STATE OF TAMIL NADUversusKODAIKANAL MOTOR UNION (P) LID.

                                                                             927

                                                                                   A

                                    STATE OF TAMIL NADU
                                             v.
                            IODAIKANAL MOTOR UNION {P) LID.

                                       MAY l, 1986                                 B

                        [R. S. PATHAK AND Si\BYASACHI MUKHARJI, JJ, ]

                   Central Sales Tax Act, 1956 - s. lOA - Penalty - Levy of


-     y
              - ~antum of Penalty - Determination of.

                    Interpretation of Statutes
              Ascertainment f)f - Duty of court.
                                                     -   Legislative    intent     C


          t     The assessee had purchased motor spare parts on the
          basis of 'C' fo!'lll certificates issued to the11 under the
          Central Sales Tax Act, 1956, for sale, but instead of selling,
          the assessees used the11 for their own consumption. The Revenue          D
          proceeded on the basis that since the goods purchased had not
          been used for the purpose specified in s.8(3)(b) and as
          recorded in the 'C' form certificates, the assessees !Ld
          comitted offences under s. lO(d) of the Act and therefore,
      -"' were liable to pay penalty as welt. This view was affirmed by
          all the authorities including the Tribunal.                              E



-,,
              On the question of quantum of penalty, the Tribunal held
        that the penalty leviable under s. lOA should be
        one-and-a-half times the concessional rate of tax and not
      i one-and-a-half the tax which would have been leviable if no
        'C' form certificate had been produced.                                    F

 ,-·-T            The Revenue challenged before the High Court the
          ' correctness of the view taken by the Tribunal. The High Court
            following its earlier decision in the State of Madras v. Pre.
            Industrial Corporation (24 S.T.C. 507) approved the view taken
            by the Tribunal.                                                       G
'r                  Allowing the Appeals of the Revenue to this Court,

                   HELD: 1. Sub-section (1) of s. lOA of the Central Sales
              Tax Act, 1956 makes it clear that penalty should be worked out
                                                                                   H
    928                     SUPREME COURT REPORTS     [L986J 2 s.c.R.

A
    at the rate of tax which would have been levied l.f the offence :i._
    had not been committed. In other words the question is what
    tax would have been levied under the Act if the offence had
    not been comnitted. The assessee would not have comnitted any
    offence only if he had carried out the undertaking given by it
    in its declaration in form 'C' or if he purchased the goods
B   without giving any declaration thereby incurring liability to
    pay normal rate of tax as contemplated by sub-s. (2) of s.8.
    One who commits defaults cannot be said to have carried out ~



                                                                            -
    the undertaking given by him. [939 C-E]                         ·

          2. The use of the expression "if" in the phrase "if the
c   offence had not been comnitted" was meant to indicate a
    condition, the condition being that at the time of assessing ·~
    the penalty, that situation should be visualised wherein there ,
    was no scope of comnitting any of fence. Such a situation could f
    arise only if the tax liability fell under sub-s. (2) of s.8
    of the Act. The scheme of s.8 indicated the concessional rates
D   contemplated by sub-s. (1) thereof would be available only
    with reference to those goods which are covered by the
    declarations in form 'C'. The moment it is found that in
    respect of particular quantity of goods the undertaking given
    by the assessee in form 'C' declaration has not been carried
    out, the goods were presumed to be such in respec.t of which no "'
E   undertaking was existing. Such goods would be liable to noI'llllll
    tax contemplated under sub-section (2) of s.8. Therefore, the
    penalty should be worked out only on the basis of the normal
    rates prescribed under sub-s. (2) of s.8. [939 F-H; 940 A-Bl

           M. Pais & Sons and Another v. 1be State of Mysore, 17 't" •-
F   S.T.C. 161, Bisra Limestone Company Ltd. v. Sales Tax Officer,
    lloortela Circle, Uditnagar, and Others, 27 S.T.C. 531, 'Die
    Aasessing Authority and another v. ~ Metal Rolling Mills, f - - ' , ,
    [ 1971] Tax Law Report 1861, Kottay- Electricals Private
    Limited v. 1be State of Kerals, 32 S.T.C. 535 and 1be GeekvaT
    Mills Ltd. v. 1be State of Qijarat, 37 S. T.C. 129·, approved.
G
             1be State of Madras v. Prea Industrial Corporation, 24,
    s.r.c.  507 and Deputy eo..t.ssioner of tc-rcial taus,                  >
    Madurai Division, Madurai v. Xodafkaml !btor Union Private          y
    Limited, 31 s.r.c. l, overruled.

H         3. Section lOA was introduced for imposition of penalty
    in lieu of prosecution, that is to visit the person guilty
                         STATE v. KODAIKANAL MOTOR UNION              929


  ,J, with certain ·penalty in place of prosecution. lie cannot be           A
       placed in a better position than one who would have complied
       with the provisions of the Act. [940 B-C]

            4. The Court !DlSt always seek to find out the intention
     of the legislature. This can be done from the language used in
     the statute. But the court need not always cling to                     B
     literalness and should seek to endeavour to avoid an unjust or
  -1 absurd result. To make sense out of an unhappily worded
     provision, where purpose is apparent the judicial eye 'some'
     voilence to language is permissible. The purpose of the Act
     and the object of a particular section has to be borne in
     mind. [938 F-H]
                                                                             c
               Seaford Court Estates v. Asher, (1949] 2 All E.R. 155 at
       - 164,  LP. Varghese v. Inco.e-tax Officer, Ernakul1111 and
        another, 131 I.T.R. 597 at 604 to 606 and Luke v. Inland
        l!evenue eo..:Lssioners, 54 I.T.R. 692, relied upon.

              CIVIL APPELLATE JURISDICTION        Civil      Appeal   Nos.   D
        1121-1124 (NT) of 1974.

              From the Judgment and Order dated 4th April, 1972 of the
  _A    Madras High Court in T.C. Nos. 158 to 161 of 1966.

              S. Padmanabhan, A.V. Rangam and V.C. Nagaraj for the           E
        appellant.

                Nemo for the Respondent.

                The Judgment of the Court was delivered by
                                                                             F
- )                                These appeals by certificate
                SABYASACHI MllKRAR.JI, J.
   arise from the decision of the Madras High Court dated 4th
   April, 1972 in Tax Cases Nos. 158-161 of 1966. These are tn
   respect of assessment under Centra 1 Sales'~· Tax Act, 1956. The
   assessees in the four tax cases were assessed under Central
   Sales Tax Act, 1956 (hereinafter called the 'Act'), The                   G
   assessment years involved arE 1958-59 to 1961-62. It was found
 ~ that the assessees had purchased motor spare parts on the
   basis of the 'C' form certificates issued to them under the
   provisions of the said Act for sale, but instead of selling
   those, the assessees had used those for their own consumption.
                                                                             H
    930                  SUPREME COURT REPORTS    [1986] 2 s.c.R.

A
    The revenue proceeded on the basis that since the goods ._
    purchased had not been used for the purposes specified in
    section 8(3)(b) of the Act and as recorded in the 'C' form
    certificates, the assessees had conrnitted offences under
    section lO(d) of the Act inasmuch as they had used the goods
    purchased by them on the basis of 'C' form certificate for the
B   purpose other than the one mentioned in the certificates and
    therefore were liable to pay penalty as we•ll. All the
    authorities induding the Tribunal had found that the "'"
    assessees had actually committed the offences under section
    lO(d) of the Act in using the goods for the purposes other
    than the one mentioned in 'C' form certificates. Being a
c   finding of fact, the High Court proceeded on the basis that
    the assessees had committed the offence. The question that was·~
    pcsed before , the High Court was what was the quantum of
    penalty that had to be levied und~r section 10-A of the Act.
    Section 10-A of the Act deal with penalties. Section 10-A is a
    provision for imposition of penalty in lieu of prosectuion.
D   This section was initially added by section 8 of the Amendment
    Act 31 of 1958 with effect from 1st October, 1958. This
    section has undergone several amendments. On 9th June, 1969
    with retrospective effect the section was amended. The section
    was again amended with effect from 1st April, 1973.
    Sub-section (1) of section lOA which is material for our ;.,
E   present purpose at the relevant time was as follows :

              "lOA. (1) If any person purchasing goods is guilty
              of an offence under clause (b) or clause (c) or
              clause (d) of section 10, the authority who granted
              to him, or as the case may be, is competent to +
F             grant to him a certificate of registration under
              this Act may after giving him a reasonable
              opportunity of being heard, by order in writing, -f.
              impose upon him by way of penalt)r a sum not (
              exceeding one-and-a-half times the tax which would
              have been levied under this Act in r<'spect of the
              sale to him of the goods, if the offence had not
G
              been committed;

              Provided that no prosecution for an offence under     y
              section 10 shall be instituted in respect of the
              same facts on which a penalty has been imposed
              under this sect ion."
H
          STATE v. KODAIKANAL MOTOR UNION [SABYASACHI MUKHARJI, J.] 931


              Sub-section (1) of section iOA provided that if any          A
    A, person purchasing goods is guilty of an offence under clause
         (b) or clause (c) or clause (d) of section 10, the authority
         who granted to him or, as the case may be, is competent to
         grant to him a certificate of registration under the Act, may,
         after giving him a reasonable opportunity of being heard, by
         an order in writing, impose upon him by way of penalty sum        B
         not exceeding one-and-a-half times the tax which would have
     -1, been levied at the relevant time in respect of sale of goods
         if the of fence had not been committed. The only question that
         was under consideration was the quantum of penalty that had to
         be levied under section lOA of the Act.
'
               It may be mentioned that section 10 imposes penalty if      c
          any person, inter alia, under clause (d) of section 10 after
          purchasing any goods for the purpose specified in clause (b)
          or clause (c) or clause (d) of sub-section (3) of section 8,
          fails without reasonable excuse to make use of the goods for
          the purposes mentioned in the certificates. Section 8 deals
          with the rates of tax on sales in the course of inter-State      D
          trade or commerce. it stipulates that every dealer, who in the
          course of inter-State trade or conmerce, inter alia, sells to
          a registered dealer other than the Government goods of the
          description referred to in sub-section (3) shall be liable to
    ·"'   pay tax under the Act, which shall be four per cent now and at
          the relevant time prior to 197 5 was three per cent of the       E
          turnover. Sub-section (3) of section 8 deals with the goods
•         referred to in clause (b) of sub-section (1) of section 8.

     ~·     The Tribunal as mentioned hereinbefore accepted the
       contention that the penalty liable under section !OA in this
       case should be one-and-a-half times the concessional rate of        F
    t· tax and not one-and-a half times the tax which would have been
     ' leviable if no 'C' form certificate had been produced. The
       Revenue challenged before the High Court the correctness of
       the view taken by the Tribunal.

           The High Court followed the decision of the Madras High         G
      Court in the State of Madras v. Prem Industrial Corporation
    ~ 24 S.T.C. 507. Another view was expressed by the Mysore High
      Court in M. Pais & Sons and another v. Die State of Mysore, 17
      S.T.C. 161 and the Orissa High Court in Bisra Limestone
      Company Ltd. v. Sales Tax Officer, Rourkela Circle ooit
      & Ors., 27 S. T.C. 531 took a different view It -•l     nagar,       H
                                                   •    a so appears
        932                  SUPREME COURT REPORTS     [1986] 2 S.C.R.

    A
        that in Bisra Limestone Company Ltd., the decision of the
        Madras High Court in The State of Madras v. Prem Industrial ~
        Corporation, (supra) was specifically referred to but was not
        accepted as laying down the correct principle.

             In the impugned judgment, the Madras High Court was of
B       the view that these decisions apart from the decision of the
        Madras High Court in The State of Madras v. Prem Industrial
        Corporation had proceeded on the basis that if the offence had
        been committed under section lOA, it should be taken that thef"
        concerned asses see never applied for and obtained any valid
        certificate in form 'C' which would have entitled him to have
c       the beneficial rate of tax and that therefore the penalty
        leviable under section lOA could only be 1-1/2 times the
        normal tax i.e. 1-1/2 times the tax that the dealer would have ~
        been liable to pay if he had not taken 'C' form certificate.
        The Madras High Court was of the view that if th•~ principle on
        which the larned judges of the Mysore and Orissa High Courts
D       in the above-mentioned decisions had proceeded was correct,
        then there was no question of any offence being committed by
        the assessee in not taking 'C' form certificate, though the
        assesssee might be thrown open to a larger and normal rate of
        tax in place of concessional rate of tax. The Madras High
        Court in the judgment under appeal was unable to accept the
E       principle laid clown by the two decisions of the Mysore High "-
        Court and the Orissa High Court respectively. In that view of
        the matter, the challenge of the Revenue to the decision of
        the Tribunal failed.

             Aggrieved by the impugned decision and in view of the ·t-
F       conflict of decisions between different High Courts, the
        Revenue has come up in these appeals.

             In M. Pais &Sons & Anr. v. The State of Mysore, (supra),    ·f
        Hegde, J. as the learned judge then was in the Mysore High
        Court held that as the goods purchased by the petitioner in
G       that case were not covered by any valid 'C' form, sales tax
        was leviable at 7 per cent, and therefore the penalty that was
        leviable 10-1/2 per cent of the turnover. The petitioner, in
        another case, had manufactured soap and he had included the
        following goods in his application for certificate of
        registration under section 8: coconut oil, perfumes, silicate,   "'
H       caustic soda, nails, colours, strappings, papers and rosin.
       STATE v. KODAIKA.NAL MOTOR UNION [SABYASACHt MUKHARJt, J. ] 933


   ,J., During the relevant year the petitioner purchased maroti oil
        and groundnut oil by using some of the 'C' forms. The question
        was whether he was guilty of the offence under sectlon lO(b)
        of the Act. The last contention urged ln that case as appears
        from page 169 of the report was that on a true interpretation
        of section lOA it was clear that the assessee should have been
        levied penalty only at 1-1/2 per cent of the disputed turnover   B
        and not at the rate of 10-1/2 per cent as was done by the
    ~ authorlties below. This contentlon did not appears to the High
        Court to be correct. All the sales of goods validly covered by
         'C' forms were liable to be taxed at 1 per cent of the turn-
~       over. Such of the goods which were not validly covered by 'C'
        forms were liable to be taxed at 7 per cent of the turnover.
  'y The penalty provided by section lOA was 1-1/2 times the tax         c
    1 leviable. It was found in that case that the goods with which
     ~·the Court was concerned were not covered by any valid 'C'
        forms and, therefore, sales tax was leviable on them at 7 per
        cent of the turnover. If that was so, then the penalty on that
        turnover was leviable at 10-1/2 per cent of the turnover.
                                                                         D
            The Madras Hlgh Court in The State of Madras v. Prem
       Industrial Corporation, (supra) had occasion to consider this
       question and lt was upon thls declslon that the Madras Hlgh
     A Court in the judgment under appeal relled. There it was held
    · that for an offence committed within the scope of section
       lO(b) of the Act by the misuse of 'C' forms, the penalty at       E
       one and a half times should be calculated on the concesslonal
       rate of tax that would have been applicable of the offence had
       not been C011111litted, that ls, if the 'C' forms had been
     i properly used, and not on the basts of the rate for sales not
       covered by the 'C' forms. The attentlon of the Madras Hlgh
'      Court was drawn to the judgment of the Mysore Hlgh Court in       F
      ·the case of K. Pais & Sons. v. 'l'he State of Mysore, (supra).
       The Madras High Court, however, felt that the decision dtd not
       take lnto account the concluding words 'if the offence had not
       been committed' in section lOA. In that case before the Madras
       High Court, the revenue sought to revise and order of the
       Sales-tax Appellate Trlbunal by which lt modlfied the penalty     G
       imposed. It was not ln controversy in that case as in the
    ~ instant cases before us that 'C' forms had been misused and
       thereby an offence was committed within the scope of section
       lO(b) of the Act. The department had levied penalty at 10-1/2
       per cent on the view that in the clrcumstances, the
                                                                         H
    934                   SUPREME COURT REPORTS      [1986] 2 S.C.R,

A
    concessional rate would not be available and that the assessee ;._
    would be liable to tax at 7 per cent under section 8(2) of the
    Act. The Tribunal reduced the penalty to one and a half times
    the tax, as, in its opinion, for purposes of levying penalty,
    the rate of tax should be taken as that which would have been
    applicable if the offence had not been committed. The Madras
B   High Court accepted this view. According t0 the Madras High
    Court, the department's contention did not give effect to the
    concluding words of section lOA 'if the offence had not been~
    committed'. The High Court was of the view that the offence
    under the provision was that a person being a registered
    dealer, falsely represented when purchasing any class of goods     ,...
c   that goods of such class were covered by his certificate of
    registration. The words 'if the offence had not been ~
    committed' clearly pointed to the result that the tax for .
    purposes of assessing one and a half times thereof was not~
    that which would have been levied on the basis that the 'C'
    forms had not been complied with or had been misused, but, as
D   if they had been used in a proper way. It is this view which
    found favour in the impugned judgment before us.

         The question again cropped up before the Orissa High
    Court in Bisra LiEstone ~y Ltd. v. Sales Tax Officer,
    (supra). There the Orissa High Court was of the view that the ~
E   question of penalty would arise only when the goods were not
    mentioned in the certificate of registration a1nd purchase of
    the same was made on a false representation made by the
    purchasing dealer that these were so mentioned. If the normal
    rate had been paid for the goods, without making any false
    representation, no offence under section lO(b) would be +
                                                                        -
F   committed. It was only to such cases that the expression "if
    the offence had not been committed" had application and there- ,
    fore the penalty payable under section IOA would be one and a · ·
    half times the normal rate and not the concessional rate.
    Based on the language of section lOA(I), a contention was :
    raised before the High Court that penalty should bot exceed
G   one-and-a-half times the tax which would have been levied
    under this Act in respect of the sale to him of the goods, if
    the offence had not been committed'. According to the
    contention if the goods were purchased on concessional rate on .,._
    false representation that these were covered under the regis-
    tration, the penalty that imposed should not exceed one and a
H               '
   STATE v. KODAIKANAL MOTOR UNION [SABYASACHI MUKHARJI, J.] 935

                                                                      A
~half     times the concessional rate and not the normal rate. The
· contention was held not to be sound. The Orissa High Court was
    of the view that if the goods mentioned in the certificate of
     registration and the goods purchased at concessional rate as
     purchasing dealer committed no offence under section lO(b) of    B
     the Act the question of imposing penalty did not arise. The
     question of penalty would arise only when goods were not
     mentioned in the certificate of regisration and purchase of
 --I the same is made on a false represention by the purchasing
     dealer that they were so mentioned. If the normal rate had
     been paid for the goods without making any false represent-
     ation, no offence under section lO(b) would be committed. It     c
     was only to such cases that the expression 'if the offence had
     not been cotDDitted' had application and the penalty payable
     would be one and a half times the normal rate.

             The question was again considered by the Full Bench of
   Ja11111JJ & Kashmir High Court in the case of The Assessing        D
   Authority and another v. J - Metal Rolling Mills, [1971] Tax
   Law Report 1861. There Jaswant Singh, J. as the learned judge
   then was of the JallllJ.1 & Kashmir High Court, had occasion to
   consider the concluding words of section lOA i.e. 'impose upon
   him by way of penalty a sum not exceeding one and a half times
   the tax which would have been levied under this Act in respect     E
 -"of the sale to him of the goods if the offence had not been
   committed' and it was interpreted as not to mean that the
   penalty should be calculated at one and a half times the
    concessional rate of tax. All that the aforesaid words,
    according to the J & K High Court, meant was that the person
 icommitting the offence specified in section lO(d) would be          F
    liable to penalty which would extend to one and a half times
    the tax payable by a person who purchased goods for the
   .purpose covered by the certificate of registration or the
    penalty would be upto one and a half times the tax which an
    honest dealer would have normally to pay while purchasing the
    goods of similar description for similar use. Any other           G
    interpretation according to the said High Court, would have
    the effect of putting a premium on the misuse of certif ieate
    of registration by unscrupulous dealers. The said High Court
 -Jrelied on the observations of the Orissa High Court in Bisra
  ~Limestone Co. Ltd., (supra) and also the Mysore High Court's
    view mentioned hereinbefore. The J & K High Court was unable
                                                                      H
    to agree with the views of the Madras High Court in 1be State
    of Madras v. Prea Industrial Corporation (supra).
    936                   SUPREME COURT REPORTS       [19861 2 s.c.R.

A
           The quest ion again came to be considered by the Kera la
    High Court in the case of Kottayam Electricals Private Lillllted ;..,
    v. 'lbe State of Kerala, 32 S. T.C. 535. There the submission
    was that the courts should construe the phrase 'if the offence
    had not been committed' to mean 'if the assessee had not
    misused or misapplied the goods'. The argument was that if the
B   goods were not misused or misapplied the tax payable would be
    at the concessional rate of 3 per cent under section 8(1 )(b)
    of the Act and that the maximum penalty that could be imposed~
    could only be one and a half times the tax calct1lated at 3 per
    cent on the turnover in respect of which the of fence had been
    committed. After discussing the contentions and acknowledging
c   that section lOA was not happily worded, the High Court felt
    that it was unable to accept the view of the Madras High Court~
    in State of Madras v. Prem Industrial Corporation, (supra).
    The High Court was of the opinion that if the court inter-
    preted the section to mean that such a person need pay penalty
    calculated only at the rate of one-and-a-half times the
0   'concessional rate', it would lead to absurd consequences. It
    accepted the views of the Orissa as well as the Mysore High
    Courts mentioned hereinbefore.

          The Gujarat High Court had occasion to consider this
    question again in the case of 1be Gaekvar Ml.lls Ltd. v. 'lbe
E   State of Gujarat, 37 S.T.C. 129. The Gujarat High Court was of-~
    the view that the penalty which was contemplated by section
    lOA of the Act, was to be worked out by reference to the rate
    of tax provided in section 8(2) of the Act and not by
    reference to the concessional rate of tax provided in section
    8(1) of the Act. The Gujarat High Court felt that the Tribunal~
F   was justified in rejecting the contention of the assessee that
    the maximum penalty that could be levied under section \OA was
    1-1/2 times the concessional rate of tax pro,1ided in section
    8(1). Dealing with the several authorities noted hereinbefore
    and the scheme and language of the section, the Gujarat High
    Court was of the opinion that to accept the contention that
G   the true effect of the words 'if the offence had not been
    committed' was to presume a situation in which the undertaking
    given by the declaration was carried out even though in fact
    the same was not carried out that would not be a proper
    presumption because if such a presumption was raised, it would 1-'
    make the whole situation highly absurd. The absurdity would be
H
    that for the purpose of penalising the defaulter, a presump-
    tion was to be made that the defaulter was not one who had
         STATE v. KODAIKANAL MOTOR UNION (SABYASACRI MUKHARJI, J.] 937

                                                                          A
.,ti., committed any default. 'nle legislature could not be attributed
        with any such absurd intention. 'nle High Court noted that
        while framing section lOA, the legislature had not used the
        expression 'as if', at the time of using the words 'if the
        offence had not been committed', at choice of the word 'if' ,
        instead of the expression 'as if' indicatecl a conditional        B
        phrase, and not a phrase prescrib.tng a deeming fiction. 'nle
        High Court was of the view that the interpretation canvassed
    ~ by the assessee obviously introduced the concept of a fiction
        which treated the offender as one who had not offended.
        Section lOA was a penal provision which stipulated penalty in
        lieu of the prosecution. 'nle High Court expressed the view
        that one has yet to come across a penal provision, which          c



~
        created a fiction that an offender was not an offender, and
        should, therefore, be treated as a non-offender. Obviously, by
        such a fiction, the very object of the penal provision in
        question was frustrated and, therefore, the legislature could
        never have intended that by the creation of the above-referred
        fiction, the very object of introducing the penal clause          D
        contained in section lOA of the Act should have been destroy-
        ed. 'nle truth of the matter, according to the High Court, was
        that the use of the word "if" simpliciter, was meant to
        indicate a condition, the condition being that at the time of
    ,._ assessing the penalty, that situation should be visualised
        wherein there was no scope of committing any offence. Such a      E
        situation could arise only if the tax liability fell within
         the provisions of sub-section (2) of section 8 of the Act. nie
         scheme of the section showed that concessional rates con-
         templated by sub-section (1) thereof would be available only
    +with reference to those goods which were covered by the de-
         claration of form 'C'. 'nlis was clear in the scheme of the      F
    1    section. Further the High Court noted that if the contention
       -canvassed by the asses see was accepted, then the person who
         committed default in carrying out his solemn undertaking con-
         templated by form 'C', would be in a better position than the
         assessee, who honestly paid the tax under sub-section (2) of
         section 8 without giving any undertaking contemplated by form    G
         'C' •
'
    '1         In the case of Deputy c-Lssiooer of Connercial Truces,
         Madurai Division, Madurai v. Kodaikanal lbtor Union Private
         Limited, 31 S. T.C. 1 the Madras High Court agreed with the
         view of Veeraswami, C.J. in State of Madras v. Prem Industrial   H
         Corporation, (supra).
    938                   SUPREME COURT REPORTS      [19861 2 s.c.R.
A
          The section as it stood at the relevant time permitted
    imposition on dealer by way of penalty of a sum not exceeding ,.
    one-and-a-half times the tax which would have been levied
    under this Act in respect of the sale of goods to him 'if the
    offence had not been committed'. The section as it reads today
    after amendment in 1973 permits imposition by way of penalty
B
    of a sum not exceeding one-and-a-half times the tax which
    would have been levied under sub-section (2) of sect ion 8.
    Sub-section (2) of section 8 deals with tax in the course of
    inter-State sales.                                             )"

          Lord Denning, in Seaford Court l!states v. Asher, [1949]
c   2 All E.R. 155 at 164 said thus :

               " ..... When a defect appears a Judge cannot simply     ~
               fold his hands and blame the draftsman. He llllSt set
               to work on the constructive task of finding the
               intention of Parliament •••••••• and then he llllSt
D
               supplement the written word so as to give 'force
               and life' to the intention of the legislature •••••
               ••• A Judge should ask himself the question how, if
               the makers of the Act had themselves come across
               this ruck in the texture of it, they would have
               straightened it out? He llllst then do as they would
E
               have done. A Judge llllst not alter the material of >
               which the Act is woven, but he can and should iron
               out the creases."

           The courts must always seek to find out the intention of
F
    the legislature. Though the courts llllSt find out the             +
    intention of the statute from the language used, but language
    more often than not is an imperfect instrument of expression
    of human thought. As Lord Denning said it would be idle to
    expect every statutory provision to be drafted with divine
    prescience and perfect clarity. As judge Learned Hand said, we
    llllSt not make a fortress out of dictionary but remember that
G
    statutes llllst have some purpose or object, whose imaginative
    discovery is judicial craftsmanship. We need not always cling
    to literalness and should seek to endeavour to avoid an unjust
    or absurd result. We should not make a mockery of legislation.
    To make sense ont of an unhappily worded provisl.on, where the '!-"
    purpose is apparent to the judicial eye 'some' violence to
H
    language is permissible. (See K.P. Varghese v. lncoE-Tax
         STATE v. KODAIKANAL MOTOR UNION [SABYASACHI MUKHAR..JI, J,] 939

                                                                                 A
         Officer, Ernakulaa & Anr., 131 I.T.R. 597 at 604 to 606 and
    -'., Wke v. Inland l!evemie Comissioners, 54 I. T. R. 692.

            Bearing the scheme of the Act in perspective we are of
       the opinion that the contention of the revenue in this case
       has to be accepted. 'If the offence had not been conmitted'               B
       cannot have the effect that penalty should be levied on the
       basis of the rate which would have been levied had no of fence
       been colllllitted under clause (d) of section 10 of the Act. For
    -I the purpose of i~osition of penalty, it could not be treated
       that the rate which would govern the question of penalty was
       the rate which could be levied on the basis that the assessee
       had made no fault. It would lead to putting a premium on                  c
       avoidance of the provisions of the Act.


    ""          In our opinion sub-section (1) of section lOA makes it
     1 clear that penalty should be worked out at the rate of tax
         which would have been levied if the offence had not been
         committed. In other words the question is what tax would have           D
         been levied under the Act if the offence had not been
         committed. The assessee would not have committed any offence
         only if he had carried out the undertaking given by it in its
         declaration in form 'C' or if he purchased the goods without
         giving any declaration thereby incurring Habit ity to pay



,r
    ,.i, normal rate of tax as contemplated by sub-section (2) of                    E
         section 8. One who commits defaults cannot be said to have
         carried out the undertaking given by him. The presumption
          canvassed to be raised that the true effect of the words 'if
          the offence had not been committed' was to presume a situation
    4. in which the undertaking given by the assessee had been
          carried out even though in fact the same had not been carried              F
          out. Tha~ would be an absurd result. In our opinion the use of
          the expression 'tf' simpliclter, w;is meant to indicate a
          crn1:\i.l:i.ori, the conditlori being that at the ti.me of assessing
          the peMlty, that slt11ation sho11l:i be ~l:;11altsed wherein there
1         was no scope of committing any of fence. Such a situation could
,         arise only if the tax liability fell under sub-section (2) of              G
          section 8 of the Act. The scheme of section 8 indicated that
          concessional rates contemplated by sub-section (l) thereof
    ~ would be available only with reference to those goods which
    ~ are covered by the declarations in form 'C'. The moment it is

'         found that in respect of particular quantity of goods the
          ttndertaking given by the assessee in form 'C' declaration has             H
     940                   SUPREME COURT REPORTS      [19861 2 s.c.R.

A
     not been carrled out, the goods were presumed to be such in
     respect of whlch no undertaking was exlsting. Therefore such ~,
     goods would be llable to normal tax contemplated under
     sub-section (2) of section 8. Therefore, the penalty should be
     worked out only on the basts of the normal rates prescribed
     under sub-section (2) of section 8. That would make sense.
B    That ls a reasonably posslble constructlon. That would avoid
     absurd result.

           It is further to be borne in mlnd that sectlon lOA was ~
     introduced for imposition of penalty in lieu of prosecution,
     that is to visit the person guilty with certain penalty in
c    place of prosecution. He cannot be placed in a better position
     than one who would have complied with the provislons of the
     Act. In this respect having regard to the object of the Act, ~
     in our opinion, we are in full agreement with the vlews
     expressed by the Gujarat High Court in The Gaekwar Kills Ltd.
     v. The State of Gujarat, (supra). As Lord Denning has said,
1)   the judge has to perform the constructive task of finding the
     intention of Parliament, and he must supplement the written
     word so as to give 'force and life' to the intention of the
     legislature. Primarlly, it ls always the duty to flnd out the
     intention of the legislature and if it can be done wltout
     doing much vlolence to the language as we flnd it can be done
E    in this case, though as we have noted that when the purpose
     was writ large ln the scheme of the section "some vlolence" ls
                                                                         "'
     permlssible, here we are of the opinion that the construction
     put by the assessee cannot be accepted and the contention
     urged on behalf of the revenue in this case should be
     pref erred.                                                    ._
F
            We DllSt remember that the provision ls a penal provlsion.
     It has further to be borne in mind that the expression 'if' is
     not same as 'as if' nor does lt contemplate a deeming
                                                                         i
     provision. It has also to be borne in mlnd that the provision       ,
     was introduced for the lmposition of penalty ln 1feu of prose-      /
G    cution. The purpose of the Act and the object of a particular
     section has to be borne in mind. Having regard to the same, we
     are in agreement with he views expressed by the Orissa High
     Court in Bisra Linestone Company Ltd. v. Sales Tax Officer,
     Rourkela Circle, Uditnagar, and Others, (supra), JalDllll &
     Kashmir High Court in The Assessing Authority and another v.
H    J8111111 Metal Rolling Kills, (supra), the Hlgh Court of Kerala
    STATE v. KODAlKANAL MOTOR UNION [SABYASACHl MUKHARJl, J.] 941


       in Kottayaa Electricals Private lJ.al.ted Vo 'lbe State of        A
 ,...( Kerala (supra). The High Court of Mysore in M. Pats &Sons Vo
       'lbe State of Mysore (supra), the High Court of Gujarat in 'lbe
       Gaekwar Ml.Us Ltd. Vo 'lbe State of Qijarat (supra) and with
       respect we are unable to accept the views of Veeraswami, C.J.
       in State of Madras Vo Prem Industrial Corporation (supra), and
       the other decision of the Madras High Court in Deputy             B
       Coml.saioner of ~rcial Taxes (supra).

         In the premises the dealer's contention           cannot   be
    accepted and revenue's stand 11l1St be upheld.

          The   decision   under   appeal   cannot,    therefore,   be
'y sustained. The appeals are allowed and the judgment and order         c
    of the High Court of Madras are set aside. The revenue is
 '\ entitled to the costs of these appeals.



    A. P.J.                                           Appeals allowed.