LexR. S. JOSHI, S.T.O. GUJARAT ETC. ETC. versus AJIT MILLS LTD., AHMEDABAD & ANR. ETC. ETC.
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338 A R. S. JOSHI, S.T.O. GUJARAT ETC. ETC. v. AJIT MILLS LTD., AHMEDABAD & ANR. ETC. ETC. August 31, 1977 [M. H. BEG, C.J., Y. V. CHANDRACHUD, P. N. BHAGWATI, V. R. B KRISHNA IYER, N. L. UNTWALIA, S. MURTAZA FAZAL ALI AND c D E F G H P. S. KAILASAM, JJ.] Bombay Sales Tax Act, 1959-Ss. 37, 46, 63 validity of-Act prohibitecl collection of any sum not payable by way of sales tax or in excess of tax payable-Amounts so collected forfeited-Forfeiture, .If withili, the legislative competence of the State Le!(islature. Constitution of India, 1950-Entries 54 and 64-List II-Constitutional vali- diJy of an enactment-Rests for determination of-Forfeiture, if a penalty. Words and phrases-"Colourable"; "forfeiture"; "collected"; "shall be for- jeited"-Meaning of. Section 46(1) of the Bombay Sales Tax Act, 1959 (as applicable to the State of Gujarat) enacts that no person shall collect any sum by way of tax in respect of sale of any goods on which by virtue of s. 5 no tax is payable~ Sub-section (2) provides that no person, who is not a registered dealer and liable to pay tax in respect of any sale or purchase, shall collect on the sale of any goods any sum by way of 1<l!X from any other person and no regis- tered dealer shall collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of the Act. Section 63(1) (h) provides that whoever contravenes any of the provisions of s. 46 shall, on conviction be punished with sin1ple imprisonment or with fine or with both. Section 3 7 ( 1) which deaJs with imposition of penalty de- partmentally for contravention of s. 46 provides in cl. (a) that if iuy person, not being a dealer ljable to pay tax under the Act collects any sum by way of tax in excess of the tax payable by him or otherwise collects tax in contravention of the provisions of s. 46 he shall be liable to pay, in addi- tion to any t<l!X for which he may be liable, a penalty as prescribed in cl. (i). Clause (i) states that where there has been a contravention referred to in c1. (a) a penalty of an amount not exceeding two thousand rupees .... and in addition any sum collected by the person by way of tax in contravention of s. 46 shall be forfeited to the Stele Governn1ent. The respondents, who were registered dealers of sales tax, collected from various customers amounts qua sales tax prohibited by s. 46 of the Act. Acting on the prohibition plus penalty contained in s. 46 read with s. 37(1) of the- Act the Sales Tax officers imposed penalties and forfeited the sums coJlected in contravention of s. 46 (less amounts refunded). The High Court struck down the last limb of the forfeiture prov1s1on contained ins. 37(1)(ai) as being unconstitutiofllal on the ground that it was not competent for the State Legislature to forfeit to the public exchequer punitively, under entry 54 read with entry 64 of List II, sums collected by dealers by wa\' of sales tax which was not exigible under the Act. (The High Court of Bombay took an opposite view .while other High Courts ranged themselves on one side or the other of the ·controversy). Allowing the appeals HELD : Per Beg CJ., Chandrachud, Bhagwati, Krishna Iyer, Untwalia. Murt.aza Fazal Ali, J.T. ' The punitive impost in s. 37(1) (a) is legitimate and valid. [349 DJ \ R. s. JOSHI v. AJIT MILLS (Krishna Iyer, J.'j. 339 / The High Court was wrong in denouncing the impugned legislation as A-·· ~ exceeding legislative competence or as a coloura-ble device or a5 supp1ementary, not complementary. [348 Fl ·' j J --~ l. (a) The true key to constitutional construction is to view the equity of the statute and sense the social mission of the law, language permitting, against the triune facets of justice highlighted in the Preamble to the Paramount Parch- ment, read with a spacious signification of the listed entries concerned. A law has to be adjudged for its constitutionality by the generality of cases it covers, not by the freaks and exceptions it martyrs. [348 HJ B (b) The professed object of the law .being clear, the motive of the legis- lature is irrelevant to- castigate an Act as a colourable device. The interdict on public mischief. and the insurance of consumer interests against likely, albeit, unwitting or ex abundanti ca11tela excesses in the working of a statute are not merely an am:illary power put a necessary obligation of a social welfare state. One potent prohibitory process fo
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