judgement:
Appeals Nos.
511 514 of 1966.
Appeals, by special leave from the judgments and orders dated August 9, 1961, July 20, 1964, of the Bombay High Court, Nagpur Bench in Misc.
Civil Applications Nos. 1118 of 1959.
192 of 1961.
1360 of 1959 and 193 of 1961 respectively.
H. R. Gokhale, M. R. Bhandare, P. C. Bharta, and O. C. Mathur, for the appellant (in all the appeals).
N. section Bindra, P. C. Chatterjee, section P. Nayar for R.H. Dhebar, the respondents (in all the appeals).
The Judgment of WANCHOO C. J., MITTER and HEGDE, JJ. was delivered by HEGDE, J. The dissenting judgment of BACHAWAT and RAMASWAMI, JJ. was delivered by BACHAWAT, J. HEGDE, J.
The principal question canvassed in this group of appeals by special leave is whether section 11(4)(a) of the Central Provinces and Berar Sales Tax Act 1947, to be referred to as the Act hereinafter, is ultra vires Article 14 of the Constitution and consequently the notices impugned in the writ petitions from which these appeals arise are liable to be struck down and the respondents restrained from levying sales tax on the appellants for the period May 1, 1952 to October 31, 1955.
The appellants are a private limited company carrying on business inter alia as dealers in iron and steel materials in Vidharba region of the Maharashtra State.
In that region they have more than one place of business.
They registered themselves as dealers under section 8A of the Act and obtained a certificate of registration on August, 17, 1947.
Their assessment year as shown in their registration certificate is from November 1 to October 31.
They were required to submit quarterly returns of their turnovers.
They did so till April 30, 1952.
Thereafter no returns were submitted.
On September 13, 1955, the Assistant Commissioner of Sales Tax, the assessing authority at that time, issued a notice calling upon the appellants to show cause why action should not be taken against them under sections 10(3) and 11(4)(a), on account of their failure to furnish the return for the period 1.1.53 to 31.12.53.
Similar notices were issued to them on October 27, 1955 for the period 1.1.54 to 31.12.54 and on July 7, 1956 for the period 1.1.55 to 31.12.55.
It appears that the appellants repeatedly took time for submitting their explanation.
The first respondent to whom the appellants ' case stood transferred issued in 1958 fresh notices to the appellants similar to those issued in 1955.
At that stage the appellants objected to the validity of those notices both orally as well as in writing on the ground that their assessment year was not the calendar year as mentioned in those notices but the year ending October 31.
Evidently in view of that objection, the first respon dent issued another set of notices on July 8, '1959.
The appellants contended that those notices were barred by time.
Thereafter the appellants challenged the validity of the notices issued in 1959 in the petitions under article 226 from which these appeals arise.
In these apneals the questions arising for decision are whether section 11 (4)(a) or section 11 A(3) or any parts thereof contravene the guarantee of equal protection of the laws or equality before the law or whether those provisions are based on a valid classification which is reasonable in view of the object with which they were enacted.
Mr. H.R. Gokhale learned counsel for the appellants, urged that both these provisions deal with the same class of persons having common characteristics and Properties and hence there is no just 666 basis for the classification made.
According to him the classification complained of has brought about a discrimination.
Further he asserted that the Act had conferred arbitrary power on the assessing authority to pick and choose from the persons belonging to the same class to be dealt with either under section 11(4)(a) or under 11A(1).
He urged that as a case coming under section 11(4)(a) also falls under section 11 A, as the law now stands, the persons proceeded against under section 11A(1) will have the benefit of the period of limitation prescribed therein; while the said benefit is not available for those proceeded under section 11(4)(a).
According to the learned counsel for the revenue, sections 11(4)(a) and 11A deal with different classes of persons; the classification made under those provisions is a reasonable classification having nexus with the object sought to be achieved.
Before adverting to the points at issue, it would be convenient to set out the circumstances under which section 11A(3) which is said to have brought about the discrimination complained of came to be enacted.
The Act is in force ever since 1947.
Section 11A as it originally stood was inserted into the Act in 1953.
In Bisesar House vs State of Bombay(1) the question arose whether a notice under section 11(2) initiates a fresh proceeding and if that is so, whether the limitation prescribed under s.11A(1) is attracted to that proceeding.
A Full Bench of the Bombay High Court speaking through Chagla, C. J. held that a notice under section 11(2) initiates a fresh proceeding and to such a proceeding the limitation prescribed in section 11A is attracted.
From the ratio of that decision it followed that the limitation prescribed under section 11 A also governed proceedings under s.11(4)(a).
Evidently, to get over the effect of that decision, the Bombay Legislature enacted the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act 1959 (No. 22 of 1959) which came into force on April 18, 1959.
Section 6 of that Act inserted the new subsection (3) into S.11A and the reason for that amendment, as stated in the statement of objects and reasons, is as follows: "In its judgment in Bisesar House vs Commissioner of Sales Tax, Nagpur, the Bombay High Court has held that the period of limitation laid down in S.IIA of the Central Provinces and Berar Sales Tax Act, 1947, for reassessment of the turnover which has escaped assessment applies to original assessment also.
It has also been found that the said limitation applies to suo motu revisions also.
The said decision affects the original assess ments and suo motu revisions, which have been made after the expiry of the period of limitation laid down for the reassessment of turnover escaping assessment under the different sales tax laws in force in this State.
It has, (1) 60 B.L.R. 1395 667 therefore, become necessary to establish the validity of all such assessments and to provide that the period of limitation prescribed for reassessment of escaped turn overs does not apply to original assessment and suo motu revisions.
" In Ghanshyam Das vs Regional Assistant Commissioner of Sales Tax, Nagpur(1) this Court did not agree with that decision so far as the scope of s.11(2) is concerned.
Therein it was held that a notice under section 11(2) does not initiate a fresh proceeding and to that proceeding the limitation prescribed in section 11A does not apply.
Though in view of that decision, s.11A(3) became superfluous in respect of a proceeding in which a notice under section 11 (2) is given, it undoubtedly changed the law in respect of proceedings under s.11(4)(a).
Before we proceed to consider the aforementioned complaint of discrimination, it is necessary to have a survey of the relevant provisions of the Act.
'Dealer ' is defined in section 2(c) as meaning a person who whether as principal or agent carries on in the State the business of selling or supplying goods whether for commission, remuneration or otherwise and includes a firm, a partnership, a Hindu undivided family or a State government or any of their departments and includes also a society, club or association selling or supplying goods to its members.
A 'registered dealer ' is defined in section 2(f) as meaning a dealer registered under the Act.
Section 2(j) defines 'turnover ' as meaning the aggregate of the amounts of sale prices and parts of sale prices received or receivable by a dealer in respect of the sale or supply of goods or in respect of the sale or supply of goods in the carrying out of any contract effected or made during the prescribed period; and the expression 'taxable turnover ' means that part 'of a dealer 's turnover during such period which remains after deducting therefrom his turnover during that period in respect of the sale of goods declared tax free under section 6 The definition of the term 'year ' as provided in section 2(1) to the extent necessary for our present purpose reads: "year ' means the 12 months ending on 31st day of March, or if the accounts of the assessee are made up to any other day in respect of a year ending on any date other than the 31st day of March, than at the option of the assessee the year ending on the day to which his accounts have been so made up. . . ."
Section 8 says: "(1) No dealer shall, while being liable to pay tax under this Act, carry on business as a dealer unless he has been registered as such and possesses a registration certificate."
Section 8A provides for voluntary registration of a dealer.
Sub s.(3) thereof provides that every dealer who has been registered upon an application made under this section so long as his registration remains in force, be liable to pay tax under that Act.
Sub section(4) of that section stipulates that the registration of a dealer upon an application made under that section shall be in force for a period not less than three complete years and shall remain in force thereafter unless cancelled under the provisions of the Act.
Section 10 provides for returns by dealers.
It reads: "(1) Every such dealer as may be required so to do to by the Commissioner by notice served in the prescribe manner and every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed."
Sub section(2) of that section is not necessary for our present purpose.
Sub section(3) of that section reads: "(3) it a dealer fails to comply with the requirement of a notice issued under sub section (1) or a registrate dealer fails to furnish his return for any period within prescribed time to the prescribed authority without any sufficient cause, the Commissioner may, after giving such dealer a reasonable opportunity of being heard, direct him to pay, by way of penalty, a sum not exceeding one fourth of the amount of the tax which may be assesses on him under section 11 ".
Sections 11 and 11A are important for our present purpose.
They deal with assessment and assessment on turnover escaping assessment.
They, to the extent necessary for our present purpose read: "11(1).If the Commissioner is satisfied that the returns furnished by a dealer in respect of any period are correct and complete, he shall assess the dealer on them, (2) If the Commissioner is not so satisfied he shall serve the dealer with a notice appointing a place and day and directing him (i) to appear in person or by an agent entitled to appear in accordance with the provision of section 11B, (ii) to produce evidence or have it produced in support of the returns or (iii) to produce or cause to be produced any accounts, registers, cash memoranda or other document, as may be considered necessary by the Commissioner for the purpose, (3) After hearing the dealer or his agent and examining the evidence produced in compliance with the requirements of clause (ii) or clause (iii) of sub section(2) and such further evidence as the Commissioner may be require, the Commissioner shall assess him to tax.
(4) If a registered dealer (a) does not furnish returns in respect of any period by the prescribed date or (b) having furnished such returns fails to comply with any of the terms of a notice issued under sub section (2), or (c) has not regularly employed any method of accounting or if the method employed is such that, in the opinion of the Commissioner, assessment cannot properly be made on the basis thereof, the Commissioner shall in the prescribed manner assess the dealer to the best of his judgment: Provided that he shall not so assess him in respect of the default specified in clause (a) unless the dealer has been first given a reasonable opportunity of being heard." (Sub sections 5 and (6) are not necessary for our present purpose).
Section 11A provides: "(1).If in consequence of any information which has come into possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed in such manner as may be prescribed to reassess or assess, as the case may be, the tax payable on any such turnover; and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount.
The assessment or reassessment made under sub section (1) shall be at the rate at which it would have been made, had there been no under assessment or escapement.
Nothing in sub sections (1) and (2) (i) shall apply to any proceeding (including any notice issued) under Sections 11 or 22A or 22B, and (ii) notwithstanding any judgment, decree or order 'of a Court or Tribunal, shall be deemed ever to have been applicable to such proceeding or notice.
(b) The validity of any such proceeding or notice shall not be called in question merely on the ground that such proceeding or notice was inconsistent with the provisions of sub sections (1) and (2).
Rule 19 of the rules framed under the Act provides that every registered dealer should furnish to the appropriate sales tax 670 officer his quarterly return in the prescribed form within one calendar month from the expiry of the quarter to which the return relates.
Each of such returns submitted should be accompanied by a treasury challan in the form prescribed in proof of the fact that he had paid the tax payable on the basis of his return, The only other rule relevant for Our present purpose is r. 32 in Part VII of the Rules, which deals with assessment of tax and/ or penalty.
That rule provides that where a registered dealer has rendered himself to a best judgment assessment as well as penalty by reason of his default in furnishing the prescribed return or re turns in respect of any period by the prescribed date, the assessing authority shall serve on him a notice in form 12 specifying the default, escapement or concealment as the case may be and calling upon him to show cause by such date ordinarily not less than 30 days, from the date of issue of the notice, as may be fixed in that behalf, why he should not be assessed or reassessed to tax, or a penalty should not be imposed upon him and directing him lo produce on the said date his books of account and other documents which the assessing authority may require or which he may wish to produce in support of his objection.
That rule further pro vides that no such notice shall be necessary where the dealer, having appeared before the assessing authority, waives such notice.
Now we may turn to the questions formulated for decision.
As mentioned earlier, the main contention advanced on behalf of the appellants is that sub section(3) of section 11A has brought about a discrimination between those dealers proceeded against under section 11(4)(a) and those dealt with under section 11A.
The contention advanced on behalf of the appellants is that the turnover of a registered dealer who has failed to submit his return and also to deposit the tax due from him, has escaped assessment; the case of such a dealer comes both within section 1 1 (4) (a) as well as section 11A; therefore, he can be dealt with under either of those two provisions.
Where section 11A prescribes a period of limitation for a proceeding under that provision, in view of sub section 3 of section 11A a proceeding under section 11(4)(a) can be initiated at any time; under those circumstances it is open to the authorities to proceed against some of the same class of dealers under section 11(4)(a) and others under section 11A.
It was said on their behalf that it is well settled that in its application to legal proceedings, article 14 assures to every one the same rules of evidence and modes of procedure; in other words, the same rule must exist for all in similar circumstances.
On the other hand, it was urged on behalf of the revenue that section 11(4)(a) deals only with registered dealers who have certain advantages under the Act, whereas section 11A deals with dealers who do not come either under section 11(4) or section 11(5), and therefore the classification of dealers made under the various provisions is based on real and substantial distinction bearing a just and reasonable relation to the object sought to be attained.
671 We have now to see whether the dealers who come within the mischief of section 11(4)(a) can also be dealt with under section 11A.
Before a person can be dealt with under section 11A, it must be shown that in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of that dealer during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom.
Quite plainly the expression 'dealer ' in section IIA(1) includes both registered and unregistered dealers.
In this case we are concerned with the escapement of assessment.
Therefore the first question that arises for decision is whether it can be said that the appellants ' turnovers for the period 1 5 52 to 30 10 55 had escaped assessment.
There is no dispute that those turnovers had not been assessed.
From the fact that those turnovers had not been assessed, can it be said that they had escaped assessment? In Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa,(1), this Court laid down that the expression "has escaped assessment" in section 34(1)(b) of the Indian Income Tax Act, 1922 is applicable not only where the income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted, but also where a return has been submitted but the income tax officer erroneously failed to tax a part of assessable income.
In Commissioner of Income Tax, Bombay City vs M/s. Narsee Nagsee and Co., Bombay(2) interpreting the words "profits escaping assessment" in section 14 of the Business Profits Tax Act, 1947, this Court held that those words apply equally to cases where a notice was received by the assessee but resulted in no assessment, under assessment or excessive relief and to cases where due to any reason no notice was issued to the assessee and there was no assessment of his income.
Kapur, J. speaking for the majority of Judges in that case, observed (at p. 993 of the report) that it is well settled that an income escapes assessment when the process of assessment has not been initiated as also in a case where it has resulted in no assessment after the completion of the process of assessment.
The true scope of the expression "escaped assessment" in section 11A came up for consideration before this Court in Ghanshyam Das vs Regional Assistant Commissioner of Sales Tax, Nagpur(3).
This is what Subba Rao, J. (as he then was) who delivered the judgment of the majority of the Judges, observed in that regard: "In Commissioner of Income Tax, Bombay vs Pirojbai N. Contractor the words 'escaped assessment ' in the Indian Income tax Act were defined.
It was held therein that the said words were wide enough to include cases where no notice under s.22(2) of the Income tax Act had been issued to the assessee and therefore his income had not been assessed at all under section 23 thereof.
The said view has been assumed to be correct by this Court in Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa [1959] Supp. 1 S.C.R. 10 and Maharajadhiraj Sir Kameshwar Singh vs State of Bihar ([1960] 1 S.C.R. 322) and extended to cover a, case where the first assessment was made in due course but a part of the income escaped therefrom.
This Court, in Commissioner of Income tax, Bombay vs Narsee Nagsee and Co. ([1960] 3 S.C.R. 988), construing the provisions of section 14 of the Business Profits Tax Act, 1947, reviewed the law on the subject and came to the following conclusion: All these cases show that the words "escaping assessment" apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and to cases where due to any reason no notice was issued to the assessee, and, therefore, there was no assessment of his income. '
It is true that the said decisions were given with reference to either section 34(1) of the Income Tax Act or section 14 of the Business Profits Tax Act but so far as the present enquiry is concerned the said sections are in pari materia with section 11A of the Act.
In construing the meaning of the expression 'escaped assessment ' in section 11A of the Act there is no reason why the said expression should bear a more limited meaning than what it bears under the said two Acts.
All the three Acts are taxing statutes and the three relevent sections therein are intended to gather the revenue which has improperly escaped.
A division Bench of the Madras High Court in the State of Madras vs Balu Chettiar (7 S.T.C. 519) following the decision of a Full Bench of that Court, held that where an assessee did not tile at any time a return of his turnover for a year and, therefore, there was no assessment made, the turnover escaped assessment.
It was observed therein: 'Whether it was a case of omission or of deliberate concealment on the part of the assessee, he did not submit any return.
It was his default that led to the escape of the turnover for 1951 52 from assessment to the tax lawfully due.
It was the whole of the turnover for that year that escaped assessment. ' It is not necessary to multiply citations.
We, therefore, hold that the expression 'escaped assessment ' in section 11A of the Act includes that of a turnover which has not been assessed at all, because for one reason or other no assess ment proceedings were initiated and therefore no assessment was made in respect thereof."
In one of the appeals dealt with in that judgment, i.e. C.A. No. 102 of 1901, this Court had to consider whether a case under 673 (a) also comes under section 11A.
The Court answered that question in the affirmative seen earlier it was the duty of the appellants not only to submit their quarterly returns but send along with those returns the treasury challans in proof of the payment of the tax admittedly due from them.
As they have failed to do so within the prescribed period, it follows that the turnovers in question had escaped assessment.
This takes us to, the next question whether in the instant case the assessing authority can be said to have been satisfied about the escapement of the assessment as a consequence of any information which had come into his possession.
From the notices issued in 1955 as well as later on, it is clear that the assessing authorities were satisfied about the escapement of the assessment due from the appellants.
But the real question is whether they were so satisfied "in consequence of any information which had come into their possession".
The assessing authorities knew that the appellants had neither submitted their returns nor treasury challans in proof of the payment of the tax due from them.
From that circumstance it is reasonable to, hold that in consequence of the information that the appellants had not submitted their returns as well as the treasury challans the assessing authority should have been stisfied about the escapement of the assessment.
It was urged on behalf of the revenue that 'information ' contemplated by s.11A should be from some outside source and not something that could be gathered by the assessing authority from his own records.
According to the revenue in the instant case there was no information from any outside source, therefore, it cannot be said that the assessing authority was satisfied about the escapement of tax in consequence of any information which has come into its possession.
In our view, this contention is untenable.
In Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa, this Court held that the word 'information ' in section 34(1)(b) of the Income Tax Act, 1922, includes information as to the true and correct state of the law and so would cover information as to the relevant judicial decisions.
It was laid down therein that that information need not be about any fact; it may be even as to the legal position.
In other words, the term 'information ' in section 34(1)(b) of the Income Tax Act 1922 really means knowledge.
In Salem Provident Fund Society Ltd. vs Commissioner of Income Tax madras(1) a division bench of the Madras High Court interpreting the scope of the words 'information which has come into his possession ' found in section 34 of the Indian Income Tax Act, observed thus: "We are unable to accept the extreme proposition that nothing that can be found in the record of the (1) 674 assessment which itself would show escape of assessment or under assessment, can be viewed as information which led to the belief that there has been escape from assessment or under assessment.
Suppose a mistake in the original order of assessment is not discovered by the Income Tax Officer himself on further scrutiny but it is brought to his notice by another assessee or even by a subordinate or a superior officer, that would appear to be information disclosed to the Income Tax Officer.
If the mistake itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of information to the Income, Tax Officer in such circumstances is in one sense extraneous to the record.
It is difficult to accept the position that while what is seen by another in the record is 'information ' what is seen by the Income Tax officer himself is not information to him.
In the latter case he just informs himself.
It will be information in his possession within the meaning of section 34.
In such cases of obvious mistakes apparent on the face of the record of assessment, that record itself can be a source of information, if that informa tion leads to a discovery or belief that there has been an escape of assessment or under assessment."
The meaning of the word 'information ' came up again for consideration before a division bench of the Kerala High Court in United Mercantile Co. Ltd. vs Commissioner of Income Tax Kerala(1).
Their Lordships held that to 'inform ' means to 'impart knowledge ' and a detail available to the Income Tax Officer in the papers filed before him does not by its mere availability become an item of 'information '.
It is transmuted into an item of information in his possession only if and when its existence is realised and its implications recognized.
Applying that test to the facts of the case before them the Court held that the awareness of the Income Tax Officer for the first time after the assessment order of November 19, 1957, that the bonus shares were issued not out of Premiums received in cash and the consequent result in the light of the Finance Act 1957, was information within the meaning of that expression as used in section 34(1) of,the Indian Income Tax Act, 1922, and consequently the reopening of the assessment under that provision was not illegal.
In our judgment, the knowledge of the fact that the appellants had not submitted their quarterly returns as well as the treasury challans.
constituted In information to the assessing authority from which it could be satisfied and in fact it was satisfied that the turnovers with which we are concerned in this case bad escaped assessment.
(1) 675 From the above conclusions it follows that the appellants ' case falls both under section 11(4)(a) and section 11A(1).
Therefore, it was open to the assessing authority to proceed against them under any one of those two sections.
But as they were proceeded against under section 11(4)(a) they cannot have the benefit of the period of limitation prescribed under section 11 A(1).
Hence, it must be held that the present case falls within the rule laid down by this Court in Suraj Mail Mohta and Co. vs A. V. Visvanatha Sastri & another(1).
On the facts found it follows that section 1 (4)(a) has become a discriminatory provision in view of section 11 A(3).
Hence the same is liable to be struck down under article 14.
But for the inclusion of sub section 3 in section 11A, there would have been no discrimination between those dealt with under section 11(4)(a) and those under section 11A(1).
The period of limitation prescribed in section 11A(1) would have attracted itself to proceedings under section 11(4)(a) as held by this Court in Ghanshyam Das 's case(2).
Mr. Bindra, learned counsel for the revenue, contended that a registered dealer has certain advantages over an unregistered dealer; therefore the classification made under the Act is a reasonable classification.
To be a valid classification, the same must not only be founded on an intelligible differentia which distinguishes persons and things that are grouped together from others left out of the group but that differentia must have a reasonable relation to the object sought to he achieved.
Both section 11(4)(a) and section 11A(1) concern themselves with escaped assessments.
The classification suggested has no nexus with that object.
That much is established by the decision of this Court in Ghanshyam Das 's case(1) which is binding on us.
It is true the State can by classification determine who should be regarded as a class for the purpose of legislation and in relation to a law enacted on a particular subject, but the classification must be based on some real and substantial distinction bearing a just and reasonable relation to the object sought to be attained and cannot be made arbitrarily and without any substantial basis.
Judged from the object sought to be achieved by the Act, we are of the opinion that the classification made between the registered and unregistered dealers is not a reasonable classification.
From this conclusion it follows that section 11(4)(a) is liable to he struck down as being discriminatory in view of section 11A(3).
Section 11(4)(a) is separable from the rest of the sub section.
Its separation from that sub section does not affect the implementation of the other provisions of the Act.
This takes us to the question which was debated at our in stance whether the notices issued by the assessing authority in 1955 were valid notices.
The High Court had not considered this question, though it appears that the same was presented to it for decision (1) ; , (2) ; L/P(N)7SCI 4 676 by the parties.
In the course of its judgment, the High Court observed: "In this view (in view of its earlier findings) of the matter it is not necessary to consider whether the earlier notices of the year 1955 are good and valid notices or whether they stood superseded by subsequent notices of 1958 and 1959".
For convenience we shall take up for consideration notice No. 4519/STN dated 13 9 55.
Our conclusions in respect of that notice would cover the other notices.
The material facts as set out by the High Court, the correctness of which was not disputed before us, are these: "On the 3rd September, 1955, the Assistant Commissioner, Sales Tax, issued a notice under section 10(3), section 11(4) (a), section 11A and sub section(1) of section 22C of the Act, calling upon the petitioners to show cause why action should not be taken against them under section 10(3) and section 11(4) of the Act on account of their failure to furnish the returns for the period 1 1 53 to 31 12 53.
Similar notices were given on 27th October, 1955 for the period 1 1 54 to 31 12 54 and on 7th July 1956 for the period 1 1 55 to 31 12 55.
From those facts, it is seen that no notice had been issued within three years in respect of the turnover relating to the period from 1 5 52 to 31 12 52.
The assessment in respect of that period is clearly barred in view of our earlier conclusion.
The period 1 1 1 52 to 31 1 53 forms part of the quarter commencing from 1 11 52.
No notice was given in respect of that quarter.
A quarter forms a unit by itself.
Therefore, it follows that the proceeding in respect of that quarter is also barred by limitation.
Now we shall take up the question whether the notices issued in 1955 in respect of the turnovers relating to other quarters were in accordance with law.
The notice No. 4519/STN dated 13 9 55 reads."Notice (for 1 1 53 to 31 12 53) dated 13 9 55.No. 4519/ STN.D/13 9 55.
Form XII (See rule 32) Notice under sub section (3) of section 10, sub section (4) (a) and (5) of section 11, sub section (1) of section 11 (A) and sub section (1) of section 22 of the Central Provinces and B erar Sales Tax Act, 1947.
Whereas Shri Anandji Haridas and Co., Ltd., Nagpur.
You have failed to furnish a return as required by a 677 notice in that behalf served on you under section 10(1) of the Central Provinces and Berar Sales Tax Act, 1947.
OR You being a registered dealer have failed to furnish a return for the periods 1 1 53 to 31 12 53 and have thereby rendered yourself liable under section 11 (4) to be assessed to the best of judgment; Further, you are hereby directed to attend in person or by a person authorised by you in writing in that behalf, being a person specified in section 11B(1) before me and to produce or cause to be produced your books of accounts and the documents specified in the schedule hereunder and any evidence on which you rely in support of your objection at Jabalpur at 11 00 A.M. on 22 9 55.
Sd/ Asstt.
Commissioner of Sales Tax Nagpur Region, Nagpur."
It is true that it is not a notice in respect of any particular quarter, it is a notice in respect of the period 1 1 53 to 31 12 53.
In the State of Orissa and another vs M/s. Chakobhai Chelabhai and Company,(1) this Court held that the issue of one notice under section 12(5) of the Orissa Sales Tax Act, 1947 which section is similar to section 11(4)(a), for several quarters was not contrary to law as the section makes reference to a period which might consist of more than one quarter.
From the notice in question it cannot be made out whether the assessing authorities wanted to deal with the appellants under section 10(1) or under section 11(4).
The notice says that the appellants "had failed to furnish the return as required by a notice in that behalf served on them under section 10(1) of the Act, or that they being registered dealers had failed to furnish return for the periods mentioned therein and thereby rendered themselves liable under section 11(4) to be assessed to the best of judgments Quite dearly, the first alternative mentioned in the notice did not apply to the appellants.
They are registered dealers.
No notice under section 10(1) had been given to them.
The assessing authority by mistake had failed to strike out the first alternative shown in the printed form.
That circumstance could not have prejudiced the appellants.
It was held by this Court in Chakobai Chelabhai 's case(1) referred to earlier that such a mistake does not vitiate the notice issued.
But the more serious mistake pointed out by Mr. Gokhale in that notice is that the assessment year mentioned in that notice is not the assessment year of the 'appellants.
Their assessment Years commenced from 1st November.
This error according to Mr. Gokhale vitiated the notices issued.
Yet another complaint made by Mr. Gokhale was that though r. 32 provides that ordinarily not less than 30 days notice should be given to the assessee, only 9 days notice was given.
But this defect was found only in the notice quoted above and not in the other notices issued in,1955.
For the reasons to be mentioned presently, we see no merit in either of these contentions.
We are unable to accept the contention of Mr. Gokhale that a notice under section 11(4)(a) or 11A(1) is a condition precedent for initiating proceedings under those provisions or that it is the very foundation for the proceedings to be taken under those provisions.
The notice contemplated under r. 32 is not similar to a notice to be issued under section 34(1)(b) of the Income Tax Act, 1922.
All that sections 11(4) and 11A(1) prescribe is that before taking proceedings against an assessee under those provisions, he should be given a reasonable opportunity of being heard.
In fact, those sections do not speak of any notice.
But r. 32 prescribes the manner in which the reasonable opportunity contemplated by those provisions should be afforded to the assessee.
The period of 30 days prescribed in r. 32 is not mandatory.
The rule itself says that 'ordinarily ' not less than 30 days notice should be given.
Therefore, the only question to be decided is whether the defects noticed in those notices had prejudiced the appellants.
It may be noted that when the assessees received the notices in question, they appeared before the assessing authority, but they did not object to the validity of those notices.
They asked for time for submitting their explanation.
The time asked for was given.
Therefore, the fact that only nine days were given to them for submitting explanation could not have in any manner prejudiced them far as the mistake in the notice as regards the assessment year is concerned, the assessees kept silent about that circumstance till 1958.
It was only when they were sure that the period of limitation prescribed by section 11A had expired hey brought that fact to the notice of the assessing authority.
It is clear that the appellants were merely trying to take advantage of the mistakes that had crept into the notices.
They cannot be permitted to do so.
We fail to see why those notices are not valid in respect of the periods commencing from February 1, 1953 till 31 10 55.
We are unable to agree with Mr. Gokhale 's contention that each one of those notices should, be read separately and that we should not consider them together.
If those notices are read together as we 'think they should be, then it is clear that those notices give the appellants the reasonable opportunity contemplated by sections 11(4) '(a) and 11A(1).
In Chatturain and Others vs Commissioner Pt 'Income Tax, Bihar,(1) the: (1) 679 Federal Court held that any irregularity in issuing a notice under section 22 of the Income Tax Act, 1922 does not vitiate the proceeding that the income tax assessment proceedings commence with the issue of the notice, but the issue or receipt of the notice is, however, not the foundation of the jurisdiction of the Income Tax Officer to make the assessment or of the liability of the assessee to pay the tax.
The liability to pay the tax is :founded on sections 3 and 4 of the Income Tax Act which are the charging sections.
Section 22 and others are the machinery sections to determine the amount of tax.
The ratio of that decision applies to the facts of the present case.
In our opinion, the notices issued in the year 1955 are valid notices so far as they relate to the period commencing from February 1, 1953 to 31 10 55.
In view of our conclusion that every escapement of assessment coming within the scope of section 11(4)(a) is also an escapement of assessment under section 11 A(1), a notice issued under section 11 (4)(a) would be a vaild notice in respect of a proceeding under section 11A(1).
In the result, we hold that the assessing authority has no competence to assess the turnovers of the appellants in respect of the quarters commencing from 1 5 52 and ending with January 31, 1953 as the same is barred by time under section 11A.
We further hold that section 11(4)(a) is void as it is: violative of article 14.
We accordingly issue a direction to the respondents to refrain from assessing the appellants in respect of those turn overs.
In other respects, the appeals fail and they are dismissed.
In the circumstances of these cases, we make no order as to costs.
Bachawat, J. Sections, 11(4), 11(5) and 11 A of the C.P. and Berar Sales Tax Act, 1947 are as follows: "11(4) If a registered dealer (a) does not furnish returns in respect of any period by the prescribed date, or (b) having furnished such ;return fails to comply with any of the terms of a notice issued under subsection (2), or (c) has not regularly employed any method of accounting, or if the method employed is such that, in the opinion of the Commissioner, assessment cannot properly be made on the basis thereof, the Commissioner shall in the, prescribed manner assess the dealer to the best of his judgment: Provided that he shall not so assess him in respect of the default specified in clause (a) unless the dealer has been first given a reasonable opportunity of being beard.
680 (5) If upon information which has come into his possession, the Commissioner is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless wailfully failed to apply for registration, the Commissioner shall, at any time within three calendar years from the ex piry of such period, after giving the dealer a reasonable opportunity of being heard, proceed in such manner as may he prescribed to assess to the best of his judgment the amount of tax due from the dealer in respect of such period and all subsequent periods:and the Commissioner may direct that the dealer shall pay by way of penalty in addition to the amount of tax so assessed a sum not exceeding one and a half times that amount.
11 A. (1) If in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom the Commissioner may, at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard and after making such inquiry as he considers necessary, proceed in such manner as may be prescribed to re assess or assess, as the case may be, the tax payable on any such turnover; and the Commissioner may direct that the dealer shall pay, by way of penalty in ad dition to the amount of tax so assessed, a sum not exceeding that amount.
(2) The assessment or reassessment made under subsection (1) shall be at the rate at which it would have been made, had there been no under assessment or escapement."
The Bombay Sales Tax Laws, (Validating Provisions and Amendment) Act, 1959 inserted the following sub section (3) in section 11A: "(3)(a) Nothing in sub sections (1) and (2) (i) shall apply to any proceeding (including any notice issued) under section 11, or 22A or 22B, and (ii) notwithstanding any judgment, decree or order of a court or Tribunal, shall be deemed ever to have been applicable to such proceeding or notice.
(b) The validity of any such proceeding or notice shall not be called in question merely on the ground that such proceeding or notice was inconsistent with the provisions of subsections (1) and (2).
" 681 The appellant is a registered dealer.
It failed to file returns for the periods 1 5 1952 to 31 10 1952, 1 11 1952 to 31 10 1953, 1 11 1953 to 31 10 1954 and 1 11 1954 to 31 10 1955.
The Sales Tax Officer, Non resident Circle, Nagpur issued four notices to the appellant initiating proceedings under sections 10(3), 11(4), 11A(1) and 22C(1) of the Act.
The appellant filed a writ petition in the High Court challenging the notices and asking for an order restraining the respondents from taking steps under the notices and making assessments or levying penalties in respect of the aforesaid periods.
The High Court dismissed the application.
From this order, the appellant has preferred the present appeals.
Notices under section 22C(1) can be issued only in course of any proceedings under the Act.
As no proceedings were pending against the appellant, no notice under section 22C(1) could be issued to it.
We shall presently show that no notice can be issued to a registered dealer under section 11A(1) for assessing the turnover which has escaped assessment by reason of his not filing a return.
The impugned notices so far as they were issued under sections 22C(1) and 11A(1) may be treated as surplusage and rejected.
Under section 10(3), if a registered dealer fails to furnish his return for any period within the prescribed time without any sufficient cause, the Commissioner may after giving him reasonable opportunity of being heard direct him to pay by way of penalty a sum not exceeding one fourth of the amount which may be assessed on him under section 11.
If no assessment can be made under section 11, no penalty can be levied under section 10(3).
Therefore, the point for determination is whether the impugned notices so far as they were issued under section 11(4) are valid.
The contention of the appellant is that the notices under section 11 (4) are invalid as they were not issued within three years from the expiry of the aforesaid periods.
We see no force in this contention.
Section 11(4) does not prescribe a period of limitation for the issue of a notice under it.
In Ghanshyam Das vs Regional Assistant Commissioner of Sales Tax, Nagpur(1), the Court by a majority decided with reference to section 11.(4) and section 11A, as it stood before its amendment by the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959, that a notice under section 11(4) initiates new proceedings and it also decided or to be more accurate, assumed that the period of limitation prescribed by section 11A(1) should be imported into section 11(4).
The case was decided without reference to section 11A(3) inserted by the Amending Act and is no authority on the interpretation of that sub section.
Section 11A(3) now expressly provides that nothing in section 11A(1) shall apply to any proceeding including any notice issued under section 11.
The section is retrospective in operation.
It follows that the period of (1) , 682 limitation prescribed by section 11A(1) cannot be applied to a proceeding or a notice issued under section 11(4).
There is no period of limitation prescribed for a notice or a proceeding initiated under section 11(4).
Consequently, the impugned notices issued under section 11 (4) are not barred by limitation and are not invalid.
The argument then is that section 11(4)(a) offends article 14 of the Constitution in two ways.
Firstly, it is said that it is open to the sales tax authorities to proceed at their sweet will either under section 11(4)(a) or under section IIA(1) against a registered dealer for his failure to file returns and the principle of Shree Meenakshi Mills Ltd. vs Sri A. V. Viswanatha Sastri and Another(1) is invoked.
We find no merit in this contention.
Section 11(4)(a) specially pro vides for the initiation of proceedings against a registered dealer who has not furnished returns in respect of any period by the prescribed date.
Having made this special provision, the legislature must be taken to have intended that in a case falling under section 11(4)(a) the sales tax authorities must proceed against the registered dealer under section 11(4)(a) and not under section IIA(1).
The special provision must be taken silently to exclude all cases failing within it from the purview of the more general provision.
Moreover if a statute is capable of two constructions, that construction should be given which will uphold it rather than the one which will invalidate it.
Construing sections 11(4)(a) and 11A(1) together we should, therefore, hold that the cases falling within section 11(4)(a) are excluded from the purview of section 11 A(1).
The point that there is no over lapping of sections 11(4)(a) and 11A(1) is made clearer by s.11A(3).
The decisions under section 34(1)(b) of the Indian Income tax Act, 1922 such as Maharaj Kumar Kamai Singh vs Commissioner of Incometax, Bihar and Orissa(2) and under section 14 of the Business Profits Tax Act, 1947 such as Commissioner of Income Tax vs Narsee Nagsee & Co.(2) are distinguishable.
In those Acts, there was no special provision corresponding to section 11(4) for proceeding against registered dealers who have not filed returns, and the question how far the special provisions would exclude cases within it from the purview of the more general provision could not arise.
In Ghanshyam Das 's case(3), none of the notices in question was issued under section 11A, and the Court did not say that a registered dealer could be proceeded against under section 11 A for not filing a return.
Nor did the Court consider the effect of section 11 A(3).
It is true that the majority decision held that the phrase "escaped assessment" in section 11A includes that of a turnover which has not been assessed at all because no assessment proceedings were initiated.
But having regard to the special provisions of section 11(4) read with section 11A(3), the power under section 11 A(1) as interpreted in Ghanshyam Das 's case(4) to assess turnover which escaped assessment by reason of non filing of returns must be confined to cases of (1) (2) [1959] Supp. 1 S.C.R. 10.
(3) , (4) ; 683 unregistered dealers.
As pointed out already, cases of registered dealers falling within section 11(4) are excluded from the purview of section 11A(1).
It is next said that section 11 (4) offends article 14 of the Constitution because no period of limitation is prescribed for a notice under it, whereas periods of limitation are prescribed for notices under sections IIA(L) and 11(5).
We see no merit in this contention.
The Act 'deals with registered and unregistered dealers differently in many ways.
The classification and differential treatment of re gistered and unregistered dealers are based on substantial differences having reasonable relation to the object of the Act.
A registered dealer unlike an unregistered dealer is under a statutory obligation to file returns without any notice being served upon him and to pay the full amount of tax due from him before furnishing the return (sections 10 and 12).
A dealer who has registered himself under the Act admits his liability to furnish returns whereas a dealer who has not registered himself makes no such admission.
A registered dealer has certain advantages under the Act which are denied to an unregistered dealer.
Section 2(1)(a)(ii) exempts from tax sales of a registered dealer of goods specified in his certificate of registration as being intended for use by him as raw materials in the manufacture of goods for sale by actual delivery in the State for consumption therein.
An unregistered dealer cannot get the benefit of this exemption.
Moreover, section 2(j) (a)(ii) exempts from tax sales to a registered dealer of goods de clared by him in the prescribed form as being intended for resale by him by actual delivery in the State for consumption therein.
The sales to an unregistered dealer are not so exempt.
Consequently, a registered dealer call buy his goods from the producer or the wholesaler at a cheaper price and has thus ail economic advantage over an unregistered dealer.
In the matter of penalties, sections 10(3) and 22C(1) treat the two classes of dealers on the same footing, but sections 11 (4), 11(5) and 11 A(1) treat them differently.
No penalty can be levied on a registered dealer under section 11(4) but heavy penalties may be levied on an unregistered dealer under sections 11(5) and 11A(1).
While prescribing periods of limitation for proceedings against an unregistered dealer under sections 11(5) and 11A(1), the legislature has wisely not prescribed a period of limitation for a proceeding initiated under section 11(4)(a) against a registered dealer considering that (1) the registered dealer is under a statutory obligation to file the return, (2) no penalty is leviable under section 11(4)and (3) the registered dealer is given many advantages under the Act which are denied to an unregistered dealer.
The bar of limitation in the case (if an unregistered dealer and the absence of such a bar in the case of a registered dealer cannot be regarded as unjust or discriminatory.
Questions of policy are not to be debated in this Court.
There is no compulsion on the legislature to prescribe a period of limitation in every case.
In taxing statutes the legislature has a large measure of discretion.
We cannot strike 684 down section 11(4)(a) because of some preconceived notion that the same period of limitation should be prescribed for proceedings against both registered and unregistered dealers.
In Ghanshyam Das 's case(1), Raghubar Dayal, J. at p. 459 clearly held that section 11(4) is not violative of article 14.
The majority did not dissent from this opinion.
We hold that section 11 (4) is not violative of article 14 and we uphold it.
It follows that the notices issued on July 8, 1959 under section 11(4) are valid in respect of the entire period from 1 11 1952 to 31 10 1955.
As regards the alternative contention of the respondent, that the notices issued in 1955 validly initiated, proceedings under section 11(4) for the period from 1 2 1953 to 31 10 1955 we are glad to find that the majority has accepted this contention.
The irregularities, if any, in the notices do not invalidate them.
However, for the reasons already mentioned, we are of opinion that the impugned notices issued on July 8, 1959 are valid.
In the result, the appeals are dismissed with costs.
ORDER In accordance with the opinion of the majority these appeals are partly allowed with respect to turn over from 1 5 1952 to 31 1 1953.
In other respects the appeals are dismissed.
No order as to costs.

summary:
Under s.10(1) of the Central Provinces and Berar Sales Tax Act 1947 every dealer required so to do by the Commissioner by notice, and every registered dealer, shall furnish such returns by such dates and so such authority as may be prescribed, and r.19 of the Rules framed under the Act provides that every registered dealer should furnish quarterly returns accompanied by a treasury challan in proof of payment of the tax payable.
If the registered dealer does not so furnish his return, the Commissioner may, after giving the dealer a reasonable opportunity assess him to the best of his judgment (4)(a).
Under s.11(4) (a).
Rule 32 prescribes that ordinarily not less than 30 days notice should be given to an assessee for submitting his explanation before action is taken under s.11(4)(a).
In 1953, s.11A was added to the Act.
Under s.11A(1) if in consequence of any information which has come into his possession, the other Commissioner is satisfied that any turnover of a dealer has escaped assessment, the Commissioner may, within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to re assess the tax payable on any such turnover and also direct the dealer to pay a penalty.
In 1959, s.11A(3) was added by which, nothing in s.11A(1) shall apply to any proceeding including any notice under s.11, that is, the period of limitation of 3 years mentioned in s.11A(1) shall not apply to a proceeding under s.11(4)(a) on best judgment basis.
The appellants were registered dealers.
Their assessment year was from 1st November to 31st October.
They submitted their quarterly returns upto 30th April 1952.
Since no returns were submitted thereafter, on 13th September 1955, the assessing authority issued a notice with respect to the period 1st January 1953 to 31st December 1953 calling upon them to show cause why action should not be taken against them under s.11(4) (a).
A similar notice was issued on 27th October 1955 for the period 1st January 1954 to 31st December 1954, and on 7th July 1956, for the period 1st January 1955 to 31st December 1955.
The appellants repeatedly took time for submitting their explanation.
In 1958, fresh notices were issued for L/P(N) 7SCI (3)(a) 662 the calendar years1952 to 1955 and the appellants raised the objection, for the first time, that their assessment year was not the calendar year, but 1st November to 31st October.
In view of that objection, the first respondent issued another set of notices on 8th July 1959 for the periods 1st May 1952 to 31st October 1952, 1st November 1952 to 31st October 1953, 1st November 1953 to 31st October 1954 and 1st November 1954 to 31st October 1955 respectively.
The appellants contended that those notices were barred by the 3 year period of limitation under s.11A(1), but the assessing authority assessed the appellants on best judgment basis under section 11 (4) (a).
The appellants thereupon filed writ petitions in the High Court challenging the validity of the notices and the order of assessment, but the petitions were dismissed.
In appeals to this Court, the appellant contended that: (1) Section 11(4), (a) read with s.11A(3) contravenes article 14 of the Constitution, because, a registered dealer who had failed to submit his return could be proceeded against either under s.11(4)(a) or s.11A(1), but, whereas s.11A(1) provides a 3 year period of limitation, a proceeding under section 11(4)(a) could be initiated at any time in view of s.11A(3); (2) the notices of 1959 were barred by time; and (3) the notices of 1955 and 1956 were not valid, because, (a) the issue of one notice for several quarters was contrary to law, (b) that portion of the printed notice which said that the appellants had failed to furnish the return as required by a notice in that behalf served on them under s.10(1) did not apply to the appellants as no notice under s.10(1) had been given to them, (c) the assessment year mentioned in the notice was the calendar year which was not the assessment year of the appellants, and (d) though r. 32 provides that ordinarily not less than 30 days notice should be given to the assessee for submitting his explanation, the first notice gave to the appellants only 9 days time.
Held: (Per Wanchoo C. J., Mitter and Hegde, JJ.) (1) Section 11(4) (a) is void as it is violative of article 14.
The expression 'dealer ' in s.11A(1) includes both registered and unregistered dealers, and it cannot be contended that dealers are classified into registered and unregistered dealers, the former coming under s.11(4)(a) and the latter under s.11A(1).
To be a valid classification, it must not only be founded on an intelligible differential which distinguishes persons and things that are grouped together from others left out of the group, but that differentia must have a reasonable relation to the object sought to be achieved.
In the present case, both s.11(4)(a) and section 11A(1) are concerned with taxing escaped assessments, and judged from this object sought to be achieved by the Act, the classification of dealers into registered and unregistered dealers is not reasonable.
Therefore, even registered dealers are covered by section 11A(1).
As the 'information ' contemplated by s.11A(1) need not be from outside sources but could be gathered by the assessing authority from his own records, his knowledge of the facts that the appellants had not submitted quarterly returns and treasury challans and that they were notassessed to tax with respect to the turnovers in question constituted 'information ' to the assessing authority from which he could be satisfied that the turnovers had escaped assessment.
It would thus be open to the assessing authority to proceed against the appellants either under s.11(4)(a) or s.11A(1).
But as they were proceeded against under section 11(4)(a), they could not get the benefit of the limitation prescribed under section 11A(1).
It follows that section 11(4)(a) has become a discriminatory provision in view of section 11A(3), [672 B; 674 D E; 675 H; 676 A G].
663 Ghanshyam Das vs Regional Assistant Commissioner of Sales tax, Nagpur ; and Suraj Mall Mohta & Co. vs A, V. Visvanatha Sastri & Anr. ; , followed.
Maharaj Kumar Kamal Singh vs Commissioner of Income tax, Bihar & Orissa [1959] Supp. 1 S.C.R. 10, Commissioner of Incometax, Bombay City vs M/s. Narsee Nagsee & Co. Bombay, Salem Provident Fund Society Ltd. vs C. I, T. Madras, and United Mercantile Co. Ltd. vs Commissioner of Income tax, Kerala, referred to.
(2) But s.11(4)(a) is severable from the rest of the Act and its severance does not affect the implementation of the other provisions of the Act.
Therefore, the validity of the notices should be tested under s.11A(1).
So tested, the notices of 1959 are all barred by the 3 year period of limitation.
[676 G H].
(3) Since there was no valid notice for the period 1st May 1952 to 31st October 1952, there could be no assessment in respect of that period.
As regards the quarter 1st November 1952 to 31st January 1953 also, there was no valid notice.
The notice issued on 13th September 1955, no doubt refers to the period 1st January 1953 to 31st January 1953, but that is only a part of the quarter.
As a quarter is a unit in itself and there should be a notice for the entire quarter, the proceeding in respect of the quarter from 1st November 1952 to 31st January 1953 is also barred by limitation [677 E F].
But the notices issued in 1955 and 1956 are valid notices in so far as they relate to the period 1st February 1953 to 31st October 1955.
Any irregularity in the issue of the notices does not vitiate the proceeding, because, the liability to pay tax is founded on the charging sections.
[680 B C].
Chatturam & Ors.
vs C.I.T. Bihar, ; , applied.
Further, (a) The issue of one notice for several quarters is not contrary to law.
[678 E].
State of Orissa and Anr.
vs M/s. Chakobhai Chelabhai & Co. ; , followed.
(b) The assessing authority, by mistake, had failed to strike out the portion in the printed form which was inapplicable to the appellants who were registered dealers and on whom no notice need be served to furnish a return.
But this circumstance could not have prejudiced the appellants and such a mistake does not vitiate the notice.
[678 H].
Chakobhai Chelabhai 's case; , , followed.
(c) The mistake as regards the assessment year in the notices does not render the notices invalid.
The assesses deliberately kept silent and when they felt that the period of limitation prescribed by section 11A had expired, brought the fact to the notice of the authority.
The assesses were not prejudiced and could not be permitted to take advantage of such a mistake.
[679 G H].
(d) Rule 32 prescribes that ordinarily 30 days ' notice should be given.
Therefore, the period is not mandatory.
All that ss.11(4) and 11A require is that an assessee should be given a reasonable opportunity before he is proceeded against.
Since, in the present 664 A case, the appellants appeared before the assessing authority and did not object to the validity of the notices but asked for sub mitting their explanation, and as the time asked for was given, the appellants had a reasonable opportunity, for submitting their explanation.
[679 D G].
(Per Bachawat and Ramaswami JJ.) (1) Section 11(4) is not violative of article 14.
Construing ss.11(4)(a) and 11A(1) together it must be held that cases falling within s.11(4)(a) are excluded from the purview of S.11A(1).
Section 11(4)(a) specially provides for the initiation of proceedings against a registered dealer.
Having made this special provision, the legislature must be taken to have intended that the sales tax authorities must proceed against.
a registered dealer under s.11(4)(a) and not under s.11A(1).
[683 C B].
The classification and differential treatment of registered and unregistered dealers are based on substantial difference having a reasonable relation to the object of the Act.
The legislature did not prescribe a period of limitation for a proceeding initiated under section 11(4)(a) against a registered dealer, because, (i) the registered dealer is under a statutory obligation to file a return, (ii) no penalty is leviable under s.11(4) and (iii) the registered dealer is given many advantages under the Act which are denied to an unregistered dealer.
Therefore, the bar of limitation in the case of an unregistered dealer and the absence of such a bar in the case of a registered dealer cannot be regarded as unjust or discriminatory.[684 B, G H].
Ghanshyam Das vs Regional Assistant Commissioner of sales Tax Nagpur, [1964]4 S.C.R. 436, Maharaj Kumar Kamal Sing vs Commissioner of Income tax, Bihar & Orissa, [1959] Supp. 1 S.C.R. 10 and Commissioner of Income tax vs Narsee Nagsee & Co. , explained.
(2) Section 11A(3) expressly provides that nothing in section 11 A(1) shall apply to any proceeding including any notice under section 11 and the section is retrospective.
It follows that the period of limitation provided by s.11A(1) cannot be applied to a proceeding or notice under section 11(4).
Consequently, the impugned notices of 1959, issued under s.11(4) are not barred by limitation and are not invalid [682 H; 683 A].
Ghanshyam Das 's Case; , , referred to (3) Even the notices issued in 1955 and 1956 initiated proceedings validly under section 11(4) for the period from 1st February 1953 to 31st October 1955, as the irregularities in the notices did not invalidate them.
[685 B C].


judgement:
Appeal No. 72 of 1965.
Appeal by special leave from the judgment and decree dated August 28, 1962 of the Bombay High Court in Appeal No. 250 of 1959 from Original Decree.
section G. Patwardhan, R. R. Jhagirdar, V. G. Mudholkar and A. G. Ratnaparkhi, for the appellant.
R. H. Dhebar, section section Javali and section P. Nayar, for respondent No. 1.
section section Shukla, for respondents Nos.
2(ii) (v).
The Judgment of the Court was delivered by Shah, J.
One Sambhusing applied under section 19 of the Bombay Public Trusts Act 29 of 1950 for a declaration that City Survey Nos. 371 to 379 of Taloda were settled by one Dagadu Khushal in favour of the Municipality in 1883 for the benefit of the Johari Panch and for an order that the property be registered as property of a public trust under the Act.
The Assistant Charity Commissioner who heard the petition by his order dated January 20, 1956, held that "there was no such institution known as Johari Panch", and that the property in dispute had not been used for the benefit of that community, but Dagadu Khushal had trans ferred the property to the Municipality for the benefit of members of the public interested in the Samadhi of Nagabawa.
The Assistant Charity Commissioner declared that there was a public trust and City Survey Nos.
371 to 379 of Taloda Municipality were the property of the Trust and that the Municipality held it as trustee of that trust.
That order was confirmed in appeal by the Charity Commissioner.
In appeal, the District Court set aside the order of the Charity Commissioner and held that by the deed of transfer executed by Dagadu Khusbal no trust was created, that in any event the trust was not a public trust and that the property in City Survey Nos.
371 to 379 was not the property of any such trust.
In appeal under section 72(4) of the Act, the High Court of Bombay reversed the order passed by the District Court and restored the order passed by the Charity Commissioner.
The Municipality of Taloda has filed this petition with special leave.
A short history of the property may first be set out.
Land which now bears City Survey Nos. 371 to 379 originally be longed to one Charandas who erected a 'Dharamshala ' thereon.
On May 24, 1878, Charandas sold the land and the Dharamshala to Dagadu Khushal purporting to transfer the property absolutely to the vendee.
On August 27, 1883, Dagadu Khushal executed a deed in favour of the Municipality of Taloda, the relevant clause 655 of the deed (as translated in the judgment of the High Court) reads as follows "Having released all my rights, interest and title in the Property mentioned in the boundaries above, I am handing over today all that property in the possession of the Municipality for the purpose of sarvajanik kam (public purpose) as it has been utilised upto date for shelter of Atit, Abhyagat, Sadhu, Sant etc.
to be used in the same way as it has been used up till now.
" It was recited in the deed that in the property conveyed "there is a samadhi (grave) of Nagabawa".
The Municipality, pursuant to the deed, entered into the possession of the property.
It appears that thereafter the Municipality made certain constructions which were used for its offices and for shops.
On September 21, 1936, the Municipality of Taloda filed a suit against one Baba Haridas Guru Shamdas Udasi for a declaration that the defendant had no right or interest over the land City Survey Nos. 371 to 379 and that the defendant had taken unlawful possession thereof and for an order that the obstruction raised by the defendant be removed, and possession of the land be awarded to the Municipality.
In this suit it was claimed by the Municipality that it was in possession of the land for more than sixty years and the property was "utilised for municipal purposes and was enjoyed in all ways for necessary municipal requirements", but the defendant had made unauthorised construction thereon.
Baba Haridas contended that the Municipality had no right to utilise the property for municipal purposes since it was transferred in trust for the residence of "sages, saints, guests, visitors and others of the Nanak Sect", and the defendant being "a sage or saint of the Nanak Sect" had been residing in the property and was entitled to do so.
This suit was decreed by the Subordinate Judge.
In 1950 survey proceedings were started in the town of Taloda and an enquiry regarding the, title to the land was made.
The Secretary of the Municipality admitted before the City Survey Officer that in Survey No. 379 there existed "a temple of the Johari men and the members of that, community had the right to visit the temple at fixed times but they had no other right".
Members of the Johari Panch claimed that they had entrusted their temple to the Municipality for administering it for the community, but the "compound" belonged to them and that the Municipality was merely a trustee thereof.
The City Survey Officer declared the Municipality to be the owner of the property in question and further declared that the Municipality was not a trustee for the Johari Panch.
Sambhusing then submitted the application out of which this appeal has arisen.
The High Court has held that the Municipality held at all material times the property as a trustee of a public trust.
This 656 finding is challenged before us by the Municipality.
The first question which falls to be considered is whether the Municipality holds the property or any part thereof as a trustee.
Dagadu Khushal claiming to be the owner of the property by purchase from Charandas transferred it to the Municipality for public purpose i.e. to be utilised for giving shelter to "Sadhus, saints and religious mendicants" in the same manner in which it had been utilised upto the date of transfer.
We will assume that Dagadu Khushal could have, when he was the owner, stopped the user of the pro perty for the benefit of "Sadhus, saints and religious mendicants".
But after the transfer of the property was accepted by the Municipality for the purposes mentioned in the deed, it was not open to the Municipality to divert the use of that property for its own purposes.
Counsel for the Municipality urged that the Municipality is in a sense a trustee for the residents of the town of Taloda in respect of all the property vested in it by operation of the Act constituting it, and upon that trust another trust which restricts the use of the property for the benefit of.
a limited class of persons cannot be super imposed.
The Municipality was governed by Act VI of 1873 at the date of the settlement.
Section 17 of that Act provided: "All property of the nature, hereinafter specified shall be vested in and belong to the Municipality, and shall, together with all other property, of what nature or kind soever, which may become vested in the Municipality, be under their direction, management, and control, and shall be held and applied by them as trustees for the purposes of this Act; that is to say: (a) All public town walls gates, markets, slaughterhouses, manure and nightsoil depots and public buildings of every description not specially reserved by Government.
(b) All public streams, tanks, reservoirs, cisterns, wells, springs aqueducts, conduits, tunnels, pipes, pumps, and other water works, and all bridges buildings, engines, works, materials, and things connected therewith or appertaining thereto, and also any adjacent land (not being private property) appertaining to any public tank or well.
(c) All public sewers and drains, and all sewers, drains, tunnels, culverts, gutters and watercourses in, alongside, or under any street, and all works materials and things appertaining thereto, as also all :dust, dirt, dung.
ashes, refuse, animal matter or filth, or rubbish of any kind collected by the Municipality from the streets, houses, privies, sewers, cesspools, or elsewhere.
657 (d) All public lamps, lamp posts, and apparatus connected therewith, or appertaining thereto.
(e) All land transferred to them by Government, or by gift, or otherwise for local public purposes.
(f) All public streets, and spaces, and the pavements, stones, and other materials thereof, and also all trees, erections, materials, implements, and things provided for such streets and spaces.
" Property belonging to a Municipality governed by the Act must undoubtedly be held under its direction, management and control and must be applied by it as a trustee, subject to the provisions and for the purposes of the, Act.
But there is nothing in the Act or in the general law which prevents a Municipality from accepting a trust in favour of a section of the general public in respect of property transferred to it, or authorises the Municipality after accepting a trust to utilise it for its own purposes in breach of the trust.
It was then urged by counsel for the Municipality that by the decree passed in the suit filed against Baba Haridas, the right of the members of the Johari community to the property in dispute was negatived and the same right cannot, because of the rule of res judicata, be re agitated in these proceedings.
In that argument, in our judgment, there is no substance.
The only dispute in suit No. 5 10 of 1936 of the Court of the Second Class Sub Judge Nandurbar, was about the right of the Municipality to call upon Baba Haridas to vacate and deliver possession of the property which was in his occupation.
It is true that the defendant Baba Haridas had contended that the property was the property reserved for "Sadhus, saints and religious mendicants" and he as a Sadhu was entitled to reside therein.
But Baba Haridas was not sued in a representative capacity on behalf of the beneficiaries of the trust created in 1883; he was used as a trespasser.
The judgment of the civil court does not operate to prevent the Assistant Charity Commissioner from determining in an appropriate proceeding whether the property was the property of a public trust of a religious or charitable nature.
The argument of counsel for the Municipality that the decision of the City Survey Officer operates by virtue of s.50 A of the Bombay District Municipal Act, 1901, to destroy the rights of the public, is also without substance.
Sub section (1) of section 50 A of the Bombay District Municipal Act, 1901, authorises the City Survey Officer, in proceedings for survey of lands (other than land used for agriculture) in a Municipal District to determine the claim between the Municipality and other persons after formal enquiry of which due notice has been given.
By sub section
(2) any suit instituted in any civil court after the expiration of one year from the date of any order passed by the Collector, or if an appeal has been made I against such order within the period of limitation, shall be dismissed if the suit is brought to set aside such order, or if the relief 658 claimed is inconsistent with such order, provided that the plaintiff has had due notice of such order.
The property undoubtedly is entered in the City Survey record as private property of the Taloda Municipality.
But the legal ownership of the Municipality is not challenged in the proceedings before the Assistant Charity Commissioner.
It is merely contended in this proceeding under section 19 of the Bombay Public Trusts Act that the property 'is held by the Municipality subject to a public trust.
The proceeding under section 19 of the Bombay Public Trusts Act for a declaration that the property is the property of a public trust is not a suit to set aside the order of the Collector, nor is it a suit in which the relief claimed is inconsistent with the order of the City Survey Officer.
The learned Assistant Judge held that the beneficiaries referred in Ext.
14 as "Sadhus, saints and religious mendicants" do not, form the public or a section thereof, and on that account also the use of the property by them was not an object of general public utility.
The bounty of the settlor, observed the learned Judge, must be directed towards the public as a whole or a section of the public: if the object of his bounty is neither the public nor a section of the public, "but merely a conglomeration of men who constitute a mere group and the nexus which ties them is not a nexus which constitutes them a section of the public, the trust is not for advancement of any object of general public utility".
We are unable to agree with that view.
Section 9 of the Bombay Public Trusts Act provides: "For the purposes of this Act, a charitable purpose includes (1) relief of poverty or distress, (2) education, (3) medical relief, and (4) the advancement of any other object of general public utility, but does not include a purpose which relates (a) exclusively to sports, or (b) exclusively to religious teaching or worship." Section 10 of the Act provides, "Notwithstanding any law, custom or usage, a public trust shall not be void, only on the ground that the persons or objects for the benefit of whom or which it, is created are unascertained or unascertainable.
Explanation The expression "public trust" is defined in section 2(13) as meaning an, express or constructive trust for either a public, religious or charitable purpose, or both and includes a temple, a math, a wakf, a dharmada or any other religious or charitable purpose or for both 659 and registered under the .
A trust for either a religious or charitable purpose or for both by the express words of the definition is a public trust.
We are unable to agree with the learned Assistant Judge that Sadhus, religious mendicants and visitors to the samadhi of Nagabawa are not a section of the public.
They have a common bond of veneration for the samadhi.
The beneficiaries of the trust are an uncertain and fluctuating body of persons forming a considerable section of the public and answering a particular description, and the fact that they belong to a religious faith or a sect of persons of a certain religious persuasion does not make any difference in the matter: Mahant Ram Saroop Dasji vs section P. Sahi(1).
The property is entrusted to the Municipality for providing shelter to "sadhus, saints and religious mendicants", the purpose, in our judgment, is religious and charitable within the meaning of section 2(13), of the Act.
The plea that Dagadu Khushal had entrusted the property to the Municipality only for maintaining a Dharamshala for the benefit of persons visiting the samadhi of Guru Nagabawa and the trust was limited only to the building of the Dharamshala has also no force.
The terms of Ext.
14 are clear.
The trust was not limited to the buildings standing on the land, it extended to the entire property.
Two procedural objections which were raised by counsel for the, Municipality remain to be considered.
It was urged that since Sambhusing applied for a declaration that the purpose of the trust was to give shelter to sadhus, saints and religious mendicants during their sojourn in Taloda and to maintain and look after Nagabawa 's samadhi, and for an order that all the lands adjoining the samadhi of Nagabawa i.e. the Dharamshala, the whole building in which there was the Municipal office, may be given into the possession of the Johari Panchas, it was not open to the Assistant Charity Commissioner to give a findings that there existed a public trust for the benefit of persons interested in the samadhi.
It was contended that once it was found that the property was not for the benefit of the Johari Panchas the application should have been dismissed.
We are unable to agree with that contention.
The proceedings were commenced under section 1,9 of the Bombay Public Trusts Act, and it was open to the Assistant Charity Commissioner to determine whether a public trust existed, and if the Assistant Charity Commissioner was satisfied that there existed a public trust, whatever may be the claim made by the applicants.
the Assistant Charity Commissioner was bound to declare the existence of the public trust and register it.
Under section 19 of the Bombay Public Trusts Act an inquiry may be started by the Deputy or Assistant Charity Commissioner either on an application made under section 18 or on an application made by any person (1) [1959] Suppl.
(2) S.C.R. 583 ( 2 ) L/P(N)7SCI 3 660 having interest in a public trust or on his own motion.
The proceedings before the Assistant Charity Commissioner was not a proceeding inter partes, and Sambhusing was not claiming any personal relief.
He was entitled to set in motion an enquiry into the nature of the trust as a person claiming to be interested in the public trust.
If the Assistant Charity Commissioner found that a public trust existed, he could make an appropriate declaration and consequential orders consistent with his findings.
It was finally urged that against the finding of the District Court that there was no public trust, and if there was a public trust the beneficiaries were not the members of the public, the Charity Commissioner could not appeal to the High Court, for, it was said, the Charity Commissioner is constituted by the Act a judicial authority, and he cannot take up in the proceeding a contentious attitude.
We are unable to accept that contention also.
The powers of the Charity Commissioner under the Act are found in section 3.
That Officer is directed to exercise such powers and perform such duties and functions as are conferred by or under the pro visions of the Act, and shall, subject to such general or special orders as the State Government may pass, superintend the administration and carry out the provisions of the Act throughout the State.
If an adverse decision is arrived at by the Court under section 72 and if he is denied the right to appeal to the High, Court, it would be difficult for him, if he is of the view that the property is the property of the public trust and if the District Court rules otherwise, to carry out the provisions of the Act.
The Charity Commissioner was made a party to the appeal, and he was entitled to support his order before the District Court.
A person interested, as the Charity Commissioner is in the due administration of property, cannot be denied a right to appeal against an adverse decision in a proceeding to which he is a party, on the ground that he is pleading for acceptance of the view which he had declared as a quasi judicial authority at an earlier stage of that proceeding.
The appeal fails and is dismissed with costs in favour of the Charity Commissioner.

dataset_name: IN-Abs

summary:
A property was conveyed to the respondent Municipality by a deed "for the purpose of Sarvajanik Kam (public purpose) as it has been utilised uptodate for shelter of Atit, Abhyaqat, Sadhu, Sant, etc.".
It was also recited in the deed that in the property conveyed there was "a Samadhi (grave) of Nagabawa.
" The Municipality entered possession and made certain constructions which were used for its offices and for shops.
Thereafter, the Municipality sued for a decree for delivering possession of a part of the property against a Sadhu who had unlawfully.
occupied it and the suit was decreed.
Later, in survey proceedings members of the Johari Panch claimed that they had entrusted their temple to the Municipality for administering it for the community, but the compound belonged to them and that the Municipality was merely a trustee thereof.
The Secretary of the Municipality admitted that in the property there existed a temple of the Joharis and that the members of that community had the right to visit the temple at fixed times but that they had no other right.
The Survey Officer declared the Municipality to be the owner of the property and not a trustee for the Johari Panch.
Thereupon, an application under section 19 of the Bombay Public Trusts Act was filed for a declaration that the property was settled in favour of the Municipality for the benefit of the Johari Panch and that the property be registered as property of a public trust under the Act.
The Charity Commissioner declared that there was a public trust, that the Municipality was the trustee thereof, and that the property was transferred in the Municipality for the benefit of members of the public interested in the Samadhi of Nagabawa; but he held that there was no such institution known as Johari Panch and that the property had not been used for the benefit of that community.
In appeal, the District Court set aside the order of, the Charity Commissioner.
The Charity Commissioner appealed to the High Court, which reversed the order of the District Court and restored the order of the Charity Commissioner.
In appeal, this Court, Held: The appeal must fail.
(i) The property was entrusted to the Municipality for providing shelter to sadhus, saints and religious mendicants.
the purpose was religious and charitable within the meaning of section 2 (13) of the 653 Bombay Public Trusts Act.
The trust was not limited to the buildings standing on the land; but extended to the entire property.
Sadhus, religious mendicants and visitors to the Samadhi of Nagabawa are a section of the public.
They have a common bond of veneration for the Samadhi.
The beneficiaries of the trust are an uncertain and fluctuating body of persons forming a considerable section of the public and answering a particular description, and the fact that they belong to a religious faith or a sect of persons of a certain religious faith or a sect of persons of a certain religious persuasion does not make any difference in the matter.
[660 A C].
Mahant Ram Saroop Dasji vs section P. Sahi [1959] Suppl.
2 S.C.R. 583 followed.
(ii) After the transfer of the property was accepted by the Municipality for the purpose mentioned in the deed it was not open to the Municipality to divert the use of that property for its own purposes.
There is nothing in Act 6 of 1873 or in the general law which prevents a Municipality from accepting a trust in favour of a section of the general public in respect of property transferred to it.
Nor does the Act authorise a Municipality, after accepting a trust, to utilise it for its own purpose in breach of the trust.
[657 B C; 658 C].
(iii) The contention, that once it was found that the property was not for the benefit of Johari Panches, the application should have been dismissed, had no force.
The proceedings were commenced under section 19 of the Bombay Public Trusts Act, and it was open to the Charity Commissioner to determine whether a public trust existed, and if the Charity Commissioner was satisfied that there existed a public trust, whatever may be the claim made by the applicants, the Charity Commissioner was bound to declare the existence of the public trust and register it.
Under s.19 an enquiry may be started by the Deputy or Assistant Charity Commissioner on tin application made under s.18 or on an application made by any person having interest in a public trust or on his own motion.
[660 G, H].
(iv) The Sadhu who had unlawfully possessed himself of a part of the property in dispute was not sued in a representative capacity on behalf of the beneficiaries of the trust; he was sued as a trespasser.
Therefore, the judgment did not operate as resjudicata, and the Charity Commissioner was not prevented from determining in an appropriate proceeding whether the property was the property of a public trust of a religious or charitable nature.
[658 F].
(v) The argument, that the decision of the Survey Officer, operates by virtue of section 50 A of the Bombay District Municipal Act, 1901 to destroy the rights of the public, is without substance.
By sub section
(2) of section 50A, if the Collector had passed an order, a suit in a civil court shall be dismissed if the suit was brought to set aside the order of the Collector or if the relief claimed was inconsistent with such order In the present case, the property was entered in the Survey record as that of the Municipality.
But the legal ownership of the Municipality was not challenged in the proceedings before the Charity Commissioner.
The proceeding under section 19 of the Bombay Public Trusts Act was for a declaration that the property was the property of a public trust and therefore was not a suit to set aside the order of the Collector.
nor was it a suit in which the relief claimed was inconsistent with the order of the Survey Officer.
[658 G 659 B].
(vi) A person interested as the Charity Commissioner is in the due administration of property, cannot be denied a right to appeal 654 against an adverse decision in a proceeding to which he is a party, on the ground that he is pleading for acceptance of the view which he had declared as a quasi judicial authority at an earlier stage of that proceeding.
[661 E F].