VENKATARAMA AYYAR, J. -
(1.) THESE writs raise the question of the validity of the madras General Sales Tax Act (IX of 1939) and of the Turnover and Assessment rules, 1939, framed thereunder hereinafter called the Rules. The petitioners in writ Petitioners No. 21 of 1952 are doing business as tanners in Eluru. The course of business is that they purchase raw hides and skins and tan them in their own tannery. They hold a licence as tanners under the Act. Under Rule 15, they were submitting monthly returns of hides and skins purchased by them for the purpose of tanning in From No. A-4 and an order was passed on 23rd february, 1951, on the basis of these returns determining the tax payable at Rs. 10-180-7-3. Payments amounting to 4, 790-13-0 had been made by the petitioners towards the amount of the tax and for the balance of Rs. 5, 389-10-3 remaining payable, a demand was duly made by notice under Rule 15 (4 ). No appeal was taken against the order of assessment and it has become final. Nor was any action instituted to contest its validity. The tax not having been paid, the commercial Tax Officer instituted proceedings under Section 15 (b) of the Act for the recovery of the amount. The section so far as it is material runs as follows :- "any person who fails to pay within the time allowed, any tax assessed on him, or any fee due from him, under this Act shall, on conviction by a Presidency Magistrate or a Magistrate of the first class, be liable to a fine which may extend to one thousand rupees, and in the case of a conviction under clause (b), the Magistrate shall specify in the order the tax, fee or other amount, which the person convicted has failed or evaded to pay or has wrongfully collected, and the tax, fee or amount so specified shall be recoverable as if it were a fine. " *
(2.) THESE proceedings are now pending before the Honorary special First Class Magistrate, Eluru, as C. C. No. 88 of 1951. The petitioners have taken out this writ for quashing these proceedings on the ground that the act and the Rules and the assessment made thereunder are void and that the prosecution is illegal.
In Writ Petition No. 41 of 1952, the facts are similar. The petitioner is a licensed tanner of hides and skins doing business at Eluru. He sent monthly returns of hides and skins purchased for tanning in From No. A-4 and on the basis of these returns, an order was passed on 23rd February, 1951, determining the tax payable by him at Rs. 4, 407-7-0. After deducting Rs. 1, 805-3-4 which had been paid by the petitioner towards the amount of the tax, there was a balance of Rs. 2, 602-3-8 remaining payable by him and a notice for this amount under Rule 15 (4) was duly served on him. The order of assessment was not taken in appeal and has become final. Nor was any action filed contesting its validity. Default having been made in the payment of the tax, proceedings were taken for its recovery under Section 15 (b) of the Act. These proceedings are now pending before the Honorary First Class Magistrate, Eluru, as C. C. No. 90 of 1951. The present writ has been writ has been filed for quashing those proceedings on the ground that the Act and the Rules and the assessment made thereunder are all void and that the prosecution is, therefore, illegal.
It is necessary, to begin with, to define what contentions are open to the petitioners in these proceedings. The Madras general Sales Tax Act which creates the liability to pay tax on sales also constitutes Tribunals for determining the amount payable under the Act and such determination has to be made after notice to the assessee and it is open to appeal and further to a revision. The petitioners were duly served with notice under the Act and had ample opportunity of putting forward before the Tribunals all contentions based on the provisions of the Act or the Rules. Not having done so, they cannot be permitted to put forward in these proceedings contentions which were available to them before the Tribunals. The only pleas that are now open to them are those which could not have been urged before the tribunals. Such, for example, would be the plea that the Act is ultra vires : such a plea could not obviously be entertained by a Tribunal which owes its very existence to Act. Mr. K. V. Venkatasubramania Ayyar, the learned Advocate who appeared for the petitioners, did not contest this position. But he argued that even on this Section 16a should be declared void. It runs as follows :-"the validity of the assessment of any tax, or of the levy of any fee a other amount, made under this Act, or the liability of any person to pay any tax, fee or other amount so assessed or levied shall not be questioned in any criminal Court in any prosecution or other proceeding, whether under this Act or otherwise".
The contention is that the section prevents the petitioners from showing that they are not liable to be taxed under the Act and is, therefore, opposed to rules of natural justice. There would have been substance in this objection, if the petitioners had been denied an opportunity of contesting the claim before an order of assessment was made. But where, as here, the tax is determined after notice to the assessees, it is not repugnant to rules of natural justice to provide that the validity of assessment shall not be questioned at the stage of realisation of the tax. The provision is analogous to the rule which precludes judgment-debtors from putting forward at the stage of execution of a decree defences that were open to them, in the suit itself. The law on the subject is thus summed up by Rottschaefer in his work on constitutional Law at page 686 :- "the general rule is that due process requires that the taxpayer be accorded an opportunity to be heard at some stage in the proceedings before his liability is irrevocably fixed with respect to all matters the ascertainment of which involves the exercise of such administrative or quasi judicial functions, so far as those matters affect the existence or extent of his liability". (Vide Turner v. Wade 254 US 64; 65 L. Ed. 134))and again "a taxpayer who fails to take advantage of the opportunity to be heard accorded him, loses his right to object to an assessment made against him" : Vide Chicago, M. St. P. & P. R. Co. v. Risty 276 US 567; 72 L. Ed. 703) and Mcgregor v. Hogan 263 US 234; 68 L. Ed. 282 ). It is also well settled in America that where the assessment is not otherwise open to objection, laws which provide for their recovery in a speedy and summary manner are not liable to be assailed as unconstitutional. In State railroad Tax Cases 92 US 575; 23 L. Ed. 663) the Court observed :- "it is a wise policy. It is founded in the simple philosophy derived from the experience of ages that the payment of taxes has to be enforced by summary and stringent means against a reluctant and often adverse sentiment and to do this successfully other instrumentalities and other modes of procedure are necessary than those which belong to Courts of justice".
In Springer v. United States 102 US 586; 26 L. Ed. 253)the Court stated :- "the prompt payment of taxes is always important to the public welfare. It may be vital to the existence of the Government. The idea that every taxpayer is entitled to the delays of litigation is unreasonable. If the laws here in question involve any wrong or unnecessary harshness it was for Congress or the people who make the Congresses to see the evil was corrected. The remedy does not lie with the judicial branch of the government."
(3.) THE contention that Section 16-A is opposed to natural justice must, therefore, be rejected. Mr. K. V. Venkatasubramania Ayyar urged that the Madras general Sales Tax Act was void on the following grounds :- (1) THE Provincial Legislature had no power under the government of India Act of 1935 to enact a law imposing a tax on purchasers. (2) THE liability to pay a tax on sales is thrown on the purchaser not by the statute, but by the Rules. This is an unconstitutional delegation by the Legislature of its functions to the executive and the imposition of the tax is accordingly illegal. (3) THE Act has become void under article 14 of the Constitution, as it singles out for taxation purchasers in some trades and is, therefore, discriminatory. (4) THE Rules framed under the Act are inconsistent with the provisions enacted in the body of the Act and are void.
Before dealing with these contentions, it will be convenient to set out the relevant provisions of the Act. The preamble to the act declares that the object of the enactment is "to provide for the levy of a general tax on the sale of goods in the province of Madras". Section 2 (b) defines a "dealer" as a person who carries on the business of buying or selling goods. "sale" is defined in Section 2 (h) as meaning every transfer of the property in goods by one person to another in the course of trade or business. Section 2 (i) defines "turnover" as the aggregate amount for which goods are either bought or sold by a dealer. Section 3 which is the charging section runs as follows :- Section 3. (1) "subject to the provisions of this Act, (a) every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every rupee in such turnover."
Sub-clauses (4) and (5) run as follows :- "(4) For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed : Provided that no such rules shall come into force unless they are approved by a resolution of the Legislative Assembly. (5) The taxes under sub-sections (1) and (2) shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed : Provided that - (i) in respect of the same transaction of sale, the buyer or the seller, but not both, as determined by such rules as may be prescribed, shall be taxed; (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him". Section 5 (vi) is as follows :- "subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees the sale of hides and skins, whether tanned or untanned, shall be liable to tax under section 3, sub-section (1), only at such single point in the series of sales by successive dealers as may be prescribed".