C.S.P Singh, J.:— This case has come up before us on a reference made by the learned single Judge of this Court. The facts leading to this reference may be shortly stated.

2. In the assessment year in question the account books of the assessee, who dealt in loud-speakers, amplifiers and parts was rejected and the turnover estimated. Two reasons were given by the assessing authority for rejecting the accounts, one was that there was a difference in the book version and the turnover shown in the return, and the second was that the assessee had not maintained a manufacturing register. When the matter came up in revision at the instance of the assessee, the explanation given by the assessee for the difference in the turnover as shown in the accounts and that given in the return was accepted, but the rejection was upheld on account of the assessee not having maintained a manufacturing register as required by section 12(2) of the Act.

3. The effect of not complying with the provisions of section 12(2) of the U.P Sales Tax Act was considered by one of us in the case of Haleem Brothers, Allahabad v. Commissioner of Sales Tax 1979 U.P.T.C 761., and it was held that the provisions of section 12(2) were mandatory, and if the assessee's account books were not maintained as required by section 12(2), the assessing authority could refuse to rely on them. The learned single Judge desired the matter to be considered by a larger Bench, as he appears to disagree with the reasonings of Haleem Brothers' case. The reasons which weighed with the learned single Judge for making the reference were these:

The basic purpose of section 12 was the verifiability of sales and purchases, and so long as sales and purchases made by a dealer were vouched, the account books could not be rejected on the consideration that a manufacturing register as required by section 12(2) was not maintained. He was also impressed by the fact that while section 12-A incorporated certain presumptions, in cases of default on the part of an assessee, no presumption arising from a breach of section 12(2) was incorporated in that section, even though both sections 12-A and 12(2) were introduced in the Act by the same amending Act.

4. On this view of the matter he has referred the following three questions for our opinion:

“(1) Whether section 12(2) of the U.P Sales Tax Act is mandatory or directory?

(2) Whether account books can be rejected merely for breach of this subsection?

(3) Does a presumption arise that account books are not maintained in the ordinary course of business and sale and purchase are not verifiable without examining it merely because stock register or register of product obtained at every stage of production is not maintained?”

5. Before addressing ourselves to the questions referred, it will be purposeful to extract section 12 as it stood before the amendment effected by the U.P Sales Tax (Amendment) Act, 1973, which introduced section 12(2) and section 12(3) in section 12.

6. Section 12 of the Act before the amendment read as under:

“12. Accounts to be maintained by dealers.—Every dealer including a dealer exempted from tax on payment of fee under any provision of the Act, shall keep and maintain a true and correct account showing the value of the goods sold and bought by him, and in case the accounts maintained in the ordinary course, do not show the same in an intelligible form, he shall maintain true and correct account in such form as may be prescribed in this behalf:

Provided that this section shall not apply to such dealers as are not liable to that taxation under this Act.”

7. It will be noticed that section 12 as it then stood required a dealer to maintain a correct account, in an intelligible form, showing the value of goods sold and bought by him. In case the accounts maintained by the dealer were not in an intelligible form, the dealer was required to maintain accounts in such form as may be prescribed. The word “prescribed” used in the section means prescribed by the Rules. Rule 72 provided for such a contingency. This rule before its amendment on 4th March, 1974, by the U.P Sales Tax (First Amendment) Rules, 1974, published in the Uttar Pradesh Gazette, Extraordinary, dated 4th March, 1974, read as under:

“Rule 72. Accounts how to be maintained.—(1) Every dealer liable to pay tax under the Act, and every person licensed under section 3-E, shall maintain a true and correct account of all his purchases, sales and stock showing quantity and value for verification of the accuracy of his turnover.

(2) A manufacturer liable to pay tax under the Act shall maintain stock books in respect of raw materials as well as products at the various points of production.”

8. Thus, rule 72(2) required an assessee, who was a manufacturer, to maintain stock books in respect of raw materials as well as products at the various points of production. Rule 72(2) was pressed by the department on innumerable occasions for rejecting account books of an assessee, who was a manufacturer, and who had not maintained stock books in respect of raw material as well as products at the various points of production. These attempts failed, for this Court in Devi Charan Sri Mohan Dass v. Commissioner of Sales Tax, and in Commissioner of Sales Tax v. Khera Shoe Co., Agra [1975] 36 S.T.C 220, and a large number of other cases, held that if account books have been maintained by an assessee in the ordinary course of business, and entries made therein were verifiable, and reliable, the accounts could not be rejected solely on the ground that rule 72(2) had not been complied with. It was held that rule 72 only prescribes what information should be available in the account books. One other reason which weighed with the Judges who decided these cases was that the consequences of a breach of rule 72 were not set out in the Rules.

9. Section 12 was amended by the U.P Sales Tax (Amendment) Act, 1973, which came into effect from 1st March, 1973. Section 12 as it stood was numbered as section 12(1), and two sub-sections, viz., sub-section (2) and sub-section (3) were added. In the present case we are not concerned with sub-section (3). So, we will extract only sub-section (2):

“12. (2) A manufacturer liable to pay tax under this Act shall, in addition to the accounts referred to in sub-section (1), maintain stock books in respect of raw materials as well as the products obtained at every stage of production.”

10. We need not reproduce section 12(1), for section 12, as it then stood was only renumbered as sub-section (1), and no change was effected in it.

11. It may be noticed that while section 12(2) is materially similar to rule 72(2), but there is a difference. The difference is that while in section 12(2) the words “in addition to the accounts referred to in sub-section (1)” meaning thereby section 12, were not contained in rule 72(2); they are now incorporated in section 12(2). Thus, the statute now requires a dealer to maintain a correct account showing the value of goods sold and bought by him, and also to maintain stock books in respect of raw materials as well as products obtained at every stage of production. So, as a result of the amendment, in order that the account books should conform to the requirements of section 12, the requirements of both section 12(1) and section 12(2) have to be complied with.

12. It will be convenient to consider the first two questions together as discussion of the points involved in these two questions overlaps.

13. Maxwell on the Interpretation of Statutes (Twelfth Edition, on page 314) states:

“The first such question is: when a statute requires that something shall be done, or done in a particular manner or form, without expressly declaring what shall be the consequence of non-compliance, is the requirement to be regarded as imperative (or mandatory) or merely as directory (or permissive)? In some cases, the conditions or forms prescribed by the statute have been regarded as essential to the act or thing regulated by it, and their omission has been held fatal to its validity. In others, such prescriptions have been considered as merely directory, the neglect of them involving nothing more than liability to a penalty, if any were imposed, for breach of the enactment.”

14. This passage illustrates the fact that no hard and fast rule can be laid down for holding in what circumstances a provision of the statute is to be treated as imperative or directory. In Montreal Street Rly. Co. v. Normandin it was similarly stated that it was impossible to lay down any general rule for determining whether a provision is imperative or directory. The general rule for adjudging as to whether a statute is imperative or directory was broadly stated in the case of Liverpool Borough Bank v. Turner, where Lord Campbell, L.C, said: “No universal rule can be laid down for the construction of statutes, as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobdience. It is the duty of Courts of Justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.”

15. Lord Penzance in Howard v. Bodington observed:

“I believe, as far as any rule is concerned, you cannot safely go further than that in each case you must look to the subject-matter; consider the importance of the provision that has been disregarded, and the relation of that provision to the general object intended to be secured by the Act; and upon a review of the case in that aspect decide whether the matter is what is called imperative or only directory.”

16. The Supreme Court has approved of this approach. It has dealt with the question in a number of cases, but we think that it will be sufficient for the purposes of this case to refer to the decision in the case of State of U.P v. Bobu Ram Ufiadhya On page 764 of the Reports their Lordships referred to the case of Hari Vishnu Kamath v. Ahmad Ishaque A.I.R 1955 S.C 233., wherein it was held that the use of the word “shall” in a statute was not conclusive and then quoted the following passage:

“They (the rules) are well-known, and there is no need to repeat them. But they are all of them only aides for ascertaining the true intention of the legislature which is the determining factor, and that must ultimately depend on the context.”

17. The following quotation from Crawford “On the Construction of Statutes”, at page 516, is also helpful in this connection:

“The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be astertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other.”

Their Lordships then formulated the relevant rules of interpretation in such cases in paragraph 29, at page 765. It was observed that “when a statute uses the word ‘shall’, prima facie, it is mandatory, but the court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the legislature the court may consider, inter alia, the nature and the design of the statute, and the consequences which would follow from construing it one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered.”

18. Now let us adjudge the provisions of section 12(2) by reference to these tests. Section 12(2) uses the word “shall” which indicates that it is mandatory, but that by itself is not conclusive. Breach of section 12(2) makes an assessee liable to penalty under section 15-A(1)(r). But that too, remembering Maxwell, would not tilt the balance.

19. Let us then examine the intention of the legislature behind enacting section 12(2), and the impact of the other provisions of the Act in the event of interpreting section 12(2) one way or the other. While considering this we must also address ourselves to the question as to which interpretation will further the object of the legislature.

20. The Sales Tax Act is a taxing statute, and its purpose is to charge tax on sales and purchases. In order to ensure that an assessee submits a correct return of turnover, section 12 has been enacted. This provision relates to the maintenance of accounts by dealers. We have already quoted section 12(2) earlier. Section 12(1) makes it incumbent on a dealer to maintain a true and correct account showing the value of the goods sold and bought by him. Now, so far as section 12(1) is concerned the very object of the Act would be defeated in case a dealer did not maintain a true and correct account of his purchases and sales, as in that event the necessary material on the basis of which an assessment can be made would be put out of the purview of the assessing authority. Maintenance of a true and correct account of purchase and sale is vital for assessment under the Act. Thus, apart from the consideration that the word “shall” is used qua the maintenance of true and correct accounts, and the fact that default in this respect is punishable under section 15-A(1)(r), inasmuch as the very purpose of the Act, which is to bring to tax the correct turnover of an assessee would to a certain extent become frustrated, the provisions of section 12(1) have to be held to be mandatory. We may point out that the absence of a presumption under section 12-A will not affect this interpretation, considering the importance of section 12(1), which appears to be a pivotal provision of the statute. Any other view would defeat the object of the legislation which undoubtedly is to bring to tax the correct turnover of an assessee. With respect, we are unable to subscribe to the view of the learned single Judge that while interpreting section 12, considerations of section 12-A should be taken into account for determining the character of this provision. The reasons are these. Section 12-A requires that any fact which is in the special knowledge of an assessee has to be proved by him, and in case it is not so proved the assessing authority will presume the absence of such circumstance. It then refers to sections 3-A, 3-D, 4, 4-A, 4-B and 4-D, and states that the burden of proving the existence of circumstance bringing an assessee's case within any of the exceptions or reliefs mentioned in those provisions, will be upon the assessee and in case he fails to do so, the assessing authority can presume the absence of such circumstances. It is settled law that where an assessee claims an exemption or relies on an exception, the burden of proof of all facts which are necessary to entitle him to the exemption or exception or any special relief is upon the assessee, and if he fails to do so, he will not be entitled to those privileges. Section 12-A only embodies the general principle of evidence, that a fact which is in the special knowledge of a particular person has to be proved by him, and the normal rule regarding exemptions, exceptions and special reliefs, and does not impinge on the interpretation of any other provision of this statute.

21. Now, coming to section 12(2), sub-section (2) requires that in addition to the accounts maintained under section 12(1), an assessee, who is a manufacturer should also maintain stock books of raw materials as well as products obtained at every stage of production. Like section 12(1) the language is imperative, and non-maintenance of the stock register is punishable under section 15-A(1)(r). What is the object with which the legislature enacted this provision? Is it not purposeless to have such a provision in case the other accounts of the assessee show the true value of goods sold and bought by the assessee? To us it appears that the purpose of section 12(2) is to provide corroborative evidence of the accounts maintained under section 12(1). Now, undoubtedly, it can be said that the accounts maintained under section 12(1) can be corroborated by other methods, viz., by having appropriate vouchers for the purchase of the raw materials and cash memos for sale of finished products. That such corroborative information should be available with the assessee, in the absence of such material, account books can be rejected, does not admit of doubt. In India Electricals v. Commissioner of Sales Tax, U.P, one of us held that simply because section 12, as it then stood, did not require an assessee to maintain the details of stock separately, it did not mean that the assessee should not maintain such details, because, material should be there to enable the assessing authority to find out the full details of the goods bought and sold, and for that purpose it was necessary that such details should be maintained in a separate stock register, or in the ledger itself and, at the end of the year, there should be final stock checking and the details of the same should be entered in the books. In Durga Prasad Babu Lal v. Commissioner of Sales Tax, U.P, apart from the other defects that were found in the assessee's accounts, one was that the purchases were not vouched and stock checkings were not done. It was held that the accounts could be rejected. In 1971 Law Diary 4, the assessee had not maintained proper manufacturing accounts. The stock register maintained by the assessee did not show the issue of raw material and receipt of finished goods itemwise, from day-to-day, and as such no proper checking and verification was possible. Apart from this, the sales disclosed by the assessee were much lower than its total purchases, and further the assessee's claim regarding sale of goods to another branch had not been proved. It was held that these circumstances were sufficient for rejection of accounts. In Agrawal Ornaments House, Varanasi v. Commissioner of Sales Tax, U.P, Lucknow, it was found that a large number of purchases were not vouched, with the result that the correctness of the entries relating to purchases could not be corroborated. It was held that the accounts could be rejected on this consideration. It can undoubtedly be urged that in all these cases there were multiple defects, which led to the rejection of accounts. But, we have referred to these cases for another purpose to show that although section 12(1) does not specifically require corroborative evidence to be kept by an assessee in the form of purchase vouchers, cash memos, stock registers, the court has treated the absence of such corroborative evidence as relevant for rejection of accounts.

22. We may also refer to a decision of the Supreme Court under the Indian Income-tax Act of 1922, the case being Chhabildas Tribhuvandas Shah v. Commissioner of Income-tax, West Bengal. In that case the Income-tax Officer had applied the proviso to section 13 of the Act and held that the true profits could not be deducted from the accounts because (1) no stock register was maintained while it was easy to maintain it as the assessee was a wholesale dealer; (2) that he had an import licence of rupees eight lacs, which would enable him to make a handsome profit. The Supreme Court upheld the rejection of accounts on these considerations. Now, the Indian Income-tax Act, 1922, did not specifically require that stock register should be maintained by an assessee, but yet on account of lack of corroborative evidence the Income-tax Officer rejected the accounts, which view was upheld by the Supreme Court.

23. Now, in the present case, the statute requires an assessee-manufacturer to maintain stock books in addition to the accounts referred to under sub-section (1). It is clear that apart from other corroborative evidence, which the assessee may have in his possession by way of purchase vouchers, cash memos, etc., he is required by the statute to maintain stock books in respect of raw materials as well as products obtained at every stage of production. Although, the purpose of this provision is corroborative, inasmuch as the legislature intended that corroboration of accounts maintained under section 12(1) should be available by the mode required by section 12(2), and the provision is couched in imperative language, and lapse thereof is made illegal, we are unable to find any indication in the Act to treat it as directory.

24. The question then arises as to whether account books can be rejected merely for breach of section 12(2). It has been urged that in case the accounts maintained under section 12(1) shows a true and correct account of value of goods sold and purchased by a dealer, the mere fact that a stock book in respect of raw materials as well as finished products are not maintained would not be sufficient for rejection of accounts. There is a fallacy in this argument. We have seen that the intention of the legislature in introducing section 12(2) was that the dealer should maintain stock books in respect of raw material and finished material in order that the accounts maintained under section 12(1) should be corroborated. Now, before a finding can be recorded by the assessing authority that the assessee had maintained a true account of the value of goods sold and bought by a dealer, he must be satisfied that apart from the entries in his accounts, there is corroborative evidence by way of vouchers, cash memos, stock register, etc., so that no doubt is left in his mind regarding their correctness. If essential corroborative evidence is missing, it is not possible for an assessing authority to hold that the accounts maintained under section 12(1) are true and correct. So, in order to determine whether the accounts under section 12(1) are true and correct, the assessing authority has not only to look at the cash books, ledgers, etc., but also to see the corroborative evidence before coming to the conclusion that the accounts are true and correct. Therefore, the necessity of meeting the requirements of section 12(2) have to be met before the assessing authority can hold that the accounts maintained give a correct picture of the value of goods bought and sold by an assessee. If that is deficient, a conclusion in favour of assessee under section 12(1) cannot be reached. There is antithesis between section 12(1) and section 12(2), for requirements of section 12(2) have to be complied with before a finding that the assessee has maintained a true and correct account of the value of goods sold and bought by him can be recorded (sic). We feel that the only way to give effect to the legislative intent, which was to provide a mandatory mode of corroboration of his accounts maintained under section 12(1) is to hold that section 12(2) is mandatory. Any other view would result in frustrating the object of the legislature which, by section 12(2), lays down a mandatory mode of corroboration of accounts maintained under section 12(1).

25. We accordingly hold that section 12(2) of the U.P Sales Tax Act is mandatory and that account books can be rejected on account of a breach of that sub-section.

26. Coming to the third question, it has been seen that the legislature has made the maintenance of stock register of raw materials and finished products at every stage of production imperative. This has been done for purposes of providing corroborative evidence of the accounts maintained under section 12(1). It has also been seen that there is no antithesis between section 12(1) and 12(2), for, we have taken the view that an assessing authority cannot reach the conclusion that accounts under section 12(1) show the true and correct value of goods bought and sold, in the absence of the corroborative evidence statutorily required by section 12(2). In the absence of stock registers required under section 12(2), the accounts maintained under section 12(1) cannot be held to reflect the correct turnover of an assessee. Therefore, in cases where the stock register required by section 12(2) is not maintained, the account books have to be rejected for want of necessary corroboration as required by the statutes. The accounts cannot be accepted as showing the true and correct value of purchases and sales on account of failure to comply with section 12(2). They are, therefore, rejected not on account of any presumption arising out of non-maintenance of stock register required by section 12(2), but on account of the fact that the accounts maintained under section 12(1) cannot be taken as reflecting the true and correct value of purchases and sales, for want of corroboration in the manner required by section 12(2).

27. We answer these questions accordingly. The papers of the case may be sent back to the learned single Judge for decision of the case.

28. In pursuance of the above decision of the Division Bench, the petition came back for final disposal before R.M Sahai, J., who delivered the following judgment on 12th December, 1980.

R.M Sahai, J.:— For the assessment year 1973-74 the account books of the assessee, a dealer in loud-speakers, amplifiers and parts, were rejected and the turnover was determined to the best of judgment. In revision the order was maintained because the assessee did not maintain any manufacturing account. When revision against this order came up for hearing the learned standing counsel relied on certain decisions of this Court where it was held that provision of section 12(2) requiring an assessee to maintain manufacturing account added since 1973 was mandatory. As difficulty was felt in following these decisions, matter was referred to a larger Bench. The Division Bench by its order dated 9th December, 1980, has held that the provision is mandatory. The result is that the revising authority cannot be said to have committed an error in rejecting the account books for nonmaintenance of manufacturing account.

30. In the result this revision fails and is dismissed with costs.

31. Petition dismissed.