Case: The State of Rajasthan Vs. Mewar Sugar Mills Limited, Bhopalsagar

2. The respondent the Mewar Sugar Mills Ltd., (hereinafter referred to as the Company) did not file any quarterly return of its sales for the assessment years57 as required by the Rajasthan Sales Tax Act (Act No. XXIX of 1954), hereinafter referred to as the Act. Appellant No. 2, the Sales Tax Officer, Udaipur treated this default as a default of the respondent company under(1) and (2) of Sec. 7 of the Act and, after giving notice to the Company, imposed penalty under Cls. (b) and (c) of(1) of Section 16 of the Act. By his orders dated December 19, 1956 and January 25, 1957, the Sales Tax Officer impose a penalty of Rs. 5,000 in respect of the assessment yearand a penalty of Rs. 10,000 in respect of the assessment yearThereafter, on October 23, 1968 the Company moved the Rajasthan High Court for the grant of a writ under Article 226 of the Constitution to quash the two orders of the Sales Tax Officer dated December 19, 1956 and January 25, 1967. The contention on behalf of the Company was that during the material period, i. e., from April 1, 1955 to July 31, 1956 there were in existence no rules validly made under Section 26 (5) of the Act. The Writ Petition was allowed by the Rajasthan High Court by its judgment dated April 3, 1965 and the orders imposing the penalties on the Company were quashed on the ground that the imposition of penalty was legal as it contravened Article 20 (1) of the Constitution. The view taken by the High Court was that the Rules framed initially were not valid for the purpose of imposing penalties and the Rajasthan Sales Tax Rules Validating Ordinance No. 5 of 1959 and the Rajasthan Sales Tax Rules Validating Act No. 43 of 1959 could not be effective for the purpose of imposing penalty under Section 16 of the Act since the Rules could not be given retrospective effect.

Reasoning: 7. In support of this appeal theput forward the argument that the High Court was in error in holding that the orders of penalty dated December 19, 1956 and January 25, 1957 were illegal as they were in violation of the guarantee in Article 20 (1) of the Constitution. It was submitted : (1) that the Act and the Rules were legally operative with effect from April 1, 1955 by reason of Section 22 of the General Causes Act read with Section 29 of the Act. (2) In any event, the Rules even if they were not initially valid, were subsequently validated by the Rajasthan Sales Tax Rules Validating Ordinance No. 5 of 1959 and the Rajasthan Sales Tax Rules Validating Act No. 43 of 1959 which were retrospective in character. (3) The imposition of penalties upon the Company under Section 16 (1) of the Act did not fall within the provisions of Article 20 (1) of the Constitution and was not barred by that Article.In our opinion, the argument addressed by theon the first point is well founded and must be accepted as correct and the appeal must be allowed and the judgment of the Rajasthan High Court should be set aside on that ground alone. It is therefore not necessary for us to express any opinion on the second and third questions raised by thein the course of hisbehalf of the respondent the argument was stressed that there was no Act in force on March 28, 1955 and so no Rules could be framed or published on that date. It was also pointed out that after the Act came into force i.e., from April 1, 1955 no rules were framed in exercise of the powers conferred by the Act.There is no substance in the argument of the respondent because Section 29 of the Act makes the provisions of the General Clauses Act, 1897 (Act X of 1897) applicable for the interpretation of the Act in the same manner as they apply for the interpretation of a Central Act. Under Section 22 of the General Clauses Act power is expressly conferred on theauthority to make rules even before the date of the commencement of the Act but the rules so made shall not take effect all the actual enforcement of the Act. It is apparent that in the present case, by the application of Section 22 of the General Clauses Act the rules published by the Rajasthan Government on March 28, 1955 in the Rajasthan Gazette must be held to be validly made in the exercise of thepower of the State Government. It was pointed out by the respondent that Rule 1 provides that "the Rules shall come into once on the date of the publication in the Rajasthan Gazette" i.e. on March 28, 1955. But this is contrary to the provisions contained in Sec. 22 of the General Clauses Act.It is, however, aprinciple that a statute or statutory rule has to be so read as to make it valid : it has to be construed ut res magis valeat quam pareat. The reason is that no intention can be imputed to the legislative authority that it would exceed its own jurisdiction. It follows therefore in the present case that by reason of Section 22 of the General Clauses Act rules published by the Rajasthan Government on March 28, 1955 in the Rajasthan Gazette must be held to be validly made in exercise of thepower of the State Government but they would be deemed to be not in force for the period between March, 28, 1955 to March 31, 1955. We consider that the rules should be deemed to have validly come into effect from April, 1, 1955. We accordingly overrule the view taken by the High Court on this aspect of the case.9.It was, however, argued by Mr. Bhargava on behalf of the respondent company that Section 22 of the General Clauses Act cannot be applied for the interpretation of the Act because Sec. 22 did not fall within the group of Sections, viz., Sections 5 to 13 of the General Clauses Act dealing with "General Rules of Construction" but fell within another group of sections under the heading Provisions as to Orders, Rules, etc. made under Enactments".We are unable to accept the argument of Mr. Bhargava as correct. Section 22 of the General Clauses Act is couched in language similar to that of Section 37 of the Interpretation Act, 1889 (52 and 53 Vict. C.are therefore of the opinion that Section 22 of the General Clauses Act (corresponding to Section 37 of the English Act) is a Section dealing not merely with construction but with interpretation and it follows that the provisions of that Section are applicable for the interpretation of the Act in view of the requirement of Section 29 thereof. In our opinion, Mr. Bhargava is unable to make good his argument on this aspect of the case.