TaxTMI 
TaxTMI 
1978 (10) TMI 38
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.... 4344 of 1968. The three respondents are the three partners of a firm known as Mls. Ramakrishna Ramnath. It is a registered partnership firm. The firm was engaged in business of sale of bidis and during the relevant period used to purchase tendu leaves from the dealers. The firm failed to file any return and get itself registered under the State of Madhya Pradesh. The firm was treated as unregistered dealer and was assessed to sales tax on the basis of the best judgment. There were three assessment orders. The first was for the period November 1, 1956, to October 23, 1960, by an order dated 26th December, 1964, assessing the firm at Rs. 16,380 and imposing a penalty of Rs. 5,000. The second order related to the period October 24, 1960, to November 8, 1961, and was dated 20th December, 1964. The firm was assessed to Rs. 8,080 and a penalty of Rs. 2,000 was imposed. The third order was dated 20th December, 1964, and was for the period November 9, 1961, to October 28, 1962. The assessment against the firm was for Rs. 8,000 and a penalty of Rs. 2,000 was imposed. The demand notices were issued in the forms prescribed in the name of the firm by the STO. The firm failed to pay the tax....
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....m who are the three respondents herein. The question arises whether under the circumstances the partners can be prosecuted for the default of payment of tax and penalty by the firm. The " dealer " is defined in cl. 2(d) of the Act. It includes under s. 2(d)(1) local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carried on such business. This definition makes it clear that the firm is a separate, entity and is a dealer for the purposes of the Act. The firm under s. 7(2) of the Act was deemed to be a registered dealer. Section 18 provides that the amount of tax due from a registered dealer shall be assessed separately for each year. Accordingly, the dealer, which is a firm in this case, was assessed and notice given to the firm. In State of Punjab v. Jullundur Vegetables Syndicate [1966] 2 SCR 457 ; 17 STC 326 (SC), this court held that the firm which was assessed to sales tax under the East Punjab General Sales Tax Act was a separate entity under the Act. The firm was assessed to sales tax in 1953. The order was set aside by the Financial Commissioner, and proceedings were started for fresh asses....
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....tion is questioned on the ground that under the S.T. Act the Commissioner is entitled to pursue two different procedures for enforcing and realising the assessment,made but as there is no guidance as to the circumstances in which he should resort to either of the two procedures, the provision regarding grant of sanction is invalid. The two procedures that are available are under ss. 22(4-A) and 46(1)(c) of the Act. Section 22(4-A) runs as follows : " (4-A) If the tax assessed under this Act or any of the Acts repealed by section 52 or any other amount due under this Act or any instalment thereof is not paid by any dealer or other person liable to pay such tax, other amount due or any instalment thereof within the time specified there for in the notice of demand or in the order permitting payment in instalments or within the time allowed for its payment by the appellate or revising authority, the Commissioner may, after giving the dealer or other person a reasonable opportunity of being heard, direct that such dealer or person shall, in addition to the amount due, pay, by way of penalty, a sum equal to :-- (a) one per cent. of such amount for each month or part thereof for the....
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....e Commissioner will have to find that the dealer has failed to pay the tax within the time allowed and without reasonable cause. The submission of the learned counsel is that the procedure under s. 46, if taken, is harsh and more severe than the one contemplated under s. 22(4-A) which enables the Commissioner to levy a penalty and that too only after giving a reasonable opportunity of being heard. Before initiating prosecution the Commissioner is not under an obligation to give any notice to the assessee. Section 47-A was introduced from 1st January, 1964, by the M.P. Act No. 20 of 1964 which provides that no prosecution for contravention of any provision of this Act or of Rules made thereunder shall be instituted in respect of the same facts on which a penalty has been imposed under this Act or the said Rules, as the case may be. By the introduction of s. 47-A it is seen that when once proceedings are taken under s. 22(4A) no prosecution under s. 46(1)(c) can be instituted. The position, therefore, is that the Commissioner is at liberty to choose only one of the two remedies and the challenge is that one is harsher than the other and there is no guidance provided to the Commission....
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....ed to pay within the time allowed any tax assessed on him under the Act shall on conviction by the Magistrate of the First Class be liable to pay fine which may extend to one thousand rupees. This court after observing that the question that arose was whether s. 19 should prevail over s. 13 of the Act stated that " both the sections lay down the mode of recovery of arrears of tax and, as has already been noticed by the High Court, lead to the application of process of recovery by attachment and sale of movable and immovable properties belonging to the tax-evader and it cannot be said that one proceeding is more general than the other, because there is much that is common between them, in so far as mode of recovery is concerned ". Referring to s. 19 the court observed that in addition to recovery of the amount, it gives power to the Magistrate to convict and sentence the offender to fine or in default of payment of fine, to imprisonment and expressed its opinion that neither of the remedies for recovery, is destructive of the other, because if two remedies are open, both can be resorted to, at the option of the authorities recovering the amount. This decision supports the contention....
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....nes as to when prosecution can be resorted to and on that basis the court held that the power cannot be said to be unguided. The decision in State of Kerala v. C. M. Francis & Co. [1961] 12 STC 119 (SC) was not referred to in the two decisions. In Ram Sarup v. Union of India, AIR 1965 SC 247, the question arose as to whether the power under s. 125 of the Army Act which empowered the officer either to try a case by court martial or by an ordinary court or by a criminal court, was left entirely within his discretion without any guidance, was violative of art. 14 of the Constitution. The court held that the choice as to which court should try the accused is left to the responsible military officers under whom the accused is serving and these officers were to be guided by consideration of the exigencies of the service, maintenance of discipline in the army, speedier trial, the nature of the offence and the person against whom the offence is committed. When power is conferred on high and responsible officers they are expected to act with caution and impartiality while discharging their duties and the circumstances under which they will choose either of the remedies available should be l....
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....is considered not necessary. The option is with the Commissioner and if he thinks levy of penalty would achieve the purpose of collection of the tax he can have recourse to the provisions of s. 22(4A). Before levying a penalty under s. 22(4-A), the Commissioner shall give reasonable opportunity of being heard as to why the penalty should not be levied. Reading the two provisions harmoniously, we are of the view that the discretion is given to the Commissioner to resort to one of the two remedies as the facts of the case may require. In graver cases, he will be justified in taking the drastic remedy and resorting to prosecution in the criminal court if he is satisfied that such a course is necessary for the collection of the tax expeditiously. If the discretion is not properly exercised the court may be justified in interfering in such cases but the law cannot be held to be invalid. In the present case, we have no doubt, it is a grave case of failure to pay the tax as repeated reminders went unheeded. The Commissioner on the facts is fully justified in coming to the conclusion that resort to prosecution is necessary. On a consideration of the decisions on the point we are satisfied ....