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PETITIONER: KHEMKA & CO.

       Vs.

RESPONDENT: STATE OF MAHARASHTRA

DATE OF JUDGMENT27/02/1975

BENCH: RAY, A.N. (CJ) BENCH: RAY, A.N. (CJ) KHANNA, HANS RAJ MATHEW, KUTTYIL KURIEN BEG, M. HAMEEDULLAH CHANDRACHUD, Y.V.

CITATION:  1975 AIR 1549            1975 SCR  (3) 753  1975 SCC  (2)  22  CITATOR INFO :  R          1976 SC 410  (15)  E          1984 SC1194  (9,17,23,33)  RF         1988 SC 648  (6)

ACT: Central  Sales Tax Act 1956--S. 9(2)--Scope of Bombay  Sales Tax Act--S. 16(4)--If penalty under the Central Act could be levied under s. 16(4) of the Bombay Act.

HEADNOTE: Section  9(2)  of the Central Sales-tax Act,  1956  provides that the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under  the general  sales-tax  law of the appropriate State  shall,  on behalf  of  the  Government  of  India,  assess,  re-assess, collect  and enforce payment of tax, including any  penalty, payable by a dealer under this Act as if the tax or  penalty payable by such a dealer under this Act is a tax or  penalty payable  under  the  general sales-tax  law  of  the  State. Section 16 of the Bombay Sales-tax Act provides for  Payment and recovery of tax.  Sub-section (4) states that if the tax is  not paid by any dealer within the prescribed  time,  the dealer  shall  pay  a  penalty  in  addition  to   sales-tax assessed. The assessee unsuccessfully contended before various  sales- tax  authorities as well as before the High Court that  levy of  penalty under s. 16(4) of the Bombay Sales-tax  Act  for delay  or default in payment of tax under the Central  Sales Tax Act was without jurisdiction as it was not warranted  by the  provisions of s. 9(2) of the Central  Sales-tax.   Act, 1956. In  the  Mysore case which was similar to the  Bombay  case, however,  the High Court allowed the assessee’s  claim  that the  levy  of  penalty under the  Mysore  Sales-tax  Act  in respect of sales-tax payable under the Central Sales-tax Act was ultra vires. It  was  contended  before  this Court  that  there  was  no provision  in  the Central Sales-tax Act for  imposition  of penalty  for  delay  or  default  in  payment  of  tax  and,

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therefore, imposition of penalty under the provisions of the State  Act  for  delay  or default in  payment  of  tax  was illegal. [per  Ray, C.J. and Khanna, J.] (Beg, J. concurring  in  the final results). Allowing the appeal, HELD : The Mysore High Court correctly pointed out that  the words  "as  if the tax or penalty payable by such  a  dealer under  this Act" relate to tax or priority which is  payable only under the Central Act. [763B] The  provision in the State Sales Tax Act  imposing  penalty for  non-payment of sales-tax within the prescribed time  is not attracted to impose penalty on dealers under the Central Sales  Tax Act in respect of tax and penalty  payable  under the  Central Act.  There is no lack of sanction for  payment of tax.  Any dealer Who would not comply with the provisions for   payment  of  tax  would  be  subjected   to   recovery proceedings  under  the  Public  Demands  Recovery  Act.   A penalty is a statutory liability.  The Central Act  contains specific  provisions  for  penalty.   Those  are  the   only provisions  for penalty available against the dealers  under the  Central  Act.   Each  State  Sales  Tax  Act   contains provisions  for penalties.  Theses failure to provisions  in some  eases   are  also for failure to submit  a  return  or register-.  It is rightly said that those provisions  cannot apply  to dealers under the Central Act because the  Central Act  makes similar provisions.  The Central Act is  a  self- contained  code  which, by the  charging  section-,  creates Iiability  for  tax and which by other  sections  creates  a liability for penalty and imposes penalty.  Section 9(2)  of the Central Act creates the State authorities as agencies to carry  out  the assessment.  re-assessment.  collection  and enforcement of tax and penalty payable by a dealer under the Act. [765H; 766A-B] 754 (1)The  words  ’assess,  re-assess,  collect  and  enforce payment  of  tax including any penalty payable by  a  dealer under  this  Act’ mean that the tax as well  as  penalty  is payable  only  under  the Central Act.  By s.  9(2)  of  the Central  Sales Tax Act the State Sales-Tax  Authorities  are created as agents of the Government of India. [76ID; B] (2) The words "and for this purpose they may exercise all or any of the powers they have under the general sales-tax  law of  the  State"  in s. 9(2) of the  Central  Act  relate  to "assess,  re-assess, collect and enforce payment of tax  in- cluding any penalty payable by a dealer under this Act."  In that  context the last limb of s. 9(2) of the  Central  Act, namely,  "and the provisions of such law ....  ......  shall apply  accordingly" means that the provisions of the  State, Act   ire   applicable  for  the  purpose   of   assessment, reassessment,  collection and enforcement of payment of  tax including penalty payable under the Central Act.  The  words of   the  last  part  of  s.  9(2)  namely,   "shall   apply accordingly"  relate  clearly  to the words  "and  for  this purpose"  with the result that the provisions of  the  State Act  shall  apply only for the purpose  of  assessment,  re- assessment, collection and enforcement. [761G-H; 762A] (3)  The extent of liability for tax as well as  penalty  is not  attracted  by the doctrine of ejusdem  generis  in  the application of the provisions of the State Act in regard  to assessment,  re-assessment,  collection and  enforcement  of payment  of  tax  including any penalty  payable  under  the Central  Act.  The doctrine of ejusdem genereis  shows  that the  genus in s. 9(2) of the Central Act is ’for  this  pur- pose’.   In  other  words,  the  genus  is  assessment,  re-

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assessment,  collection  and enforcement  of  payment.   The genus   is  applicable  in  regard  to  the  procedure   for assessment,  reassessment,  collection  and  enforcement  of payment.  The genus is from whom to collect and against whom to enforce. [762A-C] (4) The deeming provision in the Central Act that the tax as well as penalty levied under the Central Act will be  deemed as if payable under the general sales tax law of the  State, cannot  possibly mean the tax or penalty imposed  under  any State Act will be deemed to be tax or penalty payable  under the  Central  Act.   The  entire  authority  of  the   State machinery  is  that "for this purpose" meaning  thereby  the purpose of assessing, re-assessing, collecting and enforcing payment  of  tax  including any penalty  payable  under  the Central Act, they, meaning the State agencies, may  exercise powers  under the general sales tax law of the  State.   The words  "for this purpose" cannot have the  effect  enlarging the  content  of tax and the content of  penalty  under  the Central  Act.  Liability to pay tax as well as liability  to pay penalty is created by the Central Act. [762D-E] (5)  If  the  liability  to pay tax  is  determined  by  the provisions  of the Central Act the liability to pay  penalty is  also that which is payable under the Central  Act.   The procedural  law prescribed in the general sales-tax  law  of the   State  applies  to  the  matter  of  assessment,   re- assessment,  collection  and enforcement of payment  of  tax under  the Central Act because the liability to pay  tax  is determined  tinder the Central Act.  Similarly liability  to pay  penalty is determined with reference to the  provisions of the Central Act. [763D] State  of  Kerala  v.  P. P. Joseph  &  Co.,  255  STC  483; followed. (6) Rebate is a concession whereas penalty is an imposition. The  concession does not impose liability but penalty  does. It,  therefore,  stands to reason that  rebate  is  included within the procedural part of collection and enforcement  of payment of tax.  Penalty, like imposition of tax, cannot  be included within the procedural part. [763G-H] Orissa  Cement Limited v. The State of Orissa & A  Anr.,  27 S.T.C. II 8; followed. C.  A.  Abraham,  Uppoottil, Kottayam  v.   The  Income  Tax Officer,   Kottayam  &  Anr.,  [1961]  2  S.C.R.   765   and Commissioner  of Income-Tax, Andhra Pradesh  v.  M/s.Bhikaji Dadabhai & Co., [1961] 3 S.C.R. 923, distinguished. (7) Penalty is within assessment proceedings just as tax  is within  the assessment proceedings when the relevant Act  by substantive charging provision levies 755 tax  as well as penalty.  Penalty is not merely a  sanction. It is not merely an adjunct to assessment.  It is not merely consequential  to assessment.  It is not  merely  machinery. Penalty  is in addition to tax and is a liability under  the Act. penalty is not a continuation of assessment proceedings and  penalty  partakes of the character of  additional  tax. [765B-D] Jain  Brothers  &  Ors. v. Union of India,  77,  I.T.R.  107 followed. (8)  Under  a  taxing statute liability does  not  begin  on assessment.   There must be a liability created by the  Act, the Act must provide for assessment and the Act must provide for  enforcement  of the taxing provisions.  The  mere  fact that  there  is  machinery for  assessment,  collection  and enforcement  of  tax Ind penalty in the State Act  does  not mean  that  the provision for penalty in the  State  Act  is treated  as penalty under the Central Act.  The  meaning  of

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penalty  under  the Central Act cannot be  enlarged  by  the provisions  of machinery of the State Act  incorporated  for working out the Central Act. [765E-F] Jain Brothers & Ors.. v. Union of India, 77, I.T.R. 107  and Chattura & Ors. v.  Commisioner  of Income-tax,  Bihar,  15, I.T.R. 302, followed. Per  BEG,  J. (1) The provisions relating to  penalties  are special  and specific provisions in each Act.  They are  not part  of "the general sales tax law" of either the State  or of the Union.  If the provisions relating to penalties, such as  those found in the Central Act and the State  Acts,  are really  special  provisions  which can  be  invoked  in  the special  circumstances given in each statute, the  reference to  penalties in the concluding portion of s. 9(2)  must  be interpreted  to  relate  only  to  the  special   provisions relating to penalties provided for specifically in the  Cen- tral Act. [782B-C] (2)  The  rule  to  be applied  with  regard  to  a  statute purporting  to  impose a charge is "that  the  intention  to impose a charge upon the subject, must be shown by clear and unambiguous  language".   If the language  leaves  room  for coming  to the conclusion that only penalties  specified  in the  Central  Act  are  enforceable  by  the  machinery  for enforcement of liability under the general sales tax law  of a  State,  then,  the legislative  intent  could  safely  be presumed  to  be  to  confine  penalties  mentioned  in  the concluding  part of S. 9(2) to only those  mentioned  speci- fically in the Central Act. [782F-G] Oriental Bank Corporation v. Wright, [1880] 5 App.  Cas. 842 @ 856 referred to. (3) Section 76(a) of the Bombay Sales Tax Act, 1959 repealed the  Bombay Sales Tax Act of 1953.  Section 16 of  the  1959 Act refers to an entirely different subject matter.  At  the time  when  the  assessment order was  made,  there  was  no provision  for imposition of any penalty under s.  16(4)  of the  Bombay Act of 1953 which the Sales Tax Authorities  and the  High  Court sought to utilise to  justify  the  penalty imposed. [777G-H] (4)  In 1956 the Parliament could not have applied its  mind to  provisions  which came into  existence  afterwards.   It could not have incorporated them by reference as parts of  a procedure  applicable to assessments which took place  after 1959 when the Bombay Act of 1953 was repealed.  At the  time of  the passing of the Central Act, the relevant statute  in existence in Bombay was the Bombay Act, 1953.  But s.  16(4) of  the  Bombay  Act  of 1953  under  which  the  sales  tax authorities  purported to act, did not exist on the  statute book  at the time of assessment.  Unless it is assumed  that s.  9(2)  of  the Central  Act,  by  necessary  implication, authorised  the  State Legislatures to go on  imposing  such penalties  for such breaches of duty as it pleased  them  to Jay  down  on  behalf of  Parliament,  subsequently  enacted Provisions of State enactments would not be available.[718A- C] Re.   Delhi Laws Act (1912) etc. [1951] S.C.R. 747  referred to. (5) Section 13 of the Mysore Sales Tax Act 1957 was entirely recast  in  1958.  it  would  be  carrying  the  theory   of referential  legislation too far to assume that s.  9(2)  of the  Central  Act,  1956 purported to  authorise  the  State Legislatures to 756 impose  liabilities  in  the nature  of  additional  tax  or penalties  leaving  their  rates and  conditions  for  their imposition  also to be determined by the State  Legislatures

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as  and  when the State Legislatures decided  to  impose  or amend them. [778D] (6) On a consideration of the provisions of s. 16 (4) of the Bombay  Act it seems clear that whatever may be the  objects of  levying  a  penalty,  its imposition  gives  rise  to  a substantive  liability  which  can be viewed  either  as  an additional tax or as a fine for the infringement of the law. It  views  an imposition of a pecuniary liability  which  is comparable to a punishment for the commission of an offence. [779B] (7) The imposition of a pecuniary liability, which take  the form  of  a  penalty  or  fine  for  a  breach  of  a  legal obligation,  cannot  be  relegated to  the  region  of  mere procedure  and machinery for the realization of  tax.   Such liabilities  must  be  created by  clear,  unambiguous,  and express  enactment.   The  language  used  should  leave  no serious doubts about its effect so that the persons who  are to  be subjected to such liability for the  infringement  of law are not left in a state of uncertainty as to what  their duties or liabilities are. [779D] (8)  The provisions of s. 9(2) of the Central Sales Tax  Act make  it  clear  that  the powers of  the  State  Sales  Tax Officers were specifically limited by the provisions of  the Central Act.  They cannot go beyond these provisions. it  is also  clear from s. 9(2) that these powers  are  exercisable only  "for  this  purpose".  In other Words,  they  are  not authorised  to collect dues for purposes extraneous  to  the Central Act. [781H] Per Mathew and Chandrachud, JJ. (dissenting) (1)  A careful analysis of s. 9(2) of the Central Act  would show  that  the authorities empowered to  assess,  reassess, collect and enforce payment of tax payable under the general sales  tax  law of the appropriate State shall  assess,  re- assess,  collect  and  enforce  payment  of  tax   including penalties  payable by a dealer under the Central Act  as  if the tax or penalty payable by a dealer under the Central Act is a tax or penalty payable under the general sales-tax  law of  the  State  and for that purpose,  the  authorities  may exercise  all  or  any of the powers  they  have  under  the general sales tax law of the State. [767F-G] (2) If the sales-tax authorities of a State have power, when enforcing payment ofsales-tax payable under the general sales-tax law of the State to impose penaltyfor non-payment of  tax  within the prescribed time, they will have  a  like power  to impose penalty, for enforcing payment of  the  tax payable  under the Central Act-within the  time  prescribed. It  was  not  necessary that power  to  impose  penalty  for enforcing  the payment of tax payable by a dealer under  the Central  Act  should have been specifically provided  in  or conferred  separately by the sub-section upon the sales  tax authorities  of  the State, because, the  power  to  enforce payment  of tax payable under the Central Act, in  the  same manner as the power to enforce tax payable under the general sales-tax  law  of  the State, has been given  by  it.   The provision  for imposition of penalty in s. 16 of the  Bombay Sales  Tax Act facilitates the collection of tax as it is  a sanction  for  non-observance  of the duty to  pay  the  tax within  the  prescribed time.  It operates  as  a  deterrent against  the  commission of breach of that duty,  and  is  a means  to  enforce  the  payment  of  tax  within  the  time prescribed. [767H; 768A-D] C.  A. Abraham Unnoottil v. The Income Tax Officer [1961]  2 S.C.R.  765,  Narsddi Krishna Reddy v. Income  Tax  Officer, Tenali  (1957) 31 I.T.R. 678. Commissioner of Income Tax  v. Bhikaji  Dadabhai  &  Co., [1961] 3 S.C.R.  923  and  Orissa

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Cement Limited v. The State of Orissa and Anr. 27 S.T.C. 1l8 referred to. (3)  If  rebate  can be given on the  basis  that  it  would facilitate,  expedite  and stimulate the collection  of  tax there  is  no reason why a penalty could not be  imposed  to expedite, facilitate and stimuate the collection of tax  and as part of the process of collection.  Payment of rebate  is a liability from the point of view of the Revenue, though it is a concession from the point of view of the assessee.   If penalty  is  levy  of money on  an  assessee,  rebate  means payment of money to an assessee [770C-D] 757 (4)  It  is difficult to hold that Parliament  invested  the State  authorities with Power to assess, re-assess,  collect and enforce payment of tax payable under the Central Act  as if the tax ’is a tax payable under the general sales tax law of  the State, but denuded them of the power to  invoke  the provision  in  the  general salestax law of  the  State  for imposition  of  penalty  for enforcing payment  of  the  tax payable  thereunder,  as that is an effective means  to  the enforcement  of payment of tax within the  prescribed  time. [770F-G] (5)  The analogy of principal and agent has no relevance  in this context.  If the power of enforcement of payment of tax payable  under the Central Act conferred on the  authorities of  the  State would include the power to  impose  penalties provided in the general sales tax law of the State there  is an end of the matter.  The whole falacy in the reasoning  of the  High  Court is the assumption that only  the  penalties provided   in  the  Central  Act  can  be  imposed  by   the authorities  by using the machinery of the sales-tax law  of the  State  as they alone are specifically mentioned  in  s. 9(2) and in ignoring what are the powers actually  conferred by the words enforce payment of tax  as if the tax   payable by  such a dealer under this Act is a tax payable under  the general  sales  tax  law of the State"  in  the  subsection. [772A-B] (6) It is clear from s. 9(2) that the penalties which  could be imposed by the State authorities by virtue of the express provision  in  it are the penalties provided in s.  10  read with s. 1OA. [772H] (7)  Where  s.  9(2) says  that  assessment,  re-assessment" collection  and enforcement of payment of tax due under  the Central  Act should be made by the authorities of the  State as  if the tax payable under that Act is tax  payable  under the general sales-tax law of the State and for that  purpose "they may exercise all or any of the powers they have  under the  sales tax law of the State", there can be no manner  of doubt that if for enforcing payment of tax due under  sales- tax  law  of the State, they have power to  impose  penalty, they  have the same power of imposing penalty for  enforcing payment  of tax payable under the Central Act.   The  reason why  the  sales  tax authorities of  the  State  were  given specific  power  under  s. 9(2)  to  enforce  the  penalties payable  by  a dealer under the Central Act  is  that  those penalties were not and perhaps could not have been  provided for  in  the  sales-tax law of  the  State.   The  penalties provided  in s. 10 read with s. 10A of the Central  Act  are not for the purpose of or in connection with assessment, re- assessment,  collection  and enforcement of payment  of  tax payable by a dealer under the Central Act and could not have been  imposed by the sales tax authorities of the  State  in making assessment, re-assessment, collection or in enforcing payment   of  the  tax  payable  under  the   Central   Act. Therefore, express power had to be conferred upon the  sales

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tax  authorities  of  the State  to  enforce  the  penalties payable by a dealer under the Central Act. [773C-G.] (8)’In the nature and scheme of the Central Act. it was  not necessary  to provide for imposition of penalty or  for  the other methods of enforcing the payment of tax payable  under the  Central Act since Parliament has adopted the  machinery provided  in  the  general sales tax law  of  the  State  as respects  enforcement of the tax payable under  the  Central Act. [774E] (9) The expression "penalties" in the latter part of the  s. 9(2) can only refer to penalties imposable under the general sales  tax law of the State in connection  with  assessment, re-assessment, collection and enforcement of payment of tax. The  latter part of the sub-section only enumerates some  of the  powers exercisable by the sales-tax authorities of  the State  to assess, re-assess, collect and enforce payment  of tax payable under the Central Act.  The language of the sub- section  beginning  with  "and for  this  purpose  they  may exercise  all  or  any of the powers  they  have  under  the general  sales tax law of the State, and the  provisions  of such   law,  including  provisions  relating   to   returns, provisional assessment, advance payment of tax .... appeals, reviews, revisions, references, refunds, penalties makes  it clear that the word ’Penalties’ occurring therein can  refer only  to penalties provided in the general sales-tax law  of the State.  In other words the express mentionof     the power  to  impose ’penalties’ among  the  enumerated  powers beginning withthe  words  "and the provisions of  such  law including the provisions relating topenalties" would put it beyond doubt that the word "penalties" 758 in  the  latter part of the sub-section can  only  refer  to penalties  imposable under the general sales tax law of  the State  in relation to assessment, re-assessment,  collection and  enforcement  of  payment  of  tax  payable  thereunder. [775B-D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2089  of 1969. Appeal  by Special Leave from the Judgment and  Order  dated the 22nd February 1968 of the Bombay High Court in Sales Tax Reference No. 36 of 1967 and Civil Appeal No. 2118 of 1970 From  the Judgment and order dated the 18th March,  1970  of the Mysore High Court in Writ Petition No. 345 of 1970. S.  T.  Desai,  P.  G. Bhartari and  K.  J.  John,  for  the appellant (In C.A. 2089/69). M. Veerappa, for the appellant (in C.A. 2118/70). Santosh   Chatterjee   and   G.  S.   Chatterjee   for   the Applicant/Intervener (State of West Bengal). L.  N.  Sinha,  Solicitor  General, M.  N.  Shroff  for  the Intervener (Union of India in C.A.2089/69). L.  N.  Sinha, Solicitor General, M. G. Bhandare and  M.  N, Shroff for respondent (C.A. No. 2089/69). The  Judgment of A. N. Ray, C.J. and H. R. Khanna,,  J.  was delivered  by Ray, C.J. K. K. Mathew, J. gave  a  dissenting opinion  on behalf of himself and Y. V. Chandrachud, J.,  M. H. Beg, J. gave a separate Opinion. RAY, C.J.-These appeals raise the question as to whether the assessees under the Central Sales Tax Act, 1956  hereinafter referred  to  as the Central Act could be  made  liable  for penalty  under  the provisions of the State  Sales  Tax  Act

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hereinafter  referred  to  as the State  Act.   The  penalty imposed  under  the State Act is for default in  payment  of taxes within the prescribed time. The Central Act states section 9(1) that the tax payable  by any dealer under the Central Act on sales of goods  effected by him in the course of inter-state trade or commerce  shall be  levied by the Government of India and the tax so  levied shall be collected by that Government in accordance with the provisions  of sub-section (2) in the State from  which  the movement of goods, commenced.               Section 9(2) of the Central Act is as follows               "Subject  to the other provisions of this  Act               and the Rules made thereunder, the authorities               for  the time being empowered to  assess,  re-               assess, collect and enforce payment of any tax               under  the  general  sales  tax  law  of   the               appropriate State 759               shall,  on behalf of the Government of  India,               assess, re-assess, collect and enforce payment               it of tax, including any penalty, payable by a               dealer under this Act as if the tax or penalty               payable  by such a dealer under this Act is  a               tax  or  penalty payable,  under  the  general               sales  tax  law  of the State;  and  for  this               purpose  they may exercise all or any  of  the               powers  they have under the general sales  tax               law  of the State; and the provisions of  such               law, including provisions relating to returns,               provisional  assessment,  advance  payment  of               tax,  registration  of the transferee  of  any               business, imposition of the tax liability of a               person carrying on business on the  transferee               of,  or successor to, such business,  transfer               of  liability of any firm or  Hindu  undivided               family  to  pay  tax  in  the  event  of   the               dissolution of such firm or partition of  such               family,  recovery of tax from  third  parties,               appeals,   reviews,   revisions,   references,               refunds,  rebates,  penalties,  componding  of               offences and treatment of documents  furnished               a   dealer   as   confidential   shall   apply               accordingly.               Provided that if in any State or part  thereof               there  is no general sales tax law  in  force,               the Central Government, may, by rules made  in               this  behalf make necessary provision for  all               or  any of the matters specified in this  sub-               section." Section  6 of the Central Act provides for liability to  tax on interState sales.  Section 8 of the Central Act  provides for rates of tax on sales in the course of inter-State trade or  commerce.   Section 9 of the Central  Act  provides  for collection of tax and penalties. Section  10  of  the Central Act  provides  penalties.   The Various  grounds for penalties are fully  enumerated  there. Section 10A(1) of the Central Act provides for imposition of penalty in lieu of prosecution. The contention on behalf of the assessee is that there is no provision  in the Central Act for imposition of penalty  for delay  or  default  in  payment  of  tax,  and,   therefore, imposition of penalty under the provisions of the State  Act for delay or default in payment of tax is illegal. The  rival contention on behalf of the Revenue is  that  the provision  for  penalty  for default in payment  of  tax  as

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enacted  in the State Act is applicable to the  payment  and collection  of  the  tax  under  the  Central  Act  and   is incidental  to and part of the process of such  payment  and collection. The  Solicitor-General  on  behalf  of  the  Revenue  placed reliance  on  the decisions in K. V.  Adinarayana  Setty  v. Commercial  Tax Officer, Kolar Circle’ Kolar 14 S.T.C.  587; Commissioner  of  Sales  Tax,  Madhya  Pradesh,  Indore   v. Kantilal  Mohanlal  &  Brothers 19 S.T.C.  377;  M/s  H.  M. Esufali  H.  M. Abdulali v. Commissioner of Sales  Tax  M.P. Indore  24 S.T.C. 1; and Auto Pins (India) v. The  State  of Haryana & o.s. 26 S.T.C. 466 in support of his contention. The contentions of the Solicitor General are these : Section 9(1)  of the Central Act speaks of tax.  That  section  does not mention penalty. 760 Tax will include collection and enforcement of payment.  The words  "tax and penalty payable by a dealer under this  Act" indicate that the words "under this Act" in the Central  Act relate  only to a dealer.  Section 9 (2) of the Central  Act is  a  provision prescribing the  procedure  for  assessing, collecting and enforcing payment of tax.  The words "collect and  enforce  payment  of tax,  including  any  penalty"  in Section  9(2) of the Central Act include not only  penalties imposed  by  the Central Act but also  penalties  under  the State  Act.  The words ’as if the tax or penalty payable  by such  a  dealer under this Act is a tax or  penalty  payable under the general sales tax law of the State" indicate  that tax  or  penalty  is  imposed by  the  Central  Act  and  by incorporating the State Act as a part of the Central Act the liability  to  pay tax is enforced by penalty for  delay  or default in payment of tax. The  Solicitor-General  further submitted as follows  :  The latter  part of section 9(2) of the Central Act, viz.,  "for this purpose they may exercise all or any of the powers they have  under the general sales tax law of the State; and  the provisions  of  such law........  shall  apply  accordingly" shows  that the enforcement provisions in the State Act  for delay  or  default  in payment of tax  are  adopted  by  the Central  Act  for  working out the  provisions  relating  to assessment, re-assessment, collection and enforcement of tax or penalties.  Penalty is a sanction for nonpayment.  If the assessee  does  not  pay and if there is  no  provision  for imposition   penalty,   there  will  be  no   sanction   for enforcement  of payment The purpose for which the State  Act is incorporated in the Central Act is, inter alia, enforcing payment of tax which includes penalty for delay and  default in payment of tax.  In short, just as penalty is imposed for non-payment  of  tax under the State Act that  provision  is attracted for delay or default, in payment of tax under  the Central Act. On  behalf of the assessee it was said that  the  provisions contained in section 9 (2) of the Central Act mean that only if  tax as well as penalty is payable by a dealer under  the Central Act then there can be collection and enforcement  of tax and penalty in the same manner as provided in sales  tax law  of  the  State.  Second, the Central Act  must  have  a substantive provision to warrant imposition of penalty.  The provision  in a State Act regarding penalty for  default  in payment  cannot  be  applied when there  is  no  substantive provision relating to levy or penalty in the Central Act  in respect of that default.  Third, section 9(2) of the Central Act  is  procedural  and  only  deals  with  utilisation  of existing machinery in State law.  The State authorities  are empowered to exercise powers under the general sales tax law

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of  the  State  to assess, re-assess,  collect  and  enforce payment  of tax and penalty payable under the  Central  Act. Just  as tax payable under the Central Act can be  collected and  enforced  similarly,  only penalty  payable  under  the Central Act can be collected and enforced. Counsel  on behalf of the assessees relied on the  decisions in  B. H. Shah & Co. v. The State of Madras 20  S.T.C.  146; The  State  of  Madras v. M. Angappa Chettiar  and  Sons  22 S.T.C.   226;  Guldas  Narasappa  Thimmaiah  Oil  Mills   v. Commercial Tax Officer, Raichur 25 S.T.C. 761 489;  and Hurdatroy Jute Mills Private Ltd.  Katihar &  Ors. v.  Superintendent  of Commercial Taxes, Purnea  &  Ors.  30 S.T.C.   151  in  support  of  the  proposition   that   the substantive  law  for  penalty under the State  Act  is  not incorporated in the Central Act. Section  9(2)  of the Central Act first  provides  that  the authorities  empowered  to assess,  re-assess,  collect  and enforce  payment of any tax under the general sales tax  law of the appropriate State shall, on behalf of the  Government of  India,  assess,  re-assess and enforce  payment  of  tax including any penalty payable by a dealer under the  Central Act.   The  State  Sales Tax authorities  are  thus  created agents  of  the Government of India.  The  second  important part  in section 9(2) of the Central Act is that  the  State authorities  shall  assess, re-assess, collect  and  enforce payment  of tax including any penalty payable by the  dealer under  the Central Act as if the tax or penalty  payable  by such  a  dealer under the Central Act is a tax  or-  penalty payable under the general sales tax law of the State.   This part of the section sets out the scope of work of the  State agencies.  The words "assess, re-assess, collect and enforce payment of tax including any penalty payable by dealer under this  Act" mean that the tax as well as penalty  is  payable only under the Central Act. To  suggest that the words "under this Act"  qualify  dealer will  be unsound for two reasons.  First, section 2  (b)  of the  Central Act defines a dealer.  A dealer is not  defined as  dealer under the Central Act but as one who  carries  on business  of buying and selling.  If the words " under  this Act"  were  to relate only to dealer then the  words  "under this  Act"  would have to be scored out in relation  to  the words "tax including any penalty payable".  The result would be  that the words " payable by a dealer" in the context  of the words "as if the tax or penalty payable by such a dealer under this Act" would be rootless. It is only tax as well as penalty payable by a dealer  under the   Central  Act  which  can  be  assessed,   re-assessed, collected and enforced in regard to payment.  The words  "as if  the  tax or penalty payable by such a dealer  under  the Central  Act is a tax or penalty payable under  the  general sales  tax  law of the State’ have origin and  root  in  the words  "payment  of  tax including any  penalty  payable  by dealer  under the Central Act." Just as tax under the  State Act cannot be payable and collected and enforced,  similarly penalty  under the State Act cannot be  assessed,  collected and enforced. The words "and for this purpose they may exercise all or any of  the powers they have under the general sales tax law  of the State in section 9(2) of the Central Act are  important. The  words  "and for this purpose" relate  to  "assess,  re- assess,  collect  and enforce payment of tax  including  any penalty payable by dealer under this Act." In that  context, the Iast limb of section 9(2) of the Central Act viz.   "and the provisions of such law........ shall apply  accordingly"

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mean that the provisions of the State Act are applicable for the  purpose  of assessment, re-assessment,  collection  and enforcement  of  payment of tax  including  penalty  payable under  the  Central  Act.  The words of  the  last  part  of section 9(2) viz.  "shall apply accordingly" relate clearly 762 to the words "and for this purpose" with the result that the provisions of the State Act shall apply only for the purpose of  assessment,  reassessment, collection  and  enforcement. The  doctrine  of ejusdem generis shows that  the  genus  in section  9(2) of the Central Act is "for this purpose".   In other   words,  the  genus  is  assessment,   re-assessment, collection  and  enforcement  of  payment.   The  genus   is applicable  in regard to the procedure for  assessment,  re- assessment,  collection  and enforcement  of  payment.   The genus  is from whom to collect and against whom to  enforce. It is apparent that the extent of liability for tax as  well as  penalty is not attracted by the doctrine of  ejusdem  in the application of the provisions of the State Act in regard to assessment, re-assessment, collection and enforcement  of payment  of  tax  including any penalty  payable  under  the Central Act. The  deeming  provision-in the Central Act that the  tax  as well as penalty levied under the Central Act will be  deemed as  if payable under the general sales tax law of the  State cannot  possibly mean that tax or penalty imposed under  any State Act will be deemed to be tax or penalty payable  under the  Central  Act.   The  entire  authority  of  the   State machinery  is  that "for this purpose" meaning  thereby  the purpose of assessing, re-assessing, collecting and enforcing payment  of  tax including any penalty  payable  under,  the Central Act, they, meaning the State agencies, may  exercise powers  under the general sales tax law of the  State.   The words "for this purpose" cannot have the effect of enlarging the content of tax and the content of penalty payable  under the Central Act.  Liability to pay tax as well as  liability to  pay penalty is created by the Central Act.  One  of  the reasons  why  tax  as well as  penalty  is  the  substantive provision  in  the Central Act and is  not  incorporated  by reference to the State Act is illustrated by the history  of section  9(2) of the Central Act.  The present section  9(2) of the Central Act was formerly section 9(3) of the  Central Act.   The  Madras  High Court in D. H.  Shah  &  Co’s  case pointed  out  that the imposition of penalty  under  section 12(3)  of  the Madras Act, 1959 could not be  attracted  for levy of penalty.  The Madras High Court gave the reason that then  section  9(3)  of the Central  Act  only  adopted  the procedure  of the State Act for  assessment,  re-assessment, collection  and.  enforcement  of tax  as  well  as  penalty payable under the Central Act. The  Madras  High  Court in Angappa  Chettiar  &  Sons  case (supra)  (lave the correct reason that the power to  collect penalty under the then section 9(3) of the Central Act would cover  only  the penalty payable under the Central  Act  and would   not  include  a  power  to  impose  penalty  for   a contraventions or omission for which the Central Act did not contain a provision.  In that case, the Madras General Sales Tax Act, 1939 which was incorporated by reference by section 9(3)  of the Central Act as it then stood did not contain  a provision  for  levy of a  penalty.   Subsequently,  section 16(2) of the Madras General Sales Tax Act 1959 provided  for levy of penalty for failure to disclose a relevant turnover. The conclusion which the Madras High Court 763 arrived  at was that provisions of then section 9(3) of  the

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Central Act could not be applied for levy of a penalty under section 16(2) of the Madras Act. The  Mysore  High Court in Guldas  Narasappa  Thimmaiah  Oil Mills  case (supra) which is the present appeal pointed  out that  the provisions contained in section 13(1) and  (2)  of the  State  Act in regard to penalty for default  in  making payment  could  not  be  applicable  because  a   comparable provision  was  not  to be found in the  Central  Act.   The Mysore High Court correctly pointed out that the words "  as if the tax or penalty payable by such dealer under this Act" show  that  the words "payable by such a dealer  under  this Act"  relate to tax or penalty which is payable  only  under the Central Act. The, Mysore High Court relied on the decision of this  Court in  State of Kerala v. P. P. Joseph & Co. 25 S.T.C.  483  in support of the proposition that the St-ate law is applicable only  in regard to procedure for assessment,  re-assessment, collection and enforcement.  If the liability to pay tax  is determined  by  the  provisions  of  the  Central  Act   the liability to pay penalty is also that which is payable under the  Central Act.  This Court in the Kerala case  said  that the  procedural law prescribed in the general sales tax  law of  the  State  applies to the  matter  of  assessment,  re- assessment,  collection  and enforcement of payment  of  tax under  the Central Act because the liability to pay  tax  is determined  under the Central Act.  Similarly, liability  to pay  penalty is determined with reference to the  provisions of the Central Act. This Court in Orissa Cement Limited v. The State of Orissa & Anr.  27  S.T.C. 118 considered whether rebate  provided  in section  13(8) of the Orissa Sales Tax Act was available  to dealers  if they paid the tax under the Central  Act  before the  due  date of payment.  It may be, stated  that  at  the relevant  time  of the decision in the  Orissa  Cement  case (supra) the provisions contained in the then section 9(3) of the  Central Act stated inter alia that "the  provisions  of such  law  including  the provisions  relating  to  returns, appeals,  reviews,  revision,,,  references,  penalties  and compounding  of offences shall apply accordingly," and’  the word  "rebate"  did not occur there.  This Court  said  that rebate  for  payment it of tax within  the  prescribed  time under the State Act was, available to dealers for payment of tax under the Central Act on the reasoning that the power to collect  the tax assessed in the same manner as the  tax  on the  sale and purchase of goods under the general sales  tax law of the State would include within itself all concessions given under the State Act for payment within the  prescribed time.   The  reason  why rebate is allowed  and  penalty  is disallowed is that rebate is a concession whereas penalty is an imposition.  The concession does not impose liability but penalty  does.  It, therefore, stands to reason that  rebate is  included  within the procedural part of  collection  and enforcement  of  payment.  Penalty like  imposition  of  tax cannot be included within, the procedural part. The  decision  of this Court in C.  A.  Abraham,  Uppoottil, Kottaya 7 v. The Income Tax Officer, Kottayam & Anr.  (1961) 2  S.C.R.  765  was belied on by the  Solicitor  General  in support of the proposition that 764 assessment" includes iability to pay penalty.  The ratio  of the decision does not support the submission.  In  Abraham’s case   (supra)  the  assessee  was  subjected  to  tax   for suppressed  income and penalties for concealing the  income. The  question was whether section 44 of the Income  Tax  Act would  attract  liability  to pay.  Section 44  of  the  Act

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stated that the assessee would be liable to assessment under Chapter  IV  for  the  amount of tax  payable  and  all  the provisions  of  that Chapter would apply.  This  Court  said that  the  word  "assessment" had been used  in  its  widest connotation in Chapter IV of the Act.  It was contended that an order imposing penalty under section 28 of the Act  could not  by  virtue of section 44 be imposed.  This  Court  held that  section 44 of the Act expressly enacted that the  pro- visions  of  Chapter IV would apply to the assessment  of  a business  carried on by a firm even after discontinuance  of its business.  Section 28 is one of the sections in  Chapter IV.   Section  28 imposed a penalty for the  concealment  of income  or  the  improper  distribution  of  profits.   ’The defaults made in furnishing a return of the total income, in complying with a notice and in concealing the particulars of income were treated as penalties under section 28.   Section 28  was  held by this ,Court to be a provision  enacted  for facilitating the proper assessment of taxable income and  to apply  to an assessment under Chapter IV.  ’The decision  of this  Court  in Abraham’s case (supra)  is  non-sequiter  in regard to the contentions advanced on behalf of the  Revenue in  the present case.  The reason is that in Abraham’s  case (supra)  ’assessment and imposition of penalty is under  the same  Chapter in the Act.  The assessment is  under  Chapter IV.   Penalty  is provided in a section  under  Chapter  IV. Penalty  is arising in course of assessment under  the  same Act. This Court in Commissioner of Income-Tax, Andhra Pradesh  v. M/s.  Bhikaji Dadabhai & Co. (1961) 3 S.C.R. 923 dealt  with the meaning of the word "assessment." The Income-tax Officer there  found  that  the assessee’s books  of  accounts  were unreliable  and he issued a notice under section 40  of  the Hyderabad  Income-tax Act to show cause why  penalty  should not be imposed in addition to tax.  The State, of  Hyderabad merged  with  the Indian Union during the  pendency  of  the proceedings before the Income Tax officer.  By section 13 of the Finance Act, 1950 the Hyderabad Income Tax Act ceased to have  effect from 1 April, 1950, but the operation  of  that Act in respect of levy, assessment and collection of  income tax  and super-tax in respect of periods prior  thereto  for which  liability to income-tax ,could not be  imposed  under the Indian Income Tax Act was saved by section 13(1) of  the Finance  Act.   The question, was  whether  ’the  Income-tax Officer  had  power on 31 October, 1951  to  impose  penalty under  section  40 of the Hyderabad Income  Tax  Act.   This Court  held  that the, power of the  Income-tax  Officer  to impose  penalty  under section 40 of the  Hyderabad  Act  in respect of the year preceding the date of the repeal of  the Hyderabad income-tax Act was not lost because section 13  of the Finance Act, 1950 saved its operation.  The  proceedings for imposing penalty could be continued after the  enactment of  the  Finance Act, 1950.  The decision of this  Court  in Bhikaji  Dadabhai & Co’s case (supra) shows that penalty  is imposed as a substantive liability. 765 The  Income Tax Act 1961 imposes penalty under sections  270 and  271.  These sections in the Income Tax Act provide  for imposition   of   penalty  on  contumacious   or   fradulent assessees.   Penalty is in addition to income tax,  if  any, determined as payable by the assessee.  Tax and penalty like tax  and interest are distinct and different concepts  under the  Indian  Income Tax Act.  The word  "assessment"  could. cover penalty proceedings if it is used to denote the  whole procedure  for  imposing  liability  on  the  tax  payer  as happened  in  Abraham’s  case (supra).   Penalty  is  within

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assessment  proceedings  just as tax  is  within  assessment proceedings  when the relevant Act by  substantive  charging provision levies tax as well as penalty. Penalty is not merely sanction.  It is not merely adjunct to assessment.   It is not merely consequential to  assessment. It  is not merely machinery.  Penalty is in addition to  tax and is a liability under the Act.  Reference may be made  to section 28 of the Indian Income-tax Act, 1922 where  penalty is  provided  for  concealment of  income.   Penalty  is  in addition  to the amount of income-tax.  This Court  in  Jain Brothers  & Ors. v. Union of India 77 I.T.R. 107  said  that penalty is not a continuation of assessment proceedings  and that penalty partakes of the character of additional tax. The  Federal  Court in Chatturam & Ors. v.  Commissioner  of Income-tax, Bihar 15 I.T.R. 302 said that liability does not depend  on assessment.  There must be a charging section  to create liability.  There must be, first a liability  created by  the Act.  Second, the Act must provide  for  assessment. Third,  the Act must provide for enforcement of  the  taxing provisions.   The  mere  fact that there  is  machinery  for assessment, collection and enforcement of tax and penalty in the  State Act does not mean that the provision for  penalty in  the State Act is treated as penalty under-  the  Central Act.  The meaning of penalty under the Central Act cannot be enlarged  by  the provisions of machinery of the  State  Act incorporated for working out the Central Act. This Court in State of Tamil Nadu v. K. A. Ramudu Chettiar & Co.  A.I.R.  1973 S.C. 2230 said that the power  to  enhance assessment  which  was contained in the Madras Act  of  1959 though such power was not available under the 1939 Act would be available in respect of assessment under the Central Act. Enhancement   it  of  assessment  is  in  the   process   of assessment.  It is a procedural power.  The liability to tax is  created  by the statute.  Therefore, when the  power  to assess  is  attracted a fortiori enhancement is  within  the power.  For  the  foregoing  reasons we are  of  opinion  that  the provision in the state Act imposing penalty for  non-payment of income-tax within the prescribed time is not attracted to impose  penalty on dealers under the Central Act in  respect of tax and penalty payable under the Central Act.  There  is no  lack  of sanction for payment of tax.   Any  dealer  who would  not  comply with the provisions for payment  of  tax, would be subjected to recovery proceedings under the  public Demands  Recovery Act.  A penalty is a statutory  liability. The 766 Central Act contains specific provisions for penalty.  Those are  the only provisions for penalty available  against  the dealers  under  the Central Act.  Each State Sales  Tax  Act contains provisions for penalties.  These provisions in some cases  are also for failure to submit return or  failure  to register.   It is rightly said that those provisions  cannot apply  to dealers under the Central Act because the  Central Act  makes  similar provisions.  The Central Act is  a  self contained  code which by charging section  creates  liablity for tax and which by other sections creates a liability  for penalty and impose penalty.  Section 9(2) of the Central Act creates  the State authorities as agencies to carry out  the assessment, reassessment, collection and enforcement of  tax and penalty by a dealer under the Act. For  these  reasons  the  appeal of  M/s  Khemka  &  Co.  is accepted.  The answer to the reference by the High Court  is discharged.   The  question is answered  in  the  negative,, viz.,  that the Tribunal was wrong in holding  that  penalty

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could be levied under section 16(4) of the Bombay Sales  Tax Act,  1953.   The  appeal of the State of  Mysore  in  Civil Appeal No. 2118 of 1970 is dismissed.  The appellant will be entitled to costs in Civil Appeal No. 2089 of 1969.  In view of the fact that in Civil Appeal No. 2118 of 1970 the  Hi-II Court  made no order as to costs, the parties will  pay  and bear their own costs. MATHEW,  J.  We take up for consideration Civil  Appeal  No. 2089 of 1969 and the decision there will govern the decision of Civil Appeal No. 2118 (NT) of 1970. The  question for consideration in Civil Appeal No. 2089  of 1969 is, whether, upon a correct construction of s.9 of  the Central  Sales  ’Tax  Act (hereinafter referred  to  as  the ’Central Act), it was permissible for the Sales Tax  Officer in  question  to  invoke the provisions of  s.16(4)  of  the Bombay Sales Tax Act for imposing penalty for failure by the dealer  to pay the sales tax payable under the  Central  Act within  the prescribed time.  The High Court of Bombay  held that  the Sales tax Officer had power to impose the  penalty under that section and questioner in this appeal is  whether the High Court was right. Section  9  of  the Central Act, in its  present  form,  was introduced  in 1969 with retrospective effect from the  date of the Act.  Sub-section (I) provides that the tax.  payable by  any dealer under the Act on sales of goods  effected  by him in the course of inter-State trade or commerce shall  be levied  by  the Government of India and the  tax  so  levied shall be collected by that Government in accordance with the provisions of sub-section (2); and sub-section (2) says : "Subject  to the other provisions of this Act and the  rules made thereunder, the authorities for the time being empower- ed to assess, re-assess, collect and enforce payment of  any tax under the general sales tax law of the appropriate State shall,  on  behalf of the Government of  India  assess,  re- assess, 767               collect and enforce payment of tax,  including               any  penalty, payable by a dealer  under  this               Act as if the tax or penalty payable by such a               dealer  under  this Act is a  tax  or  penalty               payable under the general sales tax law of the               State; and for this purpose they may  exercise               all  or any of the powers they have under  the               general  sales tax law of the State;  and  the               provisions  of such law, including  provisions               relating  to returns, provisional  assessment,               advance  payment of tax, registration  of  the               transferee of any business, imposition of  the               tax liability of a person carrying on business               on  the  transferee of or successor  to,  such               business, transfer of liability of any firm or               Hindu undivided family to pay tax in the event               of the dissolution of such firm or petition of               such  family,  recovery  of  tax  from   third               parties,    appeals,    reviews,    revisions,               references, refunds, penalties, compounding of               offences and treatment of documents  furnished               by  a  dealer  as  confidential  shall   apply               accordingly." Section 16 of the Bombay Sales Tax Act provides for  payment and  recovery of tax.  Sub-section (1) of the  section  says that  the  tax  shall be paid  in  the  manner  thereinafter provided  at  such  intervals as may  be  prescribed.   Sub- section  (2)  states  that  before  any  registered   dealer furnishes  the returns, be shall, in the prescribed  manner,

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pay  into a Government treasury the full amount of  the  tax due  from  him according to such returns.   Sub-section  (3) provides  that  before  any registered  dealer  furnishes  a revised return which shows a greater amount of tax to be due than was payable in accordance with the original return,  he shall pay into a Government treasury the extra amount of the tax.  Sub-section (4) states that if the tax is not paid  by any dealer within the prescribed time, the dealer shall pay, a  penalty in addition to the amount of tax and  sub-section (6) enables the realization of tax and penalty as an  arrear of land revenue. A careful analysis of s. 9(2) of the Central Act would  show that the authorities empowered to assess, re-assess, collect and  enforce payment of tax payable under the general  sales tax  law of the appropriate State shall  assess,  re-assess, collect  and enforce payment of tax including any  penalties payable  by a dealer under the Central Act as if the tax  or penalty payable by a dealer under that Act (Central Act)  is a tax or penalty payable under the general sales tax law  of the State and for that purpose, the authorities may exercise all  or any of the powers they have under the general  sales tax law of the State. In  effect,  what  s.  9 (2) says  is  that  sales  tax  and penalties  payable  by a dealer under the  Central  Act  are deemed  to  be  sales tax and penalties  payable  under  the general  sales  tax  law  of the State  and  the  sales  tax authorities  of  the State can exercise all or any  ’Of  the powers  they  have under the general sales tax  law  of  the State   for  the  purpose  of   assessment,   re-assessment, collection  and for enforcing payment of that tax.   So,  if the  sales  tax  authorities of a  State  have  power,  when enforcing  payment  of sales tax payable under  the  general sales tax law of the State to impose penalty for non-payment of  tax  within the prescribed time, they will have  a  like power to impose 768 penalty  for enforcing payment of the tax payable under  the Central  Act  within  the  time  prescribed.   It  was   not necessary  that  power to impose penalty for  enforcing  the payment  of  tax payable by a dealer under the  Central  Act should  have  been  specifically provided  in  or  conferred separately by the sub-section upon the sales tax authorities of  the State, because, the power to enforce payment of  tax payable  under  the Central Act in the same  manner  as  the power  to enforce tax, payable under the general  sales  tax law  of  the  State has been given by it. As  the  power  to impose penalty is specifically provided for in s. 16 of  the Bombay  Sales Tax Act for enforcing payment of  tax  payable under  it, it is unnecessary to speculate whether,  but  for the express provision in that Act, a power to impose penalty for  enforcement  of tax payable under that Act  would  have been   implied.   The  object  of  the  provision  for   the imposition  of penalty in s. 16 of the Bombay Sales Tax  Act is  to,  provide a stimulant to the dealer  to  observe  the mandate  of  the section directing the payment  of  the  tax within  the prescribed time.  In other words  the  provision for  imposition of penalty in s.16 of the Bombay  Sales  Tax Act  facilitates the collection of tax as it is  a  sanction for  non-observance  of the duty to pay the tax  within  the prescribed  time.   It operates as a deterrent  against  the commission of breach of that duty, and is a means to enforce the payment of tax within the time prescribed. In C. A. Abraham Uppoottil v. The Income Tax Officer(1) this Court was concerned with the question whether the  appellant before the Court who was carrying on business in  foodgrains

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in  partnership with another person was liable to a  penalty for  submitting the returns of the income of the  firm  even after his partner’s death.  It was found that certain income of  the  firm was concealed and the Income Tax  Officer  not only assessed the firm to tax for the suppressed income  but also imposed penalty for concealing the same.  Section 44 of the Indian Income Tax Act, 1922, at the material time  stood as follows               "Where  any business... carried on by  a  firm               has been discontinued every person who was  at               the  time of such discontinuance a partner  of               such  firm,  shall in respect of  the  income,               profits  and gain of the firm be  jointly  and               severally  liable to assessment under  Chapter               IV  for the amount of tax payable and all  the               provisions of Chapter IV               shall,  so  far as may be, apply to  any  such               assessment." It  was  contended for the assessee that  a  proceeding  for imposition  of  penalty and a proceeding for  assessment  of income  tax  were  distinct,  that although  s.  44  may  be resorted  to  for assessing tax due and payable  by  a  firm which  has discontinued, an order imposing penalty under  s. 28  cannot,  by virtue of s.44, be passed.  The  Court  said that  penalty "is imposable as a part of the  machinery  for assessment of tax liability". The  Court  quoted   with approval the following observations ofSubba Rao, C. J.  in Mareddi Krishna Reddy v. Income-tax officer, Tenali(2) The  defaults  enumerated therein (in s. 28) relate  to  the process of assessment. Section 28, therefore, is a (1) [1961] 2 S.C.R. 765           (2) [1957] 31 I.T.R. 678. 769               provision enacted for facilitating the  proper               assessment of taxable income and can  properly               be  said to apply to an assessment made  under               Chapter IV......" The ratio of the decision is that penalty is imposed as part of  the machinery for assessment of tax and that  the  power to  assess    would      include     the  power  to   impose penalty  for the effective exercise of the power to  assess. It  is a general principle of law that all powers which  are necessary  and appropriate to effectuate the main  grant  of power will be implied.  Just as the provision for imposition of  penalty  under  s.  28  of  the  Income  Tax  Act,  1922 facilitated  the collection of tax as Subba Rao, C.  J.  has said  and  Is  imposable  as  part  of  the  machinery   for assessment of income tax, so also the provision for  penalty under  s. 16 of the Bombay Sales Tax Act for non-payment  of sales  tax within the time prescribed would  facilitate  the collection of tax and is part of the machinery for enforcing payment of tax. In  Commissioner of Income Tax v. Bhikaji Dadabhai &  Co.(1) the  Income Tax Officer in question found that the books  of account   of  the  respondent  were  unreliable  and   after assessing the income for the year 1946-47, issued notice  to the  respondent  on December, 22, 1949, under s. 40  of  the Hyderabad  income ’Tax Act to show cause why penalty  should not be levied in addition to the tax and, by an order  dated 31-10-1951  directed payment of the penalty.  The  State  of Hyderabad  merged with the Indian Union during the  pendency of  the proceedings before the Income Tax Officer and by  s. 13  of the .Finance Act, 1950, the Hyderabad Income Tax  Act ceased to have effect from April 1, 1950, but the  operation of that Act in respect of levy, assessment and collection of income  tax  and super tax in respect of  the  period  prior

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thereto  for  which liability to income tax  should  not  be imposed  under  the Indian Income Tax Act  was  saved.   One question  before  this  Court was  whether  the  Income  Tax Officer  had  power on October 31, 1951  to  impose  penalty under  s. 40(1) of the Hyderabad Income Tax Act.  The  Court held  that  the power of the Income Tax  Officer  to  impose penalty  under s. 40(1) of the Hyderabad Income Tax  Act  in respect  of  the years preceding the date of the  repeal  of that  Act was not lost because by s. 13 of the Finance  Act, 1950, the operation of the Hyderabad Act in respect of levy, assessment  and collection of income tax and super  tax’  in respect of the period prior to April 1, 1951. was saved  and therefore the proceedings for impose in the penalty could be continued even after the enactment of s. 13(1) of the Indian Finance Act, 1950. The  real  significance of the ruling for  the  point  under consideration here. is that at the time when the penalty was imposed, the only provisions of the Hyderabad Income Tax Act which  survived  the  repeal were those  relating  to  levy, assessment  and  collection of income tax and super  tax  in respect of the period prior to April 1, 1951 and unless  the power to impose the penalty was included within the power co levy, assess, or collect the tax, the imposition of  penalty would  have  been ultra vires the power of  the  Income  Tax Officer. (1) [1961] 3 S.C.R. 923. 770 In   Orissa  Cement  Limited  v.  The  State  of  Orissa   & Another(1),  the  question was whether a  dealer  under  the Central  Act  could  claim the benefit of s.  13(8)  of  the Orissa  Sales Tax Act, 1947, which provided that  rebate  of one per cent on the amount of tax payable by a dealer  shall be allowed if such a tax is paid by the dealer on or  before the due date of payment, by virtue of s. 9 (3) (as it  stood then)  of the Central Act.  This Court said that the  rebate was  offered  to  facilitate,  expedite  and  stimulate  the collection of tax and was part of the process of  collection and  that the appellant-dealer who paid the tax on  the  due date was entitled to the rebate. If  rebate  can  be  given  on  the  basis  that  it   would facilitate, expedite and stimulate the collection of tax, we see  no reason why a penalty cannot be imposed to  expedite, facilitate  and stimulate the collection of tax and as  part of  the process of collection.  It is said that  penalty  is the  imposition  of  a  liability  and  is  substantive   in character whereas rebate is a concession and is part of  the procedure.   We are not clear whether this is a  distinction at all.  Payment of rebate is a liability from the point  of view of the Revenue, though it is concession from the  point of view of the assessee.  If penalty is levy of money on  an assessee,  rebate  means payment of money  to  an  assessee. What  the ’is the difference ? No body has yet succeeded  in ’drawing   the  precise  line  between  a   procedural   and substantive  provision and in this case we do not  think  we are required to do so for the simple reason that we are only concerned  with  the  question whether for  the  purpose  of enforcing the payment of tax payable under the Central  Act, the  authorities  of the State can exercise all  the  powers they  have  under  the general sales tax law  of  the  State whether one characterizes them as procedural or substantive. It is difficult to imagine that Parliament, when it  enacted s. 9(2) of the Central Act and adopted the machinery of  the general sales tax law of the State for enforcing payment  of tax payable under the Central Act, did not want to avail  of the  sanction  of penalty for enforcing the  payment  of  it

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which  the general sales tax law of the State  provides  for enforcing  payment  of tax due under that law.  We  find  it difficult  to  hold  that  Parliament  invested  the   state authorities  with  power to assess, re-assess,  collect  and enforce  payment of tax payable under the Central Act as  if the  tax is tax payable under the general sales tax  law  of the  State,  but denuded them of their power to  invoke  the provision  in  the general sales tax law of  the  state  for imposition (1)27 S.T.C. 118. 771 of  penalty  for  enforcing  payment  of  the  tax   payable thereunder, as that is an effective means to the enforcement of payment of tax within the prescribed time, It was contended that only the penalties  expressly,provided for  in  the Central Act could be imposed by the  sales  tax authorities  of  the State by employing  the  machinery  for collection  of  tax under the general sales tax law  of  the State  and that no penalty which is not provided for by  the Central  Act could be imposed by the State authorities.   In this  connection, the appellant placed great  reliance  upon the decision of a Division Bench of the Calcutta High  Court in Mohan Lal Chokhany v. The Commercial Tax Officer(1).  The question  there  was  whether penalty  can  be  imposed  for failure  to submit the return by a dealer under the  Central Act  though  only  the general sales tax law  of  the  State provided  for it.  The Court came to the conclusion that  no penalty  can  be imposed.  For doing so, the  Court  said  : firstly,  that  by  S. 9(2) of the Central  Act,  the  whole machinery provided in the general sales tax law of the State has not been incorporated in the Central Act; secondly, that the authorities for the time being empowered to assess,  re- assess,  collect  and enforce payment of any tax  under  the general  sales tax law of the appropriate State are only  so empowered "on behalf of the Government of India"  suggesting thereby that the Government of India is to be the  principal and the State only the agent and that the agent can have  no greater  power  than the principal himself, so that  if  the principal has no power to impose penalty for  non-submission or delayed submission of, returns, the State, "on behalf  of the  Government  of  India",  cannot  impose  such  penalty, thirdly,  that s. 9(2) speaks only of penalty payable  under ,this  Act"  (Central Act) and not of  any  penalty  payable under   State  law;  fourthly,  that  the  power  of   state authorities  is  qualified by the words "as, if the  tax  or penalty payable by such a dealer under this Act is a tax  or penalty  payable  under  the general sales tax  law  of  the State",  that this is the deeming provision and can deem  no more  than what it says, namely, that the  "penalty  payable under  this (Central) Act", and not any other penalty,  will be deemed ’as if’ payable under the general sales tax law of the State; and, fifthly, that the expressions in s. 9(2)  of the  Central Act "for this purpose they may exercise all  or any of the powers they have under the general sales tax  law of the State" are limiting words, viz., for the  enforcement of tax and the penalties specified in the Central Act. We do not understand how the analogy of principal and  agent has  any  relevance  in  this  context.   If  the  power  of enforcement of payment (1) 28 S.T.C. 367. 772 of  tax  payable  under the Central  Act  conferred  on  the authorities  of the State would include the power to  impose penalties  provided  in  the general sales tax  law  of  the State, there is an end of the matter.  The whole fallacy  in

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the reasoning of the High Court is the assumption that  only the penalties provided in the Central Act can be imposed  by the authorities by using the machinery of the sales tax  law of the State as they alone are specifically mentioned in  S. 9 (2) and in ignoring what are the powers actually conferred by the words "enforce payment of tax.... as if the tax  .... payable  by  such  a dealer under this Act  is  a  tax...... payable  under the general Sales tax law of the  State",  in the sub-section. The marginal note of s. 10 of the Central Act is ’penalties’ and the section enumerates six grounds for imposing  penalty from  (a)  to (f) : (a) failure of a dealer to  get  himself registered  as  required by s. 7; (b)  a  registered  dealer falsely representing when purchasing any class of goods that the  goods of such class are covered by his certificate  ,of registration;  (c)  not being a registered  dealer,  falsely representing  when purchasing goods in the course of  inter- state  trade  or  commerce that he is a  dealer,  (d)  after purchasing  any goods for any of the purposes  specified  in clause  (b)  of  sub-section (3) of s.  8,  failing  without reasonable  excuse  to make use of the goods  for  any  such purpose;  (e) having in his possession any  form  prescribed for  the  purpose of sub-section (4) of s. 8 which  has  not been  obtained by him in accordance with the  provisions  of the Act or any rules made thereunder; and (f) collecting any amount  by  way of tax in contravention  of  the  provisions contained in s. 9A.  When a person comes within any of these six grounds 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 Rs., 50 per day during  which  the offence continued. Sub-section  (1)  of  s. 10A provides  that  if  any  person purchasing goods is guilty of an offence under clause (b) or clause (c) or clause (d) of s. 10, the authority who granted to him or, who is competent to grant to him a certificate of registration   under  the  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 sub-section (2) of s. 8 in respect of the sale to him of the goods  if the sale had been a sale falling within that  sub- section.  Sub-section (2) says that penalty imposed upon any dealer  under  sub-section  (1) shall be  collected  by  the Government  of India in the manner provided  in  sub-section (2) of s. 9. It  is  clear from s. 9(2) that the penalties which  can  be imposed  by the State authorities by virtue of  the  express provision  in  it are the penalties provided in  section  10 read with s. 10A.  The fact that s.9(2) expressly authorizes the sales tax authorities of the State to 773 impose  the penalties payable by a dealer under the  Central Act by employing the machinery of the general sales tax  law of  the  State  does not mean that they  have  no  power  to enforce  payment  of tax payable under the  Central  Act  by imposing penalty as provided in the general sales tax law of the State.  As we said, by virtue of s. 9(2), the  machinery provided  in  the general sales tax law of  the  appropriate State   for   assessment,   reassessment,   collection   and enforcement of payment of tax payable under the Central  Act has been adopted and that machinery necessarily includes the means and facilities provided in that law for the  effective exercise  of  the power to assess,  re-assess,  collect  and enforce  payment of tax; and, therefore, the absence  of  an

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express  provision,  in the Central Act  for  imposition  of penalty  for  nonpayment of tax within the  prescribed  time would not indicate that for enforcing payment of tax payable under the Central Act, the authorities of the State have  no power  to  impose  the  penalty.  When  s.  9(2)  says  that assessment,  re-assessment,  collection and  enforcement  of payment  of tax due under the Central Act should be made  by the  authorities  of the State as if the tax  payable  under that  Act is tax payable under the general sales tax law  of the State and for that purpose "they may exercise all or any of  the  powers  they have under the sales tax  law  of  the State",  there  can  be  no manner of  doubt  that  if,  for enforcing payment of tax due under the sales tax law of  the State, they have power to impose penalty, they have the same power  of  imposing  penalty for enforcing  payment  of  tax payable under the Central Act.  The express provision in  s. 9(2) enabling the imposition of penalties payable under  the Central Act by the sales tax authorities ,of the State  does not  in  any way derogate from the grant of power  to  those authorities to enforce the payment of tax payable under  the Central  Act  as if the tax was payable  under  the  general sales  tax  law of the State and to enforce  payment  of  it under  the  machinery of the general sales tax  law  of  the State.   The  reason why the sales tax  authorities  of  the State were given specific power under s. 9(2) to enforce the penalties payable by a dealer under the Central Act is  that those  penalties were trot and perhaps could not  have  been provided  for  in  the  sales tax law  of  the  State.   The penalties  provided  for in s. 10 read with s.  10A  of  the Central Act are not for the purpose of or in connection with assessment,  re-assessment,  collection and  enforcement  of payment of tax payable by a dealer under the Central Act and could not have been imposed by the sales tax authorities  of the State in making assessment, re-assessment, collection or in  enforcing payment of the tax payable under  the  Central Act.  Therefore, express power had to be conferred upon  the sales tax authorities of the State to enforce the  penalties payable  by a dealer under the Central Act.  This  does  not mean  that  these authorities have no power  to  impose  the penalties provided in the general sales tax law of the State and  which  are necessary to make power of  assessment,  re- assessment,  collection  or enforcement of  payment  of  tax effective.   How could these penalties have been  separately provided  for  in the Central Act when it is seen  that  the sales  tax  authorities  of the State were  given  power  to assess,  reassess,  collect  and  enforce  payment  of,  tax payable  under  the  Central Act as if  that  tax  were  tax payable under the general sales tax law of the State and  to exercise all or any 774 of the powers they have under the sales tax law of the State for that purpose ? Parliament must be presumed to know  when it adopted the machinery of the general sales tax law of the State   for   assessment,  re-assessment,   collection   and enforcement  of  tax  payable under  the  Central  Act,  the existence  of  the provisions for imposition of  penalty  in connection   with  and  for  the  purpose   of   assessment, reassessment,  collection and enforcement of payment of  tax in  the sale tax law of the State.  Therefore, there was  no necessity to provide separately for penalties in  connection therewith in the Central Act or give express power to  sales tax authorities of the State for imposition of penalties  in connection  therewith.   If, in the process of  or  for  the purpose   of   assessment,  reassessment,   collection   and enforcement  of payment of tax payable under the  sales  tax

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law  of  the  State, a penalty can be  imposed,  we  do  not understand why it cannot be imposed in the process of or for the   purpose  of  making  the  assessment,   re-assessment, collection  or enforcement of payment of tax  payable  under the  Central Act.  Is it possible to imagine any reason  for Parliament to withhold from the sales tax authorities of the State  an effective means for enforcing the payment  of  tax payable  under the sales tax law of the State and  which  is specifically provided for in that law for collection of  tax payable  under the Central Act ? We think not.  As we  said, in the nature and the scheme of the Central Act, it was  not necessary  to provide for imposition of penalty or  for  the other methods of enforcing the payment of tax payable  under the  Central Act since Parliament has adopted the  machinery provided  in  the  general sales tax law  of  the  State  as respects  enforcement of the tax payable under  the  Central Act. The decisions in B. H. Shah & Co. v. The State of Madras(1), The  State  of  Madras v. M. Angappa Chettiar  &  SonS  (2), Guldas  Narasappa  Thimmaiah  Oil Mills  v.  Commercial  Tax Officer,  Raichur(3) and Hardatroy Jute Mills Pvt.  Ltd.  v. Superintendent  of Commercial Taxes, Purnea(4) relied on  by the appellants do not require any elaborate consideration as they  do  not advance any reasons other than  those  already referred  to in this judgment.  The reasoning of the  Madras High  Court  in B. H. Shah & Co.’s case to the  effect  that Parliament could not have adopted by s. 9(3) of the  Central Act  (substantially corresponding to present s. 9(2) of  the Central Act) a provision of the general sales tax law of the State  which  was  not  in existence  at  the  time  of  the enactment of s. 9(3) has no relevance here. The appellant did not contend that the provision in question for  imposition of penalty in the general sales tax  law  of the  State  was not in existence at the  relevant  time  and therefore  they could not in any event have been adopted  by s. 9(2) We do not therefore think it necessary or proper  to consider the question whether Parliament can by  legislation adopt a State law and the future amendments thereto. It  was argued that the expression ’penalties’ occurring  in the  latter  part  of s. 9(2) must refer  to  the  penalties mentioned in the former part (1) 20 S.T.C. 146.       (2) 22 S.T.C. 226. (3) 25 S.T.C. 489.       (4) 30 S.T.C. 151. 775 of  the sub-section, namely, penalties payable by  a  dealer under the Central Act.  We see no reason why the  expression ’penalties’  in  the latter part of the  sub-section  should refer to the penalties payable by a dealer under the Central Act  at all.  The expression ’penalties’ in the latter  part of  the  sub-section can only refer to  penalties  imposable under  the general sales tax law of the State in  connection with assessment, reassessment, collection and enforcement of payment  of  tax.  The latter part of the  sub-section  only enumerates  some of the powers exercisable by the sales  tax authorities  of the State to assess, reassess,  collect  and enforce  payment of tax payable under the Central Act.   The language  of  the sub-section beginning with "and  for  this purpose they may exercise all or any of the powers they have under  the  general  sales tax’ law of the  State;  and  the provisions  of  such law, including provisions  relating  to returns,   provisional   assessment,  advance   payment   of tax........   appeals,   reviews,   revisions,   references, refunds,  penalties,  . . ." makes it clear  that  the  word ’penalties’  occurring therein can refer only  to  penalties provided  in  the general sales tax law of  the  State.   In

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other  words,  the express mention of the  power  to  impose ’penalties’  among the enumerated powers beginning with  the ’Words  "and  the  provisions  of  such  law  including  the provisions relating to penalties" would put it beyond  doubt that  the  word  ’penalties’  in  the  latter  part  of  the subsection  can only refer to penalties imposable under  the general   sales  tax  law  of  the  State  in  relation   to assessment,  .reassessment,  collection and  enforcement  of payment of tax payable thereunder. We  hold that the Sales Tax Officer was empowered to  impose penalty provided in s. 16(4) of the Bombay Sales Tax Act for non-payment of the tax payable under the Central Act  within the prescribed time.  We would dismiss Civil Appeal No. 2089 of 1969 and allow Civil Appeal No. 2118 (NT) of 1970 without any order as to costs. BEG,  J.-Civil  Appeal  No. 2089 of 1969 arises  out  of  an assessment  order relating to the period of assessment  from 1-4-1959  to  30-12-1959.  The order purports to  have  been made  under the Central Sales Tax Act of  1956  (hereinafter referred  to as the ’Central Act’) and the  assessment  year given there is 1962-63.  The total sales tax was assessed at Rs.  44,181.92.  In addition, a penalty of Rs.  8347.32  was levied for delay in payment.  The order passed on the appeal to  the Assistant Commissioner of Sales Tax shows  that  the only  point  pressed in the appeal related  to  the  penalty levied  under Section 16(4) of the Bombay Sales Tax  Act  of 1953, (hereinafter referred to as ’the Bombay Act of 1953’). As the appeal was rejected, a revision application was filed before the Sales Tax Tribunal, Bombay, which also upheld the penalty  imposed  under Section 16(4) of the Bombay  Act  of 1953.  This provision laid down:               "  16(4) If the tax is not paid by any  dealer               within  the prescribed time the  dealer  shall               pay,  by  way of, penalty in addition  to  the               amount of tax, a sum equal to (i) one  percent               of  the amount of tax for each month  for  the               first three 776               months  after  the expiry  of  the  prescribed               time,  and (ii) two and one-half per cent  for               each  month  subsequent  to  the  first  three               months as aforesaid during which he  continues               to  make  default in the payment of  the  tax.               Provided that, where the tax has not been paid               by  any dealer within the prescribed time  but               the   dealer  has  filed  an  appeal   or   an               application  for revision in respect  of  such               tax,  the authority hearing the appeal or  the               application  for revision may direct that  the               penalty in respect of any period shall be paid               at  such  rate as it may think fit,  the  rate               being not less than one per cent and not  more               than  two and one half per cent of the  amount               of tax for each month". The  High  Court  had, upon a reference to  it,  decided  in favour of the Department the question framed as follows :               "Whether  having  regard  to  the  facts   and               circumstances  of  the present case  which  is               under  the  Central Sales Tax Act,  1956,  the               Tribunal was justified in law in holding  that               penalty could be levied under Section 16(4) of               the Bombay Sales Tax Act, 1953 ?" In  the  appeal now before us by special leave it  has  been contended  for  the  assessee that the  penalty  was  levied without  jurisdiction  as  it  was  not  warranted  by   the

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provisions of Section 9(2) of the Central Act, 1956. Civil  Appeal No. 2118 of 1970 arises out of  an  assessment order  relating  to the assessment year  1964-65  under  the Central Act for a sum of Rs. 14,332.80 np. and a penalty  of Rs,  10,104.36  ps.  levied for default in  the  payment  of penalty imposed under Section 13 of the Mysore Sales Tax Act of  1957,  (hereinafter referred to as  ’the  Mysore  Act’), which was assumed to be applicable by reason of Section 9(3) of  the Central Act.  The ’relevant provision of the  Mysore Act lays down:               "Payment and recovery of tax               (1)  The tax under this Act, shall be paid  in               such  manner and in such instalments,  if  any               and within such time, as may be prescribed.               (2)  If default is made in making  payment  in               accordance with subsection (1) :               (i) the whole of the amount outstanding on the               date  of default shall become immediately  due               and shall be a charge on the properties of the               person or persons liable to pay the tax  under               this Act; and               (ii)  the person or persons liable to pay  the               tax  under this Act shall pay a penalty  equal               to-               (a)  one  per  cent  of  the  amount  of   tax               remaining unpaid for each month for the  first               three  months,  after the expiry of  the  time               prescribed under sub-section (1) and 777               (b)  two and one-half per cent of such  amount               for  each month subsequent to the first  three               months as aforesaid.               (3) Any tax assessed, or any other amount  due               under  this  Act from, a dealer,  may  without               prejudice to any other mode of collection,  be               recovered-               (a)   as if it were an arrear of land revenue,               or               (b) on application to any Magistrate, by  such               Magistrate  as if it were, a fine  imposed  by               him. . . ." In  this  case, the Commercial Tax Officer,  Raichur,  filed application under Section 13(3)(b), of the Mysore Act before the Munsif Magistrate of Raichur for recovery of the sum due as  penalty as if it was a fine imposed by the  Court.   The Munsif  Magistrate  having  issued a  distress  warrant  for recovery of this sum, the assessee applied to the High Court under  Section  13(4)  of  the Mysore  Act  which  reads  as follows:               "The  High  Court may either suo  motu  or  an               application by the Commissioner or any  person               aggrieved  by the order revise any order  made                             by a Magistrate under clause (b) of su b-section               (3)". Thereafter,  the  assessee filed a Writ Petition  which  was heard  together with the Sales Tax Revision  petition.   The High Court had allowed the assessee’s claim that the levy of penalty   was  ultra-vires.   The  State  of   Mysore   had, therefore, come up in appeal by special leave to this Court. I have had the advantage of going the rough the judgments of the  learned  Chief Justice and my learned  brother  Mathew. Even  if  I  was  of  the  opinion  that  two  views  on  an interpretation  of  Section  9(2) of  the  Central  Act  are equally  well  entertainable,  as one could  be  on  a  mere

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reading  of Section 9(2) of the Central Act only,  I  would, with  great respect, prefer the view adopted by the  learned Chief  Justice on the principle that the assessee  must  get the benefit of such uncertainty.  It, however, seems to  me, on  a careful consideration of the two possible views,  that reasons  for  accepting  the contentions on  behalf  of  the assessee  are quite compelling and decisive,  1,  therefore, proceed to state these shortly. So  far  as the case from Bombay is concerned, I  find  that Section  ’76(a)  of  the  Bombay  Sales  Tax  Act  of   1959 (hereinafter  referred  to  as ’the  Bombay  Act  of  1959), repeals  the Bombay Act of 1953.  Section 16 of  the  Bombay Act of 1959 refers to an entirely different subject  matter. Provisions relating to penalties are contained in Section 36 to  Section  38 of the Bombay Act of 1959, which  have  been amended from time to time.  In any case, there was no provi- sion,  at the time when the assessment order was  made,  for imposition of any penalty under Section 16(4) of the  Bombay Act  of 1953, which the Sales Tax authorities and  the  High Court sought to utilize to justify the penalty imposed. 778 Relying  upon the principles indicated by this Court  in  Re Delhi Laws Act (1912) etc.,(1) I think one could say that in 1956  the  Parliament  could not have applied  its  mind  to provisions  which came into existence afterwards.  It  could not, therefore, have incorporated them by reference as parts of  a procedure applicable to assessments which  took  place after 1959 when the Bombay Act of 1953 was repealed.  At the time of the passing of the Central Act, the relevant statute in  existence  in Bombay was the Bombay Act of  1953.   But, Section  16(4)  of the Bombay Act of 1953  under  which  the Sales  Tax  authorities purported to act, did not  exist  on the,  statute  book at the time of  assessment.   Unless  we assume that Section 9(2) of the Central Act, by a  necessary implication,  authorises  the State Legislatures  to  go  on imposing  such  penalties for such breaches of  duty  as  it pleases   them  to  lay  down  on  behalf   of   Parliament, subsequently  enacted provisions of State  enactments  would not be available. I also find from the Mysore Act of 1957, that Section 13  of the  Act was entirely recast in 1958.  It would, I think  be carrying  the theory of referential legislation too  far  to assume  that Section 9(2) of the Central Act 1956  purported to authorise the State Legislatures to impose liabilities in the  nature  of additional tax or  penalties  leaving  their rates and conditions for their imposition also to be  deter- mined  by  the  State Legislatures as  and  when  the  State Legislatures  decided  to  impose or  amend  them.   It  is, evident  that these differ from State to State, and, in  the same  State,  at different times.  A conferment of  such  an uncontrolled power upon the State Legislatures could, if  it was  really intended, be said to travel beyond the  province of permissible delegated legislation on the principles  laid down  long ago by this Court in Re-Delhi Laws’ case  (supra) as  no  guide  lines are given in  Section  9(2)  about  the nature,  conditions,  or extent of penalties  leviable.   If such a power was really conferred would it not amount to  an abdication of an essential legislative function with respect to  a  matter found as item 92A of the Union List I  of  the Seventh Schedule so that, according to article 246(1) of our Constitution, Parliament has exclusive power to legislate on a  topic  covered by it ? As this question  was  not  argued before  us  I  would only say that  the  correct  cannon  of construction  to apply in such a case is that we  should  so interpret Section 9(2) of the Central Act, if possible, that

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no  part  of  it may conceivably be  invalid  for  excessive delegation.   The well known maxim applicable in such  cases is : ut res magis valeat quami pereat. It  is evident from Section 16(4) of the Bombay Act of  1953 that  there is a particular percentage of the amount of  tax levied  which  is  prescribed as penalty to be  paid  as  an "addition  to  the amount of tax for every month  after  the expiry  of  the  prescribed period of  default".   In  other words,  it is a liability in the nature of an additional  or penal tax.  Section 13(3)(b) of the Mysore Act also makes it clear  that, on an application made to the Magistrate,  such as  the  tone made in the case which has come up  before  us from  Mysore,  the  penalty  may be  equated  with  a  fine. Section 63 of the Bombay Act (1) [1951] S.C.R. 747. 779 of 1959 speaks of certain "Offences and penalties".  Indeed, Chapter  8  of that Act is itself headed  as  "Offences  and Penalties". On  a  consideration of the provisions mentioned  above,  it seems to me to be clear that whatever may be the objects  of levying   a’  penalty,  its  imposition  gives  rise  to   a substantive  liability  which  can be viewed  either  as  an additional tax or as a fine for the infringement of the law. The  machinery or procedure for its realization  comes  into operation  after  its  imposition.  In any case,  it  is  an imposition of a pecuniary liability which is comparable to a punishment  for the commission of an offence.  It is a  well settled  cannon of construction of statutes that  neither  a pecuniary liability can be imposed nor an offence created by mere implication.  It may be debatable whether a  particular procedural   provision  creates  a  substantive   right   or liability.   But,  I do not think that the imposition  of  a pecuniary  liability, which takes the form of a  penalty  or fine for a breach of a legal obligation, can be relegated to the   region  of  mere  procedure  and  machinery  for   the realization of tax.  It is more than that.  Such liabilities must  be created by clear, unambiguous, and  express  enact- ment.   The  language used should leave  no  serious  doubts about its effect so that the persons who are to be subjected to such a liability for the infringement of law are not left in  a  state  of  uncertainty as to  what  their  duties  or liabilities are.  This is an essential requirement of a good government  of  laws.  It is implied in  the  constitutional mandate  found in Section 265 of our Constitution : "No  tax shall be levied or collected except by authority I of law". It  was argued on behalf of the State that Section  9(2)  of the Central Act contains an express reference to  provisions relating   to,  interalia,  "refunds,  rebates,   penalties, compounding  of offences".  Relying upon these words in  the last  part  of Section 9(2) of the Act, it  was  urged  that there  is  no manner of doubt that  the  penalties  leviable under  the  State  law can be utilised for  the  purpose  of enforcing the tax liabilities under the Central Act. Section  9 of the Central Act itself has  undergone  several amendments.  In 1956 it stood as follows :               "9(1) The tax payable by any dealer under this               Act  shall  be  levied and  collected  in  the               appropriate  State by the Government of  India               in the manner provided in sub-section (2).               (2)   The  authorities  for  the  time   being               empowered  to  assess,  collect  and   enforce               payment of any tax under the general sales tax               law of the appropriate State shall, on  behalf               of the Government of India and subject to  any

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             rules made under this Act, assess, collect and               enforce payment of any tax payable by a dealer               under  this Act in the same manner as the  tax               on  the  sale or purchase of goods  under  the               general   sales  tax  law  of  the  State   is               assessed,  paid  and collected; and  for  this               purpose  they may exercise all or any  of  the               powers  they have under the general sales  tax               law of the 780               State;   and  the  provisions  of  such   law,               including  provisions  relating  to   returns,               appeals,   reviews,   revisions,   references,               penalties  and compounding of offences,  shall               apply accordingly.               (3)  The  proceeds  (reduced by  the  cost  of               collection)  in any financial year of any  tax               levied  and  collected under this Act  in  any               State  on  behalf of the Government  of  India               shall,  except  in so far  as  those  proceeds               represent   proceeds  attributable  to   Union               territories,  be  assigned to that  State  and               shall  be  retained by it;  and  the  proceeds               attributable  to Union territories shall  form               part of the.  Consolidated Fund of India". It  was amended by Act 31 of 1958, and Act 29 of  1969,  and Act  61  of  1972.   We are only  concerned  here  with  the amendment by Act 31 of 1958 because this Act introduced  the provisions  which  were in operation at the  time  when  the assessment orders under consideration were made. Section  6 of the Central Sales Tax Second Amendment Act  31 ,of 1958 changed Section 9(2) and (3) and introduced  sub-s. (4).  These provisions read as follows :               "(2) The penalty imposed upon any dealer under               section   10-A  shall  be  collected  by   the               Government of India in the manner provided  in               sub-section (3) :               (a)  in the case of an offence  falling  under               clause  (b) or ’clause (d) of section  10,  in               the  State in which the person purchasing  the               goods  obtained  the form prescribed  for  the               purposes  of clause (a) of sub-section (4)  of               section  8 in connection with the purchase  of               such goods;               (b)  in the case of an offence  falling  under               clause  (c)  of section 10, in  the  State  in               which  the person purchasing the goods  should               have registered himself if the offence bad not               been committed.               (3)   The  authorities  for  the  time   being               empowered  to  assess,  collect  and   enforce               payment of any tax under the general sales-tax               law of the appropriate State shall, on  behalf               of the Government of India and subject to  any               rules made under this Act, assess, collect and               enforce  payment  of any  tax,  including  any               penalty, payable by a dealer under this Act in               the  same  manner as the tax on  the  sale  or               purchase of goods under the general sales  tax               law   of  the  State  is  assessed  paid   and               collected; and for this purpose they may exer-               cise all or any of the powers they have  under               the  general sales-tax law of the  State;  and               the   provisions   of  each   law,   including               provisions   relating  to  returns,   appeals,

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             reviews, revisions, references, penalties  and               compounding   of   offences,,   shall    apply               accordingly: 781               Provided that if in any State or part  thereof               there  is no general sales-tax law  in  force,               the  Central Government may, by rules made  in               this behalf, make necessary provision for  all               or  any  of  the  matters  specified  in  this               subsection  and such rules may provide that  a               breach  of any rule shall be  punishable  with               fine which may extend to five hundred  rupees;               and where the offence is a continuing offence,               with  a daily fine which may extend  to  fifty               rupees for every day during which the  offence               continues.               (4) The proceeds in any financial year of  any               tax   including   any  penalty,   levied   and               collected  under this Act in any State  (other               than  a  Union  territory) on  behalf  of  the               Government of India shall be assigned to  that               State  and  shall be retained by it;  and  the               proceeds  attributable  to  Union  territories               shall  form part of the Consolidated  Fund  of               India". It  will be seen that Section 9(1) of the Central  Act  1956 provided  only for "the manner" of levy Sec.  9(2).   Again, the  new  Sec.  9(2),  empowered  the  Government  of  India mentioned  in  Sec. 10A of this Act "in 9(3).  It  is  clear that  Section 10, relating to the penalties provided by  the Central Act, was meant for penalties by way of  imprisonment and  fine.   Section 10A provided only for levy  of  certain penalties   at   the  rate  specified  there  in   lieu   of prosecutions  under  Sec.  10.  This is  the  only  kind  of penalty which was enforceable by the procedure laid down  in Section  9(3) of the Act as it stood after the  1958  amend- ment.  Section 9(2), after the Act 31 of 1958, also makes it clear  that Section 9(3), which corresponded to the  earlier Section  9(2) of he 1956 Act only lays down "the manner"  of this" collection " of he penalty.  In other words, Sec. 9(2) of  the Act, as it stood after 1958, did not provide for  an imposition of a penalty as a substantive pecuniary liability or  tax.   It only authorised collection of penalty  in  the manner  laid down in Section 19(3) of the Central Act as  it stood after 1958.  The imposition of a penalty was regulated exclusively  by Sec. 10A of the Central Act and not  by  any provision of the State Act. It  has to be remembered that Section 9(2) of the 1956  Act, which corresponds to Section 9(3) after 1958, begins with  : " subject to the other provisions of this Act and the  rules made   thereunder,  the  authorities  for  the  time   being empowered to assess, re-assess, collect and enforce  payment of  any  tax  under  the  general  sales  tax  law  of   the appropriate  State shall. . . ." In other words, the  powers of the State Sales Tax Officers are specifically limited  by the  provisions of the Central Act.  They cannot  go  beyond these  provisions.   The next part of Section 9(2)  of  the’ 1956  Act further emphasises this aspect by making it  clear that  these powers are exercisable only "for  his  purpose". In other words, they are not authorised to collect lues  for purposes  extraneous to the Central Act.  We may then go  to the  last  part of Section 9(2) of the 1956  Act,  which  is strongly . 782 relied  upon on behalf of the States concerned to urge  that

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the  State provisions relating not merely to  collection  of ’taxes  but  imposition  of penalties  are  incorporated  by reference  into the provisions of the Central Act.  In  this debatable  area, I think the true meaning can only be  found by  considering the provisions as a whole.  The  context  of the whole sales tax law of the State as well as that of  the law contained in the Central Act must be taken into account. After considering the provisions of the Central Act as  well as the State Acts relating to penalties, one is irresistably driven  to  the  conclusion  that  provisions  relating   to penalties  are special and specific provisions in each  Act. They  are not part of "the general sales tax law" of  either the  State  or  of Union.  If  the  provisions  relating  to penalties,  such as those found in the Central Act  and  the State  Acts,  are  really special provisions  which  can  be invoked in the special ,circumstances given in each statute, we  must  interpret  the  reference  to  penalties  in   the concluding  portion of Section 9(2), preceding the  proviso, to  relate  only  to  the  special  provisions  relating  to penalties ,Provided for specifically in the Central Act. I  think that the maxim of interpretation to apply  here  is "Expressio  Unius exclusio alterius".  This is explained  as follows  in Maxwell on the Interpretation of Statutes  (12th Edn. p, 293);               "By the rule usually known in the form of this               Latin Maxim, mention of one or more things  of               a particular class may be regarded as silently               excluding  all  other members  of  the  class;               expressum facit cessare tacitum". No doubt this maxim has been described as "a useful  servant but  a dangerous master".  I can, however, think of no  kind of case more apt for its application than the one before us. As the Privy Council said long ago, with regard to a statute purporting  to impose a charge in Oriental Bank  Corporation v. Wright,(1) that in such a case, the rule to be applied is "that  the  intention to impose a charge upon  the  subject, must  be shown by clear and unambiguous language".   If  the language leaves room for coming to the conclusion that  only penalties  specified in the Central Act are  enforceable  by the machinery for enforcement of liability under the general Sales  Tax  law  of a State, I think  that  the  legislative intent  could safely be presumed to be to confine  penalties mentioned  in  the concluding part of Section 9(2)  to  only those mentioned specifically in the Central Act. For the reasons given above, I respectfully concur with  the opinion  expressed and the orders proposed by May  Lord  the Chief Justice.                             C.A. 2089 of 1969 allowed.                            C.A. 2118 of 1970 dismissed P.B.R. (1) (1880) 5 App.  Cas. 842 at 856. 783