77 of 1958
Petition Under article 32 of the Constitution of India for enforcement of Fandamental Rights
Bhavani Lal and P C Agarwala for the petitioners
CK Daphtary Solicitor General of India B Ganapathy Iyer and T M Sen for the respondents
March 14
The Judgment of the Court was delivered by SK DAS J
This is a writ petition under article 32 of the Constitution
The petitioners Messrs Nand Lal Raj Kishan carry on a business of commission agents at Delhi and are liable to pay sales tax in respect of their business under the provisions of the Bengal Finance Sales Tax Act 1941 as in force in Delhi
They filed returns for four quarters of 195455 and claimed exemption in respect of sales of certain goods to the registered dealers under the provi sions of section 52aii of the said Act
By his order dated April 11 1956 the Sales Tax Officer disallowed the exemption claimed by the petitioners mainly on the ground that the alleged sales were made to those 285 registered dealers whose activities had gone underground The Sales
Tax Officer issued a demand notice for a sum of Rs 111890 11 0 on account of sales tax
The petitioners then carried an appeal to the Assistant Commissioner of Sales Tax Delhi
The Assistant Commissioner set aside the order of the Sales Tax Officer and remanded the case for a fresh decision in the light of certain judgments given by the Chief Commissioner Delhi in a number of similar cases
In the meantime the Bengal Finance Sales Tax Act 1941 was amended by the Bengal Finance Sales Tax Delhi Amendment Act 1956 being Act No 17 of 1956
This amending Act which came into force on October 27 1956 inserted a new section which is section 8A of the Act
This section reads as follows section 8A Security from certain class of dealers
The Commissioner if it appears to him to be necessary so to do for the proper realisation of the tax levied under this Act may impose for reasons to be recorded in writing as a condition of the issue of a registration certificate to a dealer or of the continuance in effect of such a certificate issued to any dealer a requirement that the dealer shall give security up to ail amount and in the manner approved by the Commissioner for the payment of the tax for which he may be or become liable under this Act
 On May 17 1957 the petitioners asked for a fresh registration certificate on the ground that their original certificate had been lost in transit
They further asked for the addition of some more items of goods in the registration certificate such as cigarettes bidis and glass of all kinds
Thereupon the Sales Tax Officer made certain enquiries and found that the petitioners had been frequently shifting their places of business and the sales alleged to have been made by them to some registered dealers were not genuine because those persons could not be traced at the addresses given
On a report being submitted to the Commissioner of Sales Tax Delhi the Commissioner asked the Sales Tax Officer to issue a notice to the petitioners
On 286 July 131957 such a notice was issued to the petitioners to show cause why they should not be asked to furnish a security of Rs 10000 in accordance with the provisions of section 8A
The petitioners then appeared before the Sales Tax Officer and made a statement that they were not prepared to deposit any amount as security
They also filed a written explanation objecting to the demand of security
The matter was then referred to the Commissioner of Sales Tax who con sidered the explanation of the petitioners and the report of the Sales Tax Officer
The Commissioner expressed his finding in the following words In view of the reputation that the dealer enjoys in the market namely that he being a commission agent has been engaged in the business of selling goods to other commission agents all sales being effected to unscrupulous registered dealers frequent changes in the name and place of busines s without giving specific details late submission of information regarding the changes in the name and place of business non submission of returns for the year 1956 57 within the prescribed time it appears neces sary to demand security under section 8A of the Bengal Finance Sales Tax Act 1941 as in force in Delhi
 Accordingly on November 27 1957 he made an order directing the petitioners to furnish security either in cash or by two personal sureties for a Bum of Rs 5000 by December 15 1957
Against the aforesaid order of the Commissioner the petitioners went in revision to the Chief Commissioner of Delhi
The Chief Commissioner heard Counsel for the petitioners and by his order dated April 15 1958 dismissed the application in revision
The petitioners then filed a writ petition in the Punjab High Court which was summarily dismissed
On the present writ petition the petitioners have impugned the order of the Commissioner dated November 27 1957 on the ground that section 8A of the Act under which the order was passed is constitutionally invalid
They have challenged the validity of section 8A on three grounds firstly it is contended that section 8A 287 gives an undefined unlimited and unrestricted power to the Commissioner of Sales Tax secondly it is contended that no limit is fixed with regard to the amount of security which may be demanded under the section and thirdly it is contended that the section imposes an unreasonable restriction on the right of the petitioners to carry on their business inasmuch as it does not provide for any enquiry before the demand for security is made nor does it provide for an opportunity being given to the person against whom the order is proposed to be passed of being heard before such order is passed
We do not think that these grounds have any substance
Section 8A does not give unlimited or unrestricted power
to the Commissioner of Sales Tax
It states inter alia that the Commissioner may impose for reasons to be recorded in writing as a condition of the issue of registration Certificate to a dealer or of the continuance of such a certificate a requirement that the dealer shall give security up to an amount and in the manner approved by the Commissioner for the payment of the tax for which he may be or become liable under the Act this power of the Commissioner is however subject to the condition that it must appear to him to be necessary so to do for the proper realisation of the tax levied under the Act
In other words the Commissioner may exercise his power of demanding security only when he considers it necessary to do so for the proper realisation of the tax levied under the Act
By no stretch of argument can it be suggested that the power is an unlimited or an unrestricted power
Learned Counsel for the petitioners has referred us to the decision of this Court in Messrs Duarka Prasad Laxmi Narain vs The State of Uttar Pradesh 1
That was a case in which under cl
43 of the Uttar Pradesh Coal Control Order 1953 the licensing authority was given absolute power to grant or refuse to grant renew or refuse to renew suspend revoke cancel or modify any licence under the Order
It was pointed out by this Court that there was nothing to regulate or guide the discretion 11954 SCR 803
288 of the licensing officer and the provision impugned therein committed to the unrestrained will of a single individual the power to grant withhold or cancel licences in any way he chose
That is not the position here
Section 8A itself gives the necessary guidance when it says that the Commissioner may exercise his power only when it is necessary to do so for the proper realisation of the tax levied under the Act
In a later decision of this Court in Virendra vs The State of Punjab 1 it was pointed out that in Dwarka Prasad s case 1 the impugned provision prescribed no principles and gave no guidance in the matter of the exercise of the power but in a case where the exercise of the power is conditioned by the statute itself the ratio in Dwarka Prasad case 2 does not apply
The same view was reiterated in Kishan Chand Arora vs The Commissioner of Police Calcutta 3
Section 74ai of the Bengal Finance Sales Tax Act 1941 gives the power to the Commissioner to demand reasonable security for the proper payment of tax payable under the Act
This section came in for consideration of the Calcutta High Court in Durga Prasad Khaitan vs Commercial Tax Officer 4 and it was held that the section did not confer unfettered or arbitrary power to the Commissioner
We approve of the view expressed therein that the power to levy a tax includes the power to impose reasonable safeguards in collecting it and demanding security for the proper payment of the tax payable under the Act is neither an arbitrary nor an unreasonable restriction
As to the contention that thereis no limit to the amount which can be demanded as security it is only necessary to point out that the amount that can be demanded as security must have relation to the payment of the tax for which the person concerned may be or become liable under the Act
The amount must depend on the nature of the business its turnover and the amount of tax payable thereon by the person concerned
Furthermore the order of the Commissioner under section 8A is subject to revision by the Chief 1   321 3  21954 SCR 803
41937 8 STC 105
289 Commissioner and if an arbitrary or unreasonable amount is demanded the order of the Commissioner will be subject to scrutiny by the Chief Commissioner
We do not think that even in the matter of the amount of security the power of the Commissioner is unlimited or unrestricted
As to the last contention that the section does not provide for any enquiry or any opportunity being given to the person against whom the order is proposed to be passed of being heard this point was taken before the Chief Commissioner and the Chief Commissioner rightly pointed out that the principles of natural justice would apply and the person to whose prejudice the order is to be made must be given an opportunity to say whatever he has to say in his defence
In the present case such an opportunity was given to the petitioners
A notice was issued to the petitioners by the Sales Tax Officer
The petitioners appeared before the Sales Tax Officer submitted a written explanation and also made oral submissions
The Commissioner had before him the report of the Sales Tax Officer the explanation submitted by the petitioners in reply to the notice issued and also the statements made by them
It has been contended on behalf of the petitioners that no oral hearing was given to the petitioners by the Commissioner of Sales Tax and learned Counsel for the petitioners has made a grievance that the order of the Commissioner was passed without hearing the petitioners
It may be pointed out here that when the petitioners were heard by the Chief Commissioner in support of their application in revision they made no grievance on the score that the Commissioner of Sales Tax had not given them a second opportunity of a fresh oral hearing
We do not think that a second opportunity like the one suggested on behalf of the petitioners was either necessary or obligatory
The petitioners had an opportunity of saying what they had to say against the demand of security
They raised their objections which were considered by the Commissioner who in spite of those objections came to the conclusion that it was necessary to ask the petitioners 37 290 to furnish security for the proper realisation of the tax levied or leviable under the Act
We agree with the Chief Commissioner that there was no violation of the principles of natural justice in the present case
For the reasons given above we hold that there is no merit in the petition which is accordingly dismissed with costs
Petition dismissed


Summary:
The validity of section 8A of the Bengal Finance Sales Tax Delhi Amendment Act 956 enabling the Commissioner of Sales Tax to demand security from dealers for payment of tax was challenged by the petitioners on the grounds that i the section gave undefined unlimited and unrestricted power to the commissioner ii no limit was fixed for the amount of security and iii the section did not provide for any enquiry before the demand of security nor did it provide for an opportunity of being heard being given to the person against whom the order was proposed to be passed
Held that section 8A did not give any unlimited or unrestricted power to the Commissioner of Sales Tax
The power of the Commissioner of Sales Tax was subject to the condition that it 11958 9 STC 194
284 must appear lo him to be necessary to demand security for the proper realisation of the tax
The power to levy a tax includes the power to impose reasonable safeguards for collecting it and demanding security for the proper payment of tax is neither in arbitrary nor an unreasonable restriction
Durga prasad Khaita vs Commercial Tax Officer 1957 8 STC 105 approved
Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh   distinguished
Virendra vs The State of Punjab  and Kishan Chand Arora vs The Commissioner of police Calcutta   referred to
The power of the Commissioner as regards the amount of security was not unlimited because the order of the Commis sioner was subject to revision and scrutiny by the Chief Commissioner
In the instant case an opportunity having been give to the petitioners for submitting their defence and an explanation having been actually submitted by the petitioners there was no violation of the principles of natural justice
A second opportunity for oral hearing was not obligatory