhya Pradesh vs Ramakrishna Ganpatrao (1) described as " acting perversely or otherwise improperly ".
Although the learned High Court Judge has in the begin ning of the judgment mentioned the presumption which arises under section 4 of the Prevention of Corruption Act (II of 1947), the following passage in the judgment: " in any case, the evidence is not enough to show that the explanation offered by the accused cannot reasonably be true, and so, the benefit of doubt must go to him, " is indicative of a disregard of the presumption which the law requires to be raised under section 4.
The relevant words of this section are: " Where in any trial of an offence punishable under section 161 . . . it is proved that an accused. . person has accepted. . . any gratification (other than legal remuneration). . from any person,it shall be presumed unless thecontrary is proved that he accepted . . . that gratifica tion as a motive or reward such as is mentioned in the said section 161 . . . . ." Therefore where it is proved that a gratification has been accepted, then the presumption shall at once arise (i) A.1.R. 1054 S.C. 20.
590 under the section.
It introduces an exception to the gener al rule as to the burden of proof in criminal cases and shifts the onus on to the accused.
It may here be mentioned that the legislature has chosen to use the words ' shall presume ' and not 'may presume ', the former a presumption of law and latter of fact.
Both these phrases have been de fined in the Indian Evidence Act, no doubt for the purpose of that Act, but section 4 of the Prevention of Corruption Act is in part materia with the Evidence Act because it deals with a branch of law of evidence, e.g., presumptions, and there fore should have the same meaning. " Shall presume" has been defined in the Evidence Act as follows: " Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved.
" It is a presumption of law and therefore it is obligatory on the court to raise this presumption in every case brought under section 4 of the Prevention of Corruption Act because unlike the case of presumptions of fact, presumptions of law constitute a branch of jurisprudence.
While giving the finding quoted above the learned judge seems to have disre garded the special rule of burden of proof under section 4 and therefore his approach in this case has been on erroneous lines.
The judgment also shows that certain salient pieces of evidence were missed or were not properly appreciated.
At the time when the penalty notice was issued under section 28 of the Income tax Act the respondent was not the Income tax Officer at Coimbatore but by June 6, he had been posted at Coimbatore and the note on the Penalty File dated June 6,1951: "put up proposal to I.A.C. for levy of standard penalty," was made by him.
Although this proposal was made on June 6, 1951, it is not clear as to what final orders were passed in these proceedings and when.
At least there is nothing to indicate that any intimation was given to the complainant in regard to this matter.
The complainant has stated on oath as P.W. 8: 591 " I alone went to the accused on 28th September, 1951.
He then told me that the penalty paper was not disposed of and that the accounts for the current year had not also been gone through.
" On the day following this the respondent asked the complain ant for illegal gratification of Rs. 1,000.
Counsel for the respondent contended that there was no occasion for the respondent to say anything about the penalty proceedings because as far as he was concerned the recommendation had already been made by him but the real question is whether the complainant was told as to what had happened or had any knowledge of this.
He states that he had none and there is nothing to indicate that he bad.
The respondent has then stated that the complainant was known to him since 1942 when he, the respondent, was the Head Clerk of the Appellate Assistant Commissioner of In come tax and that is the reason why towards the end of August or the beginning of September when be casually met the complain.
ant on the road, he told him that he was in financial difficulties and the complainant offered him a loan of Rs. 1,000 to be returned in easy instalments and that he did not know at that time that the complainant was an assessee before him.
This statement of the respondent has been accepted by the High Court without considering the following important facts.
Notice was issued to the com plainant and he filed his return on August 11, 1951.
The notice must have been issued to the complainant under a. 22(2) of the Income tax Act by the respondent himself as he was at that time the Income tax Officer.
So it is difficult to believe his statement about his not knowing that the complainant was an assessee before him and it is improbable that the respondent would mention his financial troubles to a more or less casual acquaintance who has neither been shown to be a banker, nor a money lender nor a wealthy person.
The complainant has stated that he visited the respondent on 6th or 7th October, 1951, when he asked him if he had brought the money.
The complaint replied that he had no money to spare as he had purchased a house 592 and he also asked him if the respondent had finished the assessment.
The latter 's reply was that he would look into the matter and also told him that the complainant might pay half the amount (of the illegal gratification) before the deepavali time.
This statement the respondent has denied but the statement of the complainant as to his having no money as he had purchased a house has not been seriously challenged in cross examination.
The complainant had been asked to produce the accounts and be did produce them on September 27.
The notes made by the respondent in P 7 and P 7(a) show that the accounts of the complainant were not being accepted in regard to Coimbatore Hotel.
The portion of the order was : " All the defects that are usual in hotel accounts exist here.
" In regard to Bhavanisagar hotel the note stated: : " Purchases are not fully supported and sales are reckoned from till takings." On October 1, 1951, the assesses had filed his written statement and also some other documents.
Nothing more seems to have been done till November 7, when the relevant part of the note on the file is: "I have been keeping this in order to compare the results with other nearby hotels.
" As to why no enquiries could be made in the whole of this period is not clear from the assessment record and it ]ends support to the prosecution case that the respondent was making approaches to the complainant to get money from him.
The respondent during the pendency of assessment proceedings of the complainant allowed the complainant to visit him at his house and even paid visit to his cafe.
Even according to the findings of the High Court the complainant was "needing the favours" of the respondent who on his own showing was himself in dire need of a thousand rupees as he had succeeded in collecting only a thousand rupees by November2, and needed twice that amount for his son 's premi um or security as he chooses to call it.
No importance was attached to this aspect of the case by the learned 593 judge of the High Court.
In our opinion the learned trial judge correctly appreciated this part of the prosecution case and his judgment is not, as tile High Court has said, coloured by nere suspicion.
On November 6, 1951, Circle Inspector Munisami contacted the complainant and arrangement was made for Rs. 1,000 to be paid by the complainant to the respondent and the money was actually taken by the complainant and offered to the re spondent on November 8 which the respondent did not accept as he had received an anonymous letter exhibit P 18 which was dated November 6, 1951 in which the respondent had been warned that Malayalam people were attempting to "ruin him".
In spite of this warning the respondent continued to have truck with the complainant and actually accepted Rs. 800 from him.
It is true that when soon after the money was paid and the Inspector P. W. 12 and the Magistrate P.W. 13 arrived at the house of the respondent and asked him about this money he stated that he had taken it as a loan but in the context it assumes a different complexion.
The state ment of the Magistrate P.W. 13 was: " While the mahazar.
was being prepared the accused volun teered and told me that he had received the 800 rupees as a loan from P.W. 8 the complainant.
" This witness had also stated that when he went into the verandah of the house, he asked the respondent whether he had received an illegal gratification from the complainant and also asked him to produce the money.
The accused did not say anything but got up from the chair and tried to go inside the house which he was prevented from doing by the Inspector P. W. 12.
The witness added: " The accused was seen trembling and meddling with something under the towel.
I asked the accused to remove the towel.
The accused removed the towel.
I saw some bulging at his waist in the dhoti be was wearing.
I asked him again to produce the currency notes.
He produced them from the folds of the dhoti be was wearing.
When producing the currency notes the accused did not say anything." 594 No real cross examination was directed against these por tions of the statement of the Magistrate P.W. 13 nor has the High Court correctly appreciated them or given them due weight.
The respondent produced before the Special First Class Magistrate on July 11, 1952, an unsigned promote for Rs. 1,000 executed by him in favour of the complainant.
That promote was not found in the house when the search was made by the Deputy Superintendent of Police on November 19, 1951, and it is not explained why the promote should have been made for Rs. 1,000 when actually the amount paid was only Rs. 800 and why the respondent offered to give this promote to the complainant without receiving full considera tion.
These salient features of the case do not seem to have been properly appreciated or given due weight to by the High Court and in our opinion the learned judge 's approach to the question whether the sum of Rs. 800 was an illegal gratifi cation or a loan is such that the judgment falls within the words of Mahajan J. in Ramakrishna 's case (1), i.e. that the High Court has acted perversely or otherwise improperly.
The evidence and the circumstances lead to the conclusion that the transaction was not one of loan but illegal grati fication.
In view of the finding that the sum of Rs. 800 was a bribe and not a loan it is not necessary to consider whether in this case the loan would be an illegal gratification within section 4 of the Prevention of Corruption Act (II of 1947) or not.
We would, therefore, allow this appeal, set aside the judg ment and order of the High Court of Madras and restore that of the Special Judge of Coimbatore convicting the respondent of the offence he was charged with.
The respondent must surrender to his bail bond.
Appeal allowed.

dataset_name: IN-Abs

summary:
Respondent, an Income tax Officer, called an assessee to his house and took a sum of Rs. 800 from him.
Immediately afterwards a search was made and the respondent, after some evasion, produced the money.
The respondent 's defence was that he had taken the money as a loan and not as illegal, gratification.
The Special judge who tried the respondent found him guilty under section 16i, Indian Penal Code, and sen tenced him to six months simple imprisonment.
On appeal, the High Court acquitted the respondent.
The State obtained special leave and appealed.
Held, that the words used in article I36 of the Constitution show that in criminal matters no distinction can be made as a matter of construction between a judgment of conviction and one of acquittal.
The Supreme Court will not readily interfere with the findings of fact given by the High Court but if the High Court (i) A.I.R. (1954) S.C. 680.
581 acts perversely or otherwise improperly interference will be called for.
The findings of the High Court are halting and its approach to the case has been erroneous as it disregarded the special rule of burden of proof under section 4 Of the Prevention of Corruption Act (II Of 1947).
The judgment of the High Court shows that certain salient pieces of evidence were missed or were not properly appreciated.
In this situation the Supreme Court can interfere in an appeal by special leave.
Where it is proved that a gratification has been accepted, the presumption under s 4 Of the Prevention of Corruption Act shall at once arise.
It is a presumption of law and it is obligatory on the Court to raise it in every case brought under section 4.
The evidence and circumstances in this case lead to the conclusion that the transaction was not one of loan but of illegal gratification.


judgement:
ivil Appeal No. 1758 of 1986.
From the Judgment and Order dated 22.11.
1985 of the Madras High Court in C.R.P. No. 3117 of 1984.
Dr. Y.S. Chitale, A.V. Rangam, T.V. Ratnam and M. Palani for the Appellant.
K.K. Venugopal, A.T.M. Sampath and section Srinivasan for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The appellant is one of the State Transport Undertakings established in the State of Tamil Nadu.
It has questioned in this appeal by special leave the decision of the High Court of Madras in CRP No. 3117 of 1984 affirming an order granting variation of a permit issued under the provisions of the (here inafter referred to as 'the Act ') by virtue of which the respondent is permitted to run a stage carriage on the route between Checkanurani and Madurai which is a part of a noti fied route Madurai to Kumuli via Checkanurani, Valandur, Usilampatti, and Theni.
Before the High Court the State Transport Appellate Tribunal and the Regional Transport Authority the appellant had pleaded the publication of a draft scheme under section 68 C of the Act on June 4, 1976 in respect of the route Madurai to Kumuli as a bar to the grant of a variation of the permit prayed for by the re spondent.
In this Court the appellant has relied upon the existence of an approved scheme published on June 30, 1976 in respect of the very same route Madurai to Kumuli also as a bar to the order of variation of permit granted in favour of the respondent.
The route is common to both the draft scheme dated June 4, 1976 and the approved scheme dated June 30, 1976.
We shall, however, consider the effect of the approved scheme on the order granting variation of the permit first.
The facts of the case are these.
On June 30, 1976, as stated earlier, the approved scheme was published under section 68 D of the Act in the Tamil Nadu Government Gazette in respect of the route Madurai to Kumuli authorising the appellant to run its stage carriages on that route.
By that approved scheme it was proposed to exclude completely all other persons from operating their stage carriage services under permits covering the entire route, referred to above 394 except those persons mentioned in Annexure II to the said scheme without prejudice to any future modifications, varia tions etc.
of their permits.
The operators whose names had been mentioned in Annexure II to the scheme were persons who were existing operators on the different sectors of the notified route on the date of the publication of the scheme.
The respondent was not one of the those persons who was running a stage carriage service on any part or sector of the route in question on the date of its publication.
Hence, his name was not mentioned in Annexure II to the scheme.
He was then operating a stage carriage service under a permit issued under the Act on the route Batlagundu to Usilampatti which was non scheme route.
On February 28, 1981 he was able to secure the variation of the said permit from the Regional Transport Authority which enabled him tO operate on the route measuring 21.4 Kms.
from Usilampatti to Checkanurani, which formed a sector of the notified route.
The appeal filed against the said order was dismissed and no revision petition was filed against the order dismissing the said appeal.
On 23.12.1982 he obtained from the Regional Trans port Authority a second variation of his permit under which he was authorised to operate his stage carriage service over a distance of 16.6.
from Checkanurani to Madurai which was also a part of the notified route.
An appeal filed against that or& was dismissed by the State Transport Appel late Tribunal.
A revision petition was filed under section 64 B of the Act (as in force in the State of Tamil Nadu) before the High Court.
The High Court dismissed the revision petition.
This appeal by special leave is filed against the above order of the High Court.
As mentioned earlier the appellant pleaded before the High Court that a draft scheme published on June 4, 1976 which was still in force was a bar to the grant of variation of the permit authorising the respondent to operate his stage carriage on a sector of the route in respect of which the scheme had been published.
The High Court was of the view that section 68 F(I D) could not be considered as a bar for entertaining an application for the variation of a permit since such an application was neither an application for a permit nor for its renewal.
In arriving at the said decision it relied upon section 68 F(1 D) of the Act which read as follows: "68 F(1 D).
save as otherwise provided in sub section (lA) or sub section (1 C), no permit shall be granted or renewed during the period intervening between the date of publi cation, under section 68 C of any scheme and the date of publication of the approved or modified scheme, in 395 favour of any person for any class of road transport service in relation to an area or route or portion thereof covered by such scheme . . " It further relied upon a decision of this Court in Karnataka State Road Transport Corporation, Bangalore vs B.A. Jayaram and Others, [1984] 2 S.C.R. 768.
In that case this Court observed at page 789 thus: "Assuming, therefore, that an application for variation of the conditions of a permit re ferred to in sub section (8) of section 57 is to be deemed by a fiction of law to be an application for the grant of a new permit the question to which we must address ourselves is for what purpose is such an application for variation deemed to be an application for grant of a new permit.
Reading sub sections (3) to (8) of section 57 as a whole, it is clear that the only purpose is to apply to such an application for variation the proce dure prescribed by sub sections (3) to (7) of section 57 and not for the purpose of provid ing that when the application for variation is granted, the permit so varied would be deemed to be a new permit.
If a permit so varied were to be deemed to be a new permit, the result would be anomalous.
" From the above observation the High Court deduced that an application for the variation of a permit held by the re spondent was not in fact an application for a permit and did not fall within the mischief of section 68 F(1 D) of the Act.
In the context in which section 68 F(1 D) appears we find it difficult to agree that the application for varia tion of a permit by including the whole or any part of route in respect of which a scheme is published under section 68 C of the Act can be treated as falling outside the mischief of section 68 F(1 D) of the Act.
There is no justification to limit the application of section 68 F(1 D) of the Act to only applications for fresh permits or their renewal and to leave out applications for variation of a permit by the inclusion of the route or a portion of the route in respect of which a scheme is published.
The fact that the applicant is the holder of a permit to operate a stage carriage on another route whose variation he is seeking by the inclusion of a route or a part thereof in respect of which a scheme is published under section 68 C of the Act ought not to make any difference.
The principle underlying section 68 F(1 D) of the Act is that the number of services on such a route should be frozen on the publication of a scheme under sec tion 68 C of the Act.
It is not, however, necessary for us to pursue the applicability of section 68 F(1 D) 396 of the Act to the present case any further since it is brought to our notice that the very same route is the sub ject matter of the approved scheme published under section 68 D of the Act on June 30, 1976 to which we have already adverted.
The approved scheme, as mentioned earlier, ex cludes the operation by others of stage carriage services on the above mentioned route Madurai to Kumuli except those whose names are mentioned in Annexure II attached thereto.
The respondent is not protected by any provision in the approved scheme itself.
He cannot be permitted to operate on any sector of the notified route in question in view of the provisions contained in sections 68 C, 68 D and 68 FF of the Act.
The effect of these provisions has been summarised by a Constitution Bench of this Court in Adarsh Travels Bus Service and Another vs State of U.P. and Others, ; Chinnappa Reddy, J. speaking for the Constitu tion Bench observed at page 566 thus: "7.
A carefully and diligent perusal of Sec tion 68 C, Section 68 D(3) and Section 68 FF in the light of the definition of the expres sion 'route ' in Section 2(28 A) appears to make it manifestly clear that once a scheme is published under Section 68 D in relation to any area or route or portion thereof, whether to the exclusion, complete or partial of other persons or otherwise, no person other than the State Transport Undertaking may operate on the notified area or notified route except as provided in the scheme itself.
A necessary consequence of these provisions is that no private operator can operate his vehicle on any part or portion of a notified area or notified route unless authorised so to do by the terms of the scheme itself.
He may not operate on any part or portion of the notified route or area on the mere ground that the permit as originally granted to him covered the notified route or area.
" In view of the above observation we have to hold that in the instant case the respondent is not entitled to operate his stage carriage on the notified route or a portion there of even though he may have been granted variation of his permit to operate on a sector of the notified route.
We do not agree with the contention urged on behalf of the respondent that on a true construction of the scheme only persons who are operating their stage carriages under permits issued in respect of the entire route from Madurai to Kumuli alone have been excluded 397 under the approved scheme and not those Who are operating between any two places on the notified route or between any place lying outside the notified route and a place on the notified route even though they may be operating on a por tion of the notified route.
We are firmly of the view that on the entire notified route between Madurai and Kumuli or any part thereof apart from the State Transport Undertaking no person other than those mentioned in Annexure II to the approved scheme can operate a state carriage service.
We, therefore, direct the respondent not to operate his stage carriage on the sector in respect of which he has obtained the variation of his permit.
We are informed that the draft scheme published on June 4, 1976 is being considered by the authority concerned under section 68 D of the Act.
It is open to the respondent to make any representation which he is advised to make before the said authority regarding the inconvenience caused to him by reason of the approved scheme referred to above.
The above appeal is, therefore, allowed accordingly.
There is no order as to costs.
A.P.J. Appeal allowed.

summary:
The appellant is one of the State Transport Undertak ings.
On June 30, 1976 an approved scheme was published under s.68 D of the in respect of the route Madurai to Kumuli authorising the appellant to run its stage carriages and proposing to exclude completely all other persons from operating their stage carriage services under permits covering the entire route except those persons mentioned in Annexure 11 to the scheme, who were existing operators on the different sectors of the notified route on the date of the publication of the scheme.
The respondent 's name was not mentioned in Annexure I1 as he was operating on a non scheme route.
On February 28, 1981 the respondent secured the variation of his permit from the Regional Transport Authority enabling him to operate on a sector of the notified routes.
The appeal against the said order was dismissed and no revision petition was filed against that order.
On December 23, 1982 the respondent obtained from the Regional Transport Authority a second variation of his permit which authorised him to operate his stage carriage service on the route which was also a part of the notified route.
An appeal filed against that order was dismissed by the State Transport Appellate Tribunal.
The High Court dismissed the revision petition taking the view that s.68 F(I D) of the Act could not be considered as a bar for entertaining an application for the variation of a permit since such an application was neither an appli cation for a permit nor for its renewal.
In the appeal to this Court on behalf of the appellant it was 392 contended that a draft scheme published under s.68 C of the Act on June 4, 1976, which was still in force was a bar to the grant of variation of the permit authorising the re spondent to operate his stage carriage on a sector of the route in respect of which the scheme had been published.
On behalf of the respondent it was contended that on a true construction of the scheme only persons who were oper ating their stage carriages under permits issued in respect of the entire route from Madurai to Kumuli alone have been excluded under the approved scheme and not those who were operating between any two $aces on the notified route or between any place lying outside the notified route and a place on the notified route even though they might be oper ating on a portion of the notified route.
Allowing the appeal, HELD: 1.
In the context in which s.68 F(I D) of the appears it is difficult to hold that the application for variation of a permit by including the whole or any part of route in respect of which a scheme is published under s.68 C of the Act can be treated as failing outside the mischief of s.68 F(I D) of the Act.
There is no justification to limit the application of s.68 F(I D) to only applications for fresh permits or their renewal and to leave out their application for variation of a permit by the exclusion of the route or a portion of the route in respect of which a scheme is published.
The fact that the applicant is the holder of a permit to operate a stage carriage on another route whose variation he is seek ing by the inclusion of a route or a part whereof in respect of which a scheme is published under s.68 C ought not to make any difference.
The principle underlying s.68 F(I D) is that the number of services on such a route should be frozen on the publication of a scheme under s.68 C. [395E H] 2.
The approved scheme excludes the operation by others of stage carriage service on the said route except those whose names are mentioned in Annexure II attached thereto.
The respondent is not protected by any provision under the approved scheme itself.
He cannot be permitted to operate on any sector of the notified route in question in view of the provisions contained in s.68 C, 68 D and 68 FF.
[396B C] Karnataka State Road Transport Corporation, Bangalore vs
B.A. Jayaram and Others, [1984] 2 S.C.R. 768 & Adarsh Travels Bus Service and Another vs State of U.P. and Others, ; , referred to. 393