In Re: P.K. Velayudhan

Menon, J.—This is a reference by the Sub-Divisional Magistrate, Alleppey, under S. 432, Criminal P.C., 1898, and the question referred is whether S. 21, Travancore-Cochin General Sales Tax Act, 1125, is ''ultra vires'' of the Constitution and of the provisions of the said Code of Criminal Procedure. According to the learned counsellor the accused the section is also ''ultra vires'' of the Indian Evidence Act, 1872.

Section 21, Travancore-Cochin General Sales Tax Act, 1125, reads as follows:

The validity of the assessment of any tax, or of the levy of any fee or other amount made under this Act, or the liability of any person to pay any tax, fee or other amount so assessed or levied shall not be questioned in any criminal court in any prosecution or other proceeding, whether under this Act or otherwise.

The section corresponds to S. 16A, Madras General Sales Tax Act, 1939, and in view of the Instrument of Accession executed by His Highness the Raj Pramukh on 14-7-1949 and accepted by the Governor-General of India on 15-8-1949, it was agreed that the considerations to be borne in mind in dealing with the questions before us are the same as those obtaining in the State of Madras.

The Instrument of Accession was executed in pursuance pf Article IX of the Covenant entered into between the Rulers of Travancore and Cochin in May 1949 and in accordance with the provisions of S. 6, Government of India Act, 1935, and by it the State accepted as matters with respect to which the Dominion Legislature may make laws for the State all matters mentioned in List I and List III of Sch. 7; Government of India Act, 1935, except matters relating to taxation.

Article 1 of the Instrument of Accession reads:

I hereby declare that I accede to the Dominion of India with the intent that the Governor-General of India, the Dominion Legislature, the Federal Court and any other Dominion authority established for the purposes of the Dominion shall by virtue of this Instrument of Accession but subject always to the terms thereof, and for the purposes only of the Dominion, exercise in relation to the United State such functions as may be vested in them by or under the Government of India Act, 1935, as for the time being in force in the Dominion of India and

Article 3:

I accept all matters enumerated in List 1 and List III of Sch. 7 to the Act as matters in respect of which the Dominion Legislature may make laws for the United State:

Provided that nothing contained in the said Lists or in any other provision of the Act shall be deemed to empower the Dominion Legislature to impose any tax or duty in the territories of the United State or to prohibit the imposition of any duty or tax by the Legislature of the United State in the said territories:

Provided further that where a law of the United State with respect to one of the matters enumerated in the said List III contains any provision repugnant to the provision of an earlier Dominion Law or any existing law with respect to that matter, then, if the law of the United State having been reserved for the consideration of the Governor-General of India has received the assent of the Governor-General, the law of the United State shall prevail, in the United State but nevertheless the Dominion Legislature may at any time enact further legislation with respect to the same matter:

Provided further that no Bill or amendment for making any provision repugnant to any law of the United State which, having been reserved, has received the assent of the Governor-General, shall be introduced or moved in the Dominion Legislature without the previous sanction of the Governor-General.

In - In Re: Guruviah Naidu and Company and Others, a Division Bench of the Madras High Court (Govinda Menon and Basheer Ahmed Sayeed JJ.) after discussing the various arguments advanced for and against the validity of S. 16A, Madras General Sales Tax Act, 1939, said:

For all these reasons set forth in the foregoing paragraphs of this judgment, we are of the opinion that S. 16A, Madras General Sales Tax Act, is ''ultra vires'' of the Constitution and of the provisions of the Criminal Procedure Code.

Earlier in the judgment the learned Judges also said:

When the assessee is once made subject to criminal jurisdiction for failure to pay the tax or fee levied, it passes comprehension as to why he should not be entitled to resort to all the remedies open to him under the Criminal Procedure Code or Evidence Act to escape from a conviction and consequent fine that the season is opposed to "the fundamental principles of criminal justice.

The specific provisions that the learned Judges Lad in mind were Art. 14 of the Constitution, and Ss. 241 to 245, 435 and 439, Criminal P.C. No particular provision of the Indian Evidence Act is mentioned in the judgment. The arguments advanced before us by the learned counsel for the accused were mainly on the lines of those advanced by Mr. K.S. Jayarama Iyer in the case above cited.

The only further contention was that the Indian Evidence Act should be considered as a self-contained Code and in view of S. 105 of that Act S. 21, Travancore-Cochin General Sales Tax Act, 1125, should also be treated as ultra vires of the provisions of Art. 21 of the Constitution to the effect that "no person shall be deprived of his life or personal liberty except, according to procedure established by law". There is no merit in this contention. All that S. 105 provides is:

When a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any of the General Exceptions in the Penal Code, or within any special exception or proviso contained in any other part of the same Code, or in any law defining the offence is upon him, and the court shall presume the absence of such circumstances.

After studying the judgment carefully and hearing counsel at length we have also come to the conclusion that it is not possible for us to accept, the reasoning or the decision embodied in In Re: Guruviah Naidu and Company and Others, .

Section 12, Travancore-Cochin General Sales Tax Act, 1125, lays down the procedure to be followed by the Assessing Authority and Ss. 14 and 15 make adequate provision for questioning the validity of an assessment by way of appeal and revision. Section 14(1) provides:

Any assessee, objecting to an assessment made on him may, within thirty days from the date of which he was served with notice of the assessment, appeal to such authority as may be prescribed.

and sub-ss. (1), (2) and (3) of S. 15:

(1) The Board of Revenue may in its discretion call for and examine the record of any order passed or proceeding recorded by any authority, officer or person under the provisions of this Act, including sub-s. (2), for the purpose of satisfying itself as to the legality or propriety of such order, or as to the regularity of such proceeding and may pass such order, in reference thereto as it thinks fit.

(2) Powers of the nature referred to in sub-s. (1) may also be exercised by such authority or officer and in such class of cases as may be prescribed, including cases where an inferior authority or officer has exercised its or his powers under this subsection.

(3) The powers conferred by sub-ss. (1) and (2) may be exercised by the Board of Revenue or by the authority or officer concerned, as the case may be, ''suo motu'' at any time, or an application preferred within six months of the passing or recording of the order or proceeding in question.

In order to appreciate the real scope of S. 21 it is essential that one must first understand the nature and character of the offences for which prosecution can be launched under the Travancore-Cochin General Sales Tax Act, 1125. The various offences and the penalties therefore are dealt with in S. 19 which reads as follows:

Any person who,

(a) wilfully submits an untrue return or fails to submit a return as required by the provisions of this Act or the rules made thereunder, or

(b) fails to pay within the time allowed, any tax assessed on him or any fee due from him, under this Act, or

(c) prevents or obstructs inspection or entry by any officer authorised under S. 17, in contravention of the terms thereof, or

(d) fraudulently evades the payment of any tax assessed on him, or any fee due from him under this Act, or

(e) fails to submit an application for registration as required by S. 10, sub-s. (1), or

(f) collects any amount by way of tax under this Act in contravention of the provisions of S. 11, sub-s. (1), or

(g) fails to pay the amounts specified in S. 11, sub-s. (2) within the prescribed time, or

(h) wilfully acts in contravention of any of the provisions of this Act, shall on conviction by a Magistrate of the First Class, be liable to a fine which may extend to one thousand rupees and in the case of conviction under Cls. (b), (d), (f), or

(g), the Magistrate shall specify in the order the tax, fee or other amount, which the person convicted has failed, or evaded to pay or has wrongfully collected, and the tax, fee or amount specified shall be recoverable as if it were a fine under the Code of Criminal Procedure for the time being in force.

The offence with which we are concerned in this case comes under (b) and consists of the failure of the accused to pay within the time allowed the tax assessed on him under the Act. The most important thing to note is that the offence is not related to the liability to pay the tax but only to its non-payment within the time allowed. In other words, the liability is assumed having been fixed and finalised under the provisions of the Act and the trial before the Magistrate is confined to the question as to whether that liability had been liquidated within the time allowed to the accused. In such a prosecution all that the State can be called upon to prove is:

(1) that the accused had been assessed under the Travancore-Cochin General Sales Tax Act, 1125; and

(2) that the tax assessed had not been paid within the time allowed:

and all that the accused can plead in defence is that either that he had not been assessed or that he had paid the tax assessed within the time allowed to him. Any controversy as to the validity of the assessment or its quantum appears to be wholly outside the purview of a prosecution for an offence under S. 19(b), Travancore-Cochin General Sales Tax Act, 1125.

Once the exact character of the offence is realised everything else seems to fall into place. If the gist of the offence is not the validity of the assessment but only the non-payment of the tax assessed within the time allowed there can be no doubt that there is no violation of Art. 14 of the Constitution or the Code of Criminal Procedure, 1898, or the Indian Evidence Act, 1872.

We are in agreement with the view expressed in In Re: Guruviah Naidu and Company and Others, , to the effect that what is involved in a prosecution for an offence under S. 19 is a criminal trial and that the provisions of the Code of Criminal Procedure and the Indian Evidence Act will apply to such a trial. The application of those enactments, however, cannot possibly enlarge the ambit of the offences concerned or the things that should be proved by the prosecution to secure a conviction or by the defence in rebuttal of the evidence adduced.

The learned Government Pleader had a contention that even if there is repugnancy between S. 21 of the Act and the provisions of the Criminal Procedure Code or the Evidence Act the provision should not be struck down as ''ultra vires'' either under S. 107(1), Government of India Act, 1935, or Art. 254 of the Constitution. According to him the pith and substance rule should be applied and such application will save S. 21 of the Act.

As stated by the Privy Council in - AIR 1945 98 (Privy Council) :

In a Federal Constitution, in which there is a division of legislative powers between Central and Provincial Legislature, it appears to be inevitable that controversy should arise whether one or other legislature is not exceeding its own, and encroaching on the other''s, constitutional legislative power.

and in such a controversy the principle to be applied is that it is the real nature. "The pith and substance", of the legislation "which must determine into what category it falls". The argument, however, forgets that the pith and substance rule has nothing to do with the questions which arise under S. 107(1), Government of India Act, 1935, or under Art. 254 of the Constitution. That it has nothing to do with S. 107(1) has been clearly laid down by the Federal Court in - ''Megh Raj v. Allah Rakhia'', AIR 1942 FC 27 (C), wherein it is said that such questions do not arise "when objection is taken not under S. 100, Constitution Act, but under S. 107(1)".

It is, however, unnecessary to pursue this matter further as on the merits we are clearly of opinion that there is no repugnancy between S. 21, Travancore-Cochin General Sales Tax Act, 1125, or any of the provisions of the Code of Criminal Procedure, 1898, or the Indian Evidence Act, 1872.

The learned Government Pleader also drew our attention to S. 1(2), Criminal P.C., which provides:

In the absence of any specific provision to the contrary, nothing herein contained shall affect any special or local law now in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed by any other law for the time being in force.

and Section 5:

(1) All offences under the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the provisions hereinafter contained.

(2) All offences under any other law be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner of place of investigating, inquiring into, trying or otherwise dealing with such offences.

In the view we have taken it is equally unnecessary for us to discuss the exact scope and effect of the provisions extracted above.

In Re: Guruviah Naidu and Company and Others, , is not the only decision of the Madras High Court dealing with S. 16A, Madras General Sales Tax Act, 1939. In Re: Gigina Pasha Saheb, , Panchapakesa Ayyar J., said:

I have not been shown any valid reason, much less, a ruling of any High Court to holding S. 16A, to be ''ultra vires''. I hold that it is not ''ultra vires''.

and in - V.M. Syed Mohamed and Co. and Another Vs. The State of Madras and Another, , a Division Bench of the Madras High Court consisting of Rajamannar, C.J., and Venkatarama Ayyar J., held that the section was not opposed to natural justice or ''ultra vires'' of the Constitution.

Section 21, Travancore-Cochin General Sales Tax Act, 1125, is the same as S. 22 of the Hyderabad General Sales Tax Act, 1950. No case has apparently arisen in that State questioning the validity of the section and none was cited before us.

Our attention was drawn to certain decisions of the Mysore High Court by the learned Government Pleader. We find that there is no section in the Mysore Sales-tax Act, 1948, corresponding to S. 21, Travancore-Cochin General Sales-tax Act, 1125, and it is hence unnecessary to discuss those decisions in this judgment.

We are in respectful agreement with the views expressed in '' AlR 1950 Mad 619 (D)'', and V.M. Syed Mohamed and Co. and Another Vs. The State of Madras and Another, , and our conclusion is that S. 21 of the Travancore-Cochin Sales Tax Act, 1125, is not ''ultra vires'' of any of the provisions of the Constitution, the Code of Criminal Procedure, 1898, or the Indian Evidence Act, 1872. We answer the reference accordingly.