Mahomed Tayoob Daruwala v. The State Of Bombay

S.T Desai, J.:— This petition for a writ of certiorari in a case arising under the Sales Tax Act has been argued before us by Mr. S.P Mehta, learned counsel for the assessee, with his usual lucidity and discernment. The amount involved in the petition is small, but we are told and readily believe that the determination of the question of construction that arises on this petition must affect many other cases under the Sales Tax Act. The petitioner has been carrying on business in partnership under the name of Liberty Silk Mart. One of the partners died, and the petitioner continued the business as its sole proprietor. The firm was registered as a dealer under the Bombay Sales-Tax Act, 1953 (hereinafter referred to as the Act). The assessment periods are April 20, 1954 to October 14, 1954, and October 15, 1954 to March 31, 1955. The Sales-tax Officer completed the assessments for the two periods and passed an order levying a penalty of Rs. 393-2-0 and Rs. 200-7-0 respectively for the two periods under s. 16(4) of the Act. In an appeal against that order, the Assistant Collector of Sales-tax held that the penalty could not be levied, on the ground on which the Sales-tax Officer had proceeded to do so, but he levied a penalty of Rs. 157,88 nP. for late payment and non-payment of tax due by the assessee. The firm thereupon preferred revision applications to the Sales-tax Tribunal, and the Sales-tax Tribunal affirmed the view taken by the Assistant Collector of Sales-tax. It is against that order of the Tribunal that the petitioner has come to this Court on this petition.

2. The brief contention of the petitioner is that there is no provision in the Act nor is there any provision in the Rules made under the Act which empowers the taxing authorities to levy penalty for non-payment or late payment of a tax after assessment. There is no dispute about the facts and it is common ground that there was a notice served on the petitioner to pay the amount of tax as required by sub-s. (5) of s. 16 and the relevant rules. There is no dispute either that the petitioner failed to pay the amount of tax mentioned in that notice on the date specified in it. But the case of the petitioner is that failure on his part to make the payment of the amount of the tax on the date specified in that notice could not be visited with any imposition of penalty by the taxing authorities, because there is no provision of law which prescribes for the same.

3. Two objections are raised in limine by Mr. R.J Joshi, learned counsel for the respondent. It is urged that there was delay in filing the petition and on that ground alone the petition is liable to be dismissed. Two or three dates having bearing on this contention may be mentioned. The order challenged in the petition was made on April 22, 1959, and it was served on the petitioner on May 21, 1959. The petition was filed on July 21, 1959. Having regard to the nature of the dispute and the circumstances relating to the matter, we do not think it can be said that there was any inordinate delay which should debar the petitioner from prosecuting this petition. The other objection is that this Court should not interfere in the exercise of its powers under art. 227 of the Constitution in a matter of the nature before us. A good deal has been said in decisions of this Court and also by their Lordships of the Supreme Court about the principles which regulate the exercise of our power of superintendence under this article, and it is not necessary to rehearse the same. We agree that this power is sparingly exercised and only in circumstances which have been considered and discussed at length in those decisions. We do not, however, think that the dispute raised by the petitioner and the decision of the Tribunal are of such a nature that we should decline to exercise our powers under that article, if we are satisfied about the illegality of the order challenged by the petitioner. The two preliminary objections must, therefore, be negatived. The argument advanced before us by Mr. S.P Mehta may be succinctly stated. It is said that the present case can only fall under sub-s. (4) of s. 16. That is not disputed. The material part of sub-s. (4) relied on by Mr. S.P Mehta is:

“(4) If the tax is not paid by any dealer within the prescribed time, the dealer shall pay, by way of penalty in addition to the amount of tax, a sum equal to…”.

4. The argument has proceeded that it is only when the tax is not paid by any dealer ‘within the prescribed time’ that any penalty can be levied on the dealer under that sub-section. That also is not disputable and has not been disputed. Then it is said that there is no time prescribed for the payment of the tax after an order of assessment under ss. 13 and 14 has been made and there being no rule prescribing the time for payment of the amount of assessment, the only remedy of the Sales-tax authorities is to enforce the order by adopting recovery proceedings. The greatest stress is laid on the expression ‘prescribed time’ in sub-s. (4) and it is urged that the expression ‘prescribed’ has been defined in s. 2(10) and must mean prescribed by Rules framed under the Act, Sub-section 2(10) defines the expression ‘prescribed’ to mean ‘prescribed by Rules’. In support of the argument, our attention has been drawn by Mr. S.P Mehta to rr. 10 and 21 of the Sales-tax Rules, 1954, and it is said that there is nothing in any of those Rules which can be said to prescribe time for the payment of the amount of tax ascertained under ss. 13 and 14 of the Act. We shall presently turn to the relevant Rules and examine this argument. It is also said that sub-s. (4) of s. 16 deals with penalty and being a provision of a penal nature should be strictly interpreted, and if the language of sub-s. (4) is such as would raise any doubt about the meaning of the expression ‘prescribed time’ then that doubt must be resolved in favour of the assessee and against the taxing authority. On the other hand, it has been argued by Mr. R.J Joshi, learned counsel for the respondent, that sub-ss. (4) and (5) of s. 16 must be read together, and if they are so read, the Tribunal was right in the conclusion reached by it. Now, we have carefully examined the reasoning of the learned Members of the Tribunal, but we do not think that the reasoning which found favour with them is wholly satisfactory. The way we read the section and interpret, the crucial expression ‘prescribed time’ in sub-s. (4) of s. 16 is somewhat different, though the conclusion that we arrive at is the same as that reached, by the Tribunal.

5. Before we examine the language of sub-ss. (4) and (5) of s. 16 and see what interpretation should be put on the expression under consideration, we shall permit ourselves to make a few general observations. On more than one occasion, we have observed in this Court that in these taxing cases, one rule which we should particularly bear in mind is the rule of construction ex viserribus actus. The Court is bound to see that every provision of a statute is construed with reference to the context and the other provisions of the statute and preferably of the same section where it is possible to do so. The Court is entitled and even bound, as far as possible, to see that the interpretation it puts on a particular provision makes a consistent enactment of the whole statute. In applying these rules the Court has to remember what has so often been emphasised that as far as possible nothing can be read and nothing can be implied in a taxing statute. One can only look fairly at the language used. The indispensable starting point and the first step in case of any provision of the nature before us is to examine the words of the particular provision under consideration, of course, bearing in mind that it is not a detached enactment but one forming a connected scheme. Another rule having, bearing on interpretation of a provision of the nature before us which imposes a penalty is that the provision must as far as possible be construed in favour of the assessee provided no violence is done to the language used. Bearing in mind these few observations which we have made, let us see what meaning requires to be placed on the expression ‘prescribed time’ in sub-s. (4) of s. 16.

6. The whole argument of Mr. S.P Mehta rests upon an insistence that it is the definition clause and the definition clause alone which can be looked at by us for the purpose of interpreting the expression ‘prescribed time’. Nothing save that definition, says Mr. Mehta, can be considered by us in interpreting the expression, and the argument has proceeded that the only thing that we have to do in interpreting this expression ‘prescribed time’ is to see whether there is any Rule which can be said to have prescribed the time for payment of the tax assessed under ss. 13 and 14. On the other hand. Mr. R.J Joshi, learned counsel for the respondent, has urged that a definition clause cannot control the meaning of the defined expression in every provision of the enactment and he has relied on the initial words which are similar to those one finds in every definition clause in modern enactments.

7. It is needless to stress that a definition clause cannot be permitted to control the language and meaning of any provision, if there is anything repugnant in the subject or context. It is true that the expression ‘prescribed’ has been defined in s. 2(10). It is true that ordinarily the Court would have recourse to that definition, where it is called upon to attribute any meaning to the expression ‘prescribed’ standing alone or in conjunction with some other expression. It does not, however, follow that wherever the word ‘prescribed’ is to be found in the provisions of a section, the word ‘prescribed’ must necessarily require the Court to turn immediately to the Rules and ignore every other consideration such, for instance, as must arise where there is the clear indication that the expression has been used in an enlarged or diminished connotation. A definition clause does not preclude judicial interpretation and is not to be applied in a mechanical fashion. The word ‘prescribed’ in the expression ‘prescribed time’ in s. 16 does not, in our opinion, for reasons which we shall presently state, require that we should turn only to the Rules and nothing else. It would depend on the collocation of the words and various other factors having bearing or the question of construction of statutes. In sub-s. (4), the Legislature has said that if the tax is not paid by any dealer within the prescribed time, the dealer has to pay a penalty in addition to the amount of tax. The mere fact that the word ‘prescribed’ has been defined as prescribed under the Rules need not and did not prevent the Legislature from itself prescribing the time and the way we read sub-ss. (4) and (5), which must be read together, we find that there is the clearest indication in sub-s. (5) that the Legislature itself has prescribed the time for the payment of the tax, and if that be the position—and we have no doubt that it is—the whole fabric on which Mr. Mehta's argument rests must disappear. In the course of his argument, we put it to Mr. S.P Mehta if his contention went so far as to suggest that the prescribed time must be a specific period and an invariable period. With his usual fairness, Mr. Mehta stated that he was not in a position to go so far as that. The prescribed time could vary and it was not absolutely necessary that it should be a specific period or an invariable period applicable to all cases. We on our part have little doubt that the prescribed time need not be any invariable time or any fixed period of time. What is required is that there must be some measure and some manner of prescribing time adopted by the Legislature itself or by the Rules. It is in the light of these observations that we turn to examine the language of sub-s. (5) which, in our judgment, contains the material words. The material words are:

“The amount of tax…shall be paid by the dealer…by such date as may be specified in a notice issued by the Collector for this purpose and the date to be so specified shall be not less than thirty days from the date of service of such notice”.

8. And the crucial words are “the date to be so specified shall be not less than thirty days from the date of service of such notice”. As to these words, the only suggestion of Mr. S.P Mehta is that merely stating that the date to be so specified shall be not less than thirty days from the date of service of the notice should not be regarded as laying down a prescription as to time. We are unable to accede to that suggestion. In our opinion, the words are in express terms and intended to lay down specifically that the time for payment shall not be anything less than thirty days from the date of service of the notice on the assessee. It is easy to see that the time for payment, though it requires to be a prescribed time, need not be uniform in all cases and should depend on the facts and circumstances of each case. It is with all that in view that the law-maker has, in our opinion, prescribed the time for the payment of tax in such a manner as would not cause any undue hardship on the assessee and would enable the taxing authorities to give reasonable time to the assessee for the payment of the amount of assessed tax. Reasonable time must vary with the facts of each particular case and all the factors relevant to the case of the assessee.

9. The same argument was presented by Mr. Mehta in a slightly different form, when he said that the word ‘prescribed’ cannot mean ‘prescribed under the Act’. In our opinion, it is impossible to accept this argument. The Legislature when it states that a particular act or thing shall be done within a prescribed time may leave the matter of prescribing the time to the Rule-making authority, which in this case is the State, or it may itself in the very provision or in some other provision in the enactment itself prescribe the time for the doing or performance of that act. There is no principle of drafting and no rule which prevents the Legislature itself from prescribing the time for the doing or performance of any act or discharging any duty simply because it speaks of a prescribed time and in the definition clause it has said that the expression ‘prescribed’ shall mean ‘prescribed under the Rules’. Considerable comment was levelled by Mr. Mehta on the words “the date to be so specified” in the ultimate part of sub-cl. (ii) of sub-s. (5) of s. 16 and it was urged that the expression ‘specified’ should not be equated with the word ‘prescribed’. We agree that the expression ‘specified’ need not be equated with the expression ‘prescribed’, but our reading of sub-s. (5) is different from the way in which Mr. Mehta asks us to do so. Our reading of the words which we have described as crucial is that the Legislature has itself prescribed the time for payment of tax in sub-s. (5). The prescription of time can be in more than one mode or manner. It may be in a form exclusive or inclusive. In the case before us, the Legislature has prescribed the time in a manner, which requires that the period that should be allowed to the assessee to pay the tax should not be a period of less than thirty days from the date of service of the notice. Having laid down that prescription, the Legislature had necessarily to leave the matter to the Collector for the purpose of enabling him to mention a date by which the amount of the tax should be paid by the assesses and default of payment by which time would invite the operation of the penalty clause. On that reading of the relevant part of sub-s. (5), we do not think it can be said that the meaning which we attribute to sub-s. (5) requires the equation of the expression ‘specified’ with the expression ‘prescribed’. Sub-section (4) lays down inter alia the quantum of the penalty to be imposed in a case where the tax is not paid by any dealer within the prescribed time. Sub-section (5) in the main prescribes the time for the payment of the amount of tax. As we have already mentioned, we must read the expression ‘prescribed time’ in its proper context, and when the meaning is to be gathered from such intrinsic evidence, there is all the more reason that we should give the fullest effect to the latter part of sub-cl. (ii) of sub-s. (5) of s. 16. Reading the words ‘prescribed time’ in their context and in their proper collocation, and having regard to the established canon of construction which requires that, where in interpreting a section, we can get assistance from the other part of the section itself, that would be a safer guide, we must reach the conclusion that the Legislature has itself prescribed the time in sub-s. (5).

10. Where the Legislature has itself supplied in the context the key to the meaning in which any expression is used, then it is obvious that meaning should be preferred by the Court as far as possible. As to the definition clause, we have already made some observations and we may add that it is well settled law that “even where an Act contains a definition section it does not necessarily apply in all the contexts in which a defined word may be found. If a defined expression is used in a context which the definition will not fit, the context must be allowed to prevail over the artificial conceptions of the definition clause, and the word must be given its ordinary meaning”. It is the ordinary meaning of the word ‘prescribed time’ that should, therefore, he given by us to it in interpreting sub-ss. (4) and (5) of s. 16.

11. Even assuming that Mr. S.P Mehta is right when he says that we must turn only to the Rules for the purpose of ascertaining whether there is any time prescribed for the purpose of payment of the amount of tax assessed under ss. 13 and 14, it seems to us that r. 21 read along with Form No. XVII must be read as prescribing the time for the payment of the amount of tax. That Rule in terms refers to any sum payable under sub-cl. (b) of cl. (i) of sub-s. (5) of s. 16. In the case before us, the assessment indisputably was under s. 14. Then the Rule states that the dealer liable to pay such sum must be served with a notice in Form XVII, and then proceeds to state that the notice shall be as required by that sub-section. That sub-s. (5) in terms states that the date to be so specified in the notice shall be not less than thirty days from the date of service of such notice. Therefore, by incorporation, we have to read the crucial words of sub-s. (5) of s. 16 when applying r. 21 to the facts of any case and we must also look at Form No. XVII when we have to do so. There was some amendment in para. 2 of Form No. XVII, and we are concerned with the form as it existed prior to March 31, 1956. The notice served upon the assessee in the instant case was as under:

“You are hereby directed to pay the sum of Rs. 986-12-0 (as shown in the table below) into the Government Treasury…and to produce the receipt…for every month during which the amount remains unpaid after 15-4-1956 and the said sum of Rs. 986-12-0 together with the penalty as specified above will be recoverable from you as an arrear of land revenue”.

12. The notice, it is clear, specifies a date, which was not less than thirty days from the date of service of the notice, that date being April 15, 1956, and there is no dispute that the notice was in effect served on the assessee-petitioner more than thirty days before April 15, 1956. Reading r. 21 along with the requirements of sub-s. (5) of s. 16, as indeed we must do, to which it expressly refers and with the content of the notice in Form No. XVII it is not possible to accede to the contention that r. 21 does not prescribe any time for the payment of the amount of the tax. It is not necessary to repeat what we have stated in examining the language of sub-s. (5) and sub-s. (4) while examining the crucial words “the date to be specified in the notice shall not be less than thirty days from the date of service of such notice”. Reading these words along with the other words used in r. 21, and bearing in mind Form No. XVII, the conclusion seems to us inescapable that the effect of r. 21 is to prescribe time. But we prefer to rest our judgment primarily on an interpretation of sub-ss. (4) and (5) and reading sub-s. (5) itself we have already reached the conclusion that the Legislature has itself prescribed a time for the payment of tax, default in payment of which tax invites the operation of the provisions relating to penalty.

13. We may also refer to s. 45 of the Act, which empowers the State Government to make Rules for the purpose of carrying out the provisions of the Act. Clause (m) of that section authorises the State Government to make rules as to the intervals at which and the manner in which the tax shall be payable under s. 16. The expression ‘tax’ has been defined in s. 2(18) to mean “the sales tax, general sales tax or purchase tax payable under this Act”. The definition of tax is not confined to the payment which the dealer is required to make under the provisions of the statute along with his returns and at the end of every quarter. That expression also includes the amount of assessed tax.

14. There remains for consideration one more argument of Mr. Mehta, and the argument is that the meaning which we have put on the expression ‘prescribed time’ would have the effect of preventing his client from preferring any appeal and recovery proceedings would start on the expiry of the period of the notice.

15. We do not think that the apprehension of Mr. Mehta is justified. An assessee, who has been served with a notice that he would be liable to pay penalty if he fails to pay the amount of the tax by the specified date in accordance with the time prescribed for the payment of such tax, can immediately take such action by way of appeal or otherwise, as he may be entitled to do, and we do not think it can be said that there was no order passed against him for the enforcement of penalty.

16. In the result, the petition fails and will be dismissed with costs.

17. Application dismissed.