judgement:
Civil Appeal No. 1464 of 1971.
From the Judgment and order dated 18 3 71 of the Kerala High Court in Writ Appeal No. 126 of 1971.
K. R. Sudhakaran and N. Sudhakara and P. K. Pillai for the Appellants.
K. T. Harindranath and K. M. K. Nair for Respondent.
The Judgment of the Court was delivered by BEG, J.
The appellants before us, by certification of the case, had filed a petition to quash revenue recovery proceedings started against them for realisation of the remainder of the amounts due on account of their bids at auction sales of some toddy shops for the period 1st April, 1967, to 31st March, 1969, by the Government of Kerala.
The amounts at which the shops were knocked down were: 1.
Shop No. 1 = 84,000/ 2.
Shop No. 4 = 46,500/ 3.
Shop No. 8 = 56,100/ 4.
Shop No. 11 = 1,50,000/ .
The notified conditions of the auction sales made it incumbent upon the bidder to pay immediately 10% of the amount due and to provide personal security for the rest.
There was no assurance or guarantee given there that prohibition will not be removed in future by the Government in any area in the State or about any other matter of future policy of the Government relating to intoxicants.
According to notified conditions, the successful bidders had to deposit 30% of the total amount payable on demand by the Assistant Commissioner and also to execute agreements before getting the necessary licences.
The petitioners had deposited the necessary amounts on demand.
They were also allowed to start the business of running their toddy shops even before the licences were issued in their favour.
The petitioners ' case is that, at the time of bidding, there was an understanding that the respondent State will not remove prohibition so that they expected adequate profits.
As observed above, there is nothing in the notified conditions to indicate this.
It appears that in April, 1967, the respondent State announced removal of prohibition from 1st May, 1967.
The appellants allege that they suffered heavy losses due to this policy of the State and were unable to make the remainder of the payments which were sought to be recovered under section 28 of the Abkari Act (hereinafter referred to as `the Act ').
It is difficult to see what the removal of prohibition had to do with alleged 782 losses to the appellants.
Abandonment of Prohibition either totally or partially, should, ordinarily, not diminish sales of liquor.
One should expect such a development to increase sales of liquor.
The appellants contend that, as no agreement was executed between them and the Govt.
in the manner prescribed by Article 299 of the Constitution, they are not liable to pay the amounts sought to be recovered.
This is their main contention.
A learned Judge of the Kerala High Court who heard the petition held that the notification in persuance of which the shops in question were auctioned provided that, if the contract could not be executed, the whole amount was to be forfeited and the shop itself was to be resold.
Thus, non execution of the contract due to the unwillingness or inability of a bidder to pay was not a contingency outside the notification for auction the validity of which is not challenged.
The notification did not lay down that, in that case, the payment of the remainder will be remitted.
On the other hand, the condition was that the whole amount due could, in such an event, be "forfeited".
The Kerala High Court held that, despite the absence of a contract executed in accordance with the provisions of Article 299 of the Constitution, the amounts due could be recovered under Section 28 of the Act which reads as follows: "28 Recovery of duties.
All duties, taxes, fines and fees payable to the Government direct under any of the foregoing provisions of this Act or of any licence or permit issued under it, and all amounts due to the Government by any grantee of a privilege or by any farmer under this Act or by any person on account of any contract relating to the Abkari Revenue may be recovered from the person primarily liable to pay the same or from his surety (if any) as if they were arrears of Land Revenue, and, in case of default made by a grantee of a privilege or by a farmer the Commissioner may take grant or farm under management at the risk of the defaulter or may declare the grant or farm forfeited, and re sell it at the risk and loss of the defaulter.
When a grant or farm is under management under this section, the Commissioner may recover any moneys due to the defaulter by any lessee or assignee as if they were arrears of Land Revenue.
" The appellants submit that they had not become "grantee" of any privilege without the execution of contracts complying with the requirements of Article 299 of the Constitution.
The learned Judge of the Kerala High Court relied on Madhavan vs Assistant Excise Commissioner, Palghat, affirmed by a Division Bench in Damodaran vs State of Kerala.
It appears that, although the Division Bench did not specifically consider whether a bidder at an auction of the kind before us was the "grantee" of a privilege within the meaning of Section 26 of the Act, yet, it held that the liability to satisfy the dues arising out of a bid was enforceable under Section 28 of the Act quite 783 apart from any contractual liability.
Reference was also made, in this connection, to the decision of this Court in Union of India vs A. L. Ralia Ram, for contending that the absence of a formal contract is not fatal in all cases so as to make the whole transaction null and void ab initio.
Statutory duties and liabilities may be enforced in accordance with statutory provisions.
Equitable obligations may also arise and be enforced by decrees of Courts quite apart from the requirements of article 299 of the Constitution.
Mulamchand vs State of Madhya Pradesh(2) affords an instance where on a claim for compensation or restitution under Section 70 of the Contract Act, this Court relied upon the principle stated, in Nelson vs Harbolt(3) as follows (at p. 222) : "It is no longer appropriate to draw a distinction between law and equity.
Principles have now to be stated in the light of their combined effect.
Nor is it necessary to convass the niceties of the old forms of action.
Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework.
The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the Court orders restitution if the justice of the case so requires".
In the case before us, we are concerned really with the legality of proceedings under Section 28 quoted above of the Act.
It is evident that these proceedings can be taken in respect of "all amounts due to the Government by any grantee of a privilege or by any farmer under this Act or by any person on account of any contract relating to the Abkari Revenue".
It is clear that dues may also be "recovered from the person primarily liable to pay the same or from his surety (if any)".
It is not a condition precedent to recovery of an amount due and recoverable that it should be due under a formally drawn up and executed contract.
Section 18 of the Act shows that the exclusive or other privilege of selling liquor by retail may be granted on payment of rental in in consideration of the grant.
The appellants made all the initial payments of rent.
We do not think that acquisition of the status of a grantee, for the purposes of Section 18A, need await the actual receipt of a licence.
The conditions of the grant are to be laid down by the Government.
The amount of rental "may be settled by auction, negotiation or by any other method as may be determined by by the Government, from time to time".
The amounts due "may be collected to the exclusion of, or in addition to, the duty or tax leviable under Sections 17 and 18.
Section 18A(2) lays down that "no grantee of any privilege made sub section (1) shall exercise the same until he has received a licence in that behalf from the Commissioner".
It will be seen that this provision contemplates the statutory status of a "grantee" even before 784 he becomes entitled, as of right, to exercise the privileges of a grantee on the receipt of a licence.
What is noticeable is that even before he receives his licence he is described as a "grantee".
The successful bidders, in the case before us, had been permitted by the excise authorities, in recognition of their rights to receive and in anticipation of receipt of licences, to exercise the privileges of grantees.
They were thus treated as grantees in anticipation of execution of contracts and grants of licences.
Grantees under Section 29 of the Act are those who have received the privilege and not necessarily only those who have received the written contracts and licences.
The word "grantee" used there seems to us to carry this wider connotation with it.
In Madhavan 's case (supra) K. K. Mathew, J., repelled the contention that the execution of an agreement in accordance with the provisions of Article 299 of the Constitution was a condition precedent to the creation of a liability to be proceeded against under Section 28 of the Act for recovery of the balance of the rentals due.
He said (at p. 94) : "It was contended on behalf of the petitioners in some of these cases that no agreements were executed by them, and therefore, the Government are not entitled to recover any amount by way of rental.
Reliance was placed upon the decisions of the Supreme Court in H. P. Chowdhry vs State of M.P. (AIR and Mulamchand vs State of M.P. (1969(II) S.C.W.R. 397), for the proposition that unless there is an agreement executed in accordance with the provisions of Article 299 of the Constitution, the petitioners in the case where no agreements have been executed, would not be liable to pay rental.
The argument was that the liability to pay rental arises only out of the agreement, and if there is no agreement, then there is no liability to be enforced.
As I have indicated the liability to pay the rental arises not only by virtue of the agreement but also by the provisions of section 28 of the Act.
The decision of the Supreme Court in H. P. Chowdhry vs State of M.P. would make it clear that if there are provisions in the Act, the liability to pay the rental can be enforced.
I think that even if no agreement has been executed, there was the liability under section 28 of the Act, and that the liability could be enforced under the provisions of the Revenue Recovery Act.
(See Sections 6 and 62 of the T.C.Act)".
The appellants became entitled to get licences from the Government which had to perform its duty to execute written agreements and grant licences as soon as the appellants fulfilled required conditions by paying up the remainder of the amounts due.
The Government had performed its part of the bargain and even allowed the appellants to start selling liquor.
The appellants also became liable and bound to perform their corresponding obligations under the 785 conditions of the auctions imposed in pursuance of statutory provisions.
This reciprocity of obligations, quite apart from its basis in agreement, had thus acquired an operative force resting on statutory sanction and equity.
Consequently, we affirm the view of the Kerala High Court and dismiss this appeal.
Parties will bear their own costs throughout.
V.P.S. Appeal dismissed.

summary/full:
The appellants bid at auction sales of some toddy shops.
The conditions of the sales, notified in pursuance of the statutory provisions, were: (a) It was incumbent upon the bidder to pay immediately 10% of the amount due; (b) The successful bidder had to deposit 30% of the amount payable, on demand by the Assistant Commissioner, and to execute agreements before getting the necessary licences; and (c) If the contract could not be executed, the whole amount was to be forfeited and the shop itself was to be resold.
The appellants deposited the necessary amounts on demand and were allowed to start business even before agreements were executed or licences were issued.
But the appellants failed to pay the balance due to the State.
The amounts were sought to be recovered under section 28, and the proceedings were challenged, but the High Court held against the appellants.
In appeal to this Court, the appellants contended that as no agreement was executed between the appellants and the Government in the manner prescribed by article 299 of the Constitution, the appellants had not become the `grantees ' of any privilege and hence were not liable to pay the amounts sought to be recovered Dismissing the appeal, ^ HELD : The Government had to perform its duty of granting licences as soon as the appellants fulfilled the conditions by paying up the remainder of the amounts due.
In the present case, Government had performed its part by allowing the appellants to start selling liquor even before execution of the agreements and the grant of licences.
The appellants, therefore, became liable and bound to perform their corresponding obligations.
This reciprocity of obligations, quite apart from its basis in agreement, had thus acquired an operative force resting on statutory sanction and equity.
[784G 785B] (1) It is not a condition precedent to recovery of an amount due and recoverable under the Act that it should be due under a formally drawn up and executed contract.
Under the notification, in the event of the non execution of a contract, even if due to the unwillingness or inability of a bidder to pay, the whole amount due could be forfeited.
[782C; 783E F] 2(a) The acquisition of the status of a grantee for the purpose of section 18A, does not depend on the actual receipt of a licence.
Section 18A(2) lays down that no grantee of any privilege under sub section
(I) shall exercise it until the has received a licence.
This provision contemplates the statutory status of a `grantee ' even before the successful bidder becomes entitled, as of right, to exercise the privileges of a grantee on receipt of a licence even before he receives his licence he is described as a grantee.
[783F G, H 784A] 781 (b) The word `grantee ' used in section 28 carries this wider connotation of persons who have been permitted by the excise authorities, in recognition of their rights to receive and in anticipation of the receipt of licences, to exercise the privileges of grantees, and not necessarily only those who have executed the written contracts and received licences.
[784A C] Madhavan vs Assistant Excise Commissioner, Palghat I.L.R. [1969] 2 Kerala 71, approved.


judgement:
Civil Appeal No. 244 of 1976.
Appeal by Special Leave from the Judgment and Order dated 9 10 74 of the Kerala High Court in W. A. No. 142 of 1972.
M. N. Phadke, section K. Mehta, K. R. Nagaraja and P. N. Puri, for the Appellant.
G. L. Sanghi and Girish Chandra, for Respondent No. 1.
D. N. Misra, for Respondent No. 2.
The Judgment of the Court was delivered by UNTWALIA, J.
In this appeal by special leave an important question of law falls for our determination.
It concerns the interpretation of section 12(1) of the Foreign Exchange Regulation Act, 1947, Central Act 7 of 1947 as it stood amended at the relevant time by Act 40 of 1969.
The appellant is a firm, one of the partners or proprietors of which is Shri T. K. Seethy.
It is a dealer in Coir Yarn and exports the said commodity to foreign buyers also.
On March 24, 1971 a shipping bill was filed on behalf of the appellant for the export of 150 bales of Coir Yarn to Trieste a port in Italay.
The consignee 's name in the shipping bill was shown as M/s Ferolektro, Sarajavo, Yugoslavia.
Indisputably the Central Government had published a notification in 907 the official gazette under section 12(1) of the Foreign Exchange Regulation Act prohibiting the export of coir yarn from India to certain places specified in the notification including Italy unless certain conditions were fulfilled.
The exporter was, therefore, required to comply with the requirement of the said provision of law and file a declaration in the prescribed form.
The relevant prescribed from in the Foreign Exchange Regulation Rules, 1952 hereinafter referred to as the Rules framed under section 27 of the Act of 1947 was Form G.R.I.
The Invoice and G. R. I. Form were drawn up by the appellant on rupee terms in accordance with the contract dated 1.3.1971 which it claimed to have had with M/s Ferolektro, Sarajavo, Yugoslavia.
The Customs Authority found that the goods were attempted to be exported to Italy while payment, according to the form, was to be received in rupees.
So the appellant was asked to explain the discrepancy in the declaration.
A request was made on behalf of the appellant to amend the Invoice and G.R.I. showing payment in Sterling.
It was not allowed to do so.
On April 20, 1971 the premises of the appellant firm and the house of its owner were simultaneously searched and certain documents including some letters exchanged between the appellant and some foreign firms of Italy were seized.
It appeared to the Assistant Collector of Customs, Customs House, Cochin that the goods in question were being bought by M/s Tobia Giacomini, Italy while the buyer shown in the shipping document was M/s Ferolektro, Sarajavo, Yugoslavia.
Such a discrepancy in the bill was against the provisions of section 50 of the Customs Act, 1962 Central Act 52 of 1962.
The Assistant Collector further found that in the declaration furnished by the appellant in accordance with section 12(1) of the Foreign Exchange Regulation Act the manner of payment for the goods sought to be exported was contrary to Rule 7 of the Rules.
The misdeclaration or untrue declaration made by the appellant in the shipping bill and G.R.I. Form was prima facie not true in material particulars and violated section 12(1) of the Foreign Exchange Regulation Act.
In view of the 11th section in the Customs Act, the violation attracted the confiscation of the goods under section 113 (d) and imposition of penalty under section 114 of the said Act.
A showcause notice dated May 19, 1971 was issued by the Assistant Collector to the appellant.
The appellant filed a long reply to the show cause notice.
The Additional Collector of Customs by his order dated July 6, 1971 held: "By declaring the buyer 's name as FEROELETRO YUGOSLAVIA and the port of discharge and country of final destination as 'Trieste ' and Italy respectively in the shipping bill and the mode of payment as in rupees in the shipping bill as well as in the G. R. I. form, the exporters have misdeclared the material particulars regarding the prescribed manner of payment and have thus clearly contavened the provisions of Section 12(1) of the F.E.R.A. read with section 11 of the Customs Act.
The goods are, therefore, liable for confiscation under section 113(d) and 113(i) of the Customs Act and the exporters are liable for penalty under section 114 of the Customs Act.
" 908 He accordingly confiscated the goods, giving an option to the appellant to redeem them on payment of Rs. 5,000/ in lieu thereof.
A penalty of Rs. 25,000/ was imposed under section 114 of the Customs Act.
The appellant filed a writ petition in the Kerala High Court to challenge the order of the Additional Collector.
It had exercised its option of getting the goods released on payment of Rs. 5,000/ .
The fine of Rs. 25,000/ was also paid.
A learned single Judge of the High Court took the view that there was no violation of section 12(1) of the Foreign Exchange Regulation Act and quashed the order of the Additional Collector.
The Customs Authority took the matter in appeal before a Bench of the High Court.
The Bench has allowed the appeal and up held the order of the Additional Collector.
Hence this appeal was filed after obtaining special leave of this Court.
Section 23A of the Foreign Exchange Regulation Act provides, inter atia, that the restrictions imposed by or under sub section (1) of section 12 shall be deemed to have been imposed under section 11 of the Customs Act and all the provisions of that Act shall have the effect accordingly.
Section 11 of the Customs Act empowers the Central Government to prohibit either absolutely or subject to such conditions as may be specified in a notification the import or export of goods of any specified description.
Section 113 says: "The following export goods shall be liable to confiscation. . . . . (d) any goods attempted to be exported or brought with in the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;" By virtue of Section 23A of the Foreign Exchange Regulation Act the prohibition imposed under section 12(1) of that Act becomes a prohibition imposed under section 11 of the Customs Act.
And if the goods were attempted to be exported contrary to the said prohibition the goods became liable to confiscation under section 113(d) of the Customs Act.
Consequently the person attempting to export the goods also became liable to pay penalty under section 114.
There has been no difficulty in correct appreciation of the law so far either by the Customs Authority or the High Court.
A good deal of difficulty and confusion however cropped up in the interpretation of section 12(1) of the Foreign Exchange Regulation Act.
Sub section (1) of section 12 as it stood prior to the amendment brought about by Act 40 of 1969 read as follows: "The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereinafter in this section referred to as export) 909 of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless a declaration supported by such evidence as may be prescribed or so specified, is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been, or will within the prescribed period be paid in the prescribed manner." In Union of India & Ors.
vs M/s Raj Bahadur Shree Ram Durga Prasad (P) Ltd. & Ors.(1).
, Hegde, J. speaking for himself and Bachawat, J gave a narrow interpretation to section 12(1) as it stood then.
Sikri, J, as he then was, in his dissenting judgment said: "I have to construe an Act which was enacted in the interest of the national economy.
A deliberate large scale contravention of its provisions would affect the interests of every man, woman and child in the country.
Such an Act, I apprehend, should be construed so as to make it workable; it should, however, receive a fair construction, doing no violence to the language employed by the Legislature.
It was said that if two constructions are possible the one that is in favour of the subject should be accepted.
It is not necessary to pronounce on this proposition for I have come to the conclusion that there is one true construction of section 12(1).
But I should not be taken to be assenting to this proposition in so far as it is applicable to an enactment like the Exchange Act, for no subject has a right to sabotage the national economy.
" Section 12(1) was, thereafter, amended by Act 40 of 1969.
It then read as followins: "The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereinafter in this section referred to as export) of all goods or of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars which, among others, shall include the amount representing (i) the full export value of the goods; or (ii) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, haveing regard to the prevailing market conditions, expects to receive on the sale of the goods in the course of international trade, and affirms in the said declaration that the full export value of the goods (whether ascertainable at the time of 910 export or not) has been, or will within the prescribed period be, paid in the prescribed manner.
" Under the changed law the Exporter was required to furnish a declaration in the prescribed form which must be true in all material particulars including the amount representing the full export value of the goods or the expected export value of the goods.
Apart from the furnishing of the declaration containing the true statements in all material particulars the exporter under the amended section 12(1) of the Foreign Exchange Regulation Act was also required to affirm in the said declaration, i.e. in the document or the paper containing the declaration, that the full export value of the goods will within the prescribed period be paid in the prescribed manner.
The affirmation under the last part of section 12(1) is not required to be in any prescribed form.
Therefore, in the form prescribed for the declaration no form of affirmation has been specified.
Broadly speaking section 12(1) consists of 3 parts (1) issuance of a notification by the Central Government prohibiting the export of certain goods to any place specified in the notification; (2) the prohibition is relaxed and export is permitted when the exporter furnishes a declaration and (3) when he affirms in the said declaration that the payment will be in the prescribed manner.
Until and unless the exporter affirms that the payment would be in the prescribed manner, he cannot be allowed to export the goods.
This is for the purpose of conserving and preserving the foreign exchange so that by a subterfuge no person may be able to harm the national economy by exporting the goods without such affirmation.
In the instant case on the findings of fact recorded by the Additional Collector which were accepted to be correct by the High Court, both by the single Judge and the Division Bench, the stress seems to have been laid on the alleged violation of the requirement of giving true material particulars in the declaration.
And that enabled Mr. M. N. Phadke to strenously attack the decision of the High Court in appeal.
Counsel submitted that whatever the appellant had stated in the declaration was all true and nothing but true.
It may well be, he submitted, that it violated certain provisions of the Customs Act or the Foreign Exchange Regulation Act.
But surely the material particulars furnished by the appellant in its declaration not being untrue in any respect, there was no infraction of section 12(1) of the Foreign Exchange Regulation Act.
The argument as presented had substance and force but did not merit acceptance on close scrutiny.
The declaration of the buyer 's name even if wrong in the shipping bill and invoice did not attract the provisions of section 12(1) of the Foreign Exchange Regulation Act.
In the form prescribed under Rule 3 of the Rules (G.I.R. being one such form) the buyer 's name was not to be inserted.
It was not given in the declaration furnished by the appellant in that form.
But the finding of the Additional Collector is that the destination of the goods was Trieste in Italy andin the declaration furnished in form G.I.R. the appellant had stated that the payment was to be received in India in Indian rupees and this statement was untrue as being against the prescribed manner.
911 It is to be noticed that under section 12(1) as it stood prior to the amendment by Act 40 of 1969 the declaration had to contain a statement that the amount representing the full export value of the goods will be paid in the prescribed manner.
But now this is not to be a part of the declaration but has to be separately affirmed although in the declaration itself.
The learned single Judge noticed in his judgment that section 12(1)(ii) will not apply and the obligation of the exporter was: "(a) to furnish to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed: (b) which declaration must be true in all material particulars and that among others shall include 'the amount representing the full export value of the goods ' and (c) he must affirm in the said declaration that the full export value of the goods will, within the prescribed period, be paid in the prescribed manner." Stating that "There is no case that there is no affirmation in the declaration" the single Judge held that section 12(1) was not violated.
The Division Bench, however, noted the fact that the declaration furnished by the appellant "did not contain an affirmation as required by the last portion of the said sub section".
Yet because of the mode of payment mentioned in the declaration being contrary to Rule 7 of the Rules the Division Bench upheld the view of the Additional Collector that the appellant "had misdeclared the material particulars and attempted to export the goods in question in contravention of the prohibition contained in section 12(1) of the Act.
" On the facts and in the circumstances of this case we are constrained to hold that even after the statement in column 2 of Form G.R. I that the country of destination of goods was Italy the statement in column 5 that the payment was to be received in India in Indian Rupees was not untrue.
The appellant had managed or manouvered to get the payment through the firm of Yugoslavia in Indian Rupees.
The statement therefore, was not untrue although it was against the mode prescribed under Rule 7 of the Rules.
But here comes in the importance of the affirmation in the declaration.
Rule 7 of the Rules says: "The amount representing the full value of goods exported to the countries specified in the Second Schedule shall be paid through an authorised dealer and unless otherwise authorised by the Reserve Bank, shall be paid in the manner specified in the said Schedule." In the Second Schedule Italy occurs in Group A "Convertible Account Countries".
In that case the approved methods of payment are: "(a) Currency of any country in this sub group.
(b) Sterling from an 'External Account ', as defined under the U. K. Exchange Control Regulations.
912 (c) Rupees from the account of a bank in any country in the Convertible Account group.
" Yugoslavia in the Second Schedule finds place in Group B "Bilateral Account countries" where the approved method of payment is "Rupees from the account of a bank in the country of import.
" In the present case the absence of affirmation had its own signficance.
It was difficult, almost impossible, for the appellant to affirm that the full export value of the goods was to be paid in one of the three modes prescribed in the Second Schedule to the Rules for the export of the goods to Italy.
We are, therefore, of the opinion that although the statement in the declaration that the value of the goods mentioned in column 4 at Rs. 63,301.50 was to be received in India in Indian rupees for the export of goods to Italy was not untrue, the affirmation, if made, would have been either false or contrary to the requirement of the law.
If in the affirmation the appellant had stated that for the value of the goods exported to Italy it was to receive the payment in Indian rupees through the Chartered Bank Ltd. Cochin as per the declaration, then the affirmation would have violated section 12(1) as it would not have been an affirmation stating that the export value would be paid in the prescribed manner.
Absence of affirmation in the declaration furnished by the appellant is tant amount to failure on the part of the appellant to comply with the requirement of the law engrafted in section 12(1) of the Foreign Exchange Regulation Act.
That being so, the decision of the Division Bench of the High Court that the appellant had attempted to export goods in violation of the restrictions imposed under section 12(1) of the Foreign Exchange Regulation Act is fit to be upheld, but on a different basis.
In cases of economic offences and specially in relation to the law of Foreign Exchange no leniency in the quantum of punishment is warranted.
But on the facts and in the circumstances of this case we feel persuaded to reduce the amount of penalty imposed upon the appellant from Rs. 25,000/ to Rs. 15,000/ .
The direction as to the payment of Rs. 5,000/ in lieu of confiscation of the goods is upheld.
Since the law engrafted in the amended Section 12(1) of the Foreign Exchange Regulation Act was not very clear either to the Custom Authorities or to the High Court resulting in the recording of the findings against the petitioner on a wrong basis, although not affecting the substance of the view that the appellant had violated Section 12(1) of the Foreign Exchange Regulation Act, we have thought it fit to reduce the quantum of penalty by Rs. 10,000/ Before we part with this case we may just mention that now the Foreign Exchange Regulation Act in force is an Act of 1973 Central Act 46 of 1973.
Section 18(1)(a) is almost the same as Section 12(1) of the Act of 1947.
In the result the appeal is dismissed but subject to the modification in the quantum of penalty imposed under Section 114 of the .
In the circumstances we shall make no order as to costs in this Court.
V.P.S. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The appellant is a dealer and exporter in coir yarn.
On its behalf a shipp ing bill for export of 150 bales of coir yarn to a port in Italy was filed, but the consignee was shown to be a firm of Yugoslavia.
The invoice and the form of declaration prescribed under the Foreign Exchange Regulation Act.
1947, were drawn up by the appellant on rupee terms in accordance with the contract with the Yugoslav firm.
The Collector of Customs, after issuing a show cause notice to the appellant and considering the explanation of the appellant, held that the appellant had misdeclared the material particulars regarding the prescribed manner of payment, and that there was a contravention of section 12(1), Foreign Exchange Regulation Act read with section 11 Customs Act, and ordered the confiscation of the goods under section 113 and imposed a penalty of Rs. 25.000/ under section 114, Customs Act.
The High Court upheld the order.
Dismissing the appeal to this Court, ^ HELD: In the circumstances of the case, the quantum of penalty is reduced to Rs. 15,000/ .[912 F] (1) By virtue of section 23A, Foreign Exchange Regulation Act the prohibition imposed under section 12(1) of the Act becomes a prohibition imposed under section 11, Customs Act.
Section 11, Customs Act, empowers the Central Government to prohibit the export of goods absolutely or conditionally and section 113, Customs Act, provides for confiscation of goods exported contrary to any prohibition imposed, and the person attempting to export is liable to penalty under section 114.
[908 D, F G] (2) Section 12(1), Foreign Exchange Regulation Act, as amended by Act 40 of 1969, consists of 3 parts: (a) Issuance of a notification by the Central Government prohibiting the export of certain goods to any place specified in the notification.
(b) The prohibition is relaxed and export is permitted when the exporter furnishes a declaration in the prescribed form which must be true in all material particulars including the amount representing the full export value of the goods or the expected exported value of the goods.
(c) Apart from furnishing the declaration containing the true statements in all material particulars, the exporter is also required to affirm in the said declaration, that is, in the document or paper containing the declaration, that the full export value of the goods will, within the prescribed period be paid in the prescribed manner.
This affirmation is not required to be in any prescribed form.
Until and unless the exporter so affirms, he cannot, in the interests of conserving the foreign exchange, be allowed to export the goods.
[910 B D] (3) In the present case there was no affirmation that the full export value of the goods has been or will, within the prescribed period, be paid in the prescribed manner, and, the absence of the affirmation is tantamount to failure on the part of the appellant to comply with the requirements of law engrafted in section 12(1), Foreign Exchange Regulation Act.
[912 D] (a) The declaration of the buyer 's name as the Yugoslav firm was found to be wrong, but that did not attract the provisions of section 12(1), because, in the prescribed form, the buyer 's name was not to be inserted.
[910 G H] 906 (b) The High Court was wrong in holding that because the mode of payment mentioned in the declaration is contrary to r. 7 of the Foreign Exchange Rules, 1952.
there was a misdeclaration of material particulars.
The appellant has managed to get the payment in Indian rupees through the Yugoslav firm.
Therefore, even after the statement that the country of destination was Italy, the statement that the payment was to be received in India in Indian rupees was not unture, although it was contrary to the mode prescribed in r. 7.
But the absence of the affirmation is significant.
[911 E G; 912 B] (c) Rule 7 provides that the amount representing the full value of the goods exported to the countries specified in the 2nd schedule shall be paid through an authorised dealer and unless authorised by the Reserve Bank, shall be paid in the manner specified in the schedule.
The approved methods of payment in the case of Italy, which is in Group A of the schedule, are : (i) currency of any country in the sub group; (ii) sterling from an 'External Account ' as defined under the U.K. Exchange Control Regulations; and (iii) Rupees from the accounts of a bank in any country in the Convertible Account group.
[911 G 912 A] (d) The appellant could not have affirmed that the full export value of the goods would be paid in one of the prescribed modes.
If such affirmation was made it would have been false because of the statement in the declaration that the value of the goods was to be received in India in Indian rupees.
If in the affirmation the appellant had stated that for the value of the goods exported to Italy it was to receive payment in Indian rupees, then the affirmation would have violated section 12(1) as it would not have been an affirmation stating that the export value would be paid in the prescribed manner.
Hence, the decision of the High Court that the appellant had attempted to export goods in violation of section 12(1) is correct, though it is upheld on a different basis.
[912 B E] (4) Though it is an economic offence and relates to the law of foreign exchange since the law was not clear either to the Customs authorities or the High Court and has resulted in the recording of finding against the appellant on a wrong basis, although not affecting the substance of the view that the appellant violated section 12(1), the quantum of penalty is reduced.[912 F G]


judgement:
Civil Appeal No. 1191 of 1973.
Appeal by special leave from the Judgment and Order dated 7 11 72 of the High Court of Madras in T.C. No. 197 of 1968.
C. K. Viswanatha Iyer, Mrs. section Gopalakrishnan for the Appellant.
section T. Desai, A. V. Rangam and Miss A. Subhashini for the respondent.
The Judgment of the Court was delivered by RAY, C. J.
This appeal by special leave is from the judgment dated 7 November, 1972 of the High Court of Madras.
The principal question in this appeal is whether the sales of cotton by the appellant to the mills at Tirunelveli and Karur were inter State sales under section 3(a) of the called the Central Act or are second sales under State Sales under section 3(b) of the Central Act.
The appellant has its place of business at Coimbatore.
The Mills are situated within the State of Madras.
The Mills entered into an agreement with the appellant for purchase of cotton.
The appellant in turn placed orders with its sellers at Bombay for purchase of cotton.
The appellant directed its Bombay sellers to despatch the goods to the mills as consignees.
The Bombay seller sent the consignment to the mills but the railway receipts were sent by the Bombay seller to the appellant.
The appellant then endorsed the same in favour of the mills after collection of the substantial portion of the sale price.
The appellant contended that the consignments were sent directly by the Bombay seller to the mills, and, therefore, these were direct inter State sales by the Bombay seller to the mills and that the property in the goods passed to the mills when the goods were loaded at Bombay.
The Sales Tax Authorities found that the Mills were the last purchaser and therefore these were inter State sales between the Appellant and the Mills.
A most significant feature is that the railway receipts were sent by the Bombay seller to the appellant, and the appellant thereafter endorsed the same to the mills.
It is, therefore, apparent that there could not be an unconditional, appropriation of the goods at Bombay towards the contract entered into between the appellant and the mills.
The property in the goods passed only when the mills took delivery of the railway receipts from the appellant.
The Bombay seller dealt with the railway receipts in such a way that it is proved that the intention of the appellant to part with the goods in any event is not until substantial payment is made by the mills.
The Bombay seller had no privity of contract with the Mills.
The 719 Bombay seller sold the goods to the appellant.
The sale by the Bombay seller to the appellant was an inter State sale.
The sale by the appellant to the mills cannot be said to have caused the interState movement of goods.
The mere fact that the goods were consigned by the Bombay seller to the mills in accordance with the direction of the appellant will not make the transactions inter State sales.
The sale by the Bombay seller to the appellant occasioned the movement of goods.
The High Court was correct in holding that the sale by the Bombay seller to the appellant is an inter State sale and the sale by the appellant to the mills is not an inter State sale.
Therefore, the State Sales Tax Authorities had jurisdiction to assess the transaction for sale by the appellant to the mills under section 3(b) of the Central Act.
The appellant raised a second contention that the appellant is entitled to the benefit of Government Order No. 3602 which exempts from sales tax declared goods sold in the course of inter State trade or commerce where tax has been levied or collected in respect of sales or purchase of such declared goods under section 4 of the Madras General Sales Tax Act, 1959 called the Madras Act.
The Government Order No. 3602 was issued in exercise of powers conferred by section 8(5) of the Central Act.
The appellant contended that the mills paid the tax on their purchases of cotton and the same transaction could not be brought to charge in the hands of the appellant as inter State sale.
If the transaction attracts levy of tax under the Central Act it is not taxable under the Madras Act.
If the mills had paid tax under the impression that their purchases are taxable under the Madras Act that will not enable the appellant to claim the benefit of the exemption.
The exemption applies only to cases where the claimant has paid tax himself under section 4 of the Madras Act in respect of local sales preceding the inter State transactions.
The appellant in the present case did not pay tax under section 4 of the Madras Act.
The High Court, therefore, correctly held that the appellant was not entitled to claim exemption under the Government Order.
The third contention of the appellant was that the appellant was entitled to exemption in respect of turnover under section 6(2) of the Central Act.
Section 6(2) of the Central Act lays down that where a sale in the course of inter State trade or commerce of goods of the description referred to in section 8(3) of the Central Act has occasioned the movement of goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent 720 sale to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under the Act.
A dealer claiming exemption for subsequent sale during the movement of goods from one State to another is required by section 6(2) of the Central Act to furnish to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer by whom the goods were purchased containing the particulars.
In the present case, the appellant would be entitled to exemption in production of appropriate form by the Bombay seller and by showing that the buyer is a registered dealer.
The appellant produced the form from Bombay seller but did not prove that his buyer was a registered dealer in cotton.
Therefore, the Tribunal rightly held that the appellant was not entitled to exemption under section 6(2) of the Act.
The appeal is, therefore, dismissed with costs.
S.R. Appeal dismissed.

summary/full:
As per the directions of the appellant and on receipt of the requisite licence under the cotton Transport Act 1923, for transport of cotton, the Bombay seller despatched cotton to the ultimate buyer mills at Madurai and sent the Railway Receipts to the appellant who endorsed the same in favour of the Mills after collection of the substantial portion of the sale price.
The sales Tax authorities treated the transaction as intra sales and assessed the Mills as the last purchaser under the Madras General Sales Tax and assessed the appellant u/s 3(b) of the .
The question is whether in the circumstances the transaction is one of inter state sales falling u/s 3(a) or second sales under state sales u/s 3(b) of the .
The contentions of the appellant in this court were: (1) The sale of cotton by the appellant assessee to the buyer mill fell within the scope of section 3(a) of the Central Act as there was movement of goods from Bombay to Madras as a result of covenant in or incidental to the contract of sale and therefore u/s 9(1) of the Central Sales Tax the jurisdiction lay with Bombay state from where the goods moved from and (ii) Since the sale being in respect of declared goods, is exempt by the terms of notification of Order No. 3602 dated 28 12 63 issued u/s 8(5) of the C.S.T. and (ii) the turnover was exempt u/s 6(2) of C.S.T. Dismissing the appeal the court, ^ HELD: (1) The significant feature of the transaction viz. sending of the Railway Receipts by the Bombay seller to the appellant who thereafter endorsed the same to the mills, shows that (a) there could not be any unconditional appropriation of the goods at Bombay towards the contract entered into between the appellant; (b) It was an inter state sales to the appellant and the sale by the appellant to the mills is an intra state sales in as much as, the mere fact that the goods were consigned by the Bombay seller to the mills in accordance with the direction will not make the transaction inter state sales.
[718G H, 719A B] (ii) The State sales Tax authorities, (respondent) had jurisdiction to assess the transaction for sale by the appellant to the mills u/s 3(b) of the Central Act.
[719C] (iii) The exemption u/s 8(5) applies only to cases where the claimant had paid tax himself u/s 4 of the Madras Act in respect of local sales preceding the inter state transactions.
In the instant case, as the appellant did not pay tax u/s 4 of the Madras Act, he was not entitled to claim exemption under the Government order.
[719 E F] (iv) A dealer claiming exemption for subsequent sale during the movement of goods from one state to another is required by section 6(2) of the Central Act to furnish to the prescribed authority in the prescribed manner a certificate 718 duly filled and signed by the registered dealer by whom the goods were purchased containing the particulars.
In the instant case, the appellant produced the form from the Bombay seller but did not prove that his buyer was a registered dealer in cotton which disentitled him to exemption u/s 6(2) of the Act.
[720 B C]


judgement:
Civil Appeal No. 1601 of 1970.
Appeal from the Judgment and Order dated the 20 2 70 of the Punjab and Haryana High Court in L.P.A. No. 552 of 1968.
V. C. Mahajan and section section Khanduja, for the Appellant.
O. P. Sharma, for the Respondent.
The Judgment of the Court was delivered by JASWANT SINGH, J.
The question that arises for decision in this appeal by certificate granted by the High Court of Punjab and 894 Haryana against its Judgment and order dated February 20, 1970 in L.P.A. No. 552 of 1968 is whether under Rule 5.32(c) of the Punjab Civil Service Rules, Vol.
II, the Government can retire an employee on or after he attains the age of 55 years by giving him three months ' salary and allowances in lieu of three months ' notice.
The facts giving rise to the appeal lie in a short compass and may be stated thus; Before the partition of the country, the appellant joined the Veterinary Department of the Punjab Government as an Assistant Surgeon on December 1, 1933.
In course of time, he was appointed as Director of Animal Husbandry and Warden of Fisheries which post he held from March 16, 1957 to August 14, 1959, when Shri Pritarn Singh Brar was appointed Director in his place.
On Shri Pritam Singh Brar 's attaining the age of superannuation, the appellant was again appointed as Director, Animal Husbandry, on regular basis on August 4, 1965.
On September 2, 1967, the appellant was served with the following order: "The Governor of Punjab is pleased to retire Shri Mohan Singh Malhi, P.V.S.I. Director, Animal Husbandry, Punjab, Chandigarh with effect from the date of communication to him of this order on payment of three months salary and allowances in lieu of notice required by rule 5.32(c) of the Punjab Civil Service Rules, Volume II.
Shri Harbhajan Singh Saini, Technical Expert Poultry is hereby directed to relieve Shri Mohan Singh Malhi.
section section GREWAL Secretary to Government Punjab Animal Husbandry Department Chandigarh, Dated the 2nd Sept. 67 "No. 3840/AH(I) 67/6213 Chandigarh dated the 2nd Sept. 1967 A copy is forwarded to Shri Mohan Singh Malhi, P.V.S.I." Against this order, the appellant made several representations which did not evoke a favourable response.
Eventually, he approached the High Court on March 18, 1968, by means of a petition under Articles 226 and 227 of the Constitution of India for issue of an appropriate writ quashing the aforesaid order dated September 2, 1967, and declaring that he still continued to be in service.
A Single Judge of the High Court allowed the appellant 's petition by judgment and order dated April 22, 1968, and quashed the aforesaid order retiring the appellant from service.
Aggrieved by the judgment and order of the Single Judge, the State of Punjab preferred a Letters Patent Appeal.
The Bench hearing the appeal referred the above mentioned question for decision to a Full Bench of the Court.
On 895 December 18, 1969, the Full Bench by majority answered the question referred to it in the affirmative.
Thereupon the appellant applied for and obtained a certificate of fitness to appeal to this Court.
This is how the appeal is before us.
Appearing in support of the appeal, counsel for the appellant has vehemently contended that the aforesaid majority decision of the Full Bench of the High Court is erroneous as there is no provision in the Punjab Civil Service Rules like the one contained in Rule 5 of the Central Civil Services (Temporary Service) Rules, 1949, authorising the State Government to give three months ' salary in lieu of three months ' notice.
For a proper decision of the question, it is necessary to refer to Rule 5.32(c) of the Punjab Civil Service Rules, Vol.
II which runs as under: "5.32 . . (c) (Vide No. 1243 5FRI 64/1143 dated 4.2.1964) A retiring pension is also granted to a Government servant other than a class IV Government servant; (i) Who is retired by the Appointing Authority on or after he attains the age of 55 years, by giving him not less than 3 months notice, (ii) Who retires on or after attaining the age of 55 years by giving not less than three months notice of his intention to retire to the appointing authority.
Provided that where the notice is given before the age of 55 years is attained, it shall be given effect to from a date not earlier than the date on which the 55 years is attained.
NOTE: Appointing authority retains an absolute right to retire any Government servant except a Class IV servant on or after he has attained the age of 55 years with out assigning any reason.
A corresponding right is also available to such a Government servant to retire on or after he has attained the age of 55 years.
" It will be noticed that the Rule as reproduced above merely provides for a contingency in which a retiring pension is to be granted to a Government servant.
Assuming that the rule by implication requires three months ' notice to be given to a Government servant of the description referred to therein before retiring him from service, we are unable to understand how that requirement can be said to be violated if instead of three months ' notice, payment of three months salary and allowances is made to him.
The object of the notice, as well known, is to give sufficient time to the Government servant whom it is intended to retire from service to find employment elsewhere and to prevent his being suddenly left in lurch without any means of livelihood.
If that be the object of the notice, no 896 prejudice can be said to be caused to the Government servant if in lieu of three months ' notice, he is given three months salary and allowances.
In fact, he is put in a more advantageous position by being paid three months ' salary and allowances instead of notice for that period as he is thereby relieved of the obligation to spend his time in the office attending to his duty and gets all the time to himself which he can utilize in finding an alternative job or settling his affairs.
Thus we are of opinion that if the appointing authority wants to exercise its right to retire a Government servant other than a Class IV Government servant who has attained the age of 55 years, there is nothing to debar it from validly doing so by payment to him of a sum equivalent to the amount of his pay and allowances for the period of the notice.
For the foregoing reasons, we are unable to interfere with the majority view of the Full Bench of the High Court.
In the result, the appeal fails and is dismissed but in the circumstances of the case without any order as to costs.
S.R. Appeal dismissed.

summary/full:
Under Section 5.32(c) (i), a retiring pension is granted to a Government Servant, other than a Class IV Government servant, who is retired by the Appointing Authority on or after he attains the age of 55 years by giving him not less than three months ' notice.
The appellant who was served with an order on September 2, 1967, retiring him from service with effect from the date of communication to him of the order on payment of three months ' salary and allowances in lieu of notice required by rule 5.32(c)(i) of the Punjab Civil Service Rules Vol.
II challenged the order on the ground that the State Government was competent to retire him only with three months ' notice but not with salary and allowances in lieu of the notice under the rules.
The Writ Petition was accepted by a single judge and in Letters Patent Appeal by the State, the Division Bench referred it to the Full Bench.
The Full Bench by majority answered the question referred to it in the affirmative and in favour of the State.
Dismissing the appeal by special leave the Court, ^ HELD: Rule 5.32 merely provides for a contingency in which a retiring pension is to be granted to a Government servant.
Even assuming that the rule by implication requires three months ' notice to be given to a Government servant of the description referred to therein before retiring him from service the requirement of the rule cannot be said to be violated if instead of three months ' notice, payment of three months salary and allowance is made.
The object of the notice being to give sufficient time to the Government servant whom it is intended to retire from service to find employment elsewhere and to prevent him from his being suddenly left in lurch without any means of livelihood, no prejudice can be said to be caused to the Government servant if in lieu of three months ' notice, he is given three months salary and allowances.
In fact he is put in a more advantageous position by being paid three months ' salary and allowances instead of the notice for that period as he is thereby relieved of the obligation to spend his time in the office attending to his duty and gets all the time to himself which he can utilize in finding an alternative job or setting his affairs.
Therefore if the appointing authority wants to exercise its right to retire a government servant who has attained the age of 55 years, there is nothing to debar it from validly doing so by payment to him of a sum equivalent to the amount of his pay and allowances for the period of notice.
[895 F H, 896 A B]


judgement:
Civil Appeal No. 1462 of 1971.
Appeal by special leave from the Judgment and Order dated 16th April 1971 of the Patna High Court in Tax Case No. 76/68.
A. K. Sen, section T. Desai, Somen Bose, D. N. Mukherjee and K. N. Jain, for the appellant.
V. section Desai and B. P. Singh for the Respondent.
The Judgment of the Court was delivered by GOSWAMI, J.
This appeal by special leave is directed against the judgment of the Patna High Court in a reference under section 21B(1) of the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961 (briefly the Act) as amended.
The facts as appearing from the statement of case annexing the various orders of the authorities may briefly be stated: The appellant, M/s. National Transport Company, is a transport undertaking without its transport.
The appellant (hereinafter to be described as the assessee) was the sole transporter by road of the cement manufactured by the Associated Cement Company at Sindri (briefly the company) from Sindri to different stockists at various places in Bihar and West Bengal.
In order to have some sort of uniformity in price at different places the manufacturing company used to fix the transport charges according to a schedule.
The assessee 's contract with the manufacturing company commenced some time on October 12, 1963.
Since the assessee did not have its own fleet of trucks, it used to engage thirty six trucks covered by public carrier permits belonging to various persons at different times for transporting the cement.
The assessee was not registered under section 4 of the Act.
On September 3, 1966, there was a surprise inspection of the office of the assessee and certain books of accounts containing accounts of transport charges realised by the assessee for transporting of cement from the Sindri factory to the stockists in Bihar and West Bengal were seized.
The assessee also produced some books of accounts during the hearing before the Officer.
The assessee maintained his accounts ledger wise in respect of the transport charges realised and realisable from different stockists of Bihar and West Bengal for transport of cement by it from the Sindri factory to their godowns.
There were two ledgers.
One was party wise showing charges realised or realisable from the stockists and other truck wise showing hire charges 899 paid to various trucks.
The assessee also produced a list of trucks showing the names of the truck owners with their respective places of residence.
Out of thirty six trucks, twenty four were registered in Bihar and twelve in West Bengal.
Agreements with the truck owners were also produced by the assessee.
The Bills from the petrol supplying company which were paid by the assessee were also filed showing the total amount and the truck wise amount.
The ledger party wise showed rates charged from the stockists.
The ledger truck wise showed hire charges and also deductions on account of petrol, diesel and other lubricants and also for loss in the way as per agreement.
On the basis of the statement furnished by the assessee as corroborated by the books of accounts maintained by it the Assessing Officer determined the total taxable amount and imposed a tax of Rs. 1,41,618.37 by his order of November 1, 1966.
A penalty of Rs. 5000/ was also imposed under section 7(5) of the Act.
The assessee appealed to the Additional Deputy Commissioner of Commercial Taxes without success.
Thereafter the assessee preferred an application in revision before the Commercial Taxes Tribunal, Bihar, which also met with the same fate.
The Tribunal, however, on the application of the assessee under section 218(1) of the Act referred the following question of law to the High Court: "Whether in the facts and circumstances of the case the Tribunal has rightly held the applicant to be the 'owner ' of the vehicles within the meaning of section 2(d) of the Act and whether the imposition of tax and levy of penalty was legal and justified".
The High Court noted the facts found by the Tribunal as follows: (a) The assessee was the sole transporting company of the cement of the manufacturing company, (b) it had engaged certain trucks for use in his (sic) transport work, (c) it was providing petrol and oil for the running of the trucks in the transport work, although the prices paid by the assessee were later on adjusted in the hiring charges, (d) it was obtaining receipts for delivery of the goods to the stockists, (e) it was maintaining a complete record of the trucks used by it for the transport work, (f) it was keeping a complete record of the charges realisable and realised from the stockists on account of freight payable by them, (g) it was keeping a complete record of the charges actually paid to the real owners of the trucks, and 900 (h) the receipts given by the stockists indicated that they had received from the assessee, certain quantities of cement by a particular vehicle".
From the above eight factors the Tribunal came to the conclusion that the assessee was in charge of the trucks for the time being within the meaning of section 2(d) of the Act.
The High Court agreed with the Tribunal in the following words: "In any case, even if the conclusion that the assessee was in charge of the trucks, for the time being, be a conclusion in law, I do not think that any error in law has been committed by the Tribunal, in arriving at its conclusion against the contentions raised on behalf of the assessee.
Relevant facts have been found and a relevant finding has been given on them, before saddling the assessee with liability".
The High Court thereupon upheld the Tribunal 's decision against the assessee.
The only question that is canvassed by Mr. A. K. Sen on behalf of the appellant is that, on the various facts found by the Tribunal, it has erred in law in holding that the assessee is an 'owner ' within the meaning of section 2(d) of the Act.
We may, therefore, immediately turn to the definition of owner as given under section 2(d) 2(d) " 'owner ' means the owner of a public service motor vehicle in respect of which a permit has been granted by a Regional or State Transport Authority under the provisions of the (IV of 1939) and includes the holder of a permit under the said Act in respect of a public service motor vehicle or any person for the time being in charge of such vehicle or responsible for the management of the place of business of such owner".
It is clear that the above definition is an inclusive definition.
Owner means not only the owner of the specified type of vehicle but also includes the permit holder in respect of such a vehicle as also any person for the time being in charge of such vehicle or any person responsible for the management of the place of business of such owner.
The definition has fairly widened the meaning of "owner".
We are only concerned in this appeal with one category included in the definition, namely, that an owner is a person for the time being in charge of a public service motor vehicle.
There is no dispute that the trucks in question are public service motor vehicles.
We are only required to consider whether the assessee is a 'person ' "for the time being in charge of such vehicle".
As the preamble shows the Act is to provide for the levy of tax on passengers and goods carried by public service motor vehicles.
The taxing event is, thus, the carriage of goods and passengers by public service motor vehicles.
By section 2(a) 'business ' means the business of the owner for the purpose of this Act.
901 Section 3 in the charging section and may be read: 3(1) "On and from the date on which this Act is deemed to have come into force under sub section (3) of section 1, there shall be levied and paid to the State Government a tax on all passengers and goods carried by a public service motor vehicle; such tax shall be levied and paid at the rate of twelve and a half per centum of the fares and freights payable to the owner of such vehicle; * * * * (2) Every owner shall, in the manner prescribed in section 9, pay to the State Government, the amount of tax due under this section.
(3) Every passenger carried by a public service motor vehicle and every person whose goods are carried by such vehicle shall be liable to pay to the owner the amount of tax payable under this section and every owner shall recover such tax from such passenger or person, as the case may be." * * * * Under section 4(1) every owner liable to pay tax shall apply for his registration within such period and in such manner as may be prescribed.
Under sub section (2) of section 4, if the application is in order, the prescribed authority shall grant a certificate of registration in the prescribed form.
Under section 6 every owner shall furnish to the prescribed authority such returns, within such period, as may be prescribed.
There is a provision under this section for imposition of penalty on failure to submit a return without any reasonable cause.
Section 18 is the penal section for various offences under the Act including failure to apply for registration or to submit return or for contravention of any other provision of the Act of the Rules and the offender is punishable with fine which may extend to Rs. 1000/ , and when the offence is a continuing one, with a daily fine not exceeding fifty rupees during the period of the continuance of the offence.
By section 3(h) of the Act, a 'public service motor vehicle ' means any motor vehicle used or adopted to be used for the carriage of passengers and goods for hire or reward and includes a motor cab, a stage carriage, a contract carriage or a public carrier.
For the purpose of tax under the Act not every public service motor vehicle but only such a vehicle carrying goods and passengers is exigible to tax for the carriage of those goods and passengers under the Act.
The tax again is a percentage of the fares or freights realised.
The fares and freights have to be realised as a fact.
Such a vehicle carrying goods and passengers driven by employees of the owner of the 902 vehicle would ordinarily be in charge of that owner or of the permit holder wherever it may ply.
The physical presence of the owner or the proprietor or of the permit holder in the running vehicle is not essential.
Even if the driver or the conductor realises the freight it is done on behalf of the owner of the vehicle or of the permit holder and the former is accountable to the latter.
Suppose the conductor misappropriates the collection en route, that will not absolve the permit holder from liability to pay the tax actually realised for the carriage of the goods or the passengers.
In view of the terms of the agreement, on which great reliance has been placed by Mr Sen, it can be safely assumed that the appellant took full responsibility for the carriage of the goods from the Sindri factory to various destinations.
This is manifest even in absence of production by the appellant of agreements, if any, between it and the company or the stockists.
Cement bags will not be loaded on any and every vehicle that reports at the factory but only on those vehicles whose registration numbers must have been communicated to the company or which were taken there by the appellant 's representative who has to be present at the time of loading the trucks with cement as will appear from clause (1) of the agreement.
Clause (1) reads "Cement will be loaded into your lorry at the Sindri Works through us".
The Sindri factory, therefore, entrusted the carriage of their cement bags to the appellant for delivery to various stockists who again in turn, at destinations, gave buyer 's receipts as per clause (3) of the agreement.
Clause (3) States: "You will obtain proper receipts for such deliveries from the consignees on the challans handed over to you and bring back all the documents including the challan duly signed by the consignees leaving one copy of the challan with the consignees".
On delivery to the appellant of the buyer 's receipt by the truck owner or his representative.
"the bills of hire charges" of the truck owner are paid with three weeks thereafter at the rates "as per our schedule" agreed between the appellant and the truck owners".
Clause (12) of the agreement says: "Your bills of hire charges as per our schedule will be prepared every fortnight and will be paid within 3 weeks thereafter." The truck owners, in this case, received as per agreement, only "hire charges" and there is nothing to show nor is there any averment by the appellant that those charges included taxes under the Act although freight had been admittedly realised by the appellant from the stockists.
In the above background of facts and circumstances, there is no escape from the conclusion that the appellant was in charge of the trucks for the purpose of the 'business ' of the appellant during the entire course of transportation of the cement bags from the Sindri factory to the various stockists and as such comes within the third clause of the definition under section 3(d) of the Act.
903 The fact that under the terms of the agreement some incidental arrangement involving contingent financial implications in respect of carriage of the goods had been entered upon does not entitle the appellant to be relieved of the "charge" of the loaded truck for the purpose of tax under the Act for the carriage of the goods.
The matter would have been different if the truck owners had been given the tax collections in addition to the hire charges, but absence of any provision for tax payment by the truck owners in the agreement militates against the contention that in this case the truck owners are liable for the payment of tax under the Act for the carriage of the cement bags.
The owner of the truck under a public carrier permit or a public carrier permit holder is undoubtedly an 'owner ' under section 2(d) of the Act.
But in a given case, the person who is for the time being in charge of the loaded truck and who or on whose behalf some one received the freight or fare is also an 'owner ' within the third clause of the definition under section 2(d) of the Act.
The significant words "for the time being in charge of such vehicle" have to be comprehended in the context of the provisions of the taxing statute and these words have nexus with the actual realisation and appropriation of the freight for the goods carried by the vehicle.
The meaning given to the words "in charge of vehicle" in connection with traffic cases in criminal prosecution, as has been referred to by Mr. Sen citing two English cases, is of no avail to the appellant in this case.
Mr. Sen forcefully submits that the present case is squarely covered by a decision of this Court in Jagir Singh & Ors. etc.
vs State of Bihar and Anr.(1) This was a case where the same Act with some identical Acts from other States came up for consideration.
It is submitted by Mr. Sen that the truck owners lost in that decision and in this appeal also, therefore, they cannot escape from their legal liability by shifting it to the appellant.
We must bear in mind that those applications were under article 32 of the Constitution while the present matter comes to us out of a reference in the fifth tier of litigation after the matter had been gone into in great detail taking note of various facets of the rival pleas by the respective authorities and lastly by the High Court.
In Jagir Singh 's case (supra) this Court was concerned merely with Booking Agents and Forwarding Agents who were sought to be made liable under the Act at the instance of the permit holders of the public service vehicles who did not own their liability for payment of tax under the Act.
This Court observed in that case as follows: "If the permit holder lets out the vehicle to any person on hire it is a matter of internal arrangement between the owner who is the permit holder and the person who is allowed by the permit holder to hire the vehicle to collect tax in order to enable the owner to discharge the liability.
If the owner does not make adequate provision in that behalf the owner cannot escape liability by pleading that the hirer of the vehicle is liable to pay tax and the owner is not liable".
904 From the terms of the agreement in the present case, it is clear that the liability to pay taxes was entirely upon the appellant as the owners of the trucks were only entitled to "hire charges".
Legal liability for payment of tax under the Act is well known to the appellant carrying on transport business.
The appellant has taken charge of the vehicles for the purpose of the collection of tax for the carriage of the goods.
The appellant has actually collected the freight from the stockists on delivery of cement bags.
The appellant has only paid to the truck owners "the hire charges" as per its own schedule of rates without any mention of tax.
These facts clearly distinguish the present case from what apears to have been pleaded in the writ application in Jagir Singh 's case (supra) and he decision is of no aid to the appellant.
Being "in charge" of the vehicle in the context of the provisions of the Act does not relate to mere physical charge or control in the process of movement of the vehicle from one place to another but to charge or control for fulfilment of the legal obligation under the Act for payment of taxes for the carriage of goods or passengers.
Whether a certain person is in charge of the vehicle for the time being depends always on the particular facts of each case and the answer cannot be put in the straitjacket of a formula.
On the facts of the present case we are clearly of opinion that the appellant comes within the meaning of the third clause of the definition under section 2(d) of the Act.
We should observe that once the tax is realised for a particular transaction from one category of owner as defined, no further tax can be collected for the same carriage from any other person even though that person also may come within the definition of "owner" under the Act.
The Tribunal was, therefore, justified in holding the appellant as "owner" for the purpose of the Act.
The High Court was right in not interfering with the conclusion of the Tribunal and in answering the question against the assessee.
In the result the appeal is dismissed but we make no order as to costs.
V.P.S. Appeal dismissed.

summary/full:
Under section 3(1) and (2) of the Bihar Taxation on Passengers and Goods (Carried by Public Services Motor Vehicles) Act, 1961, every owner shall pay to the State Government a tax on all passengers and goods carried by a public motor vehicle.
Under section 2(d), 'owner ' means not only the owner of the specified type of vehicle but also includes, inter alia, "any person for the time being in charge of such vehicle".
Under section 4(1) every owner liable to pay tax shall apply for registration, and under section 6 every owner shall furnish the prescribed return to the prescribed authority.
Section 18 provides for penalties for failure to apply for registration or to submit the return.
The assessee was the sole transporting company of the cement of a manufacturing company.
Since it did not have its own fleet of trucks, it used to engage trucks for use in its transport work.
It was providing petrol and oil for the running of the trucks in the transport work although the prices paid by the assessee were later on adjusted in the hiring charges.
The assessee was obtaining the receipts of delivery of the goods to the various stockists indicating the quantities of cement received through a particular vehicle.
On delivery to the appellant of the buyers ' receipt by the truck owner or his representative, the bills of hire charges of the truck owner were paid by the appellant as per the agreement between the appellant and the truck owner.
The assessee was maintaining a complete record of the trucks used by it for the transport work, of the charges realisable and realised from me stockists on account of freight payable by them, and of the charges actually paid to the truck owners.
The assessee was not registered under section 4.
After a surprise check, the total taxable amount of the assessee was determined and the tax and a penalty were imposed on the assessee.
The assessee 's appeal, revision to the tribunal, and reference to the High Court, were all decided against the assessee.
Dismissing the appeal to this Court, ^ HELD: The appellant was in charge of the trucks for the purpose of its business during the entire course of transportation of the cement from the factory to the various stockists and, as such, came within the definition of owner under section 2(d).
[904 D E] (1) Whether a certain person is in charge of the vehicle for the time being depends on the particular facts of each case.
Being in charge ' of the vehicle, in the context of the provisions of the Act, does not relate to mere physical charge or control in the process of movement of the vehicle from one place to another but 'to charge or control ' for fulfilment of the legal obligation under the Act for payment of taxes for the carriage of goods or passengers.
The words "for the time being in charge of such vehicle" have to be comprehended in the context of the provisions of the taxing statute and these words have nexus with the actual realisation and appropriation of the freight for the goods carried by the vehicle.
In a given case, the person, who is for the time being in charge of the loaded truck and who or on whose behalf some one like a driver or conductor received the freight or fare.
is also a owner within the meaning of the definition in section 2(d).[903 C D; 904 C D] (2) On the facts of the present case the appellant took full responsibility for the carriage of the goods from the factory to various destinations.
The freight had been realised by the appellant from the stockists and the truck 898 owner received only 'hire charges. ' There is nothing to show nor is there any averment by the appellant that those charges included the taxes under the Act.
The matter might have been different if the truck owners had been given the tax collections in addition to the hire charges.
Further the absence of any provision for tax payment by the truck owners in the agreement militates against the contention that it is only the truck owners that are liable.
[902 B C, G 903 B] (3) The case of Jagir Singh vs State of Bihar ; was an application under article 32 of the Constitution and was concerned with booking agents and forwarding agents who were sought to be made liable under the Act at the instance the truck owners but the truck owners were held to be liable.
Unlike that case, the liability to pay taxes was entirely upon the appellants in the present case as the truck owners were entitled only to hire charges.
[903 F G; 904 A]