A. K. MATHUR. J. - (1.) THE petitioner by this writ petition has challenged the notice dated 7. 7. 1978 (Annexs. 7 and 8 ). He has also challenged the validity of section 12 of the Rajasthan Sales Tax Act, 1954.
(2.) THE petitioner is a company incorporated under the Indian Companies Act, 1956 having its registered office at Delhi and Head Office and Factory at Jodhpur. THE petitioner company purchased the running business carried on by a registered partnership firm known as M/s. Alcobex Metal Corporation, 24, Heavy Industrial Area, Jodhpur (hereinafter referred to as the firm' ). THE firm had five partners Sarva Shri G. G. Kanunga, Laxmi Chand Kanunga, Shri Asuram Kanunga, Hansraj Kanunga and Shri Ganga Dass Vyas (since dead) THE firm was registered under the Indian Partnership Act, 1932 and it stood dissolved on 1. 8. 1971 on transfer of its running business to the petitioner company. THE firm was registered both under the Rajasthan Sales Tax Act. 1954 (hereinafter referred to as the Act of 1954') and the Central Sales Tax Act. 1956 (hereinafter referred to as 'the Act of 1956' ). THE present writ petition relates to the period commencing from 10. 11. 1969 and ending on 31. 7. 1970. THE firm submitted its returns for the aforesaid period before the Commercial Taxes Officer, Special Circle, Jodhpur (hereinafter called as 'the C. T. O. ') under both the Acts in time. THE firm disclosed fully and truly all material and relevant facts in the returns with a view to enable the non-petitioner No. l to assess its turnover. THE firm in its returns had mentioned all transfers to its branches out-side the State i. e. branches located at Sahibabad, Ahmedabad and Delhi aggregating to Rs. 12,40. 695. 83p. THE firm also included in its returns the transfers made through agents on consignment basis out-side the State of Rajasthan aggregating to Rs. 34,01,447. 67 P. THE firm claimed the aforesaid transfers to its branches and transfers made through agents on consignment basis as exempted from payments of tax under the Act of 1954 and the Act of 1956. THE non-petitioner No. 1 assessed the firm and passed two detailed orders of assessment after taking into consideration the transfers to its branches and transfers made through its agents on consignment basis on 31. 5 1971, which are Annexs. 3 and 4. After a lapse of more than 7 years the non-petitioner, No. l. has issued two notices to the petitioner company, one under Section 12 of the Act of 1954 and the other under Section 12 of the State Act read with Section 9 (2) of the Act of 1956 calling upon the petitioner to show - cause why the turnovers amounting to Rs. 12,40,695. 83 P. and 34,01, 447. 57 P. should not be assessed as sales in the course of inter-state trade and commerce and why penalty should not be levied for deliberately showing the above mentioned sales amounting to Rs. 46. 42,143, 40 as transfers to its branches outside the State and sales out-side the State in the returns furnished by the firm and thus involving commission of offence under Section 16 (1) (e) of the Act of 1954 read with Section 9 (2) of the Act of 1956 Both the notices dated 9. 7. 1978 issued under Sec. 12 have been placed on record as Annexs. 7 and 8. Aggrieved against these notices the petitioner has approached this Court by filing the present writ petition. Mr. Mehta, learned counsel for the petitioner, has challenged the validity of Section 12 of the Act of 1954. He has also challenged that on mere change of opinion no notice under Section 12 can be issued. He has also submitted that notice should have been issued to the members of the partnership firm and not to the petitioner. As against this, Mr. Balia, learned counsel for the Revenue has opposed it by filing a detailed reply and contended that Section 12 of the Act of 1954 is not altra vires and be further submitted that the notices which have been issued under Section 12 are within the jurisdiction of the C. T. O. as he can issue the same when there is any escaped assessment and the notices have rightly been issued to the petitioner company and it is not required to be issued to the partners of the firm. In order to appreciate the submissions of the learned counsel for both the parties I have to reproduce the relevant provisions of the Act. The first and foremost question arises before me for my consideration is whether Section 12 of the Act of 1954 is valid or not. Section 12 reads as under:- "12. Assessment of tax and levy of exemption fee or registration fees incorrectly assessed:- (1) If for any reason the whole or any part of the business of a dealer has escaped assessment to the tax. or if the registration fee or exemption fee has escaped levy or has been assessed at too low a rate in any year, the assessing authority may serve on the dealer liable to pay the tax in respect of such business or such registration fee or exemption fee a notice in the prescribed form and may proceed to assess the re-assess amount of the tax or levy the correct amount of registration fee or exemption fee from such dealer: Provided that if the Deputy Commissioner (Administration) has reason to believe that the whole or any part of the business of a dealer has escaped assessment to tax or has been under assessed or has been assessed at too low a rate, he may at any time subject to the time limit specified in sub-section (2) either direct the assessing authority to assess or re-assess the amount of tax or himself proceed to assess or re-assess the tax. Explanation-Nothing in this section shall be deemed to prevent the assessing authority from making as assessment to the best of his judgment. (2) No notice under sub section (1) shall be issued in respect of any business, registration fee or exemption fee for any year after the expiry of eight years from the end of the relevant assessment year. Provided that nothing contained in this sub-section shall apply to any assessment or re-assessment made in consequence of, or to give effect to, any finding or direction contained in an order under section 13, 14 or 15 or in an order of any competent court. Explanation -Where the assessment proceedings relating to any dealer remain stayed under the orders of any competent court, the period during which the proceeding remain so stayed shall be excluded in computing the period of limitation for assessment or re-assessment provided under this sub-section. " Mr. Mehta, learned counsel for the petitioner submits that Section 12 is ultra vires of Article 14 of the Constitution as it confers a blanket power on the authority to issue a notice and it does not provide any guidelines that in what circumstances and for what consideration this provision should be invoked. This confers a blanket discretion on the C. T. O. and such a provision which confers an arbitrary and blanket discretion to the C. T. O. is ultra vires of Article 14 of the Constitution. In order to justify his contention learned counsel for the petitioner has referred to Ram Krishna Dalmia vs. Shri Justice S. R. Tendolkar ( () and the State of Punjab vs. Khand Chand (2 ). So far as Ram Krishna Dalmia's case (supra) is concerned, their Lordships of the Supreme Court while dealing with the validity of statute on ground of violation of Article 14 observed that it is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purpose of legislation. Their Lordships also laid down that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure. While dealing with this aspect of the matter, their Lordships of the Supreme Court laid down as under the criteria:- " (a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest; (e) that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. " This case does not lay down that such discretion which has been vested on the C. T. O. is ultra vires or not. The next case cited by the learned counsel is Khanchand's case (supra) and the learned counsel has invited my attention to the following observations of their Lordships in that case:- "there is no element of judicial arrogance in the act of the Courts in striking down an enactment. The Constitution has assigned to the Courts the function of determining as to whether the laws made by the legislature are in conformity with the provisions of the Constitution. The Courts would be shirking their responsibility if they hesitate to declare the provisions of a statute to be unconstitutional, even though those provisions are found to be violative of the articles of the Constitution. Hesitation or refusal on the part of the Courts to declare the provisions of an enactment to be unconstitutional, even though they are found to infringe the Constitution because of any notion of judicial humility would in a large number of cases have the effect of taking away or in any case eroding the remedy provided to the aggrieved parties by the Constitution. It is as much the duty of the Courts to declare a provision of an enactment to be unconstitutional if it contravenes any article of the Constitution as it is theirs to uphold its validity in case it is found to suffer from no such infirmity. "
(3.) IN that case their Lordships has laid down that if the courts come to the conclusion that any provision is not inconformity with the provisions of the Constitution, the court should not hesitate to declare that provision unconstitutional and strike down such unconstitutional provision. But the question before me is whether Section 12 is arbitrary and it confers a blanket discretion on the authority exercising this power. I am unable to agree with this contention of Mr. Mehta. Mr. Balia learned counsel for the respondent has pointed out that there is already a built in safeguard in Section 12 of the 1954 Act. Section 12 can only be operated if the authority who exercised the power under Section 12 comes to the conclusion for any reason that there is an escaped assessment in any previous year. That shows that the has to apply his mind for forming the opinion. Then there is a check that a notice has to be given to the affected party of this reopening and after hearing him passed an order whether the turn-over has really escaped or not. Thus, it provides a reasonable opportunity to the affected person. If any person is affected by the order passed on reopening then that order is appealable under the Act. Lastly, there is a time limit fixed that if the escaped turn-over is beyond the period of 8 years then this power cannot be exercised by the assessing authority. These checks which are built in this provisions and the scheme of the Act provides a sufficient safeguard against its arbitrary exercise and abuse of the provision. Their Lordships of the Supreme Court in Jyoti Pershad vs. Administrator for the Union Territory of Delhi (3) has dealt with the scope of delegated legislation and observed as under ; - "in regard to this matter we desire to make two observations. In the context of modern conditions and the variety and complexity of the situations which present themselves for solution, it is not possible for the Legislature to envisage in detail every possibility and make provisions for them. The legislature therefore is forced to leave the authorities created by it an ample discretion limited, however, by the guidance afforded by the Act. This is the ratio of delegated legislation, and is a process which has come to stay, and which one may be permitted to observe is not without its advantages So long therefore as the Legislature indicates, in the operative provision of the statute with certainty, the policy and purpose of the enactment, the mere fact, that the legislation is skeletal or the fact that a discretion is left to those entrusted with administering the law, affords no basis either for the contention that there has been an excessive delegation of legislative power as to amount to an abdication of its functions, or that the desertion vested is canalised and unguided as to amount to a carte blanche to discriminate. The second is that if the power or discretion has been conferred in a manner which is legal and constitutional, the fact that Parliament could possibly have made more detailed provisions, could obviously not be a ground for invalidating the law. " Likewise their Lordships of the Supreme Court in the Registrar of Cooperative Societies vs. K. Kunjabmu (4) has laid down that while judging a provision of a statute whether it is arbitrary or not the policy of the Act has to be seen. Their Lordships observed as under in the aforesaid case ; - 'the policy of the Act is there and so are the guidelines. The objectives are clear, the guidelines are there. There are numerous provisions of the Act dealing with registration of societies, rights and liabilities of members duties of registered societies, privileges of registered societies, property and funds of registered societies, inquiry and inspection, supersession of committees of societies, dissolution of societies, surcharge and attachment, arbitration etc The provisions are generally designed to further the objectives set out in the preamble. But numerous as the provisions are, they are not capable of meeting the extensive demands of the complex situations which may arise in the course of the working of the Act, and the formation and the functioning of the societies. In fact, the too rigorous applications of some of the provision of the Act may itself occasionally result in frustrating the very object of the Act instead of advancing them. It is provide for such situations that the Government is invested by Section 60 with a power to relax the occasional rigour of the provisions of the Act and to advance the object of the Act. Section 60 empowers the State Government to exempt a registered society from any of the provisions of the Act or to direct that such provisions shall apply to such society with specified modification". ;