Appeal No 94 of 1954
Appeal from the judgment and order dated August 17 1951 of the Calcutta High Court in Appeal from Original Order No 81 of 1959
AV Viswanatha Sastri and PK Ghosh for the appellant
PK Chatterjee and PK Bose for the respondents
The Judgment of the Court was delivered by Subba Rao J
This appeal on a certificate granted by the High Court of Calcutta raises the question of the interpretation of section 52a ii of the Bengal Finance Sales Tax Act 1941 Bengal Act VI of 1941 hereinafter called the Act
The material facts are as follows The appellant is a public limited  company registered as a dealer under the Act having its registered place of business at Calcutta
In respect of the accounting year ending with 31st December 1954 in the return for the year the assessee had shown its gross turnover at Rs 7099928 10 0 and claimed exemption under two heads namely i under section 52ai of the Act Rs 133730 6 6 and ii under section 52aii thereof Rs 6965979 9 6
After deducting the said amounts from the gross turnover the assessee showed its taxable turnover at Rs 218 9 0 and deposited the tax of Rs 9 12 6 on the said amount in the treasury
The Commercial Tax Officer by notice dated April 22 1955 fixed August 4 1955 for hearing the assessee in respect of its return
Under section 52aii the appellant in order to claim exemption thereunder had to furnish declaration forms duly filled in and  signed by registered dealers to whom the goods were sold by it
After taking some adjournments of the enquiry it appears that in the second week of January 1957 the assessee found that its file containing 147 declaration forms received  from its dealers in respect of the goods received from it was missing
The assessee it is said made various attempts to get duplicate forms of declaration from the dealers but on account of circumstances over which it had no 628 control and because of the unhelpful and hostile attitude of the Commercial Tax Officer within whose jurisdiction the said dealers functioned it was not able to furnish the duplicate forms for all the declarations that were lost
On August 8 1957 the assessee applied to the Commercial Tax Officer under section 21A of the Act for summoning the dealers to produce the necessary documents in order to prove that they had issued the declaration forms to it but the said  officer did not issue the requisite summons to the parties concerned
The assessee then flied an application to the Commissioner of Commercial Taxes West Bengal for directions to issue duplicate declaration forms but that application was rejected
The revision filed to the Revenue Board was also dismissed
On November 21 1957 the Commercial Tax Officer made an order of assessment disallowing the assessee s claim for exemption in respect of the said sales made to the purchasing registered dealers amounting to Rs 2246006 0 6 and levied on it additional tax of Rs 149778 4 6
The assessee thereafter flied a petition under article 226 of the Constitution in the High Court of Calcutta for issuing an order directing the respondents ie the Commercial Tax Officer and the Commissioner of Commercial Taxes
West Bengal not to implement the said assessment order
The said application came up at the first instance before Sinha J who dismissed the same
On appeal a Division Bench of the said High Court confirmed the order of Sinha J Hence the present appeal
At the outset we must make it clear that in the view we are taking on the construction of section 5 of the Act we do not propose to go into the question whether the department was responsible for preventing the assessee from furnishing duplicate forms of the declarations alleged to have been lost or on the question whether the department went wrong in not summoning the dealers to produce the relevant documents to establish that the declaration forms alleged to have been lost were in fact issued  by them
The only question therefore that arises is whether under section 52aii of the Act the furnishing of the declaration forms issued by the purchasing dealers was a condition for claiming the exemption thereunder
In substance section 52aii exempts from taxable turnover all sales to a registered dealer of goods of the class or classes specified in the certificate of registration of the dealer as being intended for the purposes mentioned therein
But the said exemption is made subject to a proviso
Under that proviso in the case of such sales a declaration form duly filled up and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars on a prescribed form obtainable from the prescribed authority has to be furnished  in the prescribed manner by the dealer who sells the goods
Under r 27A of the Bengal Sales Tax Rules 1941 hereinafter called the Rules a dealer who wishes to claim the said exemption shall on demand produce such a declaration in writing 629 signed by the purchasing dealer
Sub r
2 thereof enjoins on a dealer not to accept and on the purchasing dealer not to give a declaration except in the form prescribed
The other rules make stringent provisions to prevent the misuse of the said forms
The argument of Mr AV Viswanatha Sastri learned counsel for the appellant may be briefly stated thus The substantive part of section 52aii of the Act provides for the exemption in respect of certain sales to a dealer if the sales are made to a registered dealer for the purposes mentioned thereunder
The proviso to the said subclause prescribes in effect that the declaration form in the manner prescribed is the best evidence to prove that the sales were for the said purposes
The proviso cannot be construed as laying down a condition for giving the exemption but only as a directory provision to subserve the substantive provision in a reasonable way
If so construed a dealer is not precluded in a case where the proviso cannot be strictly complied with from producing other relevant evidence to prove that the sales to the registered dealers were for the purposes mentioned in the said sub clause
This conclusion is sought to be supported on the basis of the expression on demand in r 27A which according to the learned counsel indicates that the production of the prescribed declaration is not obligatory but only to be made if a demand is made by the authority concerned
The learned Solicitor General on the other hand contends on behalf of the respondents that a dealer can claim exemption under the said sub clause but if he seeks exemption he must comply strictly with the conditions under which the exemption can be granted
He argues that the clear terms of the clause read with the proviso impose a condition on a dealer for claiming exemption
Section 52aii of the Act in effect exempts a specified turnover of a dealer from sales tax
The provision prescribing the exemption shall therefore be strictly construed
The substantive clause gives the exemption and the proviso qualifies the substantive clause
In effect the proviso says that part of the turnover of the selling dealer covered by the terms of sub cl
ii will be exempted provided a declaration in the form prescribed is furnished
To put it in other words a dealer cannot get the exemption unless he furnishes the declaration in the prescribed form
It is well settled that the effect of an excepting or qualifying proviso according to the ordinary rules of construction is to except out of the preceding portion of the enactment or to qualify something enacted therein which but for the proviso would be within it see Craies on Statute Law 6th Edn p 217
If the intention of the Legislature was to give exemption if the terms of the substantive part of sub cl
ii alone are complied  with the proviso becomes redundant and otiose
To accept the argument of the learned counsel for the appellant is to ignore the proviso altogether for if his contention be correct it will lead to the position that if the declaration form is furnished well and good but if not furnished other evidence can be 630 produced
That is to rewrite the clause and to omit the proviso
That will defeat the express intention of the Legislature
Nor does r 27A support the contrary construction
The expression on demand  only fixes the point of time when the declaration forms are to be produced otherwise the rule would be inconsistent with the section
Section 52aii says that the declaration form is to be furnished by the dealer and r 27A says that it shall be furnished on demand that is to say it fixes the time when the form is to be furnished
This reconciles the provisions of r 27A with those of section 5 2aii of the Act whereas the construction suggested by the learned  counsel introduces an incongruity which shall be avoided
Section 21A on which reliance is placed has no bearing on the question to be decided
It only empowers the Commissioner or any person appointed to assist him under sub s 1 of section 3 to take evidence on oath etc
It can be invoked only in a case where the authority concerned is empowered to take evidence in respect of any particular matter but that does not enable him to ignore a statutory condition to claim exemption
Sub rules 3 and 4 of r 27A are not helpful to the appellant
They provide only safeguards against abuse of the declaration forms by the purchasing dealers they do not enable the selling dealer to either directly apply or to compel the purchasing dealers to apply for duplicate forms nor do they enjoin on the appropriate authority to give the selling dealer a duplicate form to replace lost one
We realise that the section and the rules as they stand may conceivably cause unmerited hardship to an honest dealer
He may have lost the declaration forms by a pure accident such as fire theft etc and yet he will be penalised for something for which he is not responsible
But it is for the Legislature or for the rule making authority to intervene to soften the rigour of the provisions and it is not for this Court to do so where the provisions are clear and unambiguous
There is an understandable reason for the stringency of the provisions
The object of section 52aii of the Act and the rules made thereunder is self evident
While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods it seeks also to prevent fraud and  collusion in an attempt to evade tax
In the nature of things in view of innumerable transactions that may be entered into between dealers
it will wellnigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section
Therefore presumably to achieve the twofold object namely prevention of fraud and  facilitating administrative efficiency the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section
The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences both of which the provisions of the said clause seek to avoid
631 The decision of this Court in The State of Orissa vs MA Tulloch and Co Ltd1 does not help the appellant
That decision was concerned with section 52aii of the Orissa Sales Tax Act 1947
That section was similar in terms to section 52aii of the Act in question but there was no proviso to that section in the Orissa Act similar to the one found in the present section
That makes all the difference for it is the proviso that imposes the condition
But under r 272 made under the Orissa Act a dealer shall produce a true declaration in writing by the purchasing dealer or by such responsible person as may be authorized in writing in this behalf by such dealer that the goods in question are specified in the purchasing dealer s certificate of registration as being required for resale by him or in the execution of any contract This Court held that the said mandatory provision was inconsistent with section 52 aii of the Orissa Sales Tax Act and to avoid that conflict it reconciled both the provisions by holding that the rule was only directory and therefore it would be enough and if it was substantially compiled with
The said provisions may afford a guide for amending the relevant provisions of the Act and the rules made thereunder but do not furnish any help for construing them
Before parting with the case we must make it clear that we are not expressing any opinion on the bona fides of the appellant or the appropriate sales tax authorities for we have not scrutinized the evidence in that regard
In the result the appeal fails and is dismissed with costs
Appeal dismissed
1964 7SCR810


Summary:
The appellant a public limited company sought exemption under section 52aii of the Bengal Finance Sales Tax Act 1941 in respect of certain sales
However it could not produce before the commercial tax officer the declaration forms from the purchasing dealers required to be produced under the proviso to that sub clause because the said forms were lost
The appellant tried to set duplicate forms from the purchasing dealers but without success
His application under section 21A to summon the dealers with the relevant documents was rejected by the Commercial Tax Officer and the higher authorities also refused to issue directions for the issue of duplicate declaration forms
The Commercial Tax Officer thereafter passed an assessment order without allowing
the said exemption
Against that order the appellant filed a writ petition under article 226 and thereafter a Letters Patent appeal but failed to get redress
It then appealed to this Court with certificate
It was contended on behalf of the appellant that the exemption granted under the substantive sub clause ii could be claimed by the production of other relevant evidence if the declaration forms could not be produced the proviso to that sub clause requiring the production of the said forms was only directory as was also proved by the use of the words on demand in section 27A HELD The exemption could be claimed only by the production the declaration forms as laid down in the proviso
i The effect of an excepting proviso is to except from the main clause something
which but for the proviso would be within it
Craies on Statute Law quoted If the intention of the Legislature was to give exemption if the terms of the substantive part of sub clause ii above are complied with the proviso
becomes redundant and otiose
If the proviso is treated as merely directory it will lead to the position that if the declaration form is furnished well and good but if not furnished other evidence can be produced
That is to rewrite the clause and to omit the proviso
That will defeat the express intention of the legislature
622H 630A There is an understandable reason for the stringency of the provisions
The object of section 52aii of the Act and the rules made thereunder is self evident
While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods it seeks also to prevent fraud and collusion in an attempt to evade tax
630G 627 State of Orissa vs
MA Tulloch  Co Ltd 1964 15 STC 641 distinguished
ii The words on demand in r 27A only fix the time when the declaration forms are to be produced they do not mean that their production is not obligatory
630A B iii Section 21A only empowers the Commissioner or any person appointed by him to take evidence on oath etc
It can be invoked only in a case where the authority concerned is empowered to take evidence in respect of a particular matter but that does not enable him to ignore a statutory condition to claim exemption
630C D iv Sub rules 3 and 4 of section 27A do not enable the selling dealer to either directly apply or to compel the purchasing dealers to apply for duplicate forms nor do they enjoin on the appropriate authority to give the selling dealer a duplicate form to replace the lost one
This may cause hardship but the remedy lies with the Legislature only
630E F