Sales Tax Officer, Cuttack & ANR Vs.
M/S. B. C. Patel & Co [1958] INSC 43 (15 April 1958)
DAS, SUDHI RANJAN (CJ) AIYYAR, T.L.
VENKATARAMA DAS, S.K.
SARKAR, A.K.
BOSE, VIVIAN
CITATION: 1958 AIR 643 1959 SCR 520
ACT:
Sales Tax-Notification enforcing the charge
not wholly in consonance with the charging provision-Validity-Assessment for
periods both before and after the Constitution-LegalityOrissa Sales Tax Act,
1947 (Orissa XIV Of 1947), s. 4--Constitution of India, Art. 186.
HEADNOTE:
This appeal by the Sales Tax authorities was
directed against the judgment and order of the Orissa High Court, passed under
Art. 226 of the Constitution, quashing five orders of assessment covering five
quarters made against the respondents who carried on the business of collection
and sale of Kendu leaves in the erstwhile Feudatory State of Pallaliara to
which, on its merger into the province of Orissa on January 1, 1948, the
provisions of the Orissa Sales Tax Act, 1947, were extended on March 1, 1949.
On the same date the Government of Orissa issued a notification under S. 4(1)
of the Act which was in the following terms:
" In exercise of the powers conferred by
sub-section (1) of Section 4 Of the Orissa Sales Tax Act, 1947 (Orissa Act XIV
of 1947), as applied to Orissa State, the Government of Orissa are pleased to
appoint the 31st March, 1949, as the date with effect from which every dealer
whose gross turnover during the year ending the 31st March, 1949, exceeded Rs.
5,000 shall be liable to pay 521 under the said Act on sales effected after the
said date Section 4 Of the Act, inter alia, provided : " (1) .... with
effect from such date as the Provincial Government may by notification in the
Gazette, appoint, being not earlier than 'thirty days after the date of the
said notification, every dealer whose gross turnover during the year
immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be
liable to pay tax under the Act on sales effected after the date so notified....
(2) Every dealer to whom subsection (1) does not apply shall be liable to pay
under this Act with effect from the commencement of the year immediately
following that during which his gross turnover first exceeded Rs. 5,000 ".
The goods were admittedly delivered for
consumption at various places outside the State and the Sales Tax Officer as
well as the Assistant Collector in appeal, proceeding on the basis that the
sales took place in the State, held that the respondents were liable to Sales
Tax for all the five quarters, two of which fell before the commencement of the
Constitution and three thereafter. The contention of the respondents before the
High Court was that the notification under s. 4(1) Of the Act was invalid as it
ran counter to the provisions of that sub-section and no part of that charging
section could, therefore, come into force. It was further contended that the
assessment for the three quarters following the commencement of the
Constitution was invalid by reason or Art. 286 of the Constitution. The High
Court found entirely in favour of the assessee :
Held (per Das C. J., Venkatarama Aiyar, S. K.
Das and Vivian Bose, jj.), that the decision of the High Court in so far as it
related to the three post-Constitution quarters was correct and must be upheld.
The orders of assessment for those quarters contravened both Art. 286 of the
Constitution and s. 30(r)(a)(1) of the Orissa Sales Tax Act and were without
jurisdiction and must be set aside. So far as the two pre-Constitution quarters
were concerned, the assessees were clearly liable under s. 4(2) of the Act.
Per Das C. J. and Venkatarama Aiyar J. The
first part of the impugned notification, appointing the date from which the
liability was to commence, was in consonance with s. 4(1) Of the Act and,
therefore, clearly intra vires, whereas the second part, indicating the class
of dealers on whom the liability was to fall, went beyond that section and
must, therefore, be held to be ultra vires and invalid. But since the two parts
were severable, the invalidity of the second part could in no way affect the
validity of the first part which brought the charging section into operation
and the assessees were liable for the two pre-Constitution quarters under s.
4(1) as well.
Per S. K. Das and Vivian Bose JJ.-It would
not be correct to say that the second part of the notification was a mere
surplusage severable from the rest of the notification.
Liability to pay the 522 tax under s. 4(1) of
the Act could arise only on the issue of a valid notification in conformity
with the provisions of that sub-section and as there was no such notification
the assessees were not liable under s. 4(1) Of the Act which did not come into
operation. Subsections (1) and (2) Of s. 4 are mutually exclusive, and their
periods of application being different both could not apply at the same time
and no notification was necessary to bring into operation sub-s.
(2) Of the Act.
The goods having been admittedly sold and
delivered for consumption outside the State of Orissa, under Art. 286 (1)(a)
read with the Explanation as also under S.
30(1)(a)(1) of the Act, the sales were
outside the State of Orissa and, consequently, the assessment for the three
post Constitution quarters were without jurisdiction.
The State of Bombay v. The United Motors
(India) Ltd., [1953] S.C.R. 1069 and The Bengal Immunity Company Limited v. The
State of Bihar, [1955] 2 S.C.R. 603, relied on.
Per Sarkar J.-There could be no liability
under s. 4(1) Of the Act till a date was appointed there under, and where the
notification, as in the instant case, fixing such a date, was not in terms of
that sub-clause, there was no fixing of a date at all and the sub-clause could
not come into play and no liability could arise under it. It was impossible to
ignore the second part of the notification in question as a mere surplus age
since the notification read as a whole had one meaning and another without it.
The Government could not be heard to say that what it had said in the
notification was not what it actually meant.
Both the sub-clauses Of S. 4 having been
brought into force at the same time by the same notification, they applied to
all dealers together and contemplated a situation in which the liability of a
dealer under sub-cl. (1) might arise. It was apparent from the scheme of the
Act that sub-cl. (2) was not intended to have any operation till a date was
appointed under sub-cl. (1) and a liability under it might have arisen.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 230 of 1956.
Appeal by special leave from the judgment and
order dated April 12, 1955, of the Orissa High Court in 0. J. C. No. 60 of
1952.
C. K. Daphtary, Solicitor-General of India,
R. Ganapathi Iyer and R. H. Dhebar, for the appellants.
S. N. Andley, J. B. Dadachanji and Rameshuar
Nath, for the respondent.
1958. April 15. The Judgment of Das C. J. and
523 Venkatarama Aiyar J. was delivered by Das C. J. The Judgment of S. K. Das
and Vivian Bose JJ. was delivered by S. K. Das J. Sarkar J. delivered a
separate judgment.
DAS C. J.-We agree that this appeal must be
allowed in part but we prefer to rest our judgment on one of the material
points on a ground which is different from that adopted by our learned Brother
S. K. Das J. in the judgment which has just been delivered by him and which we
have had the advantage of perusing.
The Orissa Sales Tax Act, 1947 (Orissa XIV of
1947), hereinafter referred to as the said Act received the assent of the
Governor-General on April 26, 1947, when s. I of 'the Act came into force. On
August 1, 1947, a Notification was issued by the Government of Orissa bringing
the rest of the said Act into force in the Province of Orissa, as it was then
constituted. Section 4, as it stood at all times material to this appeal, ran
as follows:
" 4(1) Subject to the provisions of
sections 5, 6, 7 and 8 and with effect from such date as the Provincial
Government may, by notification in the Gazette, appoint, being not earlier than
thirty days after the date of the said notification, every dealer whose gross
turnover during the year immediately preceding the commencement of this Act
exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected
after the date so notified:
Provided that the tax shall not be payable on
sale involved in the execution of a contract which is shown to the satisfaction
of the Collector to have been entered into by the dealer concerned on or before
the date so notified.
(2)Every dealer to whom subsection (1) does
not apply shall be liable to pay tax under this Act with effect from the
commencement of the year immediately following that during which his gross
turnover first exceeded Rs. 5,000.
(3)Every dealer who has become liable to pay
tax under this Act shall continue to be so liable until the expiry of three
consecutive years, during each of 524 which his gross turnover has failed to
exceed Rs. 5,000 and such further period after the date of such expiry as may
be prescribed and on the expiry of this latter period his liability to pay tax
shall cease.
(4)Every dealer whose liability to pay tax
has ceased under the provisions of sub-section (3) shall again be liable to pay
tax under this Act with effect from the commencement of the year immediately
following that during Which his gross turnover again exceeds Rs. 5,000."
On August 14, 1947, a notification was issued by the Government of Orissa
appointing September 30, 1947, as the date with effect from which that
sub-section was to come into force in the then province of Orissa.
On January 1, 1948, by a covenant of merger
executed by its ruler, the feudatory State of Pallahara merged into the
province of Orissa. In exercise of the powers delegated to it by the Government
of India under what was then known as the Extra Provincial Jurisdiction Act,
1947, the Government of Orissa on December 14, 1948, issued a notification
under s. 4 of that Extra Provincial Jurisdiction Act, extending the Orissa
Sales Tax Act to the territories of the erstwhile feudatory States, including
Pallahara which had merged into the province of Orissa. On March 1, 1949, a
notification under s. 1(3) was issued by the Government of Orissa bringing ss.
2 to 29 of the said Act into force in the added territories. On the same day
another notification was issued under s. 4(1) of the Act, which was in the
following terms:
In exercise of the powers conferred by
Sub-section (1) of Section 4 of the Orissa Sales Tax Act, 1947 (Orissa Act XIV
of 1947) as applied to Orissa State, the Government of Orissa are pleased to
appoint the 31st March, 1949, as the date with effect from which every dealer
whose gross turnover during the year ending the 31st March, 1949, exceeded Rs.
5,000 shall be liable to pay tax under the said Act on sales effected after the
said date." It was after this notification had been. issued that the respondents
were sought to be made liable to tax.
The respondents were assessed under the said
Act 525 for five quarters ending respectively on September 30, 1949, December
31, 1949, June 30, 1950, September 30, 1950, and December 31, 1950. It will be
noticed that the first two quarters related to a period prior to the
commencement of the Constitution and the remaining three quarters fell after
the Constitution came into force. The Sales Tax Officer, Cuttack having
assessed the respondents to Sales Tax under the said Act for each and all of
the said five quarters and the respondent's several appeals against the said
several assessment orders under the said Act having been dismissed on April 12,
1952, the respondents filed a petition under Art. 226 of the Constitution in
the Orissa High Court praying, inter alia, for a writ in the nature of a writ
of certiorari for quashing the said assessment orders and for prohibiting the
appellants from realising the tax so assessed or from making assessments on
them in future. The contention of the respondents before the High Court was
that the notification issued by the Government of Orissa on March 1, 1949,
under s. 4(1) being invalid in that it ran counter to the provisions of that
sub-section, no part of the charging section came into -force and consequently
they were not liable to tax at all for any of the five quarters. As regards the
three quarters following the commencement of the Constitution, they urged an
additional plea, namely, that the assessment orders for those three quarters
were invalid by reason of the provisions of Art. 286 of the Constitution.
The High Court accepted both these
contentions and by its judgment and order pronounced on April 12, 1955,
cancelled the assessments. The Sales Tax Officer, Cuttack, and the Collector of
Commercial Taxes. Cuttack, have appealed against the judgment and order of the
High Court.
As regards the assessment orders for the
three post' Constitution quarters, the decision of the High Court purports to
have proceeded on the decision of this Court in the State of Bombay v. United
Motors (India) Ltd. (1). We find ourselves in complete agreement with (1)
[1953] S.C.R. 1069.
67 526 our learned Brother S. K. Das J. for
reasons stated by him that the assessment orders for the three post
Constitution quarters were hit by cl. (1) of Art. 286 and also s. 30 (1) (a)
(1) of the Act and were rightly held by the High Court to be without
jurisdiction. It is with regard to the assessment orders for the two
pre-Constitution quarters that we have come to a conclusion different from that
to which our learned Brother has arrived. We proceed to state our reasons.
The impugned notification, as hereinbefore
stated, was issued on March 1, 1949, under s. 4 (1) of the said Act.
Under that sub-section every dealer whose
gross turnover during the year immediately preceding the commencement of the
Act exceeded Rs. 5,000 would be liable to pay the tax under the Act on sales
effected after the date " so notified ", that is to say, the date
which the provincial Government might by notification in the Gazette appoint.
It is clear, therefore, that s. 4 (1) by its own terms determined the persons
on whom the tax liability would fall but left it to the provincial Government
only to appoint the date with effect from which the tax liability would
commence. It follows, therefore, that the only 'power conferred by s. 4 (1) on
the Government was to appoint, by a notification in the Official Gazette, a
date with effect from which the tax liability would attach to the dealers
described and specified in the sub-section itself as the persons on whom that
liability would fall. The Government of Orissa issued the notification,
hereinbefore quoted, " in exercise of the powers conferred by sub-section
(1) of section 4 " and appointed March 31, 1949, as the date with effect
from which the tax liability would commence. It was none of the business of the
Government of Orissa to say on what class of dealers the tax liability would
fall, for that had been already determined by the sub-section itself Therefore,
by the notification the Government of Orissa properly exercised its powers
under sub-s. (1) in so far as it appointed March 31, 1949, as the date, but it
exceeded its powers by proceeding to say that all dealers whose gross turnover
during the year ending 527 March 31, 1949, exceeded Rs. 5,000 should be liable
to pay tax under the Act. This part of the notification clearly ran counter to
the sub-section itself, for under that subsection it is only those dealers
whose gross turnover exceeded Rs. 5,000 " during the year immediately
preceding the commencement of this Act " that became liable to pay the
tax. For the purposes of the five assessment orders it made no difference
whether the Act is taken to have commenced on December 14, 1948, when it was
extended to the feudatory States by notification under s. 4 of the Extra
Provincial Jurisdiction Act, 1947, or on March 1, 1949, when the notification
under s. 1 (3) was issued, for in either case the year immediately preceding
the commencement of this Act was April 1, 1947, to March 31, 1948. The
position, therefore, is that by the earlier part of the impugned notification
the Government of Orissa properly and rightly exercised its power in appointing
March 31, 1949, as the date with effect from which the liability to pay tax
under the Act would commence, but by its latter part did something more which
it had no business to do, i. e., to indicate, contrary to the sub-section
itself, that those dealers whose gross turnover during the year ending on March
31, 1949, would be liable to pay tax under the Act. The notification in so far
as it purports to determine the class of dealers on whom the tax liability
would fall, was certainly invalid.
The question that immediately arises is as to
whether the whole notification should be adjudged invalid as has been done by
the High Court and as is proposed to be done by my learned Brother S. K. Das J.
or the two portions of the notification should be severed and effect should be
given to the earlier part which is in conformity with s. 4(1) and the latter
part which goes beyond the powers conferred by the subsection to the Government
of Orissa should be rejected.
Immediately the question of severability
arises. Are the two portions severable ? We find no difficulty in holding that
the portion of the notification which went beyond the powers conferred on the
Government of Orissa is quite clearly and easily severable from that 528 which
was within its powers. It cannot possibly be said that had the Government of
Orissa known that it had no power to determine the persons on whom the tax
liability would fall it would not have appointed a date at all. In our view
there is no question of the two parts being inextricably wound up. We,
therefore, hold that the notification, in so far as it appointed March 31,
1949, as the date with effect from which liability to pay tax would commence
was valid and the rest of the notification was invalid and must be treated as
surplus without any legal efficacy. The result, therefore, is that the charging
section was effectively brought into force and the entire charging section
became operative and dealers could be properly brought to charge under the
appropriate part of the charging section.
It is true that the notification having also
stated that the dealers, whose gross turnover exceeded 5,000 (luring the year
ending March 31, 1949, would be liable to pay the tax, the sales tax
authorities naturally applied their mind to the question whether during the
year ending March 31, 1949, the gross turnover of the respondents exceeded the
requisite amount, but did not inquire into the question whether the
respondent's gross turnover exceeded Rs. 5,000 during the year immediately
preceding the commencement of the Act which in this case was the financial year
from April 1, 1947 to March 31, 1948. If the matter stood there, it would have
been necessary to send the case back to the Sales Tax Officer to enquire into
and ascertain whether the quantum of the gross turnover of the respondents during
the last mentioned financial year ending on March 31, 1948, exceeded Rs. 5,000
or it did not. But a remand is not called for because it appears from the
judgment under appeal that it was conceded that for the period April 1, 1949,
till the commencement of the Constitution on January 26, 1950, the respondents
would have been liable to pay sales tax provided a valid notification had been
issued, under sub-s. (1) of s.
4. This concession clearly amounts to an
admission that the gross turnover of the respondents during the financial 529
year ending on March 31, 1948, which was the year immediately preceding March
31, 1949, exceeded Rs. 5,000.
We have already held that the notification'
issued under s. 4(1) in so far as it appointed March 31, 1949, as the date with
effect from which the liability to pay sales tax would commence was good and
valid in law. That finding coupled with the concession mentioned above relieves
us from the necessity of remanding the case to the sales tax authorities. Even
if we assume, contrary to the aforesaid concession, that the gross turnover of
the respondents during the financial year ending on March 31, 1948, did not
exceed Rs. 5,000 and, therefore, s. 4 (1) did not apply to them the respondents
will still be liable to pay the sales tax for the two pre-Constitution quarters
under s. 4 (2).
For reasons stated above we hold that the
assessment orders for the three post-Constitution quarters were invalid and we
accordingly agree that this appeal, in so far as it is against that part of the
order of the -High Court which cancelled the assessment orders for those three
postConstitution quarters, should be dismissed. We further hold that the
assessments for the two pre-Constitution quarters were valid for reasons stated
above and accordingly we agree in allowing this appeal in so far as it is
against that part of the order of the High Court which cancelled the assessment
orders for the two pre-Constitution quarters Oil the ground that the
notification issued under s. 4 (1) of the Act was wholly invalid. Under the
circumstances of this case we also agree that the parties should bear their own
costs in the High Court as well as in this Court.
S. K. DAS J.-This appeal on behalf of the
assessing authorities, Cuttack, has been brought pursuant to an order made on
January 17, 1956, granting them special leave to appeal to this Court from the
judgment and order of the High Court of Orissa dated April 12,1955, by which
the High Court quashed certain orders of assessment of sales tax made against
the respondent.
The short facts are these. The respondent,
Messrs.B. C. Patel and Co., is a partnership firm carrying on 530 the business
of collection and sale of Kendu leaves. The firm has its headquarters at
Pallahara, which was formerly one of the Feudatory States of Orissa and merged
in the.
then province of Orissa by a merger agreement
dated January 1, 1948. The Sales Tax authorities, Cuttack, in the State of
Orissa, assessed the respondent to sales tax in respect of sales of Kendu
leaves which took place for five quarters ending on September 30, 1949,
December 31, 1949, June 30, 1950, September 30, 1950 and December 31, 1950. It
should be noted that two of the aforesaid quarters related to a period prior to
the commencement of the Constitution, and the remaining three quarters were
post-Constitution. The facts which the Sales Tax authorities found were (I.)
that the respondent collected Kendu leaves in Orissa and sold them to various
merchants of Calcutta, Madras and other places on receipt of orders from them,
(2) that the goods were sent either f. o. r. Talcher or f. o. r. Calcutta, and
(3) the sale price was realised by sending the bills to the purchasers for
payment. The admitted position was that the goods were delivered for
consumption at various places outside the State of Orissa. The Sales Tax
authorities proceeded on the footing that all the sales took place in Orissa
even though the goods were delivered for consumption at places outside Orissa.
By five separate assessment orders dated May 31, 1951, the Sales Tax Officer,
Cuttack, held that the sales having taken place in Orissa, the respondent was
clearly liable to sales tax for the pre Constitution period and, for the
post-Constitution period, though the sales came within cl. (2) of Art. 286 of
the Constitution, the respondent was liable to sales tax under the Sales Tax
Continuance Order, 1950, made by the President. These findings were affirmed by
the Assistant Collector of Sales Tax, Orissa, on appeal, by his order dated
April 12, 1952. The respondent assessee then filed a petition under Art. 226 of
the Constitution in the High Court of Orissa and prayed for the issue of a writ
of certiorari or other appropriate writ quashing the aforesaid orders of
assessment. The case of the respondent before the High Court was that the
assessment orders., both with 531 regard to the pre-Constitution and
post-Constitution periods, were invalid and without jurisdiction. The High
Court accepted the case of the respondent and held that the assessment orders
for the entire period were invalid and without jurisdiction. The present appeal
has been brought from the aforesaid judgment and order of the High Court of
Orissa dated April 12, 1955.
Though before the Sales Tax authorities and
in the High Court, an attempt was made on behalf of the respondent assessee to
show that there were no completed sales in Orissa and what took place in Orissa
was a mere agreement to sell, that question is no longer at large before us.
The Sales Tax authorities found against the respondent on that question and the
High Court did not consider it necessary to decide it on the petition filed by
the respondent. The High Court proceeded on certain other grounds pressed
before it by the respondent, and we proceed now to consider the validity of
those grounds. The grounds are different , in respect of the two periods,
pre-Constitution, and post Constitution, and it will be convenient to take
these two periods separately.
But before we do so, it is necessary to state
some facts with regard to the enactment and enforcement of the Orissa Sales Tax
Act, 1947 (Orissa XlV of 1947), hereinafter referred to as the Act, in the old
province of Orissa and the ex-Feudatory State of Pallahara. The Act received
the assent of the Governor General on April 26, 1947, and was first published
in the Orissa Gazette on May 14,1947.
Section I came into force at once in the old
province of Orissa and sub-s. (3) of that section said that " the rest of
the Act shall come into force on such date as the Provincial Government may, by
notification in the Gazette, appoint ". The Provincial Government of
Orissa notified August 1, 1947, as the date on which the rest of the Act was to
come into force in the province of Orissa. It is necessary at this stage to refer
to the charging section, namely s. 4 of the Act, which is set out below as it
stood at the relevant time:
" 4. (1) Subject to the provisions of
sections 5, 6, 7 532 and 8 and with effect from such date as the Provincial
Government may, by notification in the Gazette, appoint, being not earlier than
thirty days after the date of the said notification, every dealer whose gross
turnover during the year immediately preceding the commencement of this Act
exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected
after the date so notified.
(2) Every dealer to whom subsection (1) does
not apply shall be liable to pay tax under this Act with effect from the
commencement of the year immediately following that during which his gross
turnover first exceeded Rs. 5,000.
(3)Every dealer who has become liable to pay
tax under this Act shall continue to be so liable until the expire of three
consecutive years, during each of which his gross turnover has failed to exceed
Rs. 5,000 and such further period after the date of such expiry as may be
prescribed and on the expiry of this latter period his liability to pay tax
shall cease.
(4)Every dealer whose liability to pay tax
has ceased under the provision of sub-section (3) shall again be liable to pay
tax under this Act with effect from the commencement of the year immediately
following that during which his gross turnover again exceeds Rs. 5,000."
It is to be noticed that for a liability to arise under subs. (1) of s. 4, a
notification by the Provincial Government is necessary, and the notification
must fix the date from which every dealer whose gross turnover during the year
immediately preceding the commencement of the Act exceeded Rs. 5,000 shall be
liable to pay tax under the Act on sales effected after the date so notified.
Such a notification was issued for the old province of Orissa on August 30,
1947, and September 30,1947, was fixed as the date with effect from which every
dealer whose gross turnover during the year ending March 31, 1947, exceeded Rs.
5,000 was made liable to pay tax under the Act on sales effected after the said
date. This was the position in the old province of Orissa. We have already
stated that the 533 ex-Feudatory State of Pallahara was merged into the old
province of Orissa by a merger agreement dated January 1, 1948. After the
merger of Pallahara in the old province of Orissa, the Government of Orissa
under the delegated authority of the Central Government and exercising the
powers under s. 4 of the Extra Provincial Jurisdiction Act, 1947 (XLVII of
1947) (as it was then called) applied the Act to the former Orissa States
including Pallahara by a notification dated December 14, 1948. The only
modification made in applying the Act to the Orissa States was to substitute the
words " Orissa States "for the words " Province of Orissa
", wherever they occurred in the Act., By merely applying the Act to the
Orissa States on December 14, 1948, all sections of the Act did not come into
force in that area at once, since a notification under sub-s. (3) of s. 1 was
necessary to bring into force ss. 2 to 29. Such a notification was issued on
March 1, 1949. The notification was in these terms:
" In exercise of the powers conferred by
sub-section (3) of section 1 of the Orissa Sales Tax Act, 1947 (Orissa Act XIV
of 1947), as applied to Orissa States, the Government of Orissa are pleased to
appoint the 1st day of March, 1949, as the date on which sections 2 to 29 of
the said Act shall come into force The position therefore was this. Section 1
of the Act came into force in Pallahara on December 14, 1948, and the remaining
sections came into force on March 1, 1949, namely, those sections which dealt
with the liability of a dealer to pay sales tax, set tip a machinery for
collection of the tax and dealt with other ancillary matters. A notification
under sub-s. (1) of s. 4 was also necessary for a liability to arise under that
sub-section in the said area, and such a notification was issued on March 1,
1949. That notification must be quoted in full, as one of the points for our
decision is the validity of the notification. The notification read:
" In exercise of the powers conferred by
sub-section (1) of section 4 of the Orissa Sales Tax. Act, 1947 (Orissa Act XIV
of 1947), as applied to Orissa States, the Government of Orissa are pleased to
68 534 appoint the 31st March, 1949, as the date with effect from which every
dealer whose gross turnover during the year ending the 31st March, 1949,
exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales
effected after the said date ".
Two other provisions of the Act must be
referred to here.
The word "dealer" is defined in s.
2(c) in these terms :
" 'dealer' means any person who carries
on the business of selling or supplying goods in Orissa, whether for
commission, remuneration or otherwise and includes any firm or a Hindu joint
family, and any society, club or association which sells or supplies goods to
its members; ".
The word " year " is defined ins.
2(j) and means the financial year.
Now, with regard to the pre-Constitution
period the High Court has found that the notification under subs. (1) of s.
4 dated March 1, 1949, was an invalid
notification and therefore the respondent was not liable to tax under that
subsection in respect of the transactions which took place in the
pre-Constitution period. The reason why the High Court has held that the
notification in question was invalid must now be stated. The scheme of sub-s.
(1) of s. 4 is, firstly, to fix a date, not earlier than thirty days after the
date of the notification, from which the liability is to commence; and,
secondly, to impose a liability on, every dealer whose gross turnover during
the year immediately preceding the commencement of the Act exceeded Rs. 5,000.
The tax liability is on transactions of sale
which take place after the notified date (which must necessarily be after the
commencement of the Act); but in determining on which class of dealers, the
incidence of taxation will fall, the crucial period as mentioned in the
sub-section itself is the year immediately preceding the commencement of the
Act.
Therefore, the subsection contemplates two.
matters, one of which may be called the 'relevant date', and the other
'relevant period'. So far as the old province of Orissa was concerned, there
was no difficulty. The notification fixed September 30, 1947, as the relevant
date, and the year immediately preceding 535 the commencement of the Act in the
old province of Orissa was the relevant period, viz., the financial year
1946-47, i. e., April 1, 1946 to March 31, 1947. Therefore dealers whose gross
turnover exceeded Rs. 5,000 in 1946-47, became liable under sub-s. (1) of S. 4
to tax on transactions of sale after September 30, 1947, in the old province of
Orissa. The notification for the Orissa States, however, fixed March 31, 1949,
as the relevant date ; but in determining the class of dealers who would be
subject to the liability, it took the year ending March 31, 1949, as the
relevant period. This was clearly a mistake, because under sub-s. (1) of S. 4
the crucial year is the year immediately preceding the commencement of the Act.
The Act commenced in the Orissa States either on December 14, 1948, or on March
1, 1949, and the financial year immediately preceding was the year 1947-48, i.
e., April 1, 1947 to March 31, 1948.
The notification would have been in
consonance with the subsection, if it had mentioned the year ending March 31,
1948, (instead of March 31, 1949) as the crucial year for determining the class
of dealers who would be subject to the liability under sub-s. (1) of S. 4. This
mistake in the notification is the ground on which the High Court held that the
assessments for the two quarters of the pre-Constitution period were invalid
and without jurisdiction.
The learned Solicitor-General who has
appeared for the appellants has conceded that a mistake was made in the
notification. However, lie has argued-firstly, that the mistake was immaterial
and secondly, that the assessment orders for the pre-Constitution period were
justified under sub-s. (2) of s: 4. As to the first argument that the mistake
was immaterial, he has submitted that the liability to tax arose tinder the
sub-section and not under the notification, and any mistake in the notification
did not affect such liability; lie has also submitted that the words and
figures which gave rise to the mistake were mere surplus age and could be
severed from the rest of the notification. We are unable to accept this
argument. For a liability to arise under sub-S. (1) of S. 47 the issue of a;
536 notification is an essential
prerequisite, and unless the notification complies with the requirements of the
subsection, no liability to tax can arise under it. The notification not only
fixed the relevant date, but fixed the relevant period for determining the
class of dealers who would be subject to the liability. In doing so, it made a
mistake, the result of which was that the notification was not in conformity
with the law. We do not think that it can be severed in the way suggested by
the learned Solicitor General.
Now, we come to the second argument whether
the pre Constitution assessment orders are justified under sub-s.
(2) of s. 4. The High Court held that they
were not, and gave two reasons for its view: one was that, subsections (1) and
(2) were mutually exclusive and the other was based on the opening words of
sub-s. (2), which says that " every dealer to whom sub-section (1) does
not apply etc." The High Court expressed the view that if the notification
under subs. (1) were correctly drawn up, the subsection would have applied to
the respondent ; therefore, the opening words of sub-s. (2) barred the
application of the sub-section to the respondent. At first sight, there appears
to be some force in this view. But on a closer examination we do not think that
the view expressed by the High Court is correct. Subsections (1) and (2) are
mutually, exclusive only in the sense that they do not operate in the same
field ; that is, the relevant periods for their application are different.
The relevant period for the application of
sub-s. (1) is " the year immediately preceding the commencement of the
Act." Sub-section (2) however does not require any notification, and under
it every dealer is liable to pay tax under the Act with effect from the
commencement of the year immediately following that during which his gross
turnover first exceeded Rs. 5,000. Obviously, the relevant period for the
application of sub-s. (2) is the year immediately following that during which the
gross turnover of a dealer first exceeded Rs. 5,000. The contrast between the
two subsections is this: for sub-s. (1) the crucial year is the year
immediately preceding the commencement of 537 the, Act; but for sub-s. (2) the
crucial, year is the year in which the dealer's gross turnover first exceeded
Rs.
5,000. We agree that for the same relevant
year both subsections (1) and (2) cannot apply, because sub-s. (2) says-"
Every dealer to whom subs. (1) does not apply etc." Let us, for example,
take the year 1946-47 in the old province of Orissa. That was the year
immediately preceding the commencement of the Act in that area, and sub-s. (1)
applied to all dealers whose gross turnover exceeded Rs. 5,000, first or
otherwise, in that year; sub-s. (2) did not apply to such dealers even if their
gross turnover exceeded Rs. 5,000 for the first time, in that year; because
where sub-s. (1) applies, sub-s. (2) does not apply. But what is the case
before us? The year immediately preceding the commencement of the Act in the
Pallahara area was 1947-48, and sub-s. (1) would have applied to the respondent
if the notification had mentioned that year. But it did not, and the result was
that it was not necessary to find if the respondent's gross turnover exceeded
Rs. 5,000 in 1947-48.
What was found was that the respondent's
gross turnover exceeded Rs. 5,000 in 1948-49, that is, the year ending March
31,, 1949, which was not the year immediately preceding the commencement of the
Act in the Pallahara area.
Obviously, therefore, sub-s. (1) did not
apply to the respondent; but he clearly came under sub-s. (2). The Act came
into force in the Orissa States on March 1, 1949. By March 31, 1949, the
respondent's gross turnover exceeded Rs. 5,000. He was, therefore, liable to pay
tax under subs. (2 ) with effect from the commencement of the year immediately
following March 31, 1949, that is, from April 1, 1949. It has been argued for
the respondent that the word `first' in sub-s. (2) means ` first' after the
commencement of the Act. Assuming this to be correct, the respondent still
comes under sub-s. (2) because even if the Act came into force on March 1,
1949, the respondent's gross turnover first exceeded Rs. 5,000 in the year
ending March 31, 1949 which was after the commencement of the Act.
538 We are, therefore, of the view that all
the requirements of sub-s. (2) are fulfilled in this case, and the two
assessment orders made against the respondent for the pre Constitution period
were validly made under sub-s. (2) of s. 4 of the Act. The effect of the
invalid notification under sub-s. (1) was that there was no liability there under,
and no dealers were liable to pay tax under that sub-section.
But that did not mean that any dealer who
properly came under sub-s. (2) was free to escape his liability to pay tax.
Surely, the position cannot be worse than what it would have been if the
Provincial Government had failed to issue a, notification under sub-s. (1).
We now turn to the post-Constitution period.
The short ground on which the High Court held the assessment orders for this
period to be invalid was based on the decision of this Court in The State of
Bombay v. The United Motors (India) Ltd. (1) Said the High Court:
" Clause (1) of Article 286 prohibited a
State from taxing a sale unless such sale took place within the State as
explained in the Explanation to the clause of the Article.
Similarly, clause (2) of that Article
restricted the power of a State to tax a sale which took place in the course of
inter-State trade or commerce'. Doubtless, by virtue of the proviso to that
clause an Order by the President may save taxation on such inter-State sales
till the 31st March, 1951. The recent S.C. p. 252 hap, settled the law
regarding the true scope of these two clauses of the Article. Where a
transaction of sale involves inter-State elements if the goods are delivered
for consumption in a particular State that State alone can tax the sale by
virtue of clause (1) of that Article and by a legal fiction that sale becomes
`intra-State sale'. Clause (2) of Article 286 applies to those transactions of
sale involving inter-State elements which do not come within the scope of
clause (1) of that Article. On the admitted facts of the present case, clause
(1) of Article 286 would apply. The sales involve inter State elements inasmuch
as the buyers are outside Orissa, price is paid outside Orissa and (1) [1953]
S.C.R. 1069.
539 goods are delivered for consumption
outside Orissa. Hence, by virtue of clause (1) of Article 286 as explained by
their Lordships of the Supreme Court, the State of Orissa is not competent to
tax such transactions of sale." The learned Solicitor General has rightly
pointed out that in a later decision of this Court in The Bengal Immunity
Company Limited v. The State of Bihar and Others (1), which was, not available
to the High Court when it delivered its judgment, the view expressed in the
United Motors, case (2) was departed from in so far as the earlier decision
held that cl. (2) of Art. 286 of the Constitution did not affect the power of
the State in which delivery of goods was made to tax inter-State sales or
purchases of the kind mentioned in the Explanation to cl. (1) and the effect of
the Explanation was that such transactions were saved from the ban imposed by
Art. 286 (2). The learned Solicitor General, therefore, contends that on the
basis of the later decision, the assessments made should be held to be valid
under the Sales Tax Continuance Order 1950, made by the President, even though
the sales took place in course of inter-State trade or commerce.
It is necessary to state here that by the
Adaptation of Laws (Third Amendment) Order, 1951, made by the President in
exercise of the power given by cl. (2) of Art. 372 of the Constitution, s. 30
was inserted in the Act to bring it into accord with the Constitution, from
January 26, 1950.
Section 30 which in substance reproduced Art.
286 of the Constitution, as it then stood, was in these terms" 30. (1)
Notwithstanding anything contained in this Act-(a) a tax on sale or purchase of
goods shall not be imposed under this Act, (i) where such sale or purchase
takes place outside the State of Orissa; or (ii) where such sale or purchase
takes place, in the course of import of the goods into, or export of the goods
out of, the territory of India;
(b) a tax on the sale or purchase of any
goods (1) [1955] 2 S.C.R. 603. (2) [1953] S.C.R. 1069.
540 shall not, after the 31st day of March,
1951, be imposed where such sale or purchase takes place in the course of
inter-State trade or commerce except in so far as Parliament may by law
otherwise provide.
(2) The explanation to clause (1) of Article
286 of the Constitution shall apply for the interpretation of sub clause (i) of
clause (a) of sub-section (1). We are of the view that the Bengal Immunity
decision (1) does not really help the learned Solicitor-General to establish
his contention that the assessments for the post-Constitution period were
valid. The admitted position was that the goods sold were delivered for consumption
at various places outside the State of Orissa. Therefore, under cl. (1) (a) of
Art. 286 read with the Explanation as also under s. 30 of the Act, the sales
were outside Orissa. It is true that the Bengal Immunity decision (1) took a
view different from that of the earlier decision in so far as it held that
inter State sales were converted into intra-State sales by the Explanation; but
it -was pointed out that the States' power with respect to a sale or purchase
might be hit by one or more of the bans imposed by Art. 286. With reference to
the different clauses of Art. 286, it was observed in the majority judgment of
the Bengal Immunity decision(1):
" These several bans may overlap in some
cases but in their respective scope and operation they are separate and
independent. They deal with different phases of a sale or purchase but,
nevertheless, they are distinct and one has nothing to do with and is not
dependent on the other or others. The States' legislative power with respect to
a sale or purchase may be, hit by one or more of these bans.
Thus, take the case of a sale of goods
declared by Parliament as essential by a smaller in West Bengal to a purchaser
in Bihar in which goods are actually delivered as a direct result of such sale
for consumption in the State-of Bihar. A law made by West Bengal without the
assent of the President taxing this sale will be unconstitutional because (1)
it will offend Article 286 (1) (a) as the gale has taken place outside the
territory by virtue of the (1) [1935] 2 S.C.R. 603.
541 Explanation to clause (1) (a), (2) it
will also offend Article 286 (2) as the sale has taken place in the course of
inter-State trade or commerce and (3)such law will also be contrary to Article
286 (3) as the goods are essential commodities and the President's assent to
the law was not obtained as required by clause (3) of Article 286. This appears
to us to be the general scheme of that article." (see pp. 638-639 of the
report).
At p. 647 of the report, it was further
observed-" The operative provisions of the several parts of Article 286,
namely, clause (1) (a), clause (1) (b), clause (2) and clause (3) are
manifestly intended to deal with different topics and, therefore, one cannot be
projected or read into another. On a careful and anxious consideration of the
matter in the light of the fresh arguments advanced and discussions held oil
the present occasion we are definitely of the opinion that the Explanation in
clause (1) (a) cannot be legitimately extended to clause (2) either as an
exception or as a proviso thereto or read as curtailing or limiting the ambit
of clause (2)." As to the President's order, it was stated at p. 656:
" It will be noticed that under that
proviso the President's order was to take effect " notwithstanding that
the imposition of such tax is contrary to the provisions of this clause ".
This non obstante clause does not, in terms, supersede clause (1) at all and,
therefore, prima facie, the President's order was subject to the prohibition of
clause (1) (a) read with the Explanation. " Obviously, therefore, even on
the Bengal Immunity decision.
(1) the assessments for the post-Constitution
period in this case were hit by cl. (1) (a) of Art. 286 as also s. 30 (1) (a)
(i) of the Act and were rightly held to be without jurisdiction.
The result, therefore, is that in our view
this appeal should succeed in part, as we hold that the assessments for the
-two quarters of the pre-Constitution period were valid under sub-s. (2) of s.
4 of the Act and the (1) [1955] 2 S.C.R. 603.
69 542 assessments for the post-Constitution
period were invalid.
In view of the divided success of the parties
we further think that they should bear their own costs in the High Court and in
this Court.
SARKAR J.-The respondents are a firm of merchants
carrying on business in a part of the State of Orissa which was formerly the
feudatory State of Pallahara. This State of Pallahara had merged in the
Province of Orissa under an agreement with the Government of India, dated
January 1, 1948. On December 14, 1948, the Government of Orissa under the
powers conferred by s. 4 of the Extra Provincial Jurisdiction Act, 1947, and
with the permission of the Government of India, issued a Notification applying
the Orissa Sales Tax Act, 1947 (Orissa XIV of 1947), passed by the Legislature
of Orissa, to the areas which previously constituted the feudatory States
including Pallahara, then merged in Orissa. The respondents were assessed to
sales tax under this Act in respect of their sales which took place during five
quarters between July 1, 1949 and December 31, 1950. They had appealed under
the provisions of the Act to higher authorities from the original orders of
assessment, but were unsuccessful. They then applied to the High Court of
Orissa on November 11. 1952, for an appropriate writ directing the Sales Tax
Officer the assessing authority and one of the appellants herein, to refrain
from realizing the tax or from giving effect to the assessment orders in any
manner whatsoever and quashing such orders and also prohibiting future
assessment. By its judgment delivered on April 12, 1955, the High Court allowed
the petition and cancelled the assessment orders. From that judgment the
present appeal has come to this Court.
The question that I propose to discuss in
this judgment is whether the respondents are liable to pay tax under the
provisions of the Act in the circumstances which existed in this case and to
which, I shall refer a little later. The sections of the Act under which the
tax is sought to be levied are set out below:
S.1. (1) This Act may be called the Orissa
Sales Tax Act, 1947.
543 (2) It extends to the whole of the
Province of Orissa.
(3)This section shall come into force at once
and the rest of this Act shall come into force on such date as the Provincial
Government may, by notification in the Gazette, appoint.
S.2. In this Act, unless there is anything
repugnant in the subject or context,(j) " year " means the financial
year.
S. 4. (1) Subject to the provisions of
sections 5, 6, 7 and 8 and with effect from such date as the Provincial
Government may, by notification in the Gazette, appoint, being not earlier than
thirty days after the date of the said notification, every dealer whose gross
turnover during the year immediately preceding the commencement of this Act
exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected
after the date so notified:
Provided that the tax shall not be payable on
sale involved in the execution of a contract which is shown to the satisfaction
of the Collector to have been entered into by the dealer concerned on or before
the date so notified.
(2)Every dealer to whom sub-section (1) does
not apply shall be liable to pay tax under this Act with effect from the
commencement of the year immediately following that during which his gross
turnover first exceeded Rs. 5,000.
(3)Every dealer who has become liable to pay
tax under this Act shall continue to be so liable until the expiry of three
consecutive years, during each of which his gross turnover has failed to exceed
Rs. 5,000 and such further period after the date of such expiry as may be
prescribed and on the expiry of this latter period his liability to pay tax
shall cease.
(4)Every dealer whose liability to pay tax
has ceased under the provisions of sub-section (3) shall again be liable to pay
tax under this Act with effect from the commencement of the year immediately
following that during which his gross turnover again exceeds Rs. 5,000.
544 It is conceded that the respondents are
dealers within the meaning of the Act. The term " turnover " is
defined in the Act but for the purpose of this judgment it can be taken in its
popular sense. It is also unnecessary to consider ss.
5, 6, 7 and 8 of the Act, for nothing turns
on them in this appeal.
Section I of the Act came into force in the
Pallahara area on December 14, 1948, by virtue of the notification of that date
mentioned earlier. Oil March 1, 1949, the Government of Orissa issued under s.
1 (3) of the Act a notification, being Notification No. 2267/F appointing that
date as the date on which the, rest of the Act would come into force in the
Pallahara area. It is not in dispute that March 1, 1949, has to be considered
as the date of the commencement of the Act in the Pallahara area. That is the
result of the definition of the commencement of an Act given in s. 2 (8) of the
Orissa General Clauses Act, 1937. As will have been noticed s. 4 (1) of the Act
required a date to be appointed before liability under it could arise. Such a
date had been appointed by the Government of Orissa before the Act was applied
to the areas previously belonging to the feudatory States and the Government
felt that this appointment of a date would not be an appointment for these
areas. The case before us has proceeded oil the basis that appointment was not
a proper appointment under this section for these areas.
In fact, the Government of Orissa had oil
March 1, 1949, issued a Notification No. 2269/F, purporting to appoint a date
under s. 4 (1) for the areas previously covered by the feudatory States
including the Pallahara State, then merged in Orissa. That Notification is in
these terms:
In exercise of the powers conferred by
sub-section (1) of Section 4 of the Orissa ,Sales Tax Act, 1947 (Orissa Act XIV
of 1947), as applied to Orissa States, the Government of Orissa are pleased to
appoint the. 31st March, 1949, as the date with effect from which every dealer
whose gross turnover during the year ending the 31st March, 1949, exceeded Rs.
5,000 shall be liable to pay tax under the said Act on sales effected after the
said date.
601 might have retired from the contest on a
re-appraisement of his prospects at the election as compared with those of the
deceased contesting candidate. When death removed that contesting candidate
from the field, a person who had given notice of retirement from the contest as
aforesaid may as well re-consider his position and feel that as compared with
the other surviving candidates he -would have fair prospects of success at the
election and if an election is held after the countermanding of the poll by the
returning officer, he might just as well put forward his candidature and it is
provided that in that event he shall not be ineligible for being nominated as a
candidate for election after such countermanding ; and there is perfectly good
reason for the same, because otherwise, withdrawal or retirement might possibly
be considered a disqualification or refusal to seek election.
This brings us to the provisions as to
retirement front contest under s. 55A. A candidate might not have withdrawn his
candidature within the period prescribed and his name might have been included
in the list of contesting candidates published by the returning officer under
s. 38.
Being thus a contesting candidate duly
declared as such he would be entitled to go to the poll. He may, however, as a
result of the election campaign find himself in the predicament that his
prospects at the election are meagre and he might even have to face the
situation of having to forfeit his security deposit if he went to the poll.
There may be a number of motives operating in his mind which it is not
necessary to discuss and be may just as well withdraw his candidature and
retire from the field. A locus penitential is therefore given to him under s.
55A to retire from the contest by giving notice in the prescribed form which
has to be delivered to the returning officer on any day not later than 10 days
prior to the date fixed for the poll. If a candidate thus retires from the
contest, he decides not to go to the poll and the provision is made in the
rules for the correction of the list of contesting candidates so that no
elector shall in the absence of necessary information waste his vote upon him.
A 602 copy of such notice is to be affixed by the returning officer to his
notice board and in -the polling station "and each of the remaining,
contesting candidates or his agent is to be supplied with such copy and the
notice has also got to be published in the official gazette.
Such retirement from contest might result in
the number of remaining contesting candidates becoming equal to the number of
seats to be filled and s. 55A (6) and (7) work out the situation as it would
then obtain with reference to ss. 53 and 54 and provide that in that event the
returning officer is to forth with declare such candidates to be duly elected
to fill those seats and countermand the poll a fresh election being necessary
only in the event of filling the remaining seat or seats, if' any.
If, however, a poll has to be taken under s.
53(1) in spite of the retirement of a contesting candidate or candidates from
contest is aforesaid the process of election continues in spite of such
retirement and the question any arise as to what would happen if any of the
contesting candidates who has thus retired dies before the commencement of the
poll.
If there was nothing more, s. 52 would apply
and the returning officer upon being satisfied of the fact of the death of the
candidate Would have to countermand the poll and report the fact to the
Election. Commission and also to the appropriate authority. Provision is
therefore made in s. 55A (5) that any person who has given a notice of
retirement under s. 55A (2) is deemed not to be a contesting candidate for the
purposes of s. 52. This is a deeming provision and creates a legal fiction. The
effect of such a legal fiction however is that a position which otherwise would
not obtain is deemed to obtain under those circumstances. Unless a contesting,
candidate who had thus retired from the contest continued to be a contesting
candidate for the purposes of election and the effect of the death of such
contesting (Candidate was " contemplated in s.
52, it would not have been found necessary to
enact s. 55A (5). It is because such a contesting, candidate who retires from
the 603 contest under s. 55A (2) continues to be a. contesting candidate for
the purposes of election that it has been considered necessary to provide for
the consequence of his death and to exclude such a candidate from the category
of contesting candidates within the meaning of the term as used in s. 38 of'
the Act, that is to say, candidates who were included in the list of validly
nominated candidates and who had not withdrawn their candidature within the
period prescribed and who had been included in the list of' candidates prepared
and published by the returning, officer in the manner prescribed. This
provision, therefore warrants the conclusion that a contesting candidate whose
name was included in the list under s. 38 but who retires from the contest
under s. 55A (2) continues to be a contesting candidate for the purpose of the
Act though by reason of such retirement it would be unnecessary for the
constituency to cast its votes in his favour at the poll.
Such candidate continues to be contesting
candidate for the purposes of the Act, notwithstanding his retirement from the
contest under s. 55A (2).
When we come to the provisions of Part VI of
the Act relating to disputes regarding election, we find that there is no
definition given in s. 79 of the expression " contesting candidate ",
though there are definitions of " candidate " and " returned
candidate " to be found therein.
An election petition calling in question any
election can be presented by any candidate at such election or any elector on
one, or more of the grounds specified in ss. 100 (1) and 101 to the Election
Commission and a petitioner in addition to calling in question the election of
the returned candidate, or candidates may further claim a declaration that he
himself or any other candidate has been duly elected. Where the petitioner
claims such further declaration, he must join as respondents to his petition
all the contesting candidates other than the petitioner and also any other
candidate against whom allegations of any corrupt practices are made in the
petition. The words " other than the petitioner " are meant to
exclude the petitioner when he happens to be one of 604 the contesting
candidates who has been defeated at the polls and would not apply where the
petition is filed for instance by an elector. An elector filing such a petition
would have to join all the contesting candidates whose names were included in
the list of contesting candidates prepared and published by the returning
officer in the manner prescribed under s. 38, that is to say, candidates who
were included in the list of validly nominated candidates and who had not
withdrawn their candidature within the period prescribed.
Such contesting candidates will have to be
joined as respondents to such petition irrespective of the fact that one or
more of them had retired from the contest tinder s. 55A (2). If the provisions
of s. 82 which prescribes who shall be joined as respondents to the petition
are not complied with, the Election Commission is enjoined under s. 85 of the
Act to dismiss the petition and similar are the consequences of noncompliance
with the provisions of s. 117 relating to deposit of security of costs. If the
Election Commission however does not do so and accepts the petition, it has to
cause a copy of the petition to be published in the official gazette and a copy
thereof to be served by post on each of the respondents and then refer the
petition to an election tribunal for trial. Section 90 (3) similarly enjoins the
Election Tribunal to dismiss an election petition which does not comply with
the provisions of s. 82 or s. 117 notwithstanding that it has not been
dismissed by the Election Commission under s. 85. Section 90 (3) is mandatory
and the Election Tribunal is bound to dismiss such a petition if an application
is made before it for the purpose.
Turning now to s. 117, we find that it is a
provision relating to the deposit of security for the costs of the petition.
When a petitioner presents an election petition to the Election Commission
under s. 81 he is to enclose with the petition a Government Treasury receipt
showing that a deposit of one thousand rupees has been made by him either in a
Government Treasury or in the Reserve Bank of India in favour of the Secretary
to the Election Commission as security 605 for the costs of the petition. The
Government Treasury receipt must show that such deposit has been actually made
by him either in a Government Treasury or in the Reserve Bank of India; it must
also show that it has been so made in favour of the Secretary to the Election
Commission and it must further show that it has been made as security for the
costs of the petition. These are the three requirements of the section which
have to be fulfilled. The question, however, arises whether the words " in
favour of the Secretary to the Election Commission " are mandatory in
character so that if the deposit has not been made in favour of the Secretary
to the Election Commission as therein specified the deposit even though made in
a Government Treasury or in the Reserve Bank of India and as security for the
costs of the petition would be invalid and of no avail.
If, for instance, the petitioner made the
deposit either in a Government Treasury or in the Reserve Bank of India in
favour of the Election Commission itself and obtained a Government Treasury
receipt in regard to the same, could it be contended that in spite of such a
deposit having been made, the said Government Treasury receipt was not in
conformity with the requirements of s. 117 and the petitioner could be said not
to have complied with the requirements of that section so as -to involve a
dismissal of his petition under s. 85 or s. 90 (3) ? The extreme case
illustrated above has been taken by us only in order to demonstrate to what
lengths a literal compliance with the provisions of s. 117 can be pushed. The
petition is to be presented to the Election Commission, the security for the
costs of the petition has to be given to the Election Commission and s. 121
provides for an application to be made in writing to the Election Commission
for payment of costs by the person in whose favour the costs have been awarded
and yet, even though the deposit may have been made by a petitioner in favour
of the Election Commission and a Government Treasury receipt evidencing the
same be enclosed along with his 77 606 petition the provisions of s. 117 of the
Act can be said not to have been complied with merely because the deposit was
made in favour of the Election Commission and not in favour of the Secretary to
the Election Commission. The relationship between the Election Commission on
the one hand and the Secretary to the Election Commission on the other need not
be scrutinized for the purposes of negativing this contention. It is enough to
say that such a contention has only got to be stated in order to be negatived.
It would be absurd to imagine that a deposit made either in a Government
Treasury or in the Reserve Bank of India in favour of the Election Commission
itself would not be sufficient compliance with the provisions of s. 117 and
would involve a dismissal of the petition under s. 85 or s. 90 (3). The above
illustration is sufficient to demonstrate that the words " in favour of
the Secretary to the Election Commission " used in s. 117 are directory
and not mandatory in their character. What is of the essence of the provision
contained in s. 11.7 is that the petitioner should furnish security for the
costs of the petition, and should enclose along with the petition a (Government
Treasury receipt showing that a deposit of one thousand rupees has been made by
him either in a Government Treasury or in the Reserve Bank of India, is at the
disposal of the Election Commission to be utilised by it in the manner
authorised by law and is under its control and payable on a proper application
being made in that behalf to the Election Commission or to any person duly
authorised by it to receive the same, be he the Secretary to the Election
commission or anyone else.
If, therefore it can be shown by evidence led
before the Election Tribunal that the government Treasury receipt or the chalan
which was obtained by the petitioner and enclosed by him along with his
petition presented to the Election Commission was such that the Election
Commission could on a necessary application in that behalf be in a position to
realise the said sum of rupees one thousand for payment of the costs to the
successful party it would be sufficient compliance 607 with the requirements of
s. 117. No such literal compliance with the terms of s. 117 is at, all
necessary as is contended for on behalf of the appellant before us.
As regards the amendment of a petition by
deleting the averments and the prayer regarding the declaration that either the
petitioner or another candidate has been. duly elected, so as to cure lie
defect of nonjoinder of the necessary parties as respondents, we may only refer
to our judgment * about Io be delivered in Civil Appeal No. 76 of 1958, where
the question is discussed at considerable length. Suffice it to say here that
the Election Tribunal has no power to grant such an amendment, be it by way of
withdrawal or abandonment of a part of the claim or otherwise, once, an
Election Petition has been presented to the Election (commission claiming such
further declaration.
Considering Civil Appeal No. 763 of 1957 in
the light of the observations made above, we find that sundararaja Pillai whose
name was included in the list of contesting candidates prepared and published
by the returning officer under s. 38 but who retired from the contest under s.
55A (2) before the commencement of the poll was included in the expression
" contesting candidate " used in s. 82 and was by reason of the first
respondent claiming a further declaration that the second respondent had been
duly elected, a necessary party to the petition. Inasmuch as he was not joined
as a respondent, the petition was liable to be dismissed under s.
90(3) of the Act.
This defect could not be cured by any
amendment of the petition seeking to delete the claim for such further
declaration and the Election Tribunal was clearly in error in allowing such
amendment on the grounds disclosed in 1. A.
No. 3 of 1957 or otherwise.
In regard to the deposit of security,
however, the position was quite different. According to the evidence given by
K. Nataraja Mudaliar, head accountant in. charge of the Madurai Taluk
sub-Treasury, the amount was kept in the Election Revenue deposit and the
monies were at the disposal of the Election Commission ; also that the Election
Commission or anyone * Basappa v. Ayyappa, see p. 6ii, post.
608 authorised by the Election Commission in
that behalf could draw the said monies and no one else could withdraw the same
without such authority. If that was so, there was sufficient compliance with
the requirements of s. 117 and there could be no question of dismissing the
petition for noncompliance with the provisions of that section.
Having regard therefore to the conclusion
reached above in regard to the non-compliance with the provisions of s. 82,
Civil Appeal No. 763 of 1957 will be allowed, the orders of dismissal made by
the High Court on the writ petitions Nos.
531 of 1957 and 532 of 1957 will be set
aside, the orders passed by the Election Tribunal dated July 5, 1957, will be
vacated and the Election Petition No. 147 of 1957 will be dismissed with costs.
As the appellant has failed in his contention in regard to the provisions of s.
117, we feel that the proper order for costs should be that each party do bear
and pay his own costs here as well as in the High Court.
Civil Appeal No. 764 of 1957 also shares a
similar fate.
The first respondent therein did not join as
party respondents to his petition the two candidates whose names had been
included by the returning officer in the list of contesting candidates but who
had subsequently retired from the contest before the commencement of the poll.
They were necessary parties to the petition in so far as the first respondent
had claimed a further declaration that he himself be declared duly elected
under s. 101. The Election Petition No. 74 of 1957 filed by him, was thus
liable to be dismissed for non-joinder of necessary parties under s. 90(3) of
the Act.
This appeal will also be accordingly allowed,
the orders passed by the High Court in Writ Petitions Nos. 573 and 574 of 1957
will be set aside, the orders passed by the Election Tribunal on July 13,1957,
will be vacated and Election Petition No. 74 of 1957 will be, dismissed. The
first respondent will pay the appellants costs throughout.
So far as Civil Appeal No. 48 of 1958 is
concerned, the difficulty which faces the appellant is that we 609 have nothing
on the record of the appeal to show what were the exact terms of the deposit
made by the second respondent under s. If 7. The copy of the chalan which is
cyclostyled at p. 45 of the record is deficient in material particulars and
does not throw any light on the question. The appellant no doubt made an
application to the Election. Tribunal to try his objection as regards the
non-compliance with the provision,-, of that section as a preliminary objection
and determine whether the second respondent had complied with the provisions of
s. 117 and if not to dismiss his petition.
The Election Tribunal, however, did not
decide this preliminary objection but ordered that the trial of the petition
(lo proceed. The High Court before whom the Writ Petition M. J. No. 480 of 1957
was filed also came to the same conclusion as it thought that the matter could
be decided at the time of hearing itself and dismissed the application.
We are of opinion that both the Election
Tribunal and the High Court were wrong in the view they took. If the
preliminary objection was not entertained and a decision reached thereupon,
further proceedings taken in the Election Petition would mean a full fledged
trial involving examination of a large number of witnesses on behalf of the and
respondent in support of the numerous allegations of corrupt practices
attributed by him to the appellant. his agents or others working on his behalf;
examination of a large member of witnesses by or on behalf of the appellant
controverting the allegations made against him; examination of witnesses in
support of' the recrimination submitted by the appellant against the 2nd
respondent; and a large number of visits by the appellant from distant places
like Delhi and Bombay to Ranchi resulting in not only heavy expenses and loss
of time and diversion of the appellant from his public duty in the various
fields of' activity including those in the House of the People. It would mean
unnecessary harassment and expenses for the appellant which could certainly be
avoided if the preliminary objection urged by him was decided at the initial
stage by the Election Tribunal, 610 We are therefore of the opinion that the
orders passed by the High Court in M. J. C. No. 480 of 1957 and by the Election
Tribunal in Election Petition No. 341 of 1957 were wrong and ought to be set
aside. The Election Tribunal will decide the preliminary objection in regard to
the noncompliance with the provisions of s. 117 by the 2nd respondent in the
light of the observations made above and deal with the same according to law.
The parties will be at liberty to lead such further evidence before the
Election Tribunal as they may be advised. The costs of both the parties, here,
as well as in the courts below will be costs in the Election Petition to be
dealt with by the Election Tribunal hereafter and will abide the result of its
decision on the preliminary objection.
Appeals allowed.
Appeal No. 48 of 1958 remanded.
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