BERI, C. J. - (1.) M/s. Oriental Engineering Company, Jaipur has made two applications, one under Art. 226 of the Constitution of India and the other under sec. 9 (3) of the Central Sales Tax Act, 1956 read with sec. 14 (2) of the Rajasthan Sales Tax Act, 1954, against the order of the Board of Revenu, Rajasthan dated May 24, 1967 and they can be conveniently disposed of together.
(2.) THE petitioner is a registered firm under the Indian Partnership Act, 1932 and has been carring on the business of selling diesel engines, generators, electric motors, pump, bearings, etc. at Jaipur. It is registered as a dealer both under the Rajasthan Sales Tax Act and the Central Sales Tax Act. On July 12, 1957 the petitioner applied to be registered as a dealer under the Central Sales Tax Act and a certificate was issued to it in respect of agricultural machinery parts for re-sale only. On August 6, 1962 Inspector Baijal noticed that the certificate under the Central Sales Tax Act related only to agricultural machinery parts but the petitioner was taking benefits thereunder in regard to other machinery and goods. THE petitioner, therefore, asked for an amendment of the certificate and the same was granted to it on the 22nd of August, 1962 On 7th of August, 1968, however, a notice was issued to the petitioner, which is Ex. 4, under sec. 10 (b) of the Central Sales Tax Act in respect of the years 1959-60, 1960 61 and 1961-62 to the effect that the petitioner was importing goods on 'c' Forms at concessional rates of 1 per cent which were not mentioned in its registration certificate under the Central Sales Tax Act and thus it committed an offence under sec. 10 (b) of the said Act. THE petitioner was required to appear with account books on 17-8-1963 to show cause why legal action may not be taken against it. An answer was filed on September 22, 1962, which said that the petitioner bona fide believed during the years in question that it was entitled to import other goods, which it did, and the Sales Tax authorities without question permitted it to do so. THE petitioner also added that there was malafide and still if the Department prosecutes it then it will defend itself in a competent court of law. THE assessing authority, however held that the petitioner's plea was untenable because it had in possession the registration certificate and yet it could never detect the mistake till it was pointed out by Shri Baijal, ASTO and after calculating the figure imposed a penalty under sec. 10a of the Central Sales Tax Act against the petitioner in the sum of Rs. 4,000/ -. THE petitioner appealed but the Deputy Commissioner, Excise and Taxation (Appeals) confirmed the order of the Sales-tax Officer, 'b'circle, Jaipur. THE petitioner as well as the State preferred revision applications before the Board of Revenue, which by its order of January 17, 1967 (Ex. 9) dismissed the petitioner's revision-application and enhanced the penalty from Rs. 4,000/- to 10,000/ -. It is this order of the Board of Revenue which is challenged before us in the petition under Art. 226 of the Constitution of India. An application under sec. 9 of the Central Sales Tax has also been made. The first submission of Mr. S. M. Mehta, appearing for the petitioner, is that if a registered dealer falsely represented when purchasing any class of goods that such class was covered by the certificate of registration then two courses were available to the Sales-tax authorities, namely, one of prosecution and the other of imposing a penalty in lieu of prosecution under sec. 10a of the Central Sales Tax Act. There being no guiding line as to in that cases a dealer would be prosecuted and in what cases a penal would be imposed in lieu of the prosecution under sec. 10a of the Central Sales Tax Act, amounted to a denial of equality before law and was hit by Art. 14 of the Constitution of India, He placed reliance on Bahadur Singh vs. Jaswant Raj Mehta (l); The State of West Bengal vs. Anwar Ali Sarkar (2); Northern India Caterers (Pvt.) Ltd. vs. State of Punjab (3); and Calbaji vs. C. T. O- Sirohi (4 ). This contention of the learned counsel for the petitioner is met by Mr. Shrimal, learned Additional Government Advocate, on the ground that alternative of a prosecution or imposition of penalty are regular pattern of taxation laws and these two provisions are distinct and serve two independent purposes. Prosecutions are ordered with a view to vindicate justice against a violation contrary to the public interest while penalties are imposed with a view to augment the revenues from the coffers whereof the tax had leaked. Thus these two provisions of secs. 10 and 10a are not violative of Art. 14 of the Constitution and he placed reliance on Maddula Appa Rao vs. Income Tax Officer Eluru (4) and S. Partap Singh vs. State of Punjab (6 ). His second submission was that an action under sec. 10a was an indulgent treatment of a dealer which served him from further prosecution in view of the proviso to sec. 10a (1) but the reverse was not correct. A person who was prosecuted under sec. 10 could also be penalised under sec. 10a. The two sections are thus not mutually exclusive. He distinguished the case of Northern India Caterers (8) on the ground that the special provision for the eviction of occupants of Government premises was a departure from the common law and there was no vindication of public justice. He also invited our attention to Hari Singh vs. The Military Estate Officer, Delhi Circle, Delhi (7) and Sivagaminatha Moopanar & Sons vs. Income Tax Officer, II Circle, Madurai (8 ). In order to appreciate the rival contentions it will be profitable to extract the relevant portions of the law which are assailed before us. Sec. 10 (b) of the Central Sales Tax Act, 1956 reads : - " Sec. 10. Penalties - If any person. . . . . . . (b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration; or . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , he shall be punishable with simple imprisonment which may extend to six months, or with fine or with both; and when the offence is a continuing offence, with a daily fine which may extend to or fifty rupees for every day during which the offence continues. " Sec. 10a (1) reads : - "sec. 10a. Imposition of penalty in lieu of prosecution - (1) It any person purchasing goods is guilty of an offence under clause (b) or clause (c) or clause (d) of sec. 10, the authority who granted to him or, as the case may be, is competent to grant to him a certificate of registration under this Act may. after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied under this Act in respect of the sale to him of the goods if the offence had not been committed; Provided that no prosecution for an offence under sec. 10 shall be instituted in respect of the same fact on which a penalty ha* been imposed under this section. . . . . . . . The first principles relating to discrimination arising from procedural difference came to be considered by their Lordships of the Supreme Court in Anwar Ali's case (2 ). West Bengal Special Courts Ordinance, 1949 was under challenge. It provided a speedier trial of certain offences and empowered the State Government by notification in the official gazette to constitute special Courts. Sec. 5 provided that a Special Court should try such offences or classes of offences or cases or classes, as the State Government may by general or special order in writing, direct. Sec. 5 to 15 prescribed the special procedure which the Court had to follow in the trial of the cases referred to it. Fazl Ali, J. inter alia observed, "the Act itself lays down a procedure which is less advantageous to the accused than the ordinary procedure, and this fact must in all cases be the root-cause of the discrimination which may result by the application of of the Act. " In Northern India Caterer's case (3) the Punjab Act 31 of 1959 provided an additional remedy of eviction to the Government, a remedy which it thought was speedier than the one by way of a suit under the ordinary law. Their lordships observed that sec. 5 of the Act 31 of 1959 did not lay down any guiding principle or policy under which the Collector had to decide in which cases he had to follow the one or the other procedure and therefore, the choice was left to his arbitrary will. Consequently, sec. 5 conferring such an unguided and absolute discretion manifestly violated the right of equality guaranteed by Art. 14. Mr. Mehta laid great emphasis on this observation and urged that the Sales Tax authorities were left with unbridled option to prosecute some dealers and to impose penalties on others and, therefore, sec. 10a was violative of Art. 14 of the Constitution. A reference to sec. 11 of the Central Sales Tax Act would show that no court shall take cognisance of any offence punishable under the Act, including the one under sec. 10 (b), except with previous sanction of the Government within the local limits of whose jurisdiction the offence had committed or of such officer of that Government as it may, by general or special order, specify in this behalf. Sec. 10 A on the other hand empowers the imposition of penalty in lieu of prosecution by the authority who granted to the dealer the registration or who was competent to grant him such a certificate. Thus it is clear that the discretion to prosecute resided in an authority different from the one who would impose a penalty. To this extent it cannot be said that it was the same officer who would decide by the toss of a coin or the whim of his mood whether to prosecute or to impose a penalty. Another distinction that could be drawn is that once the penalty was imposed having regard to the proviso to sec. 10a (1) no prosecution could be launched. To this limited extent the one course of action closed the doors against the other. We accept the argument advanced by Mr. Shrimal on the authority of Maddula Appa Rao's case (5) that the object of sec. 10 was vindication of public justice as against the object of sec. 10a to make tax evasion and concealment as unprofitable and remunerative. The learned Judges of the Andhra Pradesh High Court in Maddula Appa Rao's case (5) were considering the provisions of sec. 28, 51 and 52 of the Indian Income Tax Act, 1922. Sec. 28 of the said Act provided for a penalty for concealment of income or improper distribution of profits while sec. 51 related to the failure to make payments or deliver returns or statements or allow inspection under the title of "offences and Penalties'. Sec. 52 related to prosecutions arising on account of false statements in declaration. The learned Judges observed - "the question for consideration is, do these provisions of law enable an Income Tax Officer to discriminate as amongst different assessees? We are not much impressed with the argument of the learned counsel for the petitioner on this point. We do not think that the doctrine of 'equal protection of laws' is in any way infringed by the material provisions of the Income Tax Act. They do not leave any unfettered discretion to deal with persons similarly situated in a similar fashion. It is to be borne in mind that these two sets of provisions are designed to achieve two distinct objects. The aim and object of sec. 28 is to make tax version and concealment thereof unprofitable and remunerative, while that of secs. 51 and 52 is the vindication of public justice. While the one aims at punishing the culprit and vindicating public justice, the object of the other is to protect the revenue and to imburse the Government for the expenditure involved in the investigation of the loss resulting from the fraud of the assessee. Their fields of operation also seem to be different except with regard to one or two matters. It is only with regard to sub- secs. (2) and (5) of sec. 23 that there is some overlapping. Therefore, these provisions are not mutually exclusive. A person who had been subject to penalty under sec. 28 cannot escape prosecution under sec. 51. It is true that sec. 28 (4) says that a person on whom penalty has been imposed will not be prosecuted. But this is a statutory concession and does not really bear on the question whether one excludes the other. These two kinds of sanctions appear to be a feature of several of the fiscal enactments. The idea in enacting these provisions seems to be to deter tax-payers from resorting to fraudulent practices and for the realisation of taxes as expeditiously as possible. " We are in respectful agreement with this approach to the question. The provisions of law, which we are called upon to interpret, are substantially the same. Secs. 13 and 10a do not suffer from the vice of placing power in one officer to exercise it erratically or arbitrarily. They are designed to achieve two distinct objects and, therefore, it cannot be said that they are invalid being violative of Art. 14 of the Constitution of India. The next argument of the learned counsel for the petitioner is that he was denied the reasonable opportunity as envisaged by sec. 10a of the Central Sales Tax Act. Ex. 4, the notice issued to the petitioner was under sec. 10 (b), carried with it a threat of prosecution which was appropriately answered by Ex. 6 and no notice under sec. 10a was given. This argument of the learned counsel for the petitioner is sought to be met by learned Additional Government Advocate on the ground that regardlees of the section quoted in the notice Ex. 4 the petitioner had ample opportunity of meeting the Department's case not only at one stage but at several stages. The crucial words in sec. 10a, which we have extracted already, touching the argument in question are 'after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a -half times the tax which would have been levied under this Act in respect of the sale to him of the goods if the offence had not been committed'. The expression 'reasonable opportunity of being heard' is of frequent occurrence in the field of law and has for its foundation the first principle of natural justice, namely, let no man be condemned unheard. What opportunity is reasonable in a given set of circumstances is largely influenced by what kind of notice was given before action. In the case before us the notice Ex. 4 dated 7th August, 1968, contained an unequivocal threat to the dealer that he will be prosecuted for the offence as defined under sec. 10 (b) of the Central Sales Tax Act. It is a futile attempt on the part of the learned Additional Govt. Advocate to seek resort to the words 'legal action' as employed in the notice Ex. 4, as notice for an action under sec. 10a because the notice itself contains sec. 10 (b) in its title, the threat of prosecution in paragraph 1 and the words 'legal action' are contained in paragraph 2. The legal action, therefore, as employed in paragraph 2 will take its complexion from what precedes it, namely, prosecution and under sec. 10 (b ). It is, therefore, idle to contend that this notice was adequate notice for the purpose of sec. 10a For if such a notice was given to the dealer it would have been informed that it was proposed to impose a penalty to the extent authorised by the section for the reasons that the dealer acted contrary to the terms of the registration certificate in that behalf. The amount of tax leviable, the articles which were included within the four corners of the certificate would have been quoted that would have attracted the attention of the petitioner and he would have made an appropriate answer. If the mind of the petitioner was working on the threat of criminal acton and the mind of the authority was engaged on the imposition of a penalty as it is now claimed then the notice Ex. 4 did not serve the purpose because it failed to inform what it intended to convey. The answer to Ex. 4 gives an unequivocal impression that the dealer understood Ex. 4 to mean a notice for prosecution. And the dealer was plainly right in reading the notice thus. There being no trace of the department's desire to impose a penalty in the notice Ex. 4 it is no opportunity much less reasonable under sec. 10a. Consequently the entire proceedings are vitiated for want of proper notice as contemplated by sec. 10a of the Central Sales Tax Act, and to add to the suffering of the dealer when the matter went up to the Board of Revenue the dealer's fine was increased from Rs. 4000/ -to 10,000/ -. The petitioner had at no point of time an opportunity to put forward correct figures of purchase and contest the questions relating to the tax liability. In this view of the matter the notice Ex. 4 was not a notice under sec. 10a. The dealer was not given any opportunity as required by sec. 10a and the foundational proceedings before the Sales Tax Officer suffer from this patent infirmity. Learned counsel for the petitioner raised other arguments relating to the absence of mens rea. the miscalculation of the penalty and the Revenue Board's order in dismissing the special appeal as not maintainable and the jurisdiction of the Board of Revenue to hear the revision. They need not detain us in view of the conclusion we have already reached. The result is that this writ position is allowed, the order of the assessing authority dated 19-11-1962 Ex. 7, the order of the Deputy Commissioner, Excise and Taxation dated 5-2-63 Ex. 6 and the order of the Board of Revenue dated 17-1-1967 Ex. 9 are quashed. The Department will be at libarty to proceed against the petitioner under sec. 10a in accordance with law. In view of our conclusion the Sales Tax Reference No. 30 of 1966 is not pressed and is dismissed. There will be no order as to costs. . ;