Supreme Court of India
PRAKASH ROADLINES (PVT.) LTD.versusUNION OF INDIA & ANOTHER
- Citation
- 1989 INSC 222
- Decided
- 1 August 1989
- Disposal
- Dismissed
- Bench
- G L OZA
Holding
Section 464 authorises the taxing authority to impose a monetary penalty of up to ten times the terminal tax without a conviction, and the Commissioner may validly delegate this power under Sections 59 and 491 of the Delhi Municipal Corporation Act, 1957.
Summary
The appellant, a transporter, brought goods into Delhi without paying the required terminal tax and was levied a penalty of ten times the tax under Section 464 of the Delhi Municipal Corporation Act, 1957. He challenged the demand by filing a writ petition, but the Delhi High Court upheld the penalty, holding that it could be imposed without a criminal conviction. On appeal, the Supreme Court examined whether Section 464 creates a criminal offence requiring conviction, and whether the Municipal Commissioner could delegate the power to impose the penalty to the taxing authority under Sections 59 and 491 of the Act. The Court held that Section 464 is a revenue provision allowing a monetary penalty without a conviction, and that the Commissioner’s wide powers under Section 59, together with the delegation power in Section 491, validly empower the taxing authority to impose the penalty. Consequently, the appeal was dismissed.
Issues considered
- Whether Section 464 of the Delhi Municipal Corporation Act, 1957 permits the imposition of a penalty without a prior conviction by a competent magistrate.
- Whether the penalty under Section 464 constitutes a criminal punishment or a revenue measure.
- Whether the Municipal Commissioner may validly delegate the authority to impose the penalty to the taxing authority under Sections 59 and 491 of the Act.
Legislation cited
- Delhi Municipal Corporation Act, 1957s. 463, s. 464, s. 469, s. 470, s. 491, s. 59
Subjects
terminal taxpenaltydelegation of powersrevenue provisioncriminal convictionmunicipal corporationtaxationadministrative law
Judgment
A PRAKASH ROADLINES (PVT.) LTD.
v.
UNION OF INDIA & ANOTHER
AUGUST I, 1989
B [G.L. OZA AND K.N. SAIKIA, JJ.]
Delhi Municipal Corporation Act, 1957: Sections 59, 463, 464
and 491-Whether penalty could be imposed without conviction by
Court-Delegation of powers to taxing authorities to impose penalty-
Whether valid.
c
The appellant, a transporter, brought some goods to Delhi with-!
out 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
D 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 magistrate, and
answered It In the affirmative. This appeal by special leave is against the
High Court's judgment.
I·
.>,-
E On behalf of the appellant, it was contended that Section 464 of
the Act gives a wide discretion to impose penalty upto ten times of the
tax payable and as such is a judicial function which cannot be left to the
executive authority and hence the authority who imposed the penalty
was not competent to do so.
F The respondents contended that Section 464 iJoes not pertain to any .
offence and penalty levied under this section is not punishment; that -4
section 463 provides for punishment after conviction and so, for imposi- I
lion of penalty under Section 464, the prosecution of the appellant
before a competent magistrate is not at all necessary. It was also con-
tended that Section 59 confers very wide powers on the Commissioner
G 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: I. Penalty under Section 464 of the Delhi Municipal
H Corporation Act, 1957 could be imposed without a conviction by a
650
PRAKASH ROADLINES v. U.0.1. 651
criminal court. The different phraseology used in sections 463 and 464 A
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 termi-
nal 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. J ,000 whereas under Section 464 neither there is any B
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 penalty and the limit of penalty has been
c
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]
D
2. It is no doubt true that as regards the offences, a specific
provision has been made in Section 469 for appointment 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 E
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 exercis-
ing 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 F
the scheme of this Act to impose the penalty to the tune of ten times of
the tax which is payable. [655G-H; 656A, Bl
CIVIL APPELLA1E JURISDICTION: Civil Appeal No. ISOO(N)
of 1974 :1;
G
From the Judgment and Order dated 2.11.73 of the Delhi High
Court in C.W. No. 906of 1973.
'
S.N. Mehta for the Appellant.
G. Ramaswamy, Additional Solicitor General, G. Venkatesh H
Rao and A.V. Rangam for the Respondents.
652 SUPREME COURT REPORTS I 1989] 3 S.C.R.
A 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
B 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 in-
formed 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.
!
c
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 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
D the territory. There was also some controversy raised before the High
Court in respect of the facts as to whether the cylinders 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 with-
out payment of tax and was therefore caught but all these controversial
E 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
F 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 q>unsel appearing for
the appellant also canvassed that question alone as it was the question
G on which High Court held against the appellant.
It was contended by learned counsel for the appellant that Sec-
tions 463 and 464 both fall in the Chapter "Offences and Penalties".
By referring to the languag!!_ of Section 464, he contended that in the
body of this Section language indicate that what is levied against the
H appellant is described as "fine". He. also referred to Sections 469 and
4 70 and contended that according to the scheme of this Chapter, the
PRAKASH ROADLINES v. U.0.1. [OZA. J.) 653
punishment provided in Section 463 and the penalty (or fine) provided
in Section 464 could only be imposed by a Magistrate after a proper · A
trial. He also contended that the learned Judges of the High Court
placing reliance on Section 59 and the notification delegating the func-
tions 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 B
the residuary powers of the Commissioners 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 imposition 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 c
the functions of the authority who is expected to exercise the juris-
diction under Section 464 is in the nature of judicial function and
therefore 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 D
imposed by the competent authority. Learned counsel for the respon-
dent 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 wherever the
E
offences are alleged to have been committed it has been provided that
they will be tried by a competent magistrate and the punishment could
only be inflicted by the 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
F
be imposed and these penalty provisions neither 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 G
penalty under Section 464 the prosecution of the appellant before a
competent magistrate is not at all necessary. Learned counsel also
contended that even reading the provisions of Section 470 or 469 do
not indicate contrary.
H
As regards the authority of the tax authority to impose this pen-
654 SUPREME COURT REPORTS [ 1989] 3 S.C.R.
A 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 autho-
B rity 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
c terminal tax authority or it could not be imposed unless the appellant
is convicted and found guilty by a competent Magistrate as is contemp-
lated in Section 463 of the Act. Section 463 reads:
463: Punishment for offences
D 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 .·1'
for a term which may extend to six months or with the fine
which may extend to one thousand rupees or with both,
E
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:
F 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 intro-
G duce 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 tendered, shall be .punishable with fine which
may extend to ten times the amount of such terminal tax."
H It is significant that in Sections 463 and 464 the language used is that "a
'
PRAKASH ROADLINES "· U.0.1. [OZA, J.] 655
person who brings the goods into the Union Territory of Delhi liable to A
terminal tax without the payment of tax shall on conviction be punish-
able." 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
teqninal tax could be levied.
B
'
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
punishment is also imprisonment but the highest limit of fine is limited C
to RsA,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 commit-
ted; could only be tried by a competent criminal court and on convic-
tion alone the punishment could be imposed but Section 464 is in the D
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 can not be said to be same or
similar. E
• Even the heading of the Chapter talks of "Offences and Penal-
ties". 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 F
could only be awarded after conviction whereas so far as penalties are
concerned they could be imposed by the taxing authority itsell. 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 provi- G
i sion has been made in Section 469 for appointment 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 th<,' Municipal Commissioner either to exercise these powers himself H
656 SUPREME COURT REPORTS [1989] 3 S.C.R.
.>o.
A or to delegate. It is not in dispute that in exercise of power under
Section 59 the Municipal Commissioner had the authority and exercis-
ing 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 )(
B the tune of ten times of the tax which is payable. ·
Section 59 of the Act reads:
59: Functions of
the Commissioner;
c "Save as otherwise provided in this Act, the entire execu- ~
tive power for the purpose of carrying out the provi:;ions of
this Act other than those pertaining to the Delhi Electric
Supply Undertaking and of any other Act for the time be-
ing in force which confers, any power or imposes any duty
D on the Corporation, 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;
E
(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 j
immediately subordinate to them and subject to any regu- l
F
lation that may be made in this behalf, dispose of all ques-
tions relating to the service of the said officers and other
employees their pay, privileges, allowances and oth1:r con-
ditions of service;
(c) on the occurrence or threatened occurrence of
G
any sudden accident or any unforeseen event or natural l
calamity involving or likely to involve extensive damage to
any property of the Corporation, or danger to human life,
take such immediate action as he considers necessary and
made a report forthwith to the Standing Committee and the
Corportion of the action he has taken and the reasons for
H
the same as also of the amount of cost, if any, incuITed or
PRAKASH ROADLINES v. U.0.1. [OZA, J.I 657
likely to be incurred in consequence of such action, which A
is not covered by a budget grant;
(d) exerci~e the powers and perform the duties con-
ferred or imposed by or under this Act upon the General
Manager (Electricity) in this absence or on failure by him B
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. Section 491 of the Act reads:
491: Power to delegate functions
of Commissioner:
c
"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 D
performed also by any municipal officer or other municipal
employee specified in the order."
.>j 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 E
-
I
Section 464. ·
Under these circumstances therefore the contention advanced by
the learned counsel for the appellant that the penalty under Section464
could not be imposed without a conviction by a criulfoal court is.not
sustainable in law. We therefore see no reason to entertain this appeal. F
It is therefore dismissed. In the circumstances of the case parties are
directed to bear their own costs.
G.N. Appeal dismissed.
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