http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: PRAKASH ROADLINES (PVT.) LTD.

       Vs.

RESPONDENT: UNION OF INDIA & ANOTHER

DATE OF JUDGMENT01/08/1989

BENCH: OZA, G.L. (J) BENCH: OZA, G.L. (J) SAIKIA, K.N. (J)

CITATION:  1989 AIR 1962            1989 SCR  (3) 650  1989 SCC  (4)  15        JT 1989 (3)   269  1989 SCALE  (2)153

ACT:     Delhi Municipal Corporation Act, 1957: Sections 59, 463, 464  and 491--Whether penalty could be imposed without  con- viction by Court--Delegation of powers to taxing authorities to impose penalty-Whether valid.

HEADNOTE:     The  appellant,  a transporter, brought  some  goods  to Delhi without paying terminal tax. Under Section 464 of  the Delhi  Municipal  Corporation Act, 1957, a  penalty  of  ten times  the  amount  of terminal tax was  demanded  from  the appellant.  The demand was challenged before the High  Court by  way  of a Writ Petition. The High Court  considered  the question as to whether the penalty imposed under section 464 of the Act could be imposed by the taxing authority  without a  prosecution having been filed before a  competent  magis- trate,  and answered it in the affirmative. This  appeal  by special leave is against the High Court’s judgment.     On  behalf of the appellant, it was contended that  Sec- tion 464 of the Act gives a wide discretion to impose penal- ty upto ten times of the tax payable and as such is a  judi- cial function which cannot be left to the executive authori- ty  and hence the authority who imposed the penalty was  not competent to do so.     The  respondents  contended that Section  464  does  not pertain to any offence and penalty levied under this section is not punishment; that section 463 provides for  punishment after  conviction  and so, for imposition of  penalty  under Section  464,  the  prosecution of the  appellant  before  a competent  magistrate is not at all necessary. It  was  also contended  that Section 59 confers very wide powers  on  the Commissioner  and  he  is also authorised  to  delegate  the functions,  and under such delegated authority  the  penalty has been imposed under Section 464. Dismissing the appeal,     HELD: 1. Penalty under Section 464 of the Delhi  Munici- pal Corporation Act, 1957 could be imposed without a convic- tion by a 651 criminal  court. The different phraseology used in  sections 463 and 464 clearly go to show that where the ingredients of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

Section  463 are not in doubt it is open to the  corporation authorities  to launch a prosecution against the person  who introduces the goods without payment of terminal tax and  in this  event the person, on conviction only, can be  punished and  the  punishment is also imprisonment, but  the  highest limit  of fine is limited to Rs.1,000 whereas under  Section 464  neither there is any reference to a conviction nor  any reference to the Court of a Magistrate and the only  penalty provided  is monetary which may extend to ten times.  It  is therefore  clear that Section 463 refers to a  criminal  of- fence  if  committed,  could only be tried  by  a  competent criminal court and on conviction alone the punishment  could be  imposed  but Section 464 is in the nature of  a  revenue provision  where  non-payment of tax could  be  remedied  by imposition  of  penalty and the limit of  penalty  has  been prescribed at ten times of the tax which is payable. In view of different language used in the two sections and also  the language used in the marginal note it is clear that the  two cannot be said to be same or similar. [657E, F; 655B-E]     2.  It is no doubt true that as regards the offences,  a specific provision has been made in Section 469 for appoint- ment  of a Municipal Magistrate but in respect of  penalties there  is no specific provision authorising any  officer  or authority  to exercise jurisdiction under the section  where for  evasion of tax, penalty could be levied,  like  Section 464,  but  it could not be doubted that Section 59  gives  a very  wide  power to the Municipal  Commissioner  either  to exercise  these powers himself or to delegate. It is not  in dispute  that  in exercise of powers under  Section  59  the Municipal Commissioner had the authority, and exercising the powers  under Section 491 of the Act, by notification  dated September 17, 1973 he delegated the functions under  Section 464 to the taxing authorities. Hence the taxing  authorities were  competent under the scheme of this Act to  impose  the penalty  to the tune of ten times of the tax which  is  pay- able. [655G-H; 656A, B]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No.  1800(N) of 1974     From  the Judgment and Order dated 2.11.73 of the  Delhi High Court in C.W. No. 906 of 1973. S.N. Mehta for the Appellant.     G. Ramaswamy, Additional Solicitor General, G. Venkatesh Rao and A.V. Rangam for the Respondents. 652 The Judgment of the Court was delivered by     OZA, J. This is an appeal on leave under Article 136  of the  Constitution. The appellant is a transporter and it  is alleged  that he brought goods into the limits of Delhi  and were  seized  within the Union Territory as it  was  alleged that  they were brought in without the payment  of  terminal tax.  A penalty of ten times of the amount of  the  terminal tax was also demanded from the appellant and he was informed that  if the terminal tax alongwith the penalty is not  paid within  four days the goods will be sold at his risk.  By  a writ  petition the appellant challenged this  demand  before the  High  Court of Delhi and by the impugned  judgment  the Delhi  High Court dismissed the writ petition and hence  the present appeal.     The  High  Court  has considered the law  of  the  Delhi Municipal Corporation Act, 1957 (hereinafter referred to  as the  ’Act’)  coupled with the provisions  contained  in  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

imposition of terminal tax and also examined the legislative competence of the Parliament to enact the law and ultimately came  to the conclusion that the law was applicable  in  the territory. There was also some controversy raised before the High Court in respect of the facts as to whether the  cylin- ders on which the duty was demanded were empty or were  full and  as to whether the appellant stopped its vehicle at  the post  and was allowed to go and later on he was  stopped  by the  Squad or he got into the territory without  payment  of tax  and  was therefore caught but all  these  controversial questions of facts the High Court refused to consider as the appellant had an opportunity to pursue the remedy under  the law where these facts could be investigated and therefore as that  was not done and it was a writ petition  filed  before the  High Court, the High Court rightly did not go into  the disputed  questions  of facts. The only question  which  was canvassed  before the High Court and was considered  is  the question  as to whether this penalty imposed  under  Section 464  of  the Act could be imposed by  the  taxing  authority without  a prosecution having been filed before a  competent magistrate and the High Court in its judgment dismissed  the petition  upholding  the contention of the  Delhi  Municipal Corporation and the learned counsel appearing for the appel- lant also canvassed that question alone as it was the  ques- tion on which High Court held against the appellant.     It  was contended by learned counsel for  the  appellant that Sections 463 and 464 both fall in the Chapter "Offences and Penalties". By referring to the language of Section 464, he  contended  that  in the body of  this  Section  language indicate  that what is levied against the appellant  is  de- scribed as "fine". He also referred to Sections 469 and  470 and contended that according to the scheme of this  Chapter, the 653 punishment provided in Section 463 and the penalty (or fine) provided  in Section 464 could only be imposed by  a  Magis- trate  after  a  proper trial. He also  contended  that  the learned Judges of the High Court placing reliance on Section 59  and  the notification delegating the  functions  by  the Commissioner  to  the  terminal tax authority  came  to  the conclusion  that under Section 464 it is the  tax  authority who has the jurisdiction to impose the penalty but according to  the learned counsel the residuary powers of the  Commis- sioners under Section 59 are only administrative powers  and according  to  him the High Court was not right  in  placing reliance on that     The main emphasis by the learned counsel was that  impo- sition  of penalty as provided in Section 464 where  a  wide discretion is given to impose penalty upto ten times of  the tax  payable  itself  indicates that the  functions  of  the authority who is expected to exercise the jurisdiction under Section 464 is in the nature of judicial function and there- fore it could not have been left to the executive  authority of  the  Commissioner or a delegate to whom the  powers  may have  been delegated. According to the learned  counsel  the penalty was not imposed by the competent authority.  Learned counsel for the respondent on the other hand contended  that the language used at the heading of the Chapter which starts with  Section 461 itself indicates that this  Chapter  deals with .two types of matters (i) where offences are alleged to have  been committed and (ii) where only penalties could  be imposed and the scheme of this Chapter indicates that  wher- ever the offences are alleged to have been committed it  has been provided that they will be tried by a competent  magis- trate  and  the punishment could only be  inflicted  by  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

competent  magistrate  on conviction of the person  for  the offences alleged against him. Whereas wherever penalties are provided  it has been provided that where the facts  attract the  relevant provisions pertaining to penalty the tax  plus penalty  could be imposed and these penalty provisions  nei- ther  talk  of any offence nor talk of conviction  before  a competent  court of a Magistrate. It was contended  that  on the  basis of this distinction, if the two sections 463  and 464 which are relevant are examined it is clear that Section 464 do not pertain to any offence and therefore the  penalty thus  imposed under this Section is not a  punishment  which could  only be inflicted under Section 463 after  conviction and  therefore for imposition of penalty under  Section  464 the  prosecution of the appellant before a competent  magis- trate is not at all necessary. Learned counsel also contend- ed that even reading the provisions of Section 470 or 469 do not indicate contrary. As regards the authority of the tax authority to impose this pen- 654 alty,  learned counsel referred to the  notifications  which have  been  relied on by the High Court and  contended  that Section  59 confers very wide powers on the Commissioner  of Municipal Corporation and he is also authorised to  delegate the  functions and in accordance with the provisions of  law by  a  notification the functions have been  delegated.  The Commissioner  had the authority as regards the authority  of the  tax authority to impose this penalty under Section  464 and it is in this delegated authority that the terminal  tax authority has imposed this penalty against the appellant  as has been held by this Court.     The  only question which arises in this appeal is as  to whether penalty as provided in Section 464 of the Act  could be imposed by the terminal tax authority or it could not  be imposed  unless the appellant is convicted and found  guilty by a competent Magistrate as is contemplated in Section  463 of the Act. Section 463 reads: 463: Punishment for offences relating to terminal tax.               "Whoever brings within the Union Territory  of               Delhi any goods liable to terminal tax without               the payment of such tax shall, on  conviction,               be  punishable  with imprisonment for  a  term               which  may  extend to six months or  with  the               fine  which may extend to one thousand  rupees               or with both, and the court trying an  offence               under  this section may, on  such  conviction,               also confiscate the goods in respect of  which               the offence has been committed." Sec. 464 reads: Penalty for evasion of terminal tax:               "Where  any  goods  imported  into  Delhi  are               liable  to  the payment of terminal  tax,  any               person, with the intention of evading  payment               of the tax introduces or attempts to introduce               or  causes or abets introduction of  any  such               goods  within  the Union Territory  of  Delhi,               upon which payment of terminal tax due on such               introduction,  has neither been made nor  ten-               dered, shall be punishable with fine which may               extend to ten times the amount of such  termi-               nal tax." It is significant that in Sections 463 and 464 the  language used is that "a 655 person  who  brings the goods into the  Union  Territory  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

Delhi  liable  to terminal tax without the  payment  of  tax shall  on conviction be punishable." Whereas in Section  464 the  Section  talks  of bringing the goods  into  the  Union Territory  on which terminal tax is due and is not  tendered or  paid a fine which may extend to ten times the amount  of terminal tax could be levied.     This  different  phraseology used in  the  two  Sections clearly go to show that where the ingredients of Section 463 are  not in doubt it is open to the corporation  authorities to  launch a prosecution against the person  who  introduces the goods without payment of terminal tax and in this  event the  person on conviction only can be punished but the  pun- ishment  is also imprisonment but the highest limit of  fine is  limited to Rs. 1,000 whereas under Section  464  neither there is any reference to a conviction nor any reference  to the  Court of a Magistrate and the only penalty provided  is monetary  which  may extend to ten times.  It  is  therefore clear  that  Section  463 refers to a  criminal  offence  if committed, could only be tried by a competent criminal court and on conviction alone the punishment could be imposed  but Section  464 is in the nature of a revenue  provision  where non-payment of tax could be remedied by imposition of penal- ty and the limit of penalty has been prescribed at ten times of  the tax which is payable. In view of different  language used  in the two sections and also the language used in  the marginal note it is clear that the two can not be said to be same or similar.     Even  the heading of the Chapter talks of "Offences  and Penalties".  It therefore clearly appears that this  chapter deals with two categories of matters; (i) ’offences’ and the other  ’penalties’ and the scheme of this Chapter  indicates that  so  far as offences are concerned they could  only  be tried  by  a competent criminal court and  punishment  could only be awarded after conviction whereas so far as penalties are concerned they could be imposed by the taxing  authority itself.  Even the language or Sections 470 or 469  does  not help the appellant in any manner.     It  is  no doubt true that as regards  the  offences,  a specific provision has been made in Section 469 for appoint- ment  of a Municipal Magistrate but in respect of  penalties there  is no specific provision authorising any  officer  or authority  to exercise jurisdiction under the Section  where for  evasion of tax, penalty could be levied,  like  Section 464 but it could not be doubted that Section 59 gives a very wide power to the Municipal Commissioner either to  exercise these powers himself 656 or  to  delegate. It is not in dispute that in  exercise  of power  under Section 59 the Municipal Commissioner  had  the authority and exercising the powers under Section 491 of the Act  by notification dated September 17, 1973  he  delegated the  functions under Section 464 to the  taxing  authorities and  it is the conclusion that the taxing  authorities  were competent under the scheme of this Act to impose the penalty to the tune of ten times of the tax which is payable.   Section 59 of the Act reads: 59: Functions of      the Commissioner;               "Save  as otherwise provided in this Act,  the               entire  executive  power for  the  purpose  of               carrying out the provisions of this Act  other               than  those pertaining to the  Delhi  Electric               Supply  Undertaking and of any other  Act  for               the  time  being in force which  confers,  any               power or imposes any duty on the  Corporation,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

             shall vest in the Commissioner who shall also                        (a)  exercise  all  the  powers   and               perform all the duties specifically  conferred               or  imposed  upon him by this Act  or  by  any               other law for the time being in force;                        (b)  prescribe  the  duties  of,  and               exercise supervision and control over the acts               and proceedings of, all municipal officers and               other  municipal  employees  other  than   the               Municipal  Secretary and the  Municipal  Chief               Auditor  and the municipal officers and  other               municipal employees immediately subordinate to               them and subject to any regulation that may be               made in this behalf, dispose of all  questions               relating  to the service of the said  officers               and  other  employees their  pay,  privileges,               allowances and other conditions of service;                        (c)  on the occurrence or  threatened               occurrence  of  any  sudden  accident  or  any               unforeseen event or natural calamity involving               or  likely to involve extensive damage to  any               property  of  the Corporation,  or  danger  to               human  fife, take such immediate action as  he               considers  necessary and made a report  forth-               with to the Standing Committee and the  Corpo-               ration  of  the action he has  taken  and  the               reasons for the same as also of the amount  of               cost, if any, incurred or               657               likely  to be incurred in consequence of  such               action,  which  is  not covered  by  a  budget               grant;                        (d)  exercise the powers and  perform               the  duties conferred or imposed by  or  under               this Act upon the General Manager  (Electrici-               ty)  in this absence or on failure by  him  to               exercise or perform the same." This  Section clearly shows that the Municipal  Commissioner had  wide powers and he could therefore exercise  powers  to impose  the penalty as contemplated under Section 464.  Sec- tion 491 of the Act reads: 491: Power to delegate functions of Commissioner:               "The Commissioner may by order direct that any               power conferred or any duty imposed on him  by               or under this Act shall, in such circumstances               and  under such conditions, if any, as may  be               specified  in  the  order,  be  exercised  and               performed  also  by any municipal  officer  or               other  municipal  employee  specified  in  the               order." This  Section  authorises the Commissioner to  delegate  the authority  vested  in  him and it is in  exercise  of  these powers  that in fact he had delegated the authority  to  the tax officer to exercise powers under Section 464.     Under  these  circumstances  therefore  the   contention advanced  by the learned counsel for the appellant that  the penalty  under  Section 464 could not be imposed  without  a conviction by a criminal court is not sustainable in law. We therefore  see  no reason to entertain this  appeal.  It  is therefore  dismissed. In the circumstances of the case  par- ties are directed to bear their own costs. G.N.                                            Appeal  dis- missed. 658

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7