Patna High Court
Fertilizer Corporation Of India Ltd. vs State Of Bihar on 12 September, 1974
Equivalent citations: [1975]36STC265(PAT)
Author: Nand Lall Untwalia
Bench: Nand Lall Untwalia
JUDGMENT S.K. Jha, J 1. In these references under Section 33(1) of the Bihar Sales Tax Act, 1959 (hereinafter called the Act), at the instance of the assessee, Messrs. Fertilizer Corporation of India Limited, the following common question of law has been referred for the opinion of this court by the Commercial Taxes Tribunal, Bihar, Patna : Whether, in the facts and circumstances of the case, the Tribunal has rightly held that both the conditions, namely, payment of tax and submission of return within the prescribed time must be satisfied for claiming rebate under Section 15 of the B, S. T. Act, 1959 ? 2. The three references arise out of the assessment of the assessee under the Act relating to three quarters of the year 1959-60 (i. e. 1st July, 1959, to 31st March, 1960) and the years 1960-61 and 1961-62. In all these assessments, the assessee had claimed rebate admissible under Section 15 of the Act. The assessing officer, while passing the assessment orders, found that, though the assessee had deposited the tax within the prescribed time before filing the returns, the returns were actually filed not within the time prescribed under Section 14 of the Act read with Rule 10 of the Bihar Sales Tax Rules, 1959 (hereinafter referred to as the Rules). The rebate claimed was, on this ground, disallowed. The assessee having filed three appeals relating to the aforesaid three periods in question before the Deputy Commissioner of Commercial Taxes and the appeals having been dismissed, it preferred three revisions before the Tribunal. Admittedly, in these cases the assessee paid the admitted tax within the period prescribed by the Act. With regard to the second quarter of the year 1960-61, namely, the period between 1st July, 1960, and 30th September, 1960, both the payment of tax and the filing of return were within the time prescribed by the Act. With regard to the rest of the periods covered by the three assessments, it was conceded by the assessee that it had not filed the returns within the time prescribed under Section 14(1) of the Act read with Rule 10 of the Rules nor was any extension of time prayed for or granted under Section 14(3). In that view of the matter, the Tribunal allowed the claim in respect of the second quarter of the year 1960-61 but with regard to the rest of the assessment orders no interference was made. The Tribunal repelled the contention put forward on behalf of the assessee that for a rebate to be allowed under Section 15 of the Act all that was necessary was the payment of the amount of tax admitted within the prescribed period and the filing of the return within such period was not a necessary prerequisite for grant of rebate to the assessee. 3. These cases were, in the first instance, heard by a Division Bench, before which a Bench decision of this Court in Jamuna Flour and Oil Mills (Private) Ltd. v. State of Bihar [1968] 22 S.T.C. 1 was relied upon on behalf of the assessee for the proposition that the eligibility for claiming rebate under Section 15 of the Act arises if the amount is paid under Sub-section (2) of Section 20 and that it was not necessary that the return must also be filed by the assessee within the prescribed period for conferring a right on him to claim such rebate, as also for the proposition that, assuming that the filing of returns too within the prescribed period was an essential requirement, since the assessments were based on the returns filed beyond such period, it must be held that impliedly the period for furnishing the returns was extended under the provisions of Section 14(3) of the Act. The Division Bench hearing these cases expressed grave doubts about the correctness of the aforesaid Bench decision of this Court in the case of Jamuna Flour and Oil Mills [1968] 22 S.T.C. 1 and, accordingly, these cases have been placed before a larger Bench for consideration of the question as to whether the aforesaid Bench decision of this Court was correct in law or not. Hence these cases before us. 4. As already indicated above, the facts are not at all in controversy. The assessee paid into the Government treasury the full amount of admitted tax within time. It did not, however, furnish the returns within the period prescribed under the Act and the Rules. The question then arises as to whether the assessee can be held to be entitled to the grant of rebate under Section 15 of the Act. Section 15 runs thus : A rebate at the rate of one per centum of the amount of tax admitted to be due in the return furnished under Sub-section (1) of Section 14 in the prescribed manner and within the prescribed or extended period shall be allowed to a registered dealer who has paid such amount according to the provisions of sub-section J|2) of Section 20 : Provided that where the amount finally assessed on the dealer is less than the admitted amount, rebate at the said rate shall be allowed only on the amount so assessed : Provided further that the State Government may, by notification, and subject to such conditions or restrictions as may be specified therein, enhance or reduce the rate of rebate in respect of registered dealers generally or any class of such dealers. It will be noticed that the rebate is allowable if the amount of tax admitted to be due in the return furnished under Section 14(1) in the prescribed manner and within the prescribed or extended period has been paid in accordance with Section 20(2). Section 14(1) of the Act lays down that: Every registered dealer shall furnish such returns within such period and to such authority as may be prescribed : Provided that the prescribed authority may require any dealer by notice in writing, to furnish such returns within such period as may be fixed by the said authority. Rule 10(2) of the Rules prescribes that such returns shall be filed within one calendar month of the expiry of the period to which they relate and shall be signed and verified in the manner indicated therein. Thus, Section 14(1) of the Act read with Rule 10(2) of the Rules lays down the period within which a registered dealer shall furnish such returns. Section 14(3), however, authorises the prescribed authority, if it is satisfied that a dealer is unable to furnish any return within the period prescribed under Sub-section (1), to extend the period for submission of such return. It is necessary to reproduce Section 14(3) here, which runs in these terms : If the prescribed authority is satisfied that a dealer is, for reasonable cause, unable to furnish any return within the prescribed period or the period fixed under the proviso to Sub-section (1), the said authority may extend the period for submission of the return. It may be noticed in the aforesaid provision that the word "is" after the word "dealer" and before the words "for reasonable cause" is very pertinent. In my view, any application for extension of the period prescribed under Section 14(1) for submission of the return must be made before the expiry of such period. If the legislature had intended otherwise then, instead of the verb "is" the verb "has been" ought to have been substituted therefor. It is worthwhile to quote here Section 14(4) also of the Act : If a registered dealer fails, without reasonable cause, to furnish any return within the prescribed period, or a dealer on whom a notice has been served under the proviso to Sub-section (1), fails likewise to furnish the return within the fixed period, the prescribed authority may direct that the dealer shall pay, by way of penalty for such failure, a sum not exceeding five rupees for every day, after the expiry of the prescribed or fixed period, during which the dealer fails to furnish the required return. Where the period for submission of any return is extended under Sub-section (3) and the dealer nevertheless fails, without reasonable cause, to furnish the return within the extended period, he shall be liable to penalty as aforesaid for each day after the expiry of the prescribed or fixed period. Thus, the effect of the provisions of Section 14(1), (3) and (4) is this : A dealer must furnish returns within one month of the expiry of the period to which such returns relate. If, for any reason, the dealer is unable to furnish such returns within the period prescribed then he must file an application before the expiry of the period for extension of the period for submission of the returns. If, however, he fails, without reasonable cause, to furnish any return within the period prescribed or within the period fixed in the notice served under the proviso to Sub-section (1) or within the period extended under Section 34(3), the competent authority may impose a penalty on the dealer for such failure on his part, which may extend to rupees five for every day after the expiry of the period prescribed or fixed, during which there has been such a failure to furnish the required return. Section 14(4), in my view, merely enables and empowers the competent authority to impose a penalty in cases of delinquent dealers failing to furnish returns within the time allowed by law. It. does not, however, compel such authority to impose a penalty in all cases. For, it may well be seen that even for the purpose of imposition of penalty only the maximum has been laid down as "not exceeding rupees five for every day". In appropriate and fit cases the authority may not even choose to impose such a penalty ; in cases of trifling delinquency a nominal penalty may be imposed and graver the delinquency on the part of the dealer larger the amount of penalty that may be imposed up to the maximum prescribed. Penalty is to be imposed only when the failure to file return is without reasonable cause. If there be such a cause, penalty is not to be imposed. 5. Section 20 makes provisions for payment and recovery of tax and the only sub-section relevant for the purpose of the present discussion is Sub-section (2), which may be quoted here : Before any registered dealer furnishes any return under this Act, he shall, in the prescribed manner, pay into a Government treasury the full amount of tax due from him under this Act according to such return and shall furnish, along with the return, a receipt from such treasury showing payment of the said amount : Provided that such registered dealer may, in the prescribed manner, deduct from such amount of tax any amount which may be admissible as rebate under the provisions of Section 15. 6. These being all the relevant provisions, I now turn to the true construction of Section 15 of the Act. Mr. Tarkeshwar Prasad, the learned counsel for the assessee, relying upon the decision in the case of Jamuna Flour and Oil Mills [1968] 22 S.T.C. 1, contends that the portion of Section 15 which refers to the filing of return within the prescribed period should not be construed as a condition for a right to claim rebate, for, that would be putting too narrow a construction on this provisions of law. He also contends that, where the language of a taxing statute is ambiguous and two views are possible, the view which is favourable to the assessee must be accepted. In any view of the matter, he submits, since no penalty has been imposed on the assessee for the late filing of the returns and the assessments have been made on the basis of returns thus filed beyond the period prescribed, it should be deemed that the period was impliedly extended by the prescribed authority. In my opinion, the submissions are not well-founded in law for the reasons hereinafter given. 7. It is no doubt an established principle of construction of fiscal statutes that if two views are possible then that favourable to the assessee must be accepted by the court. The decisions of the Supreme Court in the cases of Commissioner of Income-tax, Punjab v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 I.T.R. 518 (S.C.) and Commissioner of Income-tax, West Bengal I v. Vegetable Products Ltd. [1973] 88 I.T.K. 192 (S.C.) as also numerous other decisions do recognise this principle of construction of taxing statutes. This principle, however, has never been held to have any application if the language of the statute is absolutely unambiguous and unequivocal. The point for determination, therefore, is as to whether there is anything in the language of Section 15 which admits of two meanings ; is there anything in the language admitting of any controversy ? The statute says that the relief in the shape of a rebate shall be granted to a dealer paying the amount of tax admitted to be due (i) in the return furnished under Section 14(1) in the prescribed manner, and (ii) within the period prescribed or extended, (iii) if the dealer has paid such amount in accordance with Section 20(2). The tax admitted to be due for the purpose of claiming a rebate, therefore, must be so admitted in the return furnished under Section 14(1) in the prescribed manner and within the period prescribed or extended under Section 14(1) read with Rule 10(2) or Section 14(3). The word "and" is conjunctive in so far as the furnishing of the return is concerned. It is obvious, therefore, that, if no return has been furnished within the prescribed or extended period, there cannot be any amount of tax admitted to be due in a return not so furnished for the purposes of Section 15. It will be noticed from the provisions of Section 20(2), quoted above, that the payment of the full amount of tax due under the Act from the dealer according to the return furnished must precede the furnishing of such a return. And, such payment alone entitles the dealer to deduct from such amount of tax any amount admissible as rebate to him under Section 15. The contention on behalf of the assessee can be accepted only if we take the view that the words "admitted to be due in the return furnished under Sub-section (1) of Section 14 in the prescribed manner and within the prescribed or extended period" are wholly redundant and mere surplusage. Can we on the well-established canons of construction justifiably impute such a surplusage or redundance of language to the legislature ? The answer is furnished by Craies on Statute Law, 7th Edition, at page 105 : 'To reject words as insensible', said Erle, C.J., in R. v. St. John, Westgate, Burial Board (1) (1862) 2 B. & S. 703, 706, 'is the ultima ratio when an absurdity would follow from giving effect to the words of an enactment as they stand'. In R. v. Berchet (1690) 1 Show. 108, it was said to be a known rule of interpretation of statutes, that such a sense is to be made upon the whole as that no clause, sentence or word shall prove superfluous, void or insignificant if by any other construction they may all be made useful and pertinent. And in Harcourt v. Fox (1693) 1 Show. 506, 532 Lord Holt said : I think we should be very bold men, when we are entrusted with the interpretation of Acts of Parliament, to reject any words that are sensible in an Act.' This rule has often been acted upon. Thus, in Green v. R. (1876) 1 App. Cas. 513, 537, Lord Cairns states, as a reason for differing from the court below, that 'the learned Judges absolutely reduce to silence the second part of this sentence, and make it altogether inapplicable'. So in Cooper v. Slade (1858) 6 H.L.C. 672, 746, 765, in the court below, Bramwell, B., was inclined to treat the proviso at the end of Section 2 of the Corrupt Practices Prevention Act, 1854, as mere surplusage ; but in his advice to the House of Lords (Cooper v. Slade (1858) 6 H.L.C. 672, 746, 765) he stated that he had altered his opinion as to this, because it appeared that a reasonable construction could be put upon that proviso, and therefore that construction ought to be adopted, instead of treating that proviso as if it did not exist at all. Similarly, in East London Ry. v. Whitechurch (1874) L.R. 7 H.L. 81, 91, Lord Cairns expressed a strong opinion against treating words in an Act of Parliament as surplusage, if any meaning can be put upon them. The only exception to the above rule is that a court of law will reject words as surplusage if it appears that by attempting to give a meaning to every word it has to make the Act of a legislature insensible or if it is clear that otherwise the manifest intention of the legislature will be defeated. Keeping these well-established principles in mind, can it be said that the words which the learned counsel for the assessee asks us to treat as mere surplusage are violative of the manifest intention of the legislature or would make the statutory provision under Section 15 wholly insensible ? If the words, referred to above, are capable of being given effect to, I would be a very bold man indeed to reject those words that are sensible in the statutory provision. A return has to be filed within the prescribed or the extended period and when the legislature makes the rebate admissible if the amount of tax admitted to be due in the return so furnished is paid, I see no insensibility in the words "admitted to be due in the return furnished in the prescribed manner and within the prescribed or extended period". In the place and the context of the words used, there is very good reason why the legislature has so used such words. The obvious reason is that ordinarily and generally the amount of tax admitted to be due can only be so admitted in the return prepared and furnished under the provisions of the Act. It was suggested that, even if the return was not prepared, a dealer could yet know the admitted amount of tax from his account books and may on such basis pay such an amount within the stipulated period. Even if that be so, where is the difficulty in the way of the dealer furnishing a return as required by law and within the period prescribed or extended if the figures are so readily available in the account books of the dealer ? Stretching to its logical extreme, if the argument so advanced be correct, then, even if no return is filed at all, a dealer, by paying the amount of tax admitted to be due from him on the basis of his account books, would still be entitled to a rebate under Section 15. Thus I do not see any difficulty in giving effect to every word used in Section 15. The amount of tax admitted must be so admitted to be due in the return furnished and such a return must be submitted in the prescribed manner and within the prescribed or extended period so as to entitle the dealer to. the relief of the rebate under the statutory provision. Where is the palpable injustice, where is the absurd inconvenience and where is even a tinge of insensibility in any of the provisions mentioned above ? Without doing violence to the language of Section 15, I am afraid, I do not think it will be possible to deduce the inference that is sought to be deduced on behalf of the assessee. I may usefully refer here to what Viscount Simon said in the case of Hill v. William Hill (Park Lane) Ltd. [1949] A.C. 530 at 546-547 while repelling the contention that certain words used in a statute were mere tautology: When the legislature enacts a particular phrase in a statute the presumption is that it is saying something which has not been said immediately before. The rule that a meaning should, if possible, be given to every word in the statute implies that, unless there is good reason to the contrary, the words had something which would not be there if the words were left out. 8. There is yet another aspect of the matter which lends support to the view I have taken. Section 14(2), for example, lays down that if a dealer having furnished a return under Section 14(1) discovers any omission or error in the return so furnished by him, he may, at any time before the assessing authority passes the assessment order, furnish a revised return. But under the proviso to that sub-section no such revised return shall be taken into consideration if the assessing authority is satisfied upon information coming into his possession that the original return furnished was deliberately false or was furnished with an intent to defraud the revenue and the authority records such reason in writing. The furnishing of a true and correct return by the dealer, therefore, is an integral part in the scheme of Section 14. It will thus be seen that on the discovery by a dealer of an omission or error in the return furnished in the prescribed manner and within the prescribed period while the statute gives an honest dealer a liberty to rectify his own bone fide error by filing a revised return before the assessment, although the dealer has paid the amount of tax admitted to be due by him in the original return, no rebate under Section 15 is admissible to him if such a revised return is filed under Section 14(2). So also is the case of a return filed under Section 14(4). In my considered view Section 15 does not permit granting of rebate in cases of filing, of returns either revised or original under Sub-sections (2) and (4) of Section 14. 9. The learned counsel for the assessee submitted that the rebate is offered merely to facilitate and expedite collection and it was intended to stimulate the collection of taxes due. As such, this being the dominant purpose and object for the provision with regard to rebate, it must be held that the furnishing of the return was merely ancillary and subsidiary to such a purpose. In this connection reliance was placed on a decision of the Supreme Court in the case of Orissa Cement Ltd. v. State of Orissa [1971] 27 S.T.C. 118 (S.C.). I do not think the observations made in that case are applicable to the Bihar Act. That case was dealing with the provisions of Section 13(8) of the Orissa Sales Tax Act, 1947, which ran in these terms : A rebate of 1 per centum on the amount of tax payable by a dealer shall be allowed, if such tax is paid by the dealer on or before the due date of payment. And Section 13(4) (d) of the Orissa Act merely prescribed a time-limit for the purpose of payment of taxes and ran in these terms : (d) Composition money payable under the third proviso to Sub-section (1) of Section 5, less the sum, if any, already paid by the dealer ; shall be paid by the dealer into a Government treasury within thirty days from the date of the service of the notice issued by the Commissioner for the purpose. The payment of tax stipulated in Section 13(8) of the Orissa Act was in relation to such payment within the provisions of Section 13(4)(d). None of the two provisions mentions anywhere the furnishing of returns. It was in these circumstances that their Lordships of the Supreme Court held that it was a part of the process of collection and the stimulus for prompt payment was a part of the manner of collection. A comparison of the language of Section 13(8) read with Section 13(4)(d) of the Orissa Act and the provisions of Section 15 read with Section 20(2) of the Bihar Act marks out the difference and the distinction between the Supreme Court case and the instant cases. As already pointed out above, Section 20(2) of the Bihar Act specifically speaks of the payment of the full amount of tax due from the assessee before any registered dealer furnishes any return. When, therefore, Section 15 speaks of payment of the tax admitted to be due in the return furnished in accordance with the provisions of Section 20(2) of the Act, the furnishing of the return within the time prescribed or extended is as much an essential ingredient as the payment of the admitted tax within the time itself. 10. It was next contended by the learned counsel for the assessee that even assuming that on a true construction of Section 15 of the Act a rebate can be held to be allowable only on a fulfilment of the two prerequisite conditions, namely, the payment of the admitted tax due and the furnishing of the return within the period prescribed or extended, then in view of the fact that assessment orders were passed by the assessing authority on the basis of the returns filed by the assessee beyond the period prescribed and no penalty having been imposed it must be deemed that the assessing authority impliedly extended the period for the furnishing of the returns till such time as they were duly furnished. It must be presumed, therefore, that the returns were furnished within the extended period and so the assessee had fulfilled both the conditions. In support of this contention reliance was placed on the above-mentioned Bench decision of this Court in Jamuna Flour and Oil Mills' case [1968] 22 S.T.C. 1, which in its turn had relied upon a' decision of the Privy Council in Md. Akbar Khan v. Court of Wards (1934) I.L.R. 15 Lah. 216 and a Bench decision of the Calcutta High Court in Sree Sree Iswar Sridhar Jew v. Jnanendra Nath Ghose A.I.R. 1990 Cal. 718. Before referring to these cases, I must make it clear that strictly speaking such a question of law does not. arise out of the order of the Tribunal since this point was not specifically raised before it. Assuming that the point arises and since the point is of major consequence and involves an interpretation of the statutory provisions in the Act, the learned counsel for the assessee as well as the learned standing counsel for the department urged before us to lay down the correct principle of law which shall have application to a large number of cases on the point in the State. In that view of the matter, in order to cover all the points raised at the Bar, I shall reframe the question referred to us in the following terms: Whether, on the facts and in the circumstances of this case, the order of the Tribunal rejecting the claim of the dealer to a rebate under Section 15 of the Bihar Sales Tax Act, 1959, is legal ? Having reformulated the question, I shall now turn to the point of law raised on behalf of the assessee that it should be presumed that the time for furnishing the returns in these cases was impliedly extended. The decision of the Privy Council in Md. Akbar Khan's case (1934) I.L.R. 15 Lah. 216 was one relating to Section 5 of the Limitation Act. The Revenue Officer acting under Section 15(1) of the Punjab Land Revenue Act, 1887, had reviewed an order passed more than ninety days before the application to review was filed. In that connection, their Lordships of the Privy Council held that: Although the application was made more than ninety days after the date of the order of which review was sought, it must be assumed that the Revenue Commissioner, before entertaining it, was satisfied that there was sufficient cause for the delay. In the case of Sree Sree Iswar Sridhar Jew A.I.R. 1990 Cal. 718, the Calcutta High Court was dealing with the provisions of Rule 15 of Chapter VI of the Original Side Rules which prescribed that an appeal from an order made by the Master must be made within five days after the decision complained of or such further time as may be allowed by a Judge or the Registrar or the Master. The objection as to limitation in filing the appeal was specifically taken in the affidavit-in-opposition of the respondent and was urged by the learned counsel appearing for the respondent in that case before the first appellate court. In spite of such an objection, the learned Judge hearing the appeal in the first instance did not throw out the petition of appeal and passed an order on merits. In such circumstances, Chakravartti, C. J., observed at page 720 : In fact, however, his application was not thrown out, but an order of a positive character was made. It is thus perfectly clear that the learned Judge entertained the application and made an order upon it and he could not have done so, unless he was willing to treat the application as made within time...it must be presumed that the learned Judge extended the time. These two decisions are authorities for the proposition that if the passing of an order on a time-barred application or appeal is not possible except by extending the prescribed time which the authority hearing the application or appeal had power to do, then if an order on merits is passed in such proceedings, it must be presumed that the limitation was condoned and the period was extended by the appropriate court or authority. Where, however, the passing of an order on merits on an application or in a proceeding initiated out of time is permissible under any statutory provision, then such a presumption of implied extension of time or condonation of delay is not warranted. It is here that this point of distinction has been lost sight of, and I say so with utmost respect, by Narasimham, C. J., in Jamuna Flour and Oil Mills' case [1968] 22 S.T.C. 1. In the Act there is a specific provision in Section 14(4), which I have already quoted above, for furnishing a return beyond the period prescribed or extended also. As I have observed above, merely because no penalty has been imposed, it is no ground for inferring that the returns have not been entertained under Section 14(4) or that the period should be deemed to be extended. I repeat, what I have already held above, that even where a return is furnished beyond the period prescribed or extended, it is not imperative or obligatory on the assessing authority to impose a penalty if reasonable cause is found by him. The imposition of penalty is in the discretion, a judicial discretion indeed, of the assessing authority. The assessing authority in the circumstances of a given case may not choose to impose a penalty under Section 14(4) and yet entertain such a return. This makes all the difference. 11. In this connection, it was contended on behalf of the assessee that if it were a case of entertaining the return under Section 14(4), then the assessment was bound to be made under the provisions of Section 16(4) of the Act and a best judgment assessment was bound to follow. In order to appreciate and reject this contention the provisions of Section 16 may be referred to. Section 16 of the Act provides for assessment of tax. Section 16(1) authorises the prescribed authority to assess the amount of tax due from the dealer on the basis of the returns furnished by such dealer if such authority is satisfied, without requiring the presence of the dealer or the production of accounts and other evidence, that the returns furnished are correct and complete. Section 16(2), however, authorises the prescribed authority in case it is not so satisfied, without requiring the presence of the dealer or the production of accounts and other evidence, to serve a notice to such a dealer to attend in person or through an authorised representative or to produce or to cause to be produced any accounts or other evidence, on which the dealer may rely, on a date and time and at a place specified in such notice. Section 16(2)(b) runs thus : On the day specified in the notice or as soon thereafter as may be, the prescribed authority shall, after examining the accounts and other evidence produced by the dealer and such other evidence as the prescribed authority may, by notice in writing, require on specified points, assess the amount of tax due from the dealer. Section 16(3) provides for a best judgment assessment in case the dealer fails to comply with the terms of the notice under Sub-section (2) or if the accounts and other evidence produced by him are incorrect, incomplete or unreliable either wholly or partly. And Section 16(4) runs thus : If a registered dealer does not furnish returns in respect of any period within the prescribed or extended period, the prescribed authority shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of its judgment, the amount of tax due from the dealer. On a reading of the provisions of Section 16 as a whole, I am of the view that the use of the word "shall" in Section 16(4) in the context of best judgment assessment is merely directory and enabling and not mandatory. The word "shall" in the context must mean "may". Though the word "shall" for the purpose of giving the dealer a reasonable opportunity of being heard is certainly mandatory, it is merely permissive in so far as it empowers the assessing authority to resort to a proceeding for best judgment assessment. As pointed out by Craies on Statute Law (7th Edition) at page 229 : When a statute creates a duty, one of the first questions for judicial consideration is what is the sanction for its breach, or the mode for compelling the performance of the duty ? This question usually resolves itself into the inquiry whether the Act is mandatory or directory, i. e., absolute or discretionary. If it is directory, the courts cannot interfere to compel performance or punish breach of the duty, and disobedience to the Act does not entail any invalidity. If the Act is mandatory, disobedience entails legal consequences.... If suppose the assessing officer chooses not to resort to a best judgment assessment, can it be said that the assessment on the basis of the returns filed beyond the period prescribed or extended will be void and without jurisdiction ? Can it be said that an assessing officer not adopting the course of best judgment assessment must be compelled to resort to it ? The answer in my view is "no". That being the position, there is no force in the submission that in the event of a return being filed beyond the period prescribed under Section 14(1) or extended under Section 14(3), the assessing officer must make a best judgment assessment under Section 16(4) and that, therefore, he should be held to be precluded from passing an order of assessment under Section 16(2)(b) of the Act. In my considered view, a dealer can be assessed on the basis of a return furnished under Section 14(4) beyond the period prescribed or extended even in accordance with the provisions of Section 16(2) (b). That being the position, any assumption or presumption of an extension of the period for filing the return by implication must wholly be ruled out as not warranted. I must hasten to add, however, that if Section 14(4) of the Act were not there in the statute book, the ratio of the decisions in the cases of Md. Akbar Khan (1934) I.L.R 15 Lah. 216 and Sree Sree Iswar Sridhar Jew A.I.R. 1960 Cal. 718 would certainly apply. 12. For the reasons stated above, I must hold that the case of Jamuna Flour and Oil Mills [1968] 22 S.T.C. 1 was wrongly decided and must be overruled on both these points, namely, (1) that for rebate to be allowed under Section 15, the furnishing of the return within the period prescribed or extended was not a necessary condition and (2) that if the assessment has been made on the basis of a return filed beyond the period prescribed or extended under the Act, it should be presumed that the period has been extended by implication by the prescribed authority. 13. In the result, therefore, I answer the question as reframed in the affirmative in favour of the revenue and against the assessee and hold that, on the facts and in the circumstances of this case, the order of the Tribunal rejecting the claim of the dealer to a rebate under Section 15 of the Act is legal. The assessee must pay the costs of these references. A consolidated hearing fee is assessed at Rs. 200. Nand Lall Untwalia, C.J.
1. I entirely agree with my learned brother Jha, J.
Shiveshwar Pd. Sinha, J.
1. I have had the benefit of reading the judgment passed by my learned brother S. K. Jha, J., as agreed to by my Lord the Chief Justice. I have not been able to persuade myself to agree to the view expressed therein and, consequently, I proceed to pass a separate judgment. It is not necessary for me to state the facts over again, because the relevant facts have been clearly and succinctly mentioned in the said judgment.
2. These cases have been referred to the Full Bench, particularly for considering the validity or otherwise of the view expressed by this court on question No. (2) in the case of Jamuna Flour & Oil Mills (P.) Ltd. v. State of Bihar [1968] 22 S.T.C. 1. That question was : "whether the order of the Tribunal rejecting the claim of rebate for the quarter ending 30th June, 1961, is in accordance with law?" The common question which has been referred for opinion in the instant case is :
Whether, in the facts and cicumstances of the case, the Tribunal has rightly held that both the conditions, namely, payment of tax and submission of return within the prescribed time must be satisfied for claiming rebate under Section 15 of the B. S. T. Act, 1959 ?
Obviously the questions referred for opinion of this court in the respective cases differ vitally from each other. In that case, Jamuna Flour & Oil Mills (P.) Ltd. v. Slate of Bihar [1968] 22 S.T.C. 1, the question related to the admissibility of a claim made, whereas in these cases the question relates to making of a claim. Making of a claim is a step anterior to the determination of the admissibility of the claim. Thus, whereas the question in the case of Jamuna Flour & Oil Mills (P.) Ltd. [1968] 22 S.T.C. 1 required an interpretation of Section 15 of the Bihar Sales Tax Act, 1959 (hereinafter referred to as the Act), the question in the instant case requires interpretation of Sub-section (2) of Section 20 and not of Section 15 of the Act, though the Tribunal has mentioned that section in the frame of the question referred. There is a distinction between the right to claim rebate and the claim being allowed by the taxing authorities. The former is a right available to the dealer or assessee, but the latter depends upon the law and its application by the taxing authorities. Therefore reference to Section 15 of the Act in the question as referred is irrelevant. The right to claim rebate arises when an assessee deposits the admitted tax in accordance with Section 20(2) of the Act and while doing so deducts the rebate out of it in terms of the proviso thereto. To put the relevant parts of this section, it reads as under:
20. (2) Before any registered dealer furnishes any return under this Act, he shall, in the prescribed manner, pay into a Government treasury the full amount of tax due from him under this Act according to such return and shall furnish, along with the return, a receipt from such treasury showing payment of the said amount :
Provided that such registered dealer may, in the prescribed manner, deduct from such amount of tax any amount which may be admissible as rebate under the provisions of Section 15.
The requirements of laying the claim of rebate, as will be seen from the above provisions of the Act, are only three : (i) Deposit of full amount of tax, (ii) according to any return filed under this Act, and (iii) deduct from such amount of tax the rebate admissible under Section 15 of the Act, i. e., 1 per cent of the full amount of tax or at such rate as may be available at the relevant time. No question of the return being filed within the prescribed time or extended time arises at this stage.
3. I should, therefore, have answered the question referred in the negative and in favour of the assessee and I should further have observed that consideration of the validity or otherwise of the decision in the case of Jamuna Flour and Oil Mills [1968] 22 S.T.C. 1 would not be relevant in-the context of the question referred for opinion. It, however, appears from the context of the common statement of case that the question that the Tribunal intended to refer related to the admissibility of the claim for rebate and not merely to the making of a claim for rebate. The question should, therefore, be re-framed as under:
Whether, in the facts and circumstances of the case, the Tribunal has rightly held that both the conditions, namely, payment of tax and submission of return within the prescribed time, must be satisfied for rebate to be allowable under Section 15 of the B. S. T. Act, 1959 ?
4. Properly analysed the question has two distinct parts :
(a) Whether, in the facts and circumstances of the case, the rebate under Section 15 of the Act was allowable ? and
(b) Whether both the conditions, namely, payment of tax and submission of return within the prescribed time, must be satisfied for the rebate to be allowable under Section 15 of the Act ?
5. Taking up part (b) of the question, I read the relevant part of Section 15 :
A rebate at the rate of one per centum of the amount of tax admitted to be due in the return furnished under Sub-section (1) of Section 14 in the prescribed manner and within the prescribed or extended period shall be allowed to a registered dealer who has paid such amount according to the provisions of Sub-section (2) of Section 20.
In the case of Jamuna Flour and Oil Mills [1968] 22 S.T.C. 1, the expressions "the amount of tax admitted to be due in the return furnished under Sub-section (1) of Section 14 in the prescribed manner and within the prescribed or extended period" have been held to be merely descriptive and not restrictive. The relevant observations are as under :
In my opinion, however, on a proper construction of Section 15 read with Section 20 of the Act, the eligibility for claiming rebate arises if the amount is paid under Sub-section (2) of Section 20. That portion of Section 15, which refers to the filing of return within the prescribed period, should not be construed as a condition for a right to claim rebate. It is true that, until and unless the return is filed, the question of allowance of the rebate by the aiithorities will not arise ; but a distinction should be made between the right to claim rebate on the one hand and the date when the authority concerned will allow the claim. Sub-section (2) of Section 20 clearly envisages a situation where the full amount of tax is first paid by the dealer and then the return is submitted by him to the taxing authority, enclosing with the return a receipt from the treasury showing payment of the said amount. Thus, the legislature clearly recognises that, between the date of payment of the tax due and the date of submission of the return, there may be an appreciable interval depending on the obtaining of the receipt from the treasury showing payment. Delay may occur if the treasury does not pass the chalan promptly. It is not proper to construe Section 15 in such a narrow way as to disentitle a person from claiming rebate due to delay caused by some other agency, over which he has no control. The reference to the return in Section 15 is for the purpose of ascertaining the amount of tax admitted to be due, and it is not meant to restrict his right to claim rebate....
The correctness of this view has been assailed by the learned counsel for the respondent on two grounds : (i) it is contrary to all canons of interpretation in that if payment of the admitted tax was the only requirement for admissibility of the rebate, it leaves the other part of the section concerning the filing of the return, without any effect; (ii) Section 15 being unambiguous in its terms, it must be literally construed.
6. Discussions during the course of hearing of these tax reference cases have mainly centred around these two contentions : The learned counsel for the dealer trying to support the view expressed in the case of Jamuna Flour and Oil Mills [1968] 22 S.T.C. 1 on the ground, inter alia, of legislative intention behind the introduction of the provision for granting of rebate, and the learned counsel for the State attacking that view on the grounds as stated above.
7. I think, the criticisms concerning the correctness or otherwise of the view expressed in the case of Jamuna Flour and Oil Mills [1968] 22 S.T.C. 1 are based on an improper appreciation of the view expressed on the question referred in that case. The question was whether the caim for rebate had been validly rejected by the Tribunal and although the answer was in the negative, the discussion in the judgment mainly centred around the validity of the claim and incidentally regarding the validity of its disallowance. The ultimate observation was:
...It is not proper to construe Section 15 in such a narrow way as to disentitle a person from claiming relate due to delay caused by some other agency, over which he has no control....
(emphasis is mine).
In fact the question referred in the case was so worded that it was likely to confuse and attract such observations. The ultimate opinion given on the question is, however, not so much on the scope of Sections 15 and 20(2) of the Act as much on the fact that the return was held to have been filed within the extended period.
If this decision is read as deciding that the filing of the return was not one of the conditions for allowing the rebate in terms of Section 15 of the Act, the decision would be wrong. Section 15 of the Act is so unambiguous in its terms, that it cannot be said that filing of the return within the prescribed or extended period was not one of the conditions for allowing the rebate under Section 15 of the Act.
8. The question, -however, still remains as to how imperative or mandatory is the requirement for filing of the return within the prescribed or extended period for allowing the rebate in terms of Section 15 of the Act.
It cannot be gainsaid that if an Act provides a particular procedure for laying a claim, the validity of the claim must be determined by reference to the very same procedure. In the Act the procedure for claiming rebate is laid under Section 20, the relevant part of it being Sub-section (2) and the proviso thereof. For the sake of convenience, I quote the relevant provision once again. It reads :
Before any registered dealer furnishes any return under this Act, he shall, in the prescribed manner, pay into a Government treasury the full amount of tax due from him under this Act according to such return and shall furnish, along with the return, a receipt from such treasury showing payment of the said amount :
Provided that such registered dealer may, in the prescribed manner, deduct from such amount of tax any amount which may be admissible as rebate under the provisions of Section 15.
It is of significance to note that it is on "any return under this Act" furnished by a registered dealer that he is required to pay the tax admitted to be due therein after deducting the rebate admissible under Section 15 of the Act, namely, of one per centum of the tax admitted to be due in the return. The expression "any return under this Act" may mean either a return filed under Section 14(1) read with Rule 10(2), or 14(2) or 14(3) or 14(4) or in pursuance of notice under Section 18(1) of the Act. It also may mean a return filed beyond the prescribed or extended period. Now Section 15 of the Act lays down that a rebate at the rate of one per centum of the amount of tax admitted to be due in the return furnished under Sub-section (1) of Section 14 of the Act in the prescribed manner and within the prescribed period or extended period shall be allowed to a registered dealer who has paid such amount according to Sub-section (2) of Section 20. It specifies the type of return which is required for the purposes of allowing rebate and thereby narrows down the scope of the words "any return under this Act" occurring in Section 20(2). Had Section 15 been a proviso to Section 20(2) in relation to the return filed by a registered dealer, possibly the restrictive terms under the former would have prevailed over the generic terms under the latter. The two sections, however, operate in different spheres ; Section 20(2) for claiming the rebate, Section 15 for deciding the validity of the claim. Section 15 cannot, therefore, be projected as a proviso to Section 20(2). Such being the position, I think, if the claim is validly laid in terms of Section 20(2) of the Act, the restrictive terms in Section 15 of the Act in relation to the return can only be understood as merely descriptive and not restrictive. If it is not so understood, it would lead to anamolous results ; no rebate would be admissible on returns filed under Section 14(2) or 14(4) even after paying penalty or 18(1) of the Act even though furnished within the prescribed or extended period.
It is one of the cardinal rules of interpretation of statutes that "where possible, a construction should be adopted which will facilitate the smooth working of the scheme of legislation established by the Act, which will avoid producing or prolonging artificiality in the law, and which will not produce anomalous results" (Maxwell on the Interpretation of Statutes, 12th edition, page 201).
9. The Sales Tax Tribunal has observed, and very rightly, that "in interpreting a statute nothing is to be added to or to be taken away from a statute. A construction which will leave without effect any part of the language of a statute will normally be rejected".
The interpretation of Section 15, as given by me, does not violate this principle. The expression "the return furnished under Sub-section (1) of Section 14 in the prescribed manner and within the prescribed or extended period" is not left without any effect. This part of the section gets the effect of describing the return furnished by the registered dealer as "any return which is a return under the Act" whether filed under Section 14(1) of the Act within the prescribed period or admitted as a return filed within the extended period. It may be added that a return which is valid for the purpose of assessment cannot be invalid for the purpose of claiming or allowing rebate.
10. In my opinion, therefore, the question as reframed by me must be answered by saying that although filing of return as also payment of tax admitted on the basis of such return are the two conditions for claiming rebate, for the purpose of Section 15, however, the condition relating to filing of return is only descriptive and, consequently, if the return is treated as one filed under the Act, the rebate must be allowed, if the admitted tax has been paid before the filing of the return.
In the instant cases since the returns have been treated as filed under the Act and the admitted tax have also been paid within the prescribed period, the rebate has been wrongly refused. I further hold that the case, Jamuna Flour and Oil Mills [1968] 22 S.T.C. 1 has been correctly decided.
11. The question is answered in favour of the assessee and against the department. Hearing fee Rs. 200 (Two hundred) consolidated.