(A.K. Sikri and Rohinton Fali Nariman, JJ.)
M/s. Bajaj Hindustan Ltd. _____________________________Appellant
v.
State of U.P. & Ors. ______________________________ Respondent(s)
Civil Appeal No. 1467 of 2006, decided on March 14, 2016
With
Civil Appeal No. 1468/2006
The Order of the court was delivered by
Order
1. The appellant herein is a Sugar Mill which procures sugarcane for the purpose of manufacture of sugar. On the purchase of sugarcane, the tax is payable by such Sugar Mills under the provisions of U.P. Sugarcane Purchase Tax Act, 1961. In order to ensure that this tax is paid faithfully on the purchase of sugarcane, Section 3-A in the said Act mandates the Sugar Mills not to remove any sugar produced in the factory either for consumption or for sale or manufacture of any other commodity in or outside the factory, unless the owner has paid towards the tax levied under Section 3 of the said Act. Proviso to this Section 3-A, however, gives little indulgence to the owners of these factories and provide that sugar may be deposited in any godown or other space for storage approved by the Assessing Authority without payment of any sum. However, as per this proviso also such sugar which is allowed to be deposited in a Godown or other space for storage is not to be removed therefrom until the tax is paid as per the provision of Section 3 of the Act. The combined reading of the aforesaid provisions along with proviso will indicate that normally factory owner is supposed to keep the sugarcane inside the factory premises and is not allowed to take it out unless the tax as levied under Section 3 is paid. However, under certain circumstances, the factory owner can store such sugar outside the factory i.e. in some Godown or other space for storage approved by the Assessing Authority. The main purpose for such provision is to allow sugarcane owner to store the sugar outside the factory premises when there is no space available in factory premises. At the same time, proviso ensures that the sugar is not to be removed even from such godown or space for storage unless the tax is paid. In the present case, the appellant had faced the problem of storing sugar in the factory premises in the year 1995-96 and 1996-97 and had stored the sugar in some Godown outside the factory premises. When this was pointed out to the appellant by the Inspector by making entry in this behalf on the inspection, the appellant made an application dated 28.03.1997 to the Tax Assessment Officer/Collector for giving approval for storage of sugar in rented Godown outside the factory. It was followed by another application dated 05.04.1997. The appellant also furnished, vide its application dated 10.05.1997, the details of the sugar which was stored in the aforesaid Godown outside the factory premises. It was emphasized that whenever sugar bags were removed from the said Godown, tax which is payable under Section 3 of the Act was deposited. After verifying the aforesaid bags and the stand of the appellant that it had paid the tax before removal of the sugar from the godown where the same was stored, the Assessing Authority, who was at the material time Collector, granted above order dated 07.06.1997 giving tax ex-post facto approval. In the said order the Assessing Authority also warned the appellant to take such permission in time, in future.
2. It appears that the tax assessment, was thereafter assigned to the District Magistrate. After few days of the passing of the aforesaid order, after taking over the said assignment, the District Magistrate and tax Assessing Officer issued show cause notice dated 21.06.1997 calling upon the appellant to show cause within one week as to why penalty should not be imposed for not taking prior approval for depositing the sugar bags in the rented Godown situated outside the factory premises. It may be mentioned at this stage that as per sub-section (5) of Section 3 A of the Act if the quantity of sugar is removed in violation of sub-section (1) of Section 3 A, there can be a penalty not exceeding 100 per cent of the sum, so paid as tax. The aforesaid show cause notice was, purportedly issued under the aforesaid provisions. The appellant contested the aforesaid notice by submitting that it had been granted approval ex-post facto and pleaded that even ex-post facto approval was amounted to sufficient compliance of the provisions of proviso to sub-section(1) of Section 3 A of the Act.
3. This contention of the appellant was not accepted by the Assessing Authority which imposed penalty equivalent to 100% of the tax that was payable and in fact already paid by the appellant at the time of the removal of the sugar bags. Challenging that order the appellant filed an Appeal which was also dismissed. Thereafter he approached the High Court by way of Writ Petition No. 308 of 1999. This writ petition has also been dismissed by the High Court taking a view that “prior approval” was required and since no such prior approval was taken ex-post facto approval was of no consequence and could not be taken advantage by the appellant.
4. From the aforesaid facts, what emerges is that there is no evasion of any tax. The claim of the appellant that it had paid the tax at the time of removal of the bags from the Godown is not disputed by the Assessing Authority. In fact, as mentioned above, while granting ex-post facto approval, the Assessing Authority had satisfied itself about the due payment of the entire tax at the time of removal of the bags and that there was no evasion of tax. In these circumstances, we have to consider as to whether ex-post facto approval amount to sufficient compliance of the proviso to sub-section (1) of Section 3 A of the Act. The issue is no more res-integra and has been authoritatively determined by a series of judgment of this Court. It would be sufficient to refer to the judgment in the case of Ashok Kumar Das v. University of Burdwan (2010) 3 SCC 616. The discussion contained in paragraphs 10 to 12 and 15 of the said judgment squarely applies to the present case and therefore, we reproduce the same.
10. The learned counsel for the respondents Nos. 1 to 3, on the other hand, submitted that Section 21(xiii) used the expression “approval of the State Government” and not “prior approval of the State Government” and it has been held by this Court in U. P. Avas Evam Vikas Parishad v. Friends Co-operative Housing Society Ltd. [(1995) Supp. (3) SCC 456] and High Court of Judicature for Rajasthan v. P.P. Singh [(2003) 4 SCC 239] that when an approval is required, an action holds good and only if it is disapproved it loses its force. He further submitted that promotions made on the basis of Resolution of the Executive Council of the University adopted on 26.06.1995, therefore, hold good and now that the State Government has approved the Resolution of the Executive Council of the University adopted on 26.06.1995 by order dated 10.10.2002, the promotions made on the basis of the Resolution dated 26.06.1995 of the Executive Council of the University hold good and cannot be set aside by this Court.
11. In Black’s Law Dictionary (Fifth Edition), the word “approval” has been explained thus:
“Approval-The act of confirming, ratifying, assenting, sanctioning, or consenting to some act or thing done by another.”
Hence, approval to an act or decision can also be subsequent to the act or decision.
12. In U. P. Avas Evam Vikas Parishad (supra), this Court made the distinction between permission, prior approval and approval. Para 6 of the judgment is quoted hereinbelow: (SCC pp.458-59)
“6. This Court in Life Insurance Corpn. of India v. Escorts Ltd. [(1986) 1 SCC 264], considering the distinction between “special permission” and “general permission”, previous approval” or “prior approval” in para 63 held that: (SCC p.313)
‘63…..we are conscious that the word ‘prior’ or ‘previous’ may be implied if the contextual situation or the object and design of the legislation demands it, we find no such compelling circumstances justifying reading any such implication into Section 29(1) of the Act.”
Ordinarily, the difference between approval and permission is that in the first case the action holds good until it is disapproved, while in the other case it does not become effective until permission is obtained. But permission subsequently granted may validate the previous Act. As to the word ‘approval’ in Section 32(2)(b) of the Industrial Disputes Act, it was stated in Lord Krishna Textiles Mills Ltd. v. Workmen [AIR 1961 SC 860], that the Management need not obtain the previous consent before taking any action. The requirement that the Management must obtain approval was distinguished from the requirement that it must obtain permission, of which mention is made in Section 33(1).”
XX XX XX
15. The words used in Section 21(xiii) are not “with the permission of the State Government” nor “with the prior approval of the State Government”, but “with the approval of the State Government”. If the words used were “with the permission of the State Government”, then without the permission of the State Government the Executive Council of the University could not determine the terms and conditions of service of the non-teaching staff. Similarly, if the words used were “with the prior approval of the State Government”, the Executive Council of the University could not determine the terms and conditions of service of the non-teaching staff without first obtaining the approval of the State Government. But since the words used are “with the approval of the State Government”, the Executive Council of the University could determine the terms and conditions of service of the non-teaching staff and obtain the approval of the State Government subsequently and in case the State Government did not grant approval subsequently, any action taken on the basis of the decision of the Executive Council of the University would be invalid and not otherwise.
5. As is clear from the above, the dictionary meaning of the word ‘approval’ includes ratifying of the action, ratification obviously can be given ex-post facto approval. Another aspect which is highlighted is a difference between approval and permission by Assessing Authority that in the case of approval, the action holds until it is disapproved while in other case until permission is obtained. In the instant case, the action was approved by the Assessing Authority. The Court also pointed out that if in those cases where prior approval is required, expression ‘prior’ has to be in the particular provision. In the proviso to sub-section (1) of Section 3-A word ‘prior’ is conspicuous. For all these reasons, it was not a case for levying any penalty upon the appellant. We, therefore, allow this appeal and set aside the impugned judgment of the High Court as well as the penalty. No order as to costs.
CIVIL APPEAL NO. 1468/2006:-
6. In view of the order passed in Civil Appeal No. 1467/2006 this appeal also stands allowed with no order as to costs.
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