DESAI, J. -
(1.)THE petitioner is a firm registered under the Indian Partnership Act, 1932. THE business of the petitioner-firm is to deal in edible oil and vegetable ghee on wholesale scale. THE petitioner was a registered dealer under the provisions of the Bombay Sales Tax Act, 1959 (hereinafter referred to as the Act 1959 ). THE petitioner is also a registered dealer under the provisions of the Gujarat Sales Tax Act, 1969. THE petitioner was assessed by the Sales Tax Officer (2), City Division 2, Ahmedabad, respondent No. 3 herein, for the period from 1st April, 1968, to 31st March, 1969, and an order in this respect was passed on 21st August, 1971. THE Sales Tax Officer found that for the quarter ending 30th June, 1968, the petitioner filed 5 returns showing that he was liable to pay tax of Rs. 45,657 and had actually paid the tax to the tune of Rs. 20,655. 93 at the time of the filing of the return. Thus, there was part-payment of the tax with the return. THE Assistant Commissioner of Sales Tax (Administration-cum-appeal), Range I, respondent No. 1, herein, thereupon issued a show cause notice dated 3rd November, 1971, to the petitioner for showing cause why penalty under sub-section (3) of section 36 of the Act should not be levied against the petitioner. THE petitioner filed his reply to the said show cause notice stating that his financial position was not good as a result of which he could make only a part-payment of the tax. Respondent No. 1 by his order No. SAHA-1/khna/147-JA-3070/72 dated 5th January, 1972, levied penalty of Rs. 14,287. 50 upon the petitioner. Being aggrieved by the said order the petitioner filed an appeal before the Deputy Sales Tax Commissioner, Ahmedabad, Range 1, respondent No. 2 herein, who allowed the appeal of the petitioner and set aside the order dated 5th January, 1972, passed by respondent No. 1. Subsequent to the said order, respondent No. 1 again issued a show cause notice dated 17th July, 1972, upon the petitioner to show cause as to why penalty under section 36 (3a) should not be levied against the petitioner for the less payment of tax than the tax shown as payable by the petitioner in the return for the period ending with 30th June, 1968. THE petitioner filed his reply contending that the provisions of section 36 (3a) were not applicable to the facts of the case and also that the said provisions were ultra vires the provisions to determine the question of the liability to pay penalty and to determine whether the dealer is prevented from making part-payment of the tax due to the existence of reasonable cause. Respondent No. 1 by his order No. SAHA-1/kayada/72-73/ja-9734-38 dated 21st September, 1972, rejected the contention of the petitioner and decided that penalty under section 36 (3a) was attracted. He further held that the period for imposing penalty was to be counted from 1st August, 1968, to 3rd November, 1971, because the petitioner had not paid the balance payable as per order of assessment dated 3rd November, 1971. He further came to the conclusion that the penalty impossable came to Rs. 14,287. 50 and ordered that within 30 days from the receipt of the order the amount of penalty minus anything which has been paid against penalty should be deposited in the Government treasury. It is this order which is challenged in this petition, on the ground that the provisions of sub-section (3) and sub-section (3a) of section 36 are ultra vires of the Constitution being violative of articles 19 (1) (f) and (g) and 14 of the Constitution of India, inasmuch as no machinery has been provided for determining the question as to whether there has been contravention of the provisions of section 35 (3) of the Act. It is also alleged in the petition that the provision of section 36 (3a) are inoperative and unworkable as the starting point for calculating penalty cannot be determined.
(2.)DURING the course of argument Mr. Pathak appearing for the petitioner sought to raise 4 points : (1) The provisions of sub-section (3a) of section 36 are solely dependent upon the provisions of sub-section (3) of section 36 as all the provisions as far as possible of sub-section (3) are incorporated therein. Sub-section (3) of section 36 is ultra vires of the provisions of articles 19 (1) (f) and (g) and 14 of the Constitution as no machinery has been provided to determine the penalty or that the dealer due to reasonable cause has been unabled to pay tax within the prescribed time by the relevant provisions. The consequence is that the impugned order is void, and bad in law. (2) That the provisions of sub-section (3a) of section 36 are inoperative and unworkable as by applying the provisions of sub-section (3) of section 36 for levying of penalty under sub-section (3a) of section 36, starting point for calculating penalty thereunder cannot be determined. (3) That the impugned order has been passed mala fide. (4) That the provisions of section 36 (3a) did not apply to the facts of the present case with the consequence that the order of penalty passed by respondent No. 1 is illegal and bad in law.
Now so far as the point of mala fide is concerned the petition does not give full details as to the grounds on which the petitioner alleges that the order had been passed mala fide. Whether the order is passed mala fide or not is a question of fact and it is incumbent upon the petitioner alleges that the order is mala fide. As the details of mala fide are not given the said contention of the petitioner cannot be sustained. It is not necessary for us to consider the question of the constitutionality of sub-section (3) of section 36 or whether sub-section (3a) of section 36 is unworkable because the petition can be disposed of on the fourth point, viz. , sub-section (3a) of section 36 does not apply to the facts of the present case. We ill, therefore, now construe the provisions of section 36 of the Act. Section 36 runs as under : " 36. (1) Where any dealer or commission agent purchases any taxable goods under a certificate given by him under section 11, 11a or 12, and contrary to such certificate the goods are used for another purpose, or are not resold or despatched in the manner and within the period certified, then the Commissioner may, after giving such dealer or commission agent a reasonable opportunity of being heard, by order in writing impose on him, in addition to any tax payable, - (a) if he has included the purchase price of the goods in his turnover of purchases as required by sub-section (1) of section 14, a sum by way of penalty not exceeding the amount of tax; and (b) if he has not so included the purchase price as aforesaid, a sum by way of penalty not exceeding twice the amount of tax. (2) If, while assessing the amount of tax due from a dealer under section 33, it appears to the Commissioner that such dealer - (a) has wilfully failed to apply for registration as required by section 22; or (b) has, without reasonable cause, failed to comply with the notice under sub-section (3) of section 33; or (c) has concealed the particulars of any transaction or deliberately furnished inaccurate particulars of any transaction liable to tax, the Commissioner may, after giving the dealer an opportunity of being heard, by order in writing, impose upon the dealer by way of penalty, in addition to any tax assessed under section 33, a sum not exceeding one and one-half times the amount of the tax. (3) If a dealer does not, without reasonable cause, pay tax within the time he is required by or under the provisions of this Act to pay it, he shall, subject to the provisions of sub-section (5) of section 55 pay by way of penalty, in addition to the amount of tax, a sum equal to - (a) one per cent of the amount of tax per month for the first three months, after the last date by which he should have paid that tax, and (b) one and one-half per cent of the amount of tax per month thereafter, during the time he continues to make default in the payment of tax : Provided that, the Commissioner may, subject to such conditions as may be prescribed, and an appellate authority in an appeal under section 55 may, remit the whole or any part of the penalty payable in respect of any period. (3a) Where a dealer has failed to pay the whole of the amount of tax as required by sub-section (2) of section 38 or the whole of the extra amount of tax as required by sub-section (3) of that section or where in the case of a dealer the amount of tax assessed or reassessed for any period under section 33 or section 35 exceeds the sum already paid by a dealer in respect of such period prior to such assessment or reassessment by more than twenty per cent of the sum so paid, the dealer shall be deemed to have failed to pay the tax to the extent of the difference between the amount payable as aforesaid and the amount paid and the dealer shall pay by way of penalty on the amount of difference a sum calculated in accordance with the provisions of sub-section (3) and the provisions of sub-section (3) shall so far as may be applied thereto. (4) If any dealer contravenes the provisions of section 47, the Commissioner may, after giving such dealer an opportunity of being heard, direct him to pay by way of penalty a sum not exceeding double the amount of such bill or cash memorandum in respect of which such contravention has occurred, or one hundred rupees, whichever is more. (5) No prosecution for an offence under this Act, shall be instituted in respect of the same facts on which a penalty has been imposed under this section. "
It is apparent that the provisions of sub-section (3) and sub-section (3a) provide for penalty. The provisions of sub-section (3a) are more onerous than the provisions of sub-section (3) of section 36. The question then arises in what cases the provisions of sub-section (3) of section 36 will apply and in what cases the provisions of sub-section (3a) of section 36 will apply ? Before we go to the construction of this sub-section, it is necessary to consider certain provisions of the Act. Chapter V relates to return, assessment, payment, penalty, recovery, and refund of tax. Sections 32 to 45 are contained in this Chapter. Section 32 requires every registered dealer to furnish returns for such period, by such dates and to such authority, as may be prescribed. It also provides for filing of revised returns. Rule 22 provides for the form of the return, as also that the return should be submitted quarterly excepting in those cases where the return is permitted to be filed at the end of the year. Section 38 of the Act of 1959 provides that the tax shall be paid in the manner herein provided and at such intervals as may be prescribed. It further provides that a registered dealer furnishing returns as required by sub-section (1) of section 32 shall first pay into a Government treasury, in the manner prescribed, the whole of the amount of tax due from him according to such return along with the amount of any penalty payable by him under section 36. Sub-section (3) of section 38 provides for payment of tax into a Government treasury in cases of revised returns. Rule 29 provides so far as relevant that every dealer required to furnish a monthly, quarterly or annual return shall, on or before the date prescribed for the submission of such return, pay into the Government treasury the tax due and payable according to such return, and shall on or before the said date submit to the Sales Tax Officer one copy of the receipted chalan in form No. 25 and where any other Sales Tax Officer is concerned, shall submit to him a statement in lieu of the chalan. Rule 31 provides that where a dealer has furnished a return under sub-section (1) of section 32 or a revised return under sub-section (3) thereof, but has not first paid into a Government treasury the whole of the amount of tax due or the extra amount due according to such return or, as the case may be, the revised return, as required under sub-section (2), or sub-section (3) of section 38, the Sales Tax Officer concerned may by notice in form 26 serve on him and require him to pay the amount due by him according to the return or, as the case may be, the revised return, but remaining unpaid along with penalty by a date specified in the notice. There is provision in the Act laying down that if tax or penalty is not paid, the same can be recovered as arrears of land revenue. Bearing in mind this scheme, we will now come to the provisions of sub-section (3) of section 36. The sub-section provides the rate of penalty and the date from which penalty is to be calculated. The rate is a fixed one. There is no minimum or maximum.
(3.)A dealer who commits default in making payment of tax with the return as required by sub-section (2) of section 38 has to pay a penalty according to the rate fixed in sub-section (3) of section 36. But this obligation to pay the amount is not absolute. The dealer can show reasonable cause which prevented him from paying the tax. The words "reasonable cause" implies an inquiry. This inquiry is to be held after issuing a notice to the parties concerned. The parties are entitled to place materials before the officer. The approach of the officer must be a judicial one and the function which he discharges under this sub-section is a judicial function. If this is not the interpretation of sub-section (3) of section 36 the same would be rendered invalid and it is the duty of the court to interpret a provision in such a way as to avoid illegality, if such a construction is reasonably possible.
Sub-section (3a) of section 36 was added by Gujarat Act 9 of 1967. The bill corresponding to this Act is the Legislative Assembly Bill No. 17 of 1967. The Statement of Objects and Reasons by which sub-section (3a) has been added by the said Bill states following reasons for the addition of the said sub-section : " Under sub-section (3) of section 36 of the Act, penalty is payable by a dealer who fails to pay tax within the given time. It has been held by courts that the said provision would not apply to a case where a dealer while furnishing returns has not paid the whole of the amount of tax payable by him as per returns but has paid a part of it. It is, therefore, proposed to amend section 36 to cover cases of underpayment of tax. Sub-section (3a) of section 36 as set out in clause 15 seeks to achieve that object. "