Jagannath Prasad Vs. The State of
Uttar Pradesh  INSC 198 (3 May 1962)
03/05/1962 KAPUR, J.L.
GUPTA, K.C. DAS DAYAL, RAGHUBAR
CITATION: 1963 AIR 416 1963 SCR (2) 850
CITATOR INFO :
R 1964 SC1154 (9,26,29) R 1969 SC 724 (19) R
1975 SC1039 (4) R 1988 SC2267 (34)
Sales Tax--Using forged documents before
Sales Tax Officer--Prosecution--If complaint of sales Tax Officer
necessary--Sales Tax Officer, whether a Court--Liability to pay
tax--Notification prescribing single point for, taxation ineffective--Effect of
Uttar Pradesh Sales Tax Act, 1948 (U. P. 15 of 1948), ss. 3, 3A, 14(d)--Code of
Criminal Procedure 1898 (Act V of 1898), s. 195.
The appellants who carry on the business in
vegetable ghee purchased vegetable ghee from outside U. P. in the name of four
fictitious firms. In their return of sales tax they did not include the sale
proceeds of these transactions on the ground that they had purchased from the
four firms and that under a notification made under s. 3A of the U. P. Sales
Tax Act, tax was leviable only at a single-point on the sale by the outside
suppliers to these four firms. In support of this the appellant No. 1 made a
false statement before the Sales tax Officer and also filed forged bill,.
before him. The return was accepted by the
Sales Tax Officer with the result that the sales covered by these transactions
were not taxed. The appellants were tried and convicted for offence under s.
471 Indian Penal Code for using forged documents and under s. 14(d) of the Act
for fraudulently evading payment of tax due under the Act. The appellants
contended that the trial for the offence under s.
471 was illegal as no complaint had been made
by the Sales Fax Officer as required by s. 14 (d) of the Act was not made out
as no tax was payable under's. 3A because the notification issued there under
Held, that the Sales Tax Officer was not a
Court within the meaning of s. 195 Code of Criminal Procedure and it was not
necessary for him to make a complaint for the prosecution of the Appellants
under s. 471 Indian Penal Code. A Sales Tax Officer was merely an
instrumentality of the State for purposes of assessment and collection of tax
and even if he was required to perform certain quasi-judicial functions, he was
not a part of the judiciary. The nature of the functions, of a Sales Tax
Officer and the manner prescribed for their 851 performance showed that he
could not be equated with a Court. Nor could he be said to be a Revenue Court.
Though the definition of Court in s. 195 of the Code Was enlarged by the
substitution of the word "include" for the word "means" by
the amendment of 1923, it did not change the definition of "Revenue
Court." Smt. Ujjam Bai v. The State of U. P. (1963) 1 S.C.R. 778), Shell
Co. of Australia Ltd. v. Federal Commissioner of Taxation  A. C. 275 and
Brajnandan Sinha v. Jyoti Narain'  2 S.C.R. 955, applied.
Krishna v. Gocerdhanaiah, A. I. R. 1954 Mad.
In re: Punamchand Maneklal (1914) 1. L. R. 38
Bom. 642 and State v. Nemchand Pashvir Patel, (1956) 7 S. T. C. 404 not
In re : R. Nataraja Iyer (1914) 1. L. R. 36
Mad. 72 and Shri Virender, Kumar Satyawadi v. The Sate of Punjab, 2 S.
C. R. 1013 referred to.
Held, further that the appellants were rightly
convicted under s. 14 (d) of the Act. Sales tax was payable under s.3 of the
Act in respect of all sales. But under s.3A it was leviable only at a single
point if the Government issued a notification declaring the point at which tax
was payable and it was so prescribed by the rules. Under the notification
issued by the Government tax was payable only by the dealer who imported the
goods and sold them. The appellants having imported the ghee were liable to pay
the tax on the sales of this ghee which they fraudulently evaded. Though the
notification was ineffective as no rules were made under the Act prescribing
the single point, it did not help the appellants, as the only effect of this
was that s. 3A did not come into play. In trying to get the benefit of the
ineffective notification under s. 3-A the appellants evaded payment of tax
under s. 3 which they were liable to pay.
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 152/59., xi Appeal by Special leave from the judgment and Order
dated May 12, 1959 of the Allahabad High Court in Criminal Revision No. 1182 of
Nur-ud-din Ahmed, J.,B. Dadachanji, O. C.
Mathur, and Ravindar Narain for the Appellants.
852 G. C. Mathur and C.A. Lal for the
1962. May 3. The Judgment of the Court was
delivered by KAPUR, J.-The appellants are father and son carring on business in
vegetable ghee at Aligarh. They along with Romesh, the second son of appellant
Jagannath Prasad were prosecuted under s. 14 (d) of the U. P. Sales Tax Act,
1948 (U.P. 15 of 1948) hereinafter called the 'Act' and under s. 471 read with
s. 468 and s. 417 of the Indian Penal Code. They were all acquitted of the
charge under s. 468.
Jagannath Prasad was convicted under s. 471
and 417 of the Indian Penal Code and a. 14 (d) of the Act and was sentenced to
two years' rigorous imprisonment under a. 471, to one years' rigorous
imprisonment and a fine of Rs. 1,000/under s. 417 and to a fine of Rs. 1,000
under s. 14 (d) of the Act. Bhagwan Das was convicted under s. 14 (d) of the
Act and sentenced to a fine of Rs. 1, 000/-. Romesh was acquitted. The
sentences passed on Jagannath Prasad were.
concurrent. Their 'appeal to the Sessions
Judge was dismissed and in revision to the High Court Jagannath Prasad was
acquitted of the offence under a. 417 of the Indian Penal Code but the other
convictions and sentences were upheld. Against this judgment and order of the
High Court of Allahabad the appellants have come to this court by special
The facts leading to the appeal are these: In
1950-51, the firm of the appellants purchased vegetable ghee valued at about
Rs. 3 lacs from places outside the State of U. P. in the name of four
fictitious firm. The firm made its return for that year to the Sales Tax
Officer Aligarh and did not include the sale proceeds of these transactions on
the ground that they had purchased them from these four firms who were supposed
to be carrying 853 on business in Hathras, Aligarh, and other places in U. P.
By thus not including the proceeds of the
sales of these transactions the firm evaded payment of sales tax for that year
on those transactions. The return of sales tax made by the firm was accepted by
the Sales Tax Officer with the consequence that the sale of goods covered by
those transactions was not taxed. A complaint was made against the Sales Tax
Officer in regard to these transactions; an enquiry was held with the result
that the appellants and Romesh were prosecuted and convicted as above stated.
In the High Court there was no controversy about the facts i. e. the finding of
the courts below that the appellants' firm purchased vegetable ghee from
outside U. P. and did not show the sale proceeds of the sale of those goods on
the ground that they had been purchased from inside the State of' (J.
P. when in reality they had been purchased
from outside the State, that the statements made by the appellant Jagannath
Prasad before the Sales Tax Officer were false and that the bills produced by
him before the Sales Tax officer were forged. The conviction was challenged on
grounds of law alone.
Before us five points were raised: (1) that
no sales tax was exigible on these transactions under a. 3A of the Act in
1950-51 and liability arose by the amendment of the Act in 1952 which gave
retroactive operation to the section and became applicable to sales in dispute
and therefore there could be no prosecution under an ex post facto amendment;
(2) the trial of the appellants was illegal
because of' want of complaint by the Sales Tax Officer under a. 195 of the
Criminal Procedure Code; (3) there was no offence under s. 14 (d) of the Act;
(4) forged invoices were produced by appellant Jagannath Prasad because they
were called for by the Sales Tax Officer and therefore it cannot be said. that
they were used by the appellant and (5) the Sales Tax Officer having accepted
854 he invoices as genuine no prosecution could be Entertained in regard to
Now the appellants cannot be prosecutedon the
basis of any amendment subsequent to the date of the alleged offence committed
by them. Both parties are agreed on that and therefore we have to see the Act
as it stood on the date when the offence is alleged to have been committed.
According to the charge the offence was
committed on or about July 16, 1951, when forged invoices produced by the
appellants before the Sales Tax Officer. So what we have to see is the law as
it stood on that day. Section 3 of the Act deals with liability to tax under
the Act and s. 3A with single point taxation. Under s. 3 every dealer was required
to pay on his turnover of each assessment year a tax at the rate of three pies
a rupee. Thus the tax was payable in regard to all sales but under s. 3A (1)
the tax was leviable only at a single point. That section provided.
S. 3A (1) "Notwithstanding anything
contained in section 3, the State Government may, by notification in the
official Gazette, declare that the turnover in respect of any goods or class of
goods shall not be liable to tax except at such single point in the series of
sales by successive dealers as may be prescribed".
The Government could declare the tax to be
payable at a single point but there were two requirements; there had to be a
notification in the Official Gazette declaring the point at which the tax was
payable and in the series of sales by successive dealers it had to be "as
may be prescribed" i. e. as may be prescribed by rules. Section 3A was
amended in 1952 with retrospective effect but retroactive provision is not
applicable to the present proceedings. Under s. 3A a notification No. 1 (3) was
issued on 855 June 8, 1948, declaring that the proceeds of sales of vegetable
ghee imported from outside shall not be included in the turnover of the dealer
other than the importer himself. The effect of the notification thus was that
if a dealer imported vegetable ghee from outside U. P. and sold it he was
required to include the sale proceeds in his turnover but the other dealers who
bought vegetable ghee from the importer in U. P. and sold it were not so
The appellants having thus imported the
vegetable ghee from outside U. P. were required by the notification to include
the proceeds in their turnover and it was to avoid this that they falsely
produced forged invoices that they had purchased the vegetable ghee from those
fictitious dealers within the State of U. P. and thus if the notification was
an effective notification the appellants successfully evaded the payment of
sales tax which under the law they were required to pay. But it was agreed that
the notification was ineffective in view of the words "as may be
prescribed" because that could only be done by rules and no rules bad been
made under s. 3A which made every dealer liable to sales tax if he was an
importer from outside U. P. To this, extent the contention of the appellants is
well founded and therefore under a. 3A merely by notification the Government
could not prescribe a single point taxation as was done by the notification but
that does not help the appellants very much. Under s. 3 every dealer was liable
to pay sales tax on every transaction and s. 3A only gave relief in regard to
sales at every point and thus prevented multi-point taxation. If the
notification under s. 3A was ineffective, as indeed it was, the appellants were
required to pay tax on all their sales and in order to escape multi point
taxation they took advantage of an ineffective notification and tried the false
plea of the goods having been imported by fictitious persons and their having
purchased those goods from those 856 fictitious dealers and in this manner the
appellants escapes payment of sales tax under s. 3. In other words they tried
to take advantage of s. 3A by producing false documents and thereby evaded
payment of tax under s. 3 which every dealer was required to pay on his turnover.
In trying to get the benefit under the ineffective notification issued under s.
3A the appellants evaded payment of tax under
s. 3 which they were in any case liable to pay. It cannot be said therefore
that no offence was committed under s. 14 (d) of the Act which provides:Section
14. ,Offences and penalties.-Any person who
(d) fraudulently evades the payment of any
tax due under this Act, shall, without prejudice to this liability under any
other law for the time being in force, on conviction by a Magistrate of the
first class, be liable to a fine which may extend to one thousand rupees, and
where the breach is a continuing breach, to a further fine which may extend to
fifty rupees for every day after the first during which the breach
It is no defence to say that the appellants
were asked by the Sale,% Tax Officer to produce invoices. The appellants were
trying to get exclusion from their turnover of the sale of goods worth about 3
lacs and had made statements before the Sales Tax Officer in regard to it on
July 9, 1951, and in order to prove that the goods 857 were not required to be
included .,in the turnover the invoices were produced by appellant Jagannath
Prasad. When a fact has to be proved before a court or a tribunal and the court
or the tribunal calls upon the person who is relying upon a fact to prove it by
best evidence it can not be a defence as to the offence of forgery if that best
evidence which, in this case, was the invoices turn out to be forged documents.
A person who produced those documents cannot be heard to say that he was
required to prove his case by the best evidence and because be was so required
be produced forged documents.
It was then submitted that the Sales Tax
Officer was a court within a. 195 of the Criminal Procedure Code and in the
absence of a complaint in writing by such an officer no cognizance could be
taken of any offence punishable under s. 471 of the Indian Penal Code. This, in
our opinion, is an equally erroneous submission. The Sales Tax Officers are the
instrumentalities of the State for collection of certain taxes. Under the Act
and the Rules made thereunder certain officers are appointed as Sales Tax
Officers who have certain duties assigned to them for the imposition and
collection of taxes land ID the process they have to perform many duties which
are of a quasijudicial nature and certain other duties, which are
administrative duties. Merely because certain instrumentalities of state
employed for the purpose of taxation have, in the discharge of their duties, to
perform certain quasi-judicial functions they are not converted into courts
thereby. In a recent judgment of this Court in Shrimati Ujjam Bai v. The State
of U.P. (1), all the opinions were unanimous on this point that taxing
authorities are not courts even though they perform quasi-judicial functions.
The following observation of Lord (1) (1963) 1 S.C.R. 778.
858 Sankey L. C. in Shell Co. of Australia
Ltd. v. Federal Commissioner of Taxation (1)was quoted with approval :The
authorities are clear to show that there "The authorities are clear to
show that there are tribunals with many of the trappings of a court which,
nevertheless are not courts in the strict sense of exercising judicial
Lord Sankey also enumerated some negative
propositions as to when a tribunal is not a court. At p. 297 his lordship said
:"In that connection it may be useful to enumerate some negative
propositions on this subject : 1. A tribunal is not necessarily a Court in this
strict sense because it gives a final decision. 2. Nor because it hears
witnesses on oath. 3. Nor because two or more contending parties appear before
it between whom it has to decide. 4. Nor because it gives decisions which
affect the rights of subjects.
5. Nor because there is an appeal to a Court.
6. Nor because it is a body to which a matter
is referred by another body. See Rex v. Electricity Commissioners (1924) 1 K.B.
Hidayatullah J., 'in Shrimati Ujjam Bhai(2)
case described Sales tax authorities thus :"The taxing authorities are
instrumentalities of the State. They are not a part of the legislature, nor are
they a-part of the judiciary. Their functions are the assessment and collection
of taxes and in the process of assessing taxes, they follow a pattern of action
which is considered Judicial. They are not thereby converted into Courts of
Civil judicature. They still (1)  A.C. 775, 283.
(2) (1963) 1 S.C R. 778.
859 remain the instrumentalities of the State
and are within, the definition of State" in Art.
No doubt the Sales Tax officers have certain
powers which, are similar to the powers exercised by courts.but still they are
not courts as understood 'in s. 195 of the Criminal Procedure Code. In
sub-section 2 of B. 195 it is provided:S. 195(2) "In clauses (b) and (e)
of subsection. (1) the term "Court" includes a Civil Revenue or
Criminal Court, but does not include a Registrar or Sub-Registrar under the
Indian Registration Act, 1877".
It cannot be, mid that a Sales Tax Officer,
is a I Revenue Court. Under s. 2(a) of the Act an assessing authority is
defined to mean any person authorised by the State Government to make
assessment under the Act and under R.
2(h) 'a Sales, Tax Officer means :"Sales
Tax Officer" means a Sales Tax Officer of a circle appointed by the State
Government to perform the duties and exercise the powers of an assessing
authority in such circle".
Thus under the Act a Sales Tax Officer is
only an amassing authority. Under s. 7 of the Act, if the Sale*. Tax Officer,
after making such enquiries as he thinks necessary is, satisfied that a return
made is correct and, complete, he shall assess the tax on the basis thereof'
and it no return is submitted he, can make such enquiries as he considers
necessary and then determine the turnover of a dealer, Thus his determination
depends upon enquiries he may make and which he may, consider necessary.
Sections 9, 10 and 11 of the Act deal with Appeals, Revisions and Statement of
the Case to the High court. Under a. 13 power. is given 860 to a Sales Tax
Officer to require the production of all accounts, documents and other
information relating to business and accounts and registers ,shall be open to
inspection of the Sales Tax Officer at all reasonable times.
He has the power to enter any office, shop,
godown, vehicle or any other place in which business is done which is a power
destructive of theSales Tax Officer being a Court which is a place where
justice is administered as between the parties whether the parties are private
persons or one of the parties is the State. Under s. 23 certain secrecy is
attached to documents filed before the Sales Tax officer and information
received by him. Similarly under R. 43 certain power is given to the Sales Tax
Officer to calculate turnover when goods are sold for consideration other than
money and this is after such enquiry as he considers necessary. All these
provisions show that the Sales Tax Officer cannot be equated with a Court. In our
opinion therefore the Sales Tax Officer is not a Court. In Krishna v.
Goverdhansiah(1), it was held that the Income Tax Officer is not law court
within the meaning of s. 195 of the Criminal's Procedure Code and this view was
accepted by this court in Shrimati Ujjam Bai's(2) case. In Brajnandan Sinha v.
Jyoti Narain(3), a Commissioner appointed under the Public Enquiries Act 1950
was held not to be a court. Shell Co. of Australia v. Federal Commissioner of
Taxation (4) was referred to in that case. At p. 967 the following passage from
Halsbury's Laws of England, Hailisham Edition, Vol. 8, p. 526 was approved:"Many
bodies are not courts, although they have to decide questions, and in so doing
have to act judicially, in the sense that the proceedings must be conducted
with fairness (1) A.I.R. (1954) Mad. 822. (2) (1963) 1 S.C.R. 778.
(3) (1955) 2 S.C.R. 955. (4) (1931) A.C.
861 and impartiality, such as assessment
committees, guardian committees, the Court of referee constituted under the
Unemployment Insurance Acts to decide claims made on the Insurance funds the
benchers of the Inns of Courts when considering the conduct of one of their
members, the General Medical Council when considering questions affecting the
position of a medical man" That passage is now contained in Vol. 9 of the
3rd Edition at p. 343.
But it was submitted that the Sales Tax
officer while acting as an assessing authority is a court within the meaning of
s. 195 (2) of the Procedure Code because by the amendment of 1923 the definition
of the word "court" was enlarged substituting the word
"includes" in place of the word "means" and the section now
reads as has been set out above.
Undoubtedly by this change the legislature
did mean to make the definition of the word "court" wider but that
does not enlarge the definition of the words "Revenue Court". The
track of decision which was pressed on our attention is based primarily on a
full bench judgment of the Bombay High Court in In re Punemchand Maneklal(1).
In that case an Income-tax Collector was held to be a Revenue Court within the
meaning of the word as used in s. 195. The learned Chief Justice who gave the
judgment of the court proceeded on the basis that inquiries conducted according
to the Forms of judicial procedure under Chapter IV of the Income tax Act were
proceedings in a Revenue Court. This was on the ground that under the law as it
then stood revenue questions were generally removed from the cognizance of
civil courts and the officers charged with the duty of deciding disputed
question relating to revenue between an individual and the (1) (1914) I.L.R.
38, Bom. 642.
862 Government would be invested with the
functions of &,,Revenue Court". This view was followed by the Bombay
High Court in State v. Nemchand Pashvir Patel After referring to the various
powers which were given to the Sales Tax Officers under the B " bay Sales
Tax Act that Court proceeded to say that the Sales Tax Officers under the
Bombay Sales Tax Act were Revenue Courts because' they had jurisdiction to
decide Questions relating to revenue, are exclusively empowered with the powers
which are normally attributes of a court or a tribunal land are authorised to
adjudicate upon a disputed question of law or fact relating to the rights of
the citizens. The Madras High Court in re B. Nataraja Iyer held that a
Divisional Officer hearing appeals; under-the Income tax Act was a court within
the meaning of a. 476 of the Criminal Procedure Code but a Tehsildar who was
the original assessing authority was not because there was no lis before him.
There is one passage in the judgment of Sundara Ayyar J., which is of
significance. It was said:-"I may observe that I am prepared agree with
Dr. Swaminathan that more. authority to receive evidence would not make the officer
recording it a Court".
At page 84, it was said that the
determination of the assessment in the first instance may not be of a court
although the assessing officer may have the power to record statements. But an
appeal against the assessment is dealt with by the Collector in the manner in
which an appeal is' disposed of by' a Civil Court. In this connection referencemay
be; made to the statement of the law contained in the judgment of Venkatarama
Ayyar J., in Shri Virinder Kumar Satyawadi v. The State of Punjab (2). There,
(1) (1956)7 S.C.R. 404.
(2) (1955) 2 S.C.R. 1013, 1018.
863 the, distinction between a quasi-judicial
tribunal and a court,was given as follows "It may be stated broadly that
what distinguished a Court from a quasi-judicial tribunal is that it is charged
with a duty to decide disputes in a judicial manner and declare, the rights of
parties in a definitive judgment. ,To decide in a judicial manner involves that
the parties are entitled as a matter of right to be heard in support of their
claim and to adduce evidence in proof of it. And it also imports an obligation
on the part of the authority to decide the matter on a consideration of the
evidence adduced and in accordance with law. When a question therefore arisen
as to whether an authority created by an Act is a Court as, distinguished from
a quasi-judicial-tribunal, what has to:
be decided is whether having regard to the
provisions of the Act it possesses all the attributes of a Court".
Dealing with quasi-judicial tribunals it was
observed in Gullapelli Negeswara Rao v. The State of Andhra Pradesh(1) :
",The concept of a quasi-judicial act,
implies that the act is not wholly judicial, it describes only a duty cast on
the executive body or authority to conform to the norms. of judicial procedure
in performing some act in the, 'exercise of its executive power".
It is not necessary to refer to other cases
because they were decided on their own facts and related to different
tribunals. In our opinion a Sales Tax Officer is not a Court within the meaning
of.s. 195 of,the criminal Procedure Code and there. fore it was not necessary
for a Sales Tax Officer to (1) (1959) Supp. 1 S.C.R. 319, 353-4.
864 make a complaint and the proceedings
without such a complaint are not without jurisdiction.
In our opinion the appellants were rightly
convicted and we therefore dismiss this appeal. The appellant Jagannath Prasad
must surrender to his bail bonds.