M/s. Daluram Pannalal Modi v. the Assistant Commissioner of Sales Tax Etc.

Judgment

196J Firm Radha !\isl.an (Dttta.std1 RtPrt· stnttd by li~ri KisMn Admitiistralot, Munitipal Commilttt, I.udhi1na Subba Ran J. March 8 present case the mistake, if any, committed in imposing the terminal tax can only be corrected in the manner rrcscribed by the Act. The appellants have misconceived their remedy in filing the suit in the civil Court. The conclusion arrived at by the High Court is correct. In the result, thr appeal fails and is dismissed with costs. Appeal dismissed. M/s. DALURAM PANNALAL MODI THE ASSISTANT COMMISSIONER OF SALES TAX ETC. (A. K. SARKAR, K. N. WANcnoo and K. c. DAS G"CPTA JJ.) SaU.. Tax-Escaptd As81W3ment-Re-assessmnt-Power8 and duties-Deltgation o/-Madh!fa Prade.h General Saks 1'ax Act, 1!158 (M. P. 2 of /9.50), "· 19, 30. Section 19 of the M, P. General Sales Tax Act, 1958 empowers the Commissioner, if he is satisfied that any sale or purchase of goods has em•ped assessment, to re.assess the tax payable and to levy a penalty.

Section 30 empowers the Commissioner to "delegate any of hi! powers and duties under this Act.'' The Commis,ioncr delegated to AS!istant Commissioners his "powers and duties" to make an assessment or reassessment of tax or penaJty and to exercise all other powers under ss. 18, 19 and 20, The A'5istant Commissioner gave a notice to the appellant that he was sati<fied that sales from 1.4.1957 to 31.3.1958 had escaped assessment and assessed him to an additional tax and penalty. The appellant contented that the Commissioner had delegated only his power under '· 19 and not the duties and accordingly the Assistant Commiosioner could validly re-assess the a1.pellan1 only after the Commissioner had been satisfied personally that sales had escaped assessment. Held, that the order of re-assessment and penalty made by the Assistant Commissioner was valid. The requirement of his satisfaction before exercising the power to re-assess under s.

19 did not impose any duty on the Commissioner ; it was really a condition or limitation of the exercise of that power. Even if this requirement a; to satisfaction be considered as a duty, it was an adjunct to the exercise of the power to re-assess and it passed necessarily with the delegation of the power. It would make no difference even if the conditions precedent to the exercise of the power were more than one as they had no independent existence and were merely attached to the power. Mungoni v. Attorney-General [1960] A. C. 336 and Hazrat Syed Shah Mastarshid Ali Al Quadari v. Commissioner of Wakfs, West Bengal, [1961] 3 S.C.R. 759, relied on. CIVIL APPELLA.TE JURISDICTION: Civil Appeal No. 870 of 1962. Appeal by special leave from the judgment and order dated April 5, J 962, of the Madhya Pradesh High Court at Jabalpur in M. P. No. 14of1962. U. M. Trivedi, Shanti Swarup Khanduja and Ganpat Rai, for the appellant. M. Adhikari, Advocate-General for the State of Madhya Pradesh and l ..

N. Shroff, for the respondents. 1963. March 8. The Judgment of the Court was delivered by SARKAR J.-The appellant had been assessed to sales tax for the year 1957-58 under the Madhya Bharat Sales Tax Act, 1950. This Act was repealed on April 1, 1959, by the Madhya Pradesh General Sales Tax Act, 1958. On December 31, 1960, a notice was issued to the appellant by an Assistant Commissioner of Sales Tax under the 1958 Act Mis Daluram PannolaJ Modi 4sJistant Commissio· ntr oj Salu Tax SarktJr /. M /s. Da/urom Ptlllnalal Alodi Aui1ta11t CommiJsio· rur oj Salts T tv: Sarkar J, wherein it was stated, "I am satisfied that your sale during the period from l.4-l!J57 to 31-3-58 ........... . has escaped assessment and thereby rendered yourself liable to be reassessed under s. l!l (I) of the Act."

Pursuant to this notice fresh assessment proceedings were started by the Assistant Commissioner in respect of the sales in the year 1!!57-58 and on March 31, 1961, he made an order imposing an additional tax on the appellant of Rs. :H ,250/- for that year and a penalty of Rs. 15,000/-. The appellant moved the High Court of Madhya Pradesh for a writ of certiorari to quash the order but was unsuccessfu I. It has now appealed to this Court against the judgment of the High Court. We will first set out the material portion of s. 19 (1) of the Act of 19:i8 under which the assess· ment was made :

"Where an assessment has been made under this Act and the Commissioner, in consequence of any information which has come into his possession, is satisfied that any sale or purchase of goods chargeable to tax under this Act, during any year ...... has escaped assessment. .. ... ... the Commissioner may, ......... after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed, in such manner as may be prescribed, to re-assess the tax payable on such s?.le or purchase and the Commis· sioner may direct that the dealer shall pay, hy way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount." It is necessary also to refer to s. 30 of the Act which authorises the Commissioner to "delegate any of his powers and duties under this Act", subject to certain restrictions and exceptions which do not require consideration in this case, to Assistant Commissioners and certain other officers.

The Commissioner made an order under this section on April 1, 1959, delegating to Assistant Commissioners his "powers and duties specified in column (3) of the table" set out in the order. That column was headed ''Description of Powers'' and contained the following : To make an assessment or re-assessment of tax or penalty ....... .. and to exercise all other powers u/s. 18, 19 and 21." It was said that the power to re-assess conferred by s. 19 (1) on the Commissioner was subject to various duties one of which was that he had to be satisfied that sales had escaped assessmeut, without the performance of which duties the power could not be exercised. It was contended that though provision had been made by s. 30 for the dele· gation of duties, the Commissioner had by his order of April 1, 1959, delegated only his power under s. 19 but not the duties.

Therefore, it was argued, that the Assistant 8ommissioner to whom the power had been delegated, could validly exercise that power only after the Commissioner had been satisfied personally that sales had escaped assessment. It was lastly said that as the Assistant Commissioner had exercised the power to re-assess on his own satisfac· tion that sales had escaped assessment, the exercise of the power was void. Section 19 (1) no doubt required that the Commissioner had to be satisfied that sales had escaped assessment before he could proceed to exer· cise his power to re-assess. It is true that without such satisfaction there could be no re-assessment. But we do not think that by this requirement the section imposed any duty on the Commissioner. The Commissioner's satisfaction was necessary only if he wanted to exercise his power to re-assess and was really a condition or limitation of the exercise of that f'ower. Apart from the exercise of such power it had no purpose and no _existence.

Even if the requirement as to satisfaction was to be considered as M/s. Da!uram Pannalal ,\Jodi Assistant Commis1i9. ner of Sales Tax Sllrkar J, M/s. Dcluram 1'"'11alol M ~i siJ.,,., c~"'misJio· ,.,, ef So/eJ Tt1x Sorkt1r J. 290 SUPREME COURT RE.PORTS [1964] voi. a duty, it was a duty which had been created only as an adjunct to the exercise of the power, a duty which passed necessarily with the delegation of the power. That seems to us to be also commonsense for when a power is delegated it is intended that the delegate would exercise it and therefore it must have been intended that he would perform all the conditiom precedent to the exercise of the power. The view that we have taken of this case was taken by the Judicial Committee of a similar statute in the case of 11J:ungoni v. Attorney Geneml ('),and that case was cited with approval by this Court in 1/azrat Syed Shah Jlastershid Ali Al (laurlari v. Commissioner of Wakfs, West Btn!f<!l ('), where it was observed, "Where powers and duties a.-e inter.connected and it is not possible to separate one from the other in srich wise that powers may be delegated while duties arc retained and vice ver->a. the delegation of powers takes with it the duties."

The duty of being satisfied---if at all it was one--being inseparably connected with the power to re-assess and passing to a delegate along with it, was not a duty which could be independently delegated and was not, therefor~, a duty the delegation of which could be made under s. 30. We, therefore, think that the Assistant Commissioner, as the delegate of the power to re· assess, duly exercised the power on his own satisfaction that sales had escaped assessment. Then it was said that Jfongoni's wse ('),and the cases taking the same view, some of which were mentioned in the judgment of the High Court, were of no assistance for the statutes in those cases required only one thing to be done bef1ire the p<:iwcr conferred could be exercised, whereas s. l!l (I) of the Act of I 958 required a number of things to be so done. It was, therefore, contended that it could not be said in the present case that the things which had to be done before the power could be exercised were (I) [1960) A.C. 3~.

(2) [1961) 3 S.C.R. 759. I not duties which could be delegated under s. 30. In M-ur1goni's case (1), no doubt there was only one condition precedent and we will assume that in the cases referred to in the judgment of the Higll Court, the position was the same. We will also assume that sub·s. (1) of s. 19 required a number of things to be done before the power to re-assess could be exercised though as at present advised, we doubt if it did. We are however wholly unable to appreciate how the number of conditions precedent could lead to the view that they were independent duties which could be separately delegated. It seems to us that inspite of their number, they remain nonetheless conditions precedent and therefore conditions or limitations of the exercise of the power. They had, like a single condition precedent, no independent existance.

If in the case of a single contilition precedent it has to be held on the authority of Mungoni's case ('), that the requirement of its performance passed with the delegation of the power to which it was attached. we think that a delegation of a power would take with it all the conditions precedent attached to it whatever be their number. We are unable to distinguish the present case from Mungoni's case (1). The other objection to tl:~e validity of the order is that it was in respect of sales which had earlier been assessed under the Act of 1950 as sales by one Gajanand Satyanarayan and could not therefore be assessed again. This earlier assessment had been cancelled by an order made under s. 39 (2) of the Act of 1958. But it was said that that order could not cancel the assessment which was under the 1950 Act, for under s. 39 (2) only an order under the 1958 Act could be cancelled.

It se001s to us that in order to uphold tb e validity of the re-assessment order made in this case it is not necessary that the assessment order made on Gajanand Satyanarayan should have been cancelled. We will assume that the sales covered by the order against Gajanand (I) [1960] A.O. 336. M/s. Da!uram Pannttlal Motii AssiJlant Commissio • ner of Sales TM Sarkar J. M/1. D•I"'""' Pann,/a/ Modi Assistani CommissiP- ,.,, of Salts Tax Sarkat J. Satyanarayan were the same as those with which the order in hand is concerned. In the re-assessment proceedings however it was found as a fact that Gajanand Satyanarayan was a name only and that no real person bearing that name ever existed. That finding cannot be challenged in the present proceedings and that being so, it seems to us that the assessment order upon Gajanand Satyanarayan was a nullity. Obviously, no assessment could be made under the Act on a non-existent person.

If that order was a nullity-and the learned counsel has not been able to show how it could have been otherwiseit could not stand in the way of the re-assessment of the appellant at all. The second challenge to the impugned order must, therefore, also be rejected. Learned counsel for the appellant had sought to raise two other points but he was not permitted to do so because these points were not mentioned in the petition for the writ nor raised at any earlier stage. We will however state them here but without expressing any opinion of our own a~ to their tenability. The first of these points was that under s. 19 (1) of the 19ii8 Act only those sales could be re-assessed which were chargeable to tax under that Act and the sales brought to tax under the present order were of sugar, a commodity the sale of which was not chargeable under the Act. The other point was that penalty had been imposed by the impugned order under s.

Hof the Act of l 950 but this was illegal since the 1950 Act had been repealed and the right to impose a penalty under the repealed Act had not been saved by the saving section. namely, s. 52. In the result this appeal must fail and it is, therefore, dismissed with costs. Appeal dismissed.