State of Rajasthan v. the Mewar Sugar Mills Ltd., Bhopalsagar

Judgment

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1068 of c 1966. Appeal by special leave from the judgment and order dated April 3, 1965 of the Rajasthan High Court in D. B. Civil Writ Petition No. 401 of 1963. Niren De, Solicitor-General and K. B. Mehta, for the appellant. M. B. Bhargava and B. D. Sharma, for the respondent. The Judgment of the Court was delivered by Rama..wami, J. This appeal is brought by special leave, from the judgment of the Rajasthan High Court dated April 3, I 965 in Civil Writ Petition No. 401 of 1963. The respondent, the Mewar Sugar Mills Ltd. (hereinafter referred to a~ the 'Company') did not tile any quarterly return of its sales for the assessment vears 1955-56 and 1956-57 as required by the Rajasthan Sales Tax Act (Act No. XXIX of 1954), hereinafter referred to as the 'Act', Appellant No. 2, the Sal.es Tax Officer, Udaipur treated this default as a default of the respondent company under sub-ss. (I) and (2) of s.

7 of the Act and, after giving notice to the Company, imposed penalty under els. (b) and ( c) of sub-s. ( 1) of s. 16 of the Act. By his orders dated December 19, 1956 and January 25, 1957, the Sales Tax Officer imposed a penalty of Rs. 5,000 in respect of the assessment year 1955-56 and a penalty of Rs. 10,000 in respect of the assessment year 1956-57. Thereafter. on October 23, 1963 the Company moved the Rajasthan High Court for the grant of a writ under Art. 226 of the Constitution to quash the two orders of the Sales Tax Officer dated December 19. 1956 and January 1957. The contention on behalf of the Company was that during the material period i.e., from April I. 1955 to July 31, 1956 there were in existence no rules validly made under s. 26(5) of the Act. The writ petition was allowed by the Rajasthan Hi!!ll Court by its judgment dated April 3, 1965 and the orders impos- RAJASTHAN v. MEWAR SUGAR MILLS (Ramaswami, !.) ing the penalties on the Company were quashed on the ground that the imposition of penalty was illegal as it contravened Art. 20 ( l) of the Constitution.

The view taken by the High Court was that the Rules framed initially were not valid for the purpose of imposing penalties and the Rajasthan Sales Tax Rules Validating Ordinance No. 5 of 1959 and the Rajasthan Sales Tax Rules Validating Act No. 43 of.1959 could not be effective for the purpose of imposing penalty under s. 16 of the Act since the Rules could not be given retrospective effect. The Act received the assent of the President on December 22, 1954 but it came into force on April 1, 1955 under a notification of the State Government under s. 1 ( 3) of the Act. The relevant provisions of the Act read as follows : "7. Submission of returns.-(1) Every dealer liable to pay tax shall furnish returns of his turnover for the prescribed periods in the prescribed form, in the prescribed manner and within the prescribed time, to such authority as may be prescribed. (2)

Every such return shall be accompanied by a Treasury receipt or receipt of any bank authorised to receive money on behalf of the Government, showing the deposit of the full amount of tax due on the basis of return in the Government Treasury or bank concerned. ( 3 ) If any dealer discovers any omission, error, or wrong statement in any returns furrushed by him under sub-section ( 1) he may furnish a revised return in the· prescribed manner at any time before the assessment is made." "16. Offences, Penalties and Prosecutions, etc.- (1) If any person- ( a) has without reasonable cause failed to get himself registered as required by sub-section ( 1) of section 6 within the time prescribed; or 1 (b) has without reasonable cause failed to pay the tax due within the time allowed: '"

(c) has without reasonable cause failed to furnish the return· of his turnover, or failed to furnish it within the time allowed; or the assessing authority may direct that such person shall pay by way of penalty, in the case (1969] I S.C.R. referred to in clause (a), in addition to the fee payable by him, a sum not exceeding Rs. 50, and in case referred to in clause ( b), in addition to the amount payable by him. a sum not exceeding half of that amount, and that in cases referred to in clauses ( c) and ( d), in addition to the tax payable by him, a sum not exceeding half the amount of tax detennincd; ........ " "26. Power to make rules.-( I) The State Government may make rules to carry out the purposes of tnis Act. 8 (2) In particular and without prejudice to the generality of the foregoin~ powers, such rules may provide for- ( 4) The power to make rules conferred by thi> section shall be subject to the condition of the rules being made after previous publication. (5)

All rules made under this section shall be published in the Gazette, and upon such publication. shall have effect, as if enacted in this Act, from such date as may be notified in this behalf." "29. Application of General Clauses Act.-Tbe provisions of the General Clauses Act, 1897 of 1897), shall mutatis mutandis apply, so far a, may he, for the interpretation of this Act in the same manner as they apply for the interpretation of a Central Act." It is nece.,sary at this stage to set out the provisions of s. 22 of the General Clauses Act, 1897 (Act X of 1897) which is to the following effect : "Makin[: of rull's or by-laws and issuing of orders between passing arul commencement of enactment.

Where by any Central Act or Regulation which is not to come into force immediately on the passing thereof, a power is conferred to make rules or by-laws, or to issue orders with respect to the application of the Act or Regulation, or with respect to the. establishment of any Court or office or the appointment of any judg:i or officer thereunder, or with respect to the person by whom. or the time when, or the place where, or !he manner in which, or the fees for which, anything is to be done under the Act or Regulation then that power RAJASTHAN v. MEWAR SUGAR MILLS (Ramaswami, J.) · may be exercised at any time after the passing of the Act or Regulation; but rules, by-laws or orders so made or issued, shall no( take effect till the commencement of the Act or Regulation." No rules were framed under the Act after the Act came into force, but on March 28, 1955 i.e., before the Act came into force, certain rules called .''The Rajasthan Sales Tax Rules, 1955"

(hereinafter called the 'Rules') were published in the Rajasthan Gazette. Rule 1 reads as follows : "1. Short Title and Commencement.- These rules may be called the Rajasthan Sales Tax Rules, 1955, and shall come into force on the date of their publication in the Rajasthan Gazette." The Rajas than Sales Tax Rules Validating Ordinance No. 5 of 1959 was promulgated on November 6, 1959 and it was followed by the Rajasthan Sales Tax Rules Validating Act, 1959 (Rajasthan Act No. 43 of 1959). Section 3 of this Act provides: "3.

Validating of operation of the rules.-Notwithstanding any defect or want of form or procedure and notwithstanding anything contained in the Act or the Rules or fo any other· law or instrument or in any decision or order of any court,- ( a) the Rules shall be deemed to have come into force on the 1st day of April, 1955, the date· on which the Act came into force, and (b) every subsequent amendment of the Rules shall be deemed to have come into force on the date specified for the coming into force thereof or, in case no such date was specified, on the date on which such amendment was notified in the Rajasthan Gazette." Section 4 states : "Amendment of section 26, Rajasthan Act 29 of 1954.-In sub-section (5) of section 26 of the.Act, the words 'from such date as may be notified in this behalf shall be omitted and shall be deemed always to have been omitted."

In support of this appeal the Solicitor-General put forward· the argument that the High Court was in error in holding that the· orders of penalty dated December 19, 1956 and January 25, 1957 vere illegal as they were in violation of the guarantee in Art. 20 (1 ) of the Constitution. It was submitted : Cl) that the Act [1969) I SC.R. and the Rules were legally operative with effect from April l, 1955 by reason of s. 22 of the General Clauses Act read with s. 29 of the Act, (2) ln any event, the Rules even if they were not initially valid, were subsequently validated by the Rajasthan Sales Tax Rules Validating Ordinance No. 5 of 1959 and the Rajasthan Sales Tax Rules Validating Act No. 43 of 1959 which were retrospective in character, (3) The imposition of penalties upon the Company under s. l 6( l) of the Act did not fall within the provisions of Art. 20( l) of the Constitution and wa:; not barred by .that Article.

In our opinion, the argument add,·essed by the Sohcitor-General on the first point is well-founded and must be accepted as correct and the appeal must be allowed and the judgment of tbe Rajasthan High Coun should be set aside on that ground alone. It is therefore not necessary for us to cxpre" any opinion on the second and third questions raised hy the Solicitor-General in the course of his argument. It is apparent that s. 22 of the General Clauses Act expressly <:onfcrs on the rule-making authority, where there is an interregnum between the date of the commencement of the Act and the date of its enforcement, the power to make rules even during such interregnum. But the section provides that the rules so made or issued shall not take effect till the actual enforcement of the Act. In the present case the Rules were published by the Rajasthan Government in the Rajasthan Gazette on March 28, 1955 before the Act came into force.

On behalf of the respondent th~ argument was stressed that there was no Act in force on March 28, 1955 and so no Rules could be framed or published on that date. It was also pointed out that after the Act came into force, i.e., from April 1, 1955 no rules were framed in exercise of the powers <:onferred by the Act. There is no substance in the argument of the respondent because s. 29 of the Act makes the provisions of the General Clauses Act. 1897 (Act X of 1897) applicable for the interpretation of the Act in the same manner as they apply for the interpretation of a Central Act. Under s. 22 of the General Clauses Act power is expressly conferred on the rulcmaking authority to make rules even before the date of the commencement of the Act but the rules so made shall not take effect till the actual enforcement of the Act. It is apparent tha\ in the present case hy the application s.

22 of the General Cfauses Act the rules published by the Rajasthan (iovernment on March 28, 1955 in the Rajasthan Gazette mmt be held to be validly made in the exercise of the rule-making power of the State Government. It was pointed out hy the respondent that Rule I provides that "the Rules shall come into force on the date <Jf the publication in. the Rajasthan Gazette" i.e., on March 28. 1955. But this is contrary to the provisions contained in s. 2'! of the General Clauses Act. It is, however, <1 well-known prin- RAJASTHAN v. MEWAR SUGAR MILL~ (Ramaswami, J.) 851 ciple that a statute or statutory rule has to be so read as to make it valid' it has to be construed ut res magis valeat quam pareat. The re~n is that no intention can be imputed to the legislative authority that it would exceed its own jurisdiction. It follows therefore in the present case that by reason of s.

22 of the General Clauses Act rules published by the Rajasthan Government on March 28, 1955 in the Rajasthan Gazette must be held to be validly made in exercise of the rule-making power of the State Government but they would be deemed to be not in force for the period between March 28, 1955 to March 31, 1955. We consider that the rules should be deemed to have validly come into effect from April 1, 1955. We accordingly over-ruie the view taken by the High Court on this ~spect of the case. It was, however, argued by Mr. Bhargava on behalf of the respondent-company that s. 22 of the General Clauses Act cannot be applied for the interpretation of the Act because s. 22 did not fall within the group of sections, viz., ss. 5 to 13 of the General Clauses Act dealing with "General Rules of Construction" but fell within another group of sections under the heading "Provisions as to Orders, Rules, etc. made under Enactments". We are unable to accept the argument of Mr. Bhargava as correct.

Section 22 of the General Clauses Act is couched in language similar to that of s. 37 of the Interpretation Act, 1889 ( 52 & 53 Viet. C. 63) which states : "3 7.

Where an Act passed after the commencement of this Act is not to come into operation immediately on t~e passing thereof, and confers power to make any appotntment, to make, grant, or issue any instrument, that is to sa~, any order in council, order, warrant, s~heme, !etters patent, _rules, regulations, or bye-laws, to give notices, to prescnbe forms, or to do any other thing for the purJ?Oses ?f the Act, that power may, unless the contrary mtention appears, be exercised at any time after the passing of the Act, so far as may be neces- ~ary or exJ?ed1ent for the purpose of bringing the Act mto operation at the date of the commencement thereof subject to this restriction, that any instrument mad~ under th~ power shall not, unless the contrary intention ap.pe~rs m the Act, or the c~ntrary is ~ecessary for bnngmg the Act mto operat10n, come mto operation until the Act comes into operation." !he preamble of th~ English Act reads :

"An Act for consolidatmg enactments relatmg to the Construction of Acts of Parliament ¥d for further shortening the Language used in Acts of Parliame~t." Section 37 of the English Act falls within the group of sections under the heading "New General Rules of Construction". ( 1969] I S.C.R. The Indian Act is based upon the English Act of 1889 and incorporates such of its provisions as are applicable to India. It is therefore not possible for us to accept the argument put forward on behalf of the Company that s. 22 of the General Clauses Act is not a section dealing with interpretation or that it is not attr.u:ted by the lahguage of s. 29 of the Act. It was then argued for the respondent-company that s. 22 of the General Clauses Act may like s. 37 of the English Act be a section dealing with a rule of construction but it wa' not a section dealing with a rule of interpretation as contemplated by s. 29 of the Act. We do not agree with this contention.

In our opinion, the word "interpretation'' in its context of s. 29 of the Act also includes within its scope "construction". As observed by Kocourek : "Interpretation is the meaning of a fact. As applied in the law, interpretation is ascertainment always of a complex fact such as the meaning of a custom, of a judicial decision, of a statute, of a regulation, of contract or of a will. The method by which interpretation is reached is construction. Construction therefore is the means of interpretation and intcrprctatic,n is the end. These definitions are not settled in usage. Thus, it may be found what here is called 'interpretation' is also called ~construction' and vice versa." (Al\ INTRODUCTION TO THE SCIENCE 01' LAW-Kocourek, s. 41, p. 191). We are therefore of the opinion that s. 22 of the General Clauses Act (corresponding to s.

37 of the English Act) is a section dealing not merely with construction but with interpretation and it follows that the provision' of that section arc applicable for the interpretation of the Act in view of the requirement of s. 29 tl1creof. In our opinion, Mr. Bhargava is unable to make good his argument on this aspect of the case. For the reasons expressed we hold that the judgment of the Rajasthan High Court dated April 3, 1965 should be set aside and that Civil Writ Petition No. 401 of 1963 filed by the respondent should be dismis.<;e.d. We accordingly allow this appeal with costs. R.K.P.S. A ppcc1/ allowed. ii