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PETITIONER: M/s.  DALURAM PANNALAL MODI

       Vs.

RESPONDENT: THE ASSISTANT COMMISSIONER OFSALES TAX ETC.

DATE OF JUDGMENT: 08/03/1963

BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. WANCHOO, K.N. GUPTA, K.C. DAS

CITATION:  1963 AIR 1581            1964 SCR  (2) 286

ACT: Sales Tax-Escaped Assessment-Re-assessmnt-Powers and duties- Delegation of-Madhya Pradesh General Sales Tax Act, 1958 (M. P. 2 of 1959), 88. 19, 30.

HEADNOTE: Section 19 of the M. P. General Sales Tax Act, 1938 empowers the  Commissioner,  if  he is satisfied  that  any  sale  or purchase  of goods has escaped assessment, to  reassess  the tax payable and to levy a penalty.  Section 30 empowers  the Commissioner to "delegate any of his powers and duties under this   Act."   The  Commissioner  delegated   to   Assistant Commissioners his "powers and duties" to make an  assessment or reassessment of tax or penalty and to exercise all  other powers  under ss. 18, 19 and 20, The Assistant  Commissioner gave  a notice to the appellant that he was  satisfied  that sales from 1.4.1957 to 31.3.1958 had escaped assessment  and assessed  him  to  an  additional  tax  and  penalty.    The appellant contented that the Commissioner had delegated only his power under s. 19 and not the duties and accordingly the Assistant Commissioner could validly re-assess the appellant 287 only  after the Commissioner had been  satisfied  personally that sales had escaped assessment. Held,  that the order of re-assessment and penalty  made  by the  Assistant Commissioner was valid.  The  requirement  of his  satisfaction before exercising the power  to  re-assess under s. 19 did not impose any duty on the Commissioner ; it was really a condition or limitation of the exercise of that power.   Even  if  this requirement as  to  satisfaction  be considered  as a duty, it was an adjunct to the exercise  of the  power to re-assess and it passed necessarily  with  the delegation  of the power.  It would make no difference  even if  the  conditions precedent to the exercise of  the  power were more than one as they had no independent existence  and were merely attached to the power. Mungoni v. Attorney-General [1960] A. C. 336 and Hazrat Syed Shah  Mastarshid  Ali Al Quadari v. Commissioner  of  Wakfs, West Bengal, [1961] 3 S.C.R. 759, relied on.

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JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 870 of 1962. Appeal  by special leave from the judgment and  order  dated April 5, 1962, of the Madhya Pradesh High Court at  Jabalpur in M. P. No. 14 of 1962. U.   M. Trivedi, Shanti Swarup Khanduja and Ganpat Rai,  for the appellant. M.   Adhikari,  Advocate-General  for the  State  of  Madhya Pradesh and 1. N. Shroff, for the respondents. 1963.  March 8. The judgment of the Court was delivered by SARKAR  J.-The appellant had been assessed to sales tax  for the  year  1957-58 under the Madhya Bharat  Sales  Tax  Act, 1950.  This Act was repealed on April 1, 1959, by the Madhya Pradesh General Sales Tax Act, 1958.  On December 31,  1960, a  notice  was  issued  to the  appellant  by  an  Assistant Commissioner of Sales Tax under the 1958 Act 288 wherein  it  was  stated, "’I am satisfied  that  your  sale during  the  period  from 1-4-1957 to  31-3-58  has  escaped assessment  and  thereby  rendered  yourself  liable  to  be reassessed  under  s. 19 (1) of the Act." Pursuant  to  this notice  fresh  assessment proceedings were  started  by  the Assistant  Commissioner in respect of the sales in the  year 1957-58 and on March 31, 1961, he made an order imposing  an additional  tax  on the appellant of Rs. 31,250/-  for  that year and a penalty of Rs. 15,000/-.  The appellant moved the High  Court  of Madhya Pradesh for a writ of  certiorari  to quash  the order but was unsuccessful.  It has now  appealed to this Court against the judgment of the High Court. We  will first set out the material portion of s. 19 (1)  of the Act of 1958 under which the assessment   was made :               "Where an assessment has been made under  this               Act  and the Commissioner, in  consequence  of               any information which has come into his                     possession,  is satisfied that any  sale               or  purchase of goods chargeable to tax  under               this  Act, during any year..:...  has  escaped               assessment...               reasonable  opportunity  of  being  heard  and               after  making  such enquiry  as  he  considers               necessary, ’proceed, in such manner as may  be               prescribed,  to re-assess the tax  payable  on               such sale or purchase and the Commissioner may               direct  that the dealer shall pay, by  way  of               penalty  in addition to the amount of  tax  so               assessed, a sum not exceeding that amount." It  is  necessary also to refer to s. 30 of  the  Act  which authorises  the Commissioner to "delegate any of his  powers and duties under this Act", subject to certain  restrictions and  exceptions which do not require consideration  in  this case, to Assistant Commissioners and certain other officers. The Commissioner made an  289 order  under  this section on April 1, 1959,  delegating  to Assistant Commissioners his ""powers and duties specified in column (3) of the table" set out in the order.  That  column was  headed  "Description  of  Powers"  and  contained   the following : To make an assessment or re-assessment of tax or penalty.........  and to exercise all other powers u/s.  18, 19 and 21." It  was said that the power to re-assess conferred by s.  19 (1) on the Commissioner was subject to various duties one of which was that he had to be satisfied that sales had escaped assessment,  without  the performance of  which  duties  the

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power could not be exercised.  It was contended that  though provision  had  been  made by s. 30 for  the  delegation  of duties, the Commissioner had by his order of April 1,  1959, delegated  only  his power under s. 19 but not  the  duties. Therefore, it was argued, that the Assistant Commissioner to whom  the power had been delegated, could  validly  exercise that  power only after the Commissioner had  been  satisfied personally that sales had escaped assessment.  It was lastly said  that as the Assistant Commissioner had  exercised  the power  to re-assess on his own satisfaction that  sales  had escaped assessment, the exercise of the power was void. Section  19 (1) no doubt required that the Commissioner  had to be satisfied that sales had escaped assessment before  he could  proceed  to exercise his power to re-assess.   It  is true  that  without  such satisfaction  there  could  be  no reassessment.  But we do not think that by this  requirement the  section  imposed  any duty on  the  Commissioner.   The Commissioner’s satisfaction was necessary only if he  wanted to  exercise  his  power  to  re-assess  and  was  really  a condition  or  limitation  of the exercise  of  that  power. Apart from the exercise of such power it had no purpose  and no  existence.  Even if the requirement as  to  satisfaction was to be considered as 290 a  duty,  it was a duty which had been created  only  as  an adjunct  to the exercise of the power, a duty  which  passed necessarily with the delegation of the power.  That seems to us  to be also commonsense for when a power is delegated  it is  intended  that  the  delegate  would  exercise  it   and therefore  it must have been intended that he would  perform all the conditions precedent to the exercise of the power. The  view that we have taken of this case was taken  by  the judicial  Committee  of  a similar statute in  the  case  of Mungoni  v.  Attorney General (1), and that case  was  cited with  approval by this Court in Hazrat Syed Shah  Mastershid Ali  Al Qaudari v. Commissioner of Wakfs, West  Bengal  (2), where  it was observed, "Where powers and duties are  inter- connected  and it is not possible to separate one  from  the other in such wise that powers may be delegated while duties are retained and vice versa, the delegation of powers  takes with  it the duties." The duty of being satisfied  --.if  at all  it was one--being inseparably connected with the  power to  re-assess and passing to a delegate along with  it,  was not  a duty which could be independently delegated  and  was not, therefore, a duty the delegation of which could be made under  s.  30.  We,  therefore,  think  that  the  Assistant Commissioner, as the delegate of the power to reassess, duly exercised  the power on his own satisfaction that sales  had escaped assessment. Then  it  was said that Mungoni’s case (1),  and  the  cases taking  the same view, some of which were mentioned  in  the judgment  of the High Court, were of no assistance  for  the statutes  in those cases required only one thing to be  done before the power conferred could be exercised, whereas s. 19 (1) of the Act of 1958 required a number of things to be  so done.   It  was, therefore, contended that it could  not  be said  in  the present case that the things which had  to  be done before the power could be exercised were (1) [1960] A.C. 336, (2) [1961] 3 S.C.R. 759.  291 not  duties  which  could  be  delegated  under  s.  30.  In Mungoni’s  case (1), no doubt there was only  one  condition precedent  and we will assume that in the cases referred  to in  the  judgment of the High Court, the  position  was  the

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same.  We will also assume that sub-s. (1) of s. 19 required a number of things to be done before the power to  re-assess could be exercised though as at present advised, we doubt if it did.  We are however wholly unable to appreciate how  the number  of conditions precedent could lead to the view  that they  were  independent  duties which  could  be  separately delegated.   It  seems to us that inspite of  their  number, they  remain nonetheless conditions precedent and  therefore conditions  or  limitations of the exercise  of  the  power. They had, like a single condition precedent, no  independent existence.   If in the case of a single condition  precedent it  has to be held on the authority of Mungoni’s  case  (1), that  the  requirement of its performance  passed  with  the delegation  of the power to which it was attached  we  think that  a  delegation of a power would take with  it  all  the conditions  precedent  attached  to  it  whatever  be  their number.  We are unable to distinguish the present case  from Mungoni’s case (1). The other objection to the validity of the order is that  it was  in  respect of sales which had  earlier  been  assessed under the Act of 1950 as sales by one Gajanand  Satyanarayan and  could  not therefore be assessed again.   This  earlier assessment  had been cancelled by an order made under s.  39 (2)  of  the Act of 1958.  But it was said that  that  order could  not  cancel the assessment which was under  the  1950 Act,  for under s. 39 (2) only an order under the  1958  Act could be cancelled.  It scorns to us that in order to uphold the validity of the re-assessment order made in this case it is not necessary that the assessment order made on  Gajanand Satyanarayan  should  have been cancelled.  We  will  assume that the sales covered by the order against Gajanand (1)  [1960] A.C. 336. 292 Satyanarayan were the same as those with which the order  in hand is concerned.  In the re-assessment proceedings however it was found as a fact that Gajanand Satyanarayan was a name only and that no real person bearing that name ever existed. That finding cannot be challenged in the present proceedings and that being so, it seems to us that the assessment  order upon  Gajanand  Satyanarayan was a nullity.   Obviously,  no assessment  could be made under tile Act on  a  non-existent person.  If that order was a nullity-and the learned counsel has  not been able to show how it could have been  otherwise it  could not stand in the way of the re-assessment  of  the appellant  at  all.  The second challenge  to  the  impugned order must, therefore, also be rejected. Learned  counsel for the appellant had sought to  raise  two other points but he was not permitted to do so because these points  were not mentioned in the petition for the writ  nor raised  at  any earlier stage.  We will however  state  them here  but  without expressing any opinion of our own  as  to their tenability.  Tile first of these points was that under s.  19  (1) of the 1958 Act only those sales  could  be  re- assessed which were chargeable to tax under that Act and the sales brought to tax under the present order were of  sugar, a  commodity the sale of which was not chargeable under  the Act.   The other point was that penalty had been imposed  by the  impugned order under s. 14 of the Act of 1950 but  this was  illegal  since the 1950 Act had been repealed  and  the right  to  impose a penalty under the repealed Act  had  not been saved by the saving section, namely, s. 52. In  the result this appeal must fail and it  is,  therefore, dismissed with costs. Appeal dismissed. 293

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