Commissioner Sales Tax vs Gulabchand

P.V. Dixit, C.J.—In this reference u/s 44 of the Madhya Pradesh General Sales Tax Act, 1958, at the instance of the Commissioner of Sales Tax, the question which we have been asked to decide is:

Whether in the instant case in view of the Proviso to Section 16 of the C.P. and Berar Sales Tax Act, 1947, the prior approval of the Commissioner of Sales Tax to the imposition of penalty by the Sales Tax Officer was necessary or whether the prior approval of the Regional Assistant Commissioner of Sales Tax was adequate ?

The Sales Tax Officer, Bilaspur, while making an order of assessment of sales tax against the opponent Gulabchand for the period 27th Oct. 1954 to 14th November 1955 under the Central Provinces and Berar Sales Tax Act, 1947 (hereinafter referred to as the Act imposed on the Assessee a penalty of Rs. 500 u/s 10(3) of the Act for his failure to submit returns. The penalty was imposed with the previous sanction of the Regional Assistant Commissioner of Sales Tax, Bilaspur. This order imposing penalty on the Assessee was set aside in appeal by the Board of Revenue on the ground that it was invalid inasmuch as the sanction of the Commissioner of Sales Tax to the imposition of the penalty was not obtained as required by the proviso to Section 16 of the Act. Thereafter, the Commissioner of Sales Tax moved the Board of Revenue for referring the case to this Court.

Before dealing with the contention advanced by Shri Bhave, learned Government Advocate, appearing for the Commissioner of Sales Tax, it is necessary to refer to the material provisions of the Act. Sub-section (1) of Section 10 was thus:

Every such dealer as may be required so to do by the Commissioner by notice served in the prescribed manner and every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed.

Sub-section (3) then proceeded to say:

If a dealer fails to comply with the requirements of a notice issued under Sub-section (1) or a registered dealer fails to furnish his return for any period within the prescribed time to the prescribed authority without any sufficient cause, the Commissioner may, after giving such dealer a reasonable opportunity of being heard, direct him to pay, by way of penalty, a sum not exceeding one-fourth of the amount of the tax which may be assessed on him u/s 11.

Section 16 of the Act dealt with the delegation of Commissioner''s powers and ran as follows:

Subject to such restrictions and conditions as may be prescribed, the Commissioner may, by order in writing, delegate any of his powers under this Act except those u/s 32-A, Section 2-B and Sub-section (2) Section 24 to any person appointed u/s 3 to assist him:

Provided that if the power to impose penalty conferred upon the Commissioner by Sub-section (3) of Section 10, Sub-section (5) of Section 11, Section 11-A, and Section 22-C is delegated by him under this section to any person appointed u/s 3 to assist him, such person shall not exercise the power without obtaining the previous approval of the Commissioner.

Rule 67 of the Central Provinces and Berar Sales Tax Rules, 1947, dealt with the delegation of the Commissioner''s powers. It provided that the Commissioner shall not delegate any powers other than those enumerated in the rule in respect of the sections mentioned therein, nor shall he delegate any power specified in column (3) of the rule to any officer below the rank specified in the corresponding entry in column (4) or contrary to the conditions mentioned therein. By this rule the power to impose a penalty u/s 10 on a dealer for his failure to furnish returns for any period within the prescribed time to the prescribed authority could be delegated only to the Deputy Commissioner, Assistant Commissioner, Sales Tax Officer and Assistant Sales Tax Officer; and the first two functionaries could exercise this power with the previous approval of the Commissioner and the other two could exercise it with the previous approval of the Assistant Commissioner. It seems that the power to impose penalty u/s 10 was actually delegated to the Sales Tax Officer in terms of Rule 67.

It was argued by the learned Government Advocate that u/s 16 of the Act read with Rule 67 the Commissioner could delegate to the authorities mentioned at serial No. 7 in Rule 67 not only his power to impose penalty u/s 10 but also his power to give approval to the imposition of the penalty by the delegatee.

We are unable to accede to this contention which is contrary to the clear and express terms of the proviso to Section 16. That proviso expressly puts a limitation on the Commissioner''s power to delegate the power to impose penalty conferred upon him by Section 10(3) and other provisions enumerated in the proviso and says in clear terras that the authority to whom the power to impose penalty is delegated shall not exercise the power without obtaining the previous approval of the Commissioner. The delegatee thus takes this delegated power subject to the restriction put on its exercise, namely, that of obtaining the previous approval of the Commissioner before exercising it. It is thus clear that the power which the Commissioner has of giving approval to the imposition of penalty by a delegatee cannot itself be delegated. Rule 67 no doubt permitted the delegation of the Commissioner''s powers to impose penalty to a Sales Tax Officer and the exercise of that power by the Sales Tax Officer with the previous approval of the Assistant Commissioner. But this rule had not the effect of overriding the statutory provision contained in the proviso to Section 16, namely, that the person to whom the power to impose penalty was delegated shall exercise it only with the previous approval of the Commissioner. The effect of the proviso to Section 16 read with Rule 67 is that if the power to impose penalty u/s 10 is delegated by the Commissioner to the Sales Tax Officer, then he could exercise that power only after obtaining the previous approval both of the Assistant Commissioner and of the Commissioner. Thus, the Sales Tax Officer has to first obtain the previous approval of the Assistant Commissioner and then the approval of the Commissioner to the imposition of penalty u/s 10. An imposition of penalty u/s 10 by the Sales Tax Officer after securing the previous approval of the Assistant Commissioner alone and without the previous approval of the Commissioner would clearly be invalid. We find that in Jalram Parmar v. Sales Tax Officer 1967 13 STC 477, the Bora-bay High Court has expressed a view similar to that taken by us.

For all these reasons, our answer to the question stated above is that in the present case the prior approval of the Commissiner to the imposition of penalty by the Sales Tax Officer was necessary and that the prior approval of the Regional Assistant Commissioner of Sales Tax was not enough.

The opponent shall have costs of this reference. Counsel''s fee is fixed at Rs. 100.