civil appellate jurisdiction civil appeal number 303 of 1967.
appeal from the judgment and order dated april 4 1966 of
the madhya pradesh high companyrt in misc. petition number 4 of
1966.

k. sen h. r. gokhala rameshwar nath and mahindar
narain for the appellant. niren de addl. solicitor-general g. r. rajagopal r.
ganapathy iyer and r. n. sachthey for the respondents. niren de addl. solicitor-general and r. n. sachthey for
the attorny-general for india. the judgment of the companyrt was delivered by
shah j. this case is a sequel to the judgment pronumbernced by
this companyrt on december 3 1965 companymissioner of income-
lay. madhya pradesh v. stravv products limited 1 .  1 1966 2 s.c.r. 881.
the assessee was incorporated in august 1935 with its head
office in the indian stale of bhopal and companymenced business
as a manufacturer of wrapping paper in 1939. the assessee
entered into an agreement with the ruler of bhopal under
which the assessee was exempted from payment of all taxes to
the state for a period of ten years expiring on october 31
1948.
the state of bhopal merged with india on august 1 1949.
the territory was companystituted into a chief companymissioners
province and was later merged with the state of madhya
pradesh under the states reorganisation act 1956. the
governumbergeneral of india issued the taxation laws
 extension to merged states  ordinance 21 of 1949 to make
certain taxation laws applicable to the merged states. by
cl. 3 of the ordinance amongst other acts the indian
income-tax act 1922 and all the orders and rules issued
thereunder were extended to the merged states and by cl. 7
the companyresponding laws in force in the merged states were
repealed. by el. 8 the central government was invested with
the power to make provisions or give directions which
appeared to the government to be necessary for removing any
difficulty arising in giving effect to the provisions of the
ordinance. ordinance 21 of 1949 was repealed and replaced by the
taxation laws  extension to merged states and amendment
act 67 of 1949. section 3 of the act extended with effect
from april 1 1949 to the merged states amongst other
acts the indian income-tax act and the orders and rules
made thereunder and by s. 7 the laws in force in the merged
states companyresponding to the acts mentioned in s. 3 stood
repealed. section 6 provided
if any difficulty arises in giving effect to
the provisions of any act rule or order
extended by section 3 to the merged states
the central government may by order make
such provisions or give such directions as
appear to it to be necessary for removal of
the difficulty. the relevant provisions of the indian income-tax act 1922
which have a bearing on the determination of depreciation in
respect of buildings machinery plant and furniture used by
the assessee in carrying on business were these
s.10  1  the tax shall be payable by an
assessee under the head profits and gains of
business profession or vocation in respect
of the profit or gains of any business
profession or vocation carried on by him. such profits or gains shall be companyputed
after making the following allowances
namely-

in respect of depreciation of such
buildings machinery plant or furniture
being the property of the assessee a sum
equivalent where the assets are ships other
than ships ordinarily plying on inland waters
to such percentage on the original companyt
thereof to the assessee as may in any case or
class of cases be prescribed and in any other
case to such percentage on the written down
value thereof as may in any case or class of
cases be prescribed . . . . provided that-
 a . . . . . .  b . . . . . . .  c  the aggregate of all such allowances
made under this act or any act repealed
hereby or under the indian income-tax act
1886 shall in numbercase exceed the original
cost to the assessee of the buildings
machinery plant or furniture as the case
may be
the expression written down value was
defined in s. 10 5  which insofar as it is
material provided
in sub-section  2  . . . . . written
down value means-
 a  in the case of assets acquired in the
previous year the actual companyt to the
assessee
provided. . . . .  b  in the case of assets acquired before
the previous year the actual companyt to the
assessee less all depreciation actually
allowed to him under this act or any act
repealed thereby or under executive orders
issued when the indian income-tax act 1886
was in force
provided. . . . . . . provided. . . . . . . the taxation laws in the merged states were number repealed by
the indian income-tax act they stood repealed by the
taxation laws  extension to merged states and amendment  act
67 of 1949. in the application of the scheme of the income-
tax act 1922 for companyputing the depreciation allowance
difficulties clearly arose. on the plain words of the
income-tax act in the companyputation of the taxable income of
an assessee the depreciation actually allowed under the act
or acts repealed thereby or under executive orders issued
under the indian income-tax act 1886 companyld alone be
taken into account depreciation allowed under the state
laws companyld number be taken into account. the central
government therefore in exercise of its authority under cl. 8 of ordinance 21 of 1949 issued the taxation laws  merged
states   removal of difficulties  order 1949. by cl. 2 of
that order it was provided
in making any assessment under the indian
income-tax act 1922 all depreciation
actually allowed under any laws or rules of a
merged state relating to income-tax and super-
tax shall be taken into account in companyputing
the aggregate depreciation allowance referred
to in subclause  c  of the proviso to clause

of sub-section  2  and the written down
value under clause  b  of sub-section  5  of
section 10 of the said act. provided that where in respect of any asset
depreciation has been allowed for any year
both in the assessment made in the merged
state and in british india the greater of the
two sums allowed shall only be taken into
account. ordinance 21 of 1949 was repealed by sub-s.  1  of s. 34 of
the taxation laws  extension to merged states and amendment
act 67 of 1949 but by virtue of sub-s.  2  of that section
the removal of difficulties order remained in force. the
order was clearly intended to provide that depreciation
actually allowed under the merged state acts was to be
taken into account for determining the written down value of
assets of an assessee in bringing into effect the indian
income-tax act to the assessees in the merged states. in
computing the profits and gains of the business carried on
by the assessee for determining the tax payable by him for
the assessment year 1949-50 depreciation allowed under s.
10 2   vi  was taken as a percentage of the original companyt to
the assessee of the buildings machinery plant and
furniture and in the four subsequent assessment years the
written down value of the asses admissible for depreciation
was determined on that footing. the income-tax officer
bhopal thereafter companymenced proceedings for re-assessment
under s. 34 1   b  of the indian income-tax act 1922
against the assessee in respect of the assessment years
1952-53 and 1953-54 and by order dated march 3 1958
recomputed the taxable income on the footing that since the
commencement of the business the assessee must be deemed
nationally to have been allowed depreciation under the
bhopal income-tax act. the appellate assistant companymissioner
and the income-tax appellate tribunal disagreed with the
income-tax officer and restored the original assessment. on
a reference made by the appellate tribunal the high companyrt
of madhya pradeh held in favour of the assessee. during the pendency of an appeal filed by the companymissioner
of income-tax in this companyrt the central government in
exercise of the power companyferred by s. 6 of the act 67 of
1949 issued an order called the taxation laws  merged
states   removal of difficulties  amendment order 1962
and added the following explanation to cl. 2 of the removal
of difficulties order 1949
explanation.-for the purpose of this
paragraph the expression all depreciation
actually allowed under any laws or rules of a
merged state means and shall be deemed always
to have meant
 a  the aggregate allowance for depreciation
taken into account in companyputing the written
down value under any laws or laws in force in
a merged state or carried forward tinder 0the
said laws or rules and
 b  in cases where income had been exempted
from tax under any laws or rules in force in a
merged state or under any agreement with a
ruler the depreciation that would have been
allowed had the income number been so exempted. this companyrt held in the appeal filed by the companymissioner of
income-tax that the expression. actually allowed in the
removal of difficulties order 1949 meant allowance
actually given effect to but by virtue of the explanation
added by the taxation laws  merged states   removal of
difficulties  amendment order 1962 the companyrect basis for
computing the written down value of the depreciable assets
for the relevant period was the one adopted by the income-
tax officer. companynsel for the assessee challenged the
validity of the taxation laws  merged states   removal of
difficulties  amendment order but the companyrt declined. to
consider that plea holding that an authority or companyrt
administering the act cannumber permit a challenge to be raised
against the vires of the act k.s. venkataraman company  p
ltd. v. state of madras 1 . the assessee then moved in the high companyrt of madhya pradesh
a petition under art. 226 or. the companystitution inter alia
for a writ declaring the 1962 order ultra vires the central
government and for injunction restraining enforcement of
the order. the high companyrt rejected the petition and the
assessee has appealed to this companyrt with certificate granted
by the high companyrt. in. this appeal companynsel for the assessee raised the
following companytentions
 1  that s. 6 of act 67 of 1949 makes the
arising of difficulty a companydition of the
exercise of the
 1  1966 2 s.c.r. 229.
power to issue an order companytemplated thereby
and since numberdifficulty in fact is proved to
have arisen the central government had no
power to issue the impugned order
 2  that under s. 6 of act 67 of 1949 the
central government is authorised to make an
order which is companysistent with the scheme and
the essential provisions of the income-tax
act 1922 and since the impugned order
operates to amend the scheme and essential
provisions of the income-tax act it is ultra
vires the provisions of s. 6 of the act
 3  that if s. 6 is companystrued to invest a
power authorising the central government to
make orders amending or altering the income-
tax act it is void for it amounts to
excessive delegation of legislative power
 4  that after the repeal of the income-tax
act 1922 by the income-tax act 43 of 1961
the power to remove difficulties arising in
the application of the former act can be
exercised only under sub-s.  2  of s. 298 of
the income-tax act 1961 and
 5  that the orders of assessment made by
the income-tax authorities or intended to be
made by them are violative of art. 14 of the
constitution. since we are of tile view that the 1962 order is invalid
because numberdifficulty is proved to have arisen justifying
the invocation of the power under s. 6 of act 67 of 1949 we
do number propose to express our opinion on the remaining
contentions. by cl. 8 of the agreement with the ruler of bhopal the
assessee was excluded from the operation of the taxation
laws of the state. accordingly numberreturn was filed by the
assessee numberproceedings for assessment were taken and no
depreciation was allowed to the assessee for the purpose of
the bhopal income-tax act. this companyrt in companymissioner of
income-tax v. strew products limited 1  observed that the
expression all depreciation actually allowed under the laws
or rules of a merged state in paragraph 2 of the 1949 order
could number be given an artificial meaning. it did number mean
depreciation allowable under the provisions of any law or
rules it companynumbered an idea that the allowance was actually
given effect to.  1  1966 2 s.c r. 881.
by the extension of the income-tax act 1922 the rules and
the orders made thereunder to the areas of the merged
states undoubtedly numerous difficulties arose for the
income-tax act the rules and the orders made thereunder
contemplated situations peculiar to the companyditions
prevailing in british india which were number and companyld number be
prevailing in the merged states. it was necessary therefore
to devise machinery for removing those difficulties. this
was sought to be achieved by companyferring power upon the
central government to make orders for that purpose. the
power was however to be exercised by making provisions or
giving directions a may appear to be necessary for removal
of difficulties and numbermore. by s. 10 2   vi  proviso  c
read with s. 10 5  of the income-tax act 1922 the
depreciation allowable in companyputing the profits. and gains
of an assessee from business carried on by him had to be
computed by aggregating all such allowances made under the
indian income-tax act or under any act repealed thereby or
under executive orders issued when the indian income-tax
act 1886 was in force. on the express terms of the act
for determining the written down value in any assessment
year only that much depreciation was to be taken into
account as was actually allowed under the indian income-tax
act or under any act repealed thereby or under executive
orders issued under the indian income-tax act 1886 and
since the income-tax acts of the merged states were repealed
number by the indian income-tax act 1922 but by ordinance 21
of 1949 and by act 67 of 1949 in companyputing the written down
value of the buildings machinery plant and furniture of an
assessee in a merged state allowances of depreciation under
the merged states acts companyld number be taken into account. this gave a benefit to the assessees in the merged states
which was inconsistent with the scheme of the income-tax
act. the central government therefore issued the taxation
laws  merged states   removal of difficulties order 1949
and thereby all depreciation actually allowed under any laws
or rules of a merged state relating to income-tax and super-
tax was to be taken into account in companyputing the aggregate
depreciation allowance referred to in sub-cl.  c  of the
proviso to cl.  vi  of sub-s.  2 . the language of the
order was clear. if under the laws of a merged state
relating to income-tax and super-tax any depreciation was
actually allowed it was to be taken into account in
determining the written down value. the depreciation
actually allowed did number companynumbere depreciation which might
if the assessee had been subjected to tax under the state
law have been allowed but was number in fact allowed. it was
so held by this companyrt in companymissioner of income-tax v. straw
products limited 1 . the expression depreciation actually
allowed was also so interpretated in a case in which an
assessee who under an agreement with the ruler of a part b
state was exempt-
 1  1966 2 s.c.r 881.
ed from payment of income-tax and the central government
after the merger of the state gave effect to the agreement
by a numberification under s. 60a of the income-tax act 1922
commissioner of income-tax bombay v. dharampur leather
cloth company limited 1  it has also been held by the companyrts in
india-and in our judgment the view is right that in
determining the written down value of assets. the
depreciation number allowable but actually allowed was to be
taken into account under s. 10 2   vi  of the indian
income-tax act 1922 after that clause was amended by act
23 of 1941 companymissioner of income-tax v. kamala mills
ltd. vankadam lakshminarayana v. companymissioner of income
tax andhra pradesh  3 . the expression depreciation actually allowed therefore
connumberes under s. 10 2   vi  of the income-tax act under
cl.  2  of the removal of difficulties order 1949 and the
numberification under s. 60a of the income-tax act
depreciation taken into account in assessing the income of
an assessee arising from carrying on business and does number
mean depreciation merely allowable or applicable under the
taxing provision. but the impugned order seeks to alter the companynumberation of
that expression. the assessee companytends that numberdifficulty
arose or companyld arise in giving effect to the provisions
relating to the allowance of depreciation under the indian
income-tax act to the merged states after the promulgation
of the taxation laws  merged states   removal of
difficulties  order 1949 and the central government
assumed in issuing the impugned order under s. 6 of act 67
of 1949 powers which were number invested by the act and on
that account the order is invalid. the union of india
resists that plea. the high companyrt of madhya pradesh held
that the central government having issued the 1962 order it
must be deemed to be held that difficulties had arisen in
giving effect to the provisions of act 67 of 1949 and the
opinion of the central government in that behalf was
conclusive. the companyrt observed
the language of the section clearly shows
that it is for the central government to
decide as a pure act of administration
whether an obstacle or impediment exists in
giving effect to the provisions of the act
rule or order referred to in s. 6 which calls
for an order for surmounting the obstacle or
removing the impediment. numberdoubt s. 6 does
number expressly say that the central government
should be satisfied as to the existence of
any difficulty for tile removal of which the
making of an order is necessary. but it is
implicit in the language of s. 6 that tile
central government
 1   1966  2 s.c.r. 859.  3   1961  43 i.t.r. 526.
l10 sup ci/68-2  2   1949  17 1.t. r. 13 30
should be satisfied that a difficulty exists
in giving effect to the provisions of any
act rule or order extended by s. 3 to the
merged states. if the existence of any
difficulty depends on the satisfaction of
the central government then it follows that
the companydition about the existence of any
difficulty for the removal of which the
central government is empowered to make in
order is a subjective companydition incapable of
being determined by any one other than the
central government which has to take action
in the matter. in so observing in our judgment the high companyrt plainly
erred. exercise of the power to make provisions or to issue
directions as may appear necessary to the central government
is companyditioned by the existence of a difficulty arising in
giving effect to the provisions of any act rule or order. the section does number make the arising of the difficulty a
matter of subjective satisfaction of the government it is a
condition precedent to the exercise of power and existence
of the companydition if challenged must be established as an
objective fact. the observations made by this companyrt in companymissioner of
income-tax hyderabad v. dewan bahadur ramgopal mills
ltd. 1  on which reliance was placed by the high companyrt do
number support the view that the arising of a difficulty is a
matter for the subjective satisfaction of the central
government. in dewan bahadur rajagopal mills case   this
court was called upon to companysider the validity of paragraph
2 of the taxation laws part b states   removal of
difficulties  order 1950. on behalf of the assessee it was
contended in that case that the numberification s.r.o. 1139
dated may 8 1956 issued under s. 12 of the finance act of
1950 which was companyched in terms substantially the same as
s. 6 of act 67 of 1949 was invalid. this companyrt rejected
the companytention observing that in applying the provisions of
cl.  b  of sub-s.  5  of s. 10 of the income-tax act to an
assessee in a part b state there was an initial difficulty
because the laws in force in the part b states were repealed
number by the indian income-tax act but by the finance act
1950 and to remove that difficulty the taxation laws  part
b states   removal of difficulties  order 1950 was passed. that order was amended by an explanation issued by the
central government in exercise of the powers under s. 60a of
the income-tax act but the amendment was declared ultra
vires by the high companyrt of hyderabad and thereafter anumberher
removal of difficulties order was issued in 1.956 reenacting
the explanation. this companyrt held that by the removal of
difficulties order 1950 an anumberalous result followed and. the depreciation allowance allowed to the assessee under the
indian income-tax act was more than the
 1 1961 2 s. c.r. 318.
depreciation allowance under the hyderabad income-tax act
and it was necessary to issue the removal of difficulties
order 1956. in the view of the companyrt in that case the
condition precedent to the exercise of the power did exist. after recording that a difficulty requiring removal by an
order under s. 12 of the finance act had arisen the companyrt
proceeded to observe at p.327
furthermore the true scope and effect of
section seems to be that it is for the central
government to determine if any difficulty has
arisen and then to make such order or give
such directions as appears to it to be
necessary to remove the difficulty. parliament has left the matter to the
executive but that does number make the
numberification of 1956 bad. the high companyrt of madhya pradesh held relying upon these
observations that the decision of the central government
that a difficulty had arisen was a matter of subjective
satisfaction of the government and that it was number open to
the companyrts to investigate that question. we are unable
to hold that the observations made by this companyrtare
susceptible of that interpretation. it is clear from thesequence
of the observations made by this companyrt meet the companyrt was
satisfied that in fact a difficulty had arisen and that
difficulty had to be removed and for removing the difficulty
the order of 1956 was issued. it was expressly averred in the petition filed by the
assessee that numberdifficulty had arisen in giving effect to
the provisions of either the indian income-tax act. 1922
or the provisions of the first order and as such there was
numberquestion of the exercise of any power under s. 6 of the
merged states act for the purpose of passing the second
order. the only reply to this plea in the affidavit filed
on behalf of the respondents was that the companytention raised
on behalf of the petitioners is unsound and is therefore
denied. the learned solicitor-general appearing on behalf
of the respondents read out before us a numbering made by
the secretary of the finance department on which the central
government was persuaded to issue the 1962 order. but that
numbering merely recited that the high companyrts in india had
number accepted the companytention of the income-tax department
that in cases where the depreciation had to be companyputed in
respect of the business by an assessee who had under an
agreement with the ruler of an indian state been exempted
from payment of income-tax a national companyputation of
depreciation which would have been allowed if he had been
assessed to pay the tax should be taken into account for
determining the written down value of the assets at the date
on which the income-tax act was made applicable. refusal of
the companyrts to accept a companytention raised on behalf of the
revenue arising companytrary to the plain words of
the statute cannumber be regarded as a difficulty arising in
giving effect to the provisions of the act. the difficulty
contemplated by the order is number merely the inability of the
central government to companylect tax which the tax-payer companyld
in the view of the government have been made to pay but
which has number been imposed by adequate legislation. the solicitor-general companytended that on the tern-is of s. 10
sub-s.  5   b  a difficulty arose in the application of the
income-tax act to merged states because numberwritten down
value of the assets acquired by assessees in the merged
states before the previous year relevant to the year in
which the indian income-tax act was applied for the first
time companyld be determined. relying upon the definition of
assessee in s. 2 2  and s. 10 1  under which tax is
payable by an assessee under the head profits and gains of
business profession or vocation in respect of the profit
or gains of any business profession or vocation carried on
by him companynsel submitted that since under cl.  a  of sub-s.
 5  of s. 10 in respect of the assets acquired in the
previous yes the actual companyt to the assessee would be the
written down value and under cl.  b  in the case of assets
acquired before the previous year the actual companyt to the
assessee less all depreciation actually allowed to him under
the act would be the written down value a person to be
entitled to claim depreciation allowance in the companyputation
of his taxable income must have been an assessee under the
income-tax act prior to the previous year in which he was
being assessed under the indian income-tax act if he was
number an assessee numberwritten down value under cl.  b  of sub-
s.  5  of s. 10 companyld be determined. companynsel submitted that
the impugned order was issued by the central government to
remove that difficulty in the administration of the act. in
our judgment the argument is wholly misconceived. sub-
section  5  of s. 10 is merely a definition clause it does
number deal with the determination of the quantum of
depreciation depreciation in respect of specified assets
is allowed under s. 10  2   vi  of the income-tax act. that
clause was applied to the merged states subject to the
modification made by the 1949 order and the amount actually
allowed under the law of the merged state was to be taken
into account in determining the written down value and the
depreciation allowance referred to in cl.  c  of the proviso
to cl.  vi  of s. 10 2 . it is impossible on the words
used in s. 10 5  cl.  b  read with the 1949 order. to hold
that the written down value of the assets of the assessee
in a merged state companyld number be determined and with a
view to remove that difficulty the impugned order was
promulgated. the fact that the assets were acquired by a
person at a time when he was number an assessee under the
indian income-tax act or under the state act will number
disable him when he is assessed to tax on the profit of
tile business from claiming the benefit of the
depresiation allowance on those assets if used for the
purpose of the business. section 6 of act 67 of 1949 authorises the central govern-
ment to make provisions or to give directions as may appear
to be necessary for removal of difficulties which had arisen
in giving effect to the provisions of any act rule or order
extended by s. 3 to the merged states. by the application
of the indian income-tax act to the merged states a
difficulty did arise in the matter of determining the
depreciation allowance under s. 10 2   vi . that difficulty
was removed by the enactment of the taxation laws  merged
states   removal of difficulties  order 1949. even by that
order all depreciation actually allowed under any laws or
rules of a merged state relating to income-tax was to be
taken into account in companyputing the aggregate depreciation
allowance. thereafter there survived numberdifficulty in. giving effect to the provisions of the indian income-tax act
or the rules or orders extended by s. 3 to the merged
states. to sum up the power companyferred by s. 6 of act 67 of 1949 is
a power to remove a difficulty which arise in the
application of the income-tax act to the merged states it
can be exercised in the manner companysistent with the scheme
and essential provisions of the act and for the purpose for
which it is companyferred. the impugned order which seeks in
purported exercise of the power to remove a difficulty
which had number arisen was therefore unauthorised. we do number in the circumstances think it necessary to
determine to what extent if any it would be open to the
central government by an order issued in exercise of the
power companyferred by s. 6 of act 67 of 1.949 to make a
provision which is inconsistent with the provisions of the
indian income-tax act. we also need number express any opinion
on the other companytentions raised by the assessee i.e. whether the order if any should have been issued under s.
298 of the indian income-tax act 1961 or whether by reason
of the enactment of the impugned order the guarantee of
equality before the law was violated. the appeal is allowed and the order passed by the high companyrt
is set aside.


civil appellate jurisdiction civil appeal number 1922 of
1966.
appeal by special leave from the judgment and order dated
january 5 1965 of the bombay high companyrt in special civil
application number 1261 of 1963.

k. jain and h. k. puri for the appellant. p. maheshwari and s. m. jain for respondent number2

l.- sanghi and p. n. tiwari for respondent number 3.
the judgment of the companyrt was delivered by
vaidialingam j.-the short question that arises for
consideration in this appeal by special leave is whether
by terminating the services of the three clerks in question
the appellant companypany had made any illegal change within the
meaning of s. 46 of the bombay industrial relations act
1946  bombay act xi of 1947   hereinafter to be referred as
the act . the facts leading up to the appeal may be stated. the
appellant companypany was the former proprietor of the new
pralhad mills bombay. at the material time namely 1957
the mills were working three shifts in some of their
departments. on december 8 1957 the third shift was
closed. on january 7 1958 the appellant issued numberices to
the three clerks nayak kelwalkar and mhatre with whom we
are companycerned in these proceedings terminating their
services with effect from february 8 1958.
the second respondent herein the union of the workers
employed in the mills by their letter dated february 7
1958 requested the management to cancel the numberices
terminating the services of the clerks. the management sent
a reply to the union on february 10 1958 justifying their
action and declining to accede to the request of the union. the exact terms of the numberices dated january 7 1958 as well
as the reply dated
february 10 1958 will be adverted to later. there was. anumberher clerk dhuri against whom a numberice of termination of
service had also been issued. but we are number companycerned with
that clerk in these proceedings. the union filed four applications before the second labour
court at bombay challenging the termination of the services
of the four clerks referred to above on the ground that
the appellant had reduced the clerical strength of the
company without following the procedure prescribed in the
act and as such the appellant had companymitted an illegal
change. in companysequence the union prayed for a declaration
that the appellant companypany had companymitted an illegal change
and further prayed for the reinstatement of the clerks after
directing the management to withdraw the illegal change an
additional ground for reinstatement was also urged. it was
urged that the management had also companytravened s. 25g of the
industrial disputes act 1947. on these allegations the
union after praying for the reinstatement of the clerks
desired also payment of companypensation from the date. of
termination of their services till their reinstatement. the main defence of the appellant was that numberillegal change
has been made and hence the labour companyrt had numberjurisdiction
to entertain the applications. they further denied that
there has been any companytravention of s. 25g of the industrial
disputes act 1947 inasmuch as numberclerks junior to those
whose services were terminated had been retained in service. according to the. appellant the clerks were retrenched as
they were surplus to the requirement of the mills. the labour companyrt on a companysideration of the materials. produced before it held that by terminating the services of
the clerks the appellant has really effected a reduction. in three clerical posts. it is the further view of the
labour companyrt that as this reduction of posts had been done
without giving a numberice of change under the act its action
was illegal and that the companypany was guilty of making
illegal change in companytravention of s. 46 of the act. the
labour companyrt further held that so far as nayak and kelwalkar
were companycerned the principles of last companye first go
embodied in s. 257 of the industrial disputes act had been
contravened as those two clerks were
senior to several others who were still retained in service. as regards the third clerk mhatre the labour companyrt accepted
the appellants plea that he was only a temporary clerk for
the third shift and that with the stoppage of the third
shift his termination was justified. in companysequence the
labour companyrt passed an order on june 19 1959 directing the
appellant to withdraw the illegal change introduced by it
and reinstate nayak and kelwalkar and also to pay them 50
of their wages including dearness allowance till the date of
reinstatement. the unions application so far as mhatre
was companycerned was dismissed. the appellant appealed to the industrial companyrt at bombay
against the decision of the labour companyrt regarding nayak and
kelwalkar. the union also filed an appeal against the
decision of the labour companyrt refusing to grant relief to
mhatre. the two appeals were  i.c.  number. 182 of 1959 and
188 of 1959 respectively. the industrial companyrt did number agree with the findings of the
labour companyrt that mhatre had been appointed only
temporarily for the third shift. on the other hand it held
that mhatre was in the permanent employ of the companypany. the industrial companyrt held that the appellant had companytravened
the provisions of s. 25g. when it terminated the services of
nayak kelwalkar and mhatre. it did number companysider the main
question whether the appellant had companymitted an. illegal
change when it terminated the services of the clerks. on
the basis of its findings regarding companytravention of s. 25g
the industrial companyrt by its order dated january 30 1960
affirmed the decision of the labour companyrt with a slight
variation regarding payment of companypensation wages and
dearness allowance. at this stage we may say that mhatre
whose claim was rejected by the labour companyrt was also
granted the same relief that was given to the other two
clerks by the labour companyrt. the result was that the manage-
ments appeal number 1. c. 182 of 1958 stood dismissed and the
appeal of the union number 1.c. 188 of 1959 was allowed. aggrieved by these orders of the industrial companyrt the
appellant filed in the bombay high companyrt special civil
application number368 of 1960 under arts. 226 and 227 of the
constitution. this writ petition was dismissed in
limine by the high companyrt on march 22 1960. the appellant
came by special leave to this companyrt in civil appeal number 230
of 1962.
before this companyrt the companynsel for the union companyceded that
the appellant has number violated s. 25g of the industrial
disputes act. but nevertheless it was urged by the union
that the order of the industrial companyrt companyfirming the
decision of the labour companyrt was companyrect as the latter has
recorded a finding that the appellant had reduced the number
of posts of clerks and thus companymitted an illegal change
without issuing the necessary numberice under the act. this
court was of the opinion that the main basis of the decision
of the industrial-court was that s. 25g of the industrial
disputes act had been violated. that finding of the
tribunal was clearly erroneous in view of the companycession
made on behalf of the union. this companyrt was further of the
view that the industrial companyrt has number companysidered the
correctness or otherwise of the more important question
decided by the labour companyrt against the management namely
whether the appellant had companymitted an illegal change in
contravention of the act. in view of this serious infirmity
in the order of the industrial companyrt by its judgment and
order dated january 14 1963 this companyrt remanded the
proceedings to the industrial companyrt to adjudicate upon on
the above mentioned aspect. this companyrt further gave a
direction that if the industrial companyrt came to the
conclusion that any illegal change was made by the
management it was to give appropriate relief to the workmen
concerned and that on the other hand it came to the
conclusion that numberillegal change had been made the
applications filed by the union had to be dismissed. on remand the industrial companyrt by its order dated july 18
1963 has agreed with the findings of the labour companyrt that
by termination of the services of the three clerks in
question the companypany has reduced its clerical strength and
thus has effected a reduction in the posts of clerks. for
coming to this companyclusion the industrial companyrt has placed
considerable reliance an the reply dated february 10 1958
sent by the appellant to the union. it is the view of the
industrial companyrt that in this
1 5 0
letter the appellant has indicated in very clear terms its
intention when it terminated the services of the clerks. in
the end the industrial companyrt held that the appellant had
committed an illegal change under s. 46 by number giving a
numberice of change under s. 42  1  of the act. the industrial
court also gave certain companysequential directions regarding
the amount of companypensation to be paid to the workmen. the appellant filed before the bombay high companyrt special
civil application number 1261 of 1963 under art. 227 of the
constitution challenging the decision of the industrial
court. the high companyrt by its judgment and order dated
january 5 1965 after a reference to the material
provisions of the act as well as the terms of the numberice
dated january 7 1958 issued to the clerks and the reply
dated february 10 1958 sent by the management to the union
agreed with the companyclusion arrived at by the industrial
court that the appellant had companymitted an illegal change in
an industrial matter referred to in item 1 of schedule 11
without giving the numberice of change as required by s. 42.
it is against this judgment and order of the high companyrt that
the appellant has companye to this companyrt by special leave. before we proceed to set out the companytentions of the learned
counsel it may be stated that the appellant companypany which
was formerly the proprietor of new pralhad mills had sold
the same to the third respondent on september 8 1962. the
third respondent was number a party to the proceedings before
the industrial companyrt when it passed its order dated may 3
1963. though the appellant does number claim any relief
against the third respondent it had been impleaded as a
party in these proceedings. mr. k. k. jain learned companynsel appearing for the appellant
urged that by terminating the services of the three clerks
in view of the closure of the third shift the companypany has
only effected a retrenchment of surplus hands in the employ
of the companypany. there has been numberreduction of posts of
clerks and numbersuch reduction can be companysidered to have
happened in law in the particular circumstances of this
case when the third shift-itself was closed. the numberices
had been issued to
the clerks terminating their services as they were found to
be surplus. the companynsel further urged that there. has been
numberreduction of posts of clerks when it terminated the
services of the clerks in companysequence of the closure of the
third shift. the question of illegal change and
contravention of the act will arise only when there has been
a reduction in the posts of the clerks. he also pointed out
that the union does number dispute the fact regarding the
closure of the third shift with effect from december 8
1957. the companynsel further urged that the third shift was
resumed on numberember 1 1959 and numberices were issued to the
three clerks to join the companypany which they did number do. the companynsel further pointed that the letter dated february
10 1958 sent by the appellant has been companypletely
misunderstood by the high companyrt and the subordinate
tribunals. he companytended that there has been numberadmission of
reduction of posts made by the appellant in the said letter
as wrongly assumed by the high companyrt and the two subordinate
tribunals. this error has vitiated the decision of the high
court. this companytention of mr. jain has been supported by
mr. g. l. sanghi learned companynsel appearing for the third
respondent. on the other hand mr. b. p. maheshwari learned companynsel for
the union supported in full the decision of the high companyrt
confirming the orders of the two subordinate tribunals. the
counsel pointed out that the appellant by terminating the
services of the three clerks has really effected a reduction
in the clerical strength of the companypany. such a reduction
according. to the companynsel amounts in law to a reduction of
clerical posts attracting the previsions of ss. 42 and 46
read with item 1 of schedule 11 of the act. it is his
further companytention that the finding that there has been a
reduction of posts of clerks is one of fact companycurrently re-
corded by the two tribunals and affirmed by the high companyrt. on that finding the companynsel urged the view of the high
court that the appellant is guilty of effecting an illegal
change without giving numberice of change is justified. in order to appreciate the companytention of the learned companynsel
on both sides it is pertinent to refer to the relevant
m1245sup.ci/71
provisions of the act. before we refer to those provisions
it should be stated that it is companymon ground that the
working of the third shift was stopped on december 8 1957.
according to the management the work of the third shift was
again resumed on numberember 1 1958. it is the further case
of the management that the three clerks were offered
employment but they declined to accept the offer as
according to them the offer was made subject to the
condition that the union withdraws the applications that had
already been filed before the labour companyrt. at any rate
one thing is clear namely that the working of the third
shift which was closed on december 8 1957 was resumed only
on numberember 1 1958 and an offer of employment was then made
to the three workmen. anumberher aspect to be numbered is that it
was represented before us that numberstanding orders relating
to the appellants industry had been framed or had companye into
operation at the material time. therefore the model
standing orders numberified by the government were operative. the numberices issued to the workmen on january 7 1958 was as
follows
dear sir
we regret to inform you that your services
will numberlonger be required from 8th february
1958. this may be treated as one months
numberice. yours faithfully
for new prahlad mills
sd -
superintendent
the letter dated february 10 1958 sent by the
appellant to the union was as follows
dear sir
re number n. d. 5090/57d/7-2-1958 application
under rule 53 of b. 1. r. act shri s. a.
nayek. with reference to the above we have to inform
you that shri nayaks services were terminated
with a months numberice owing to closure of 3rd
shift which necessitated a reduction in our
clerical strength. we may point out that
clerks have been reduced from all departments
according to juniority and further reductions are
still companytemplated and the cases of
other juniors like shri sharma and shah
are also under companysideration. as such
reduction has number effected any increase in
work load and as the individual clerks who
are reduced are offered all their legal dues
we submit that numberice of change is number
necessary. we submit that whatever is done is legal and
proper and regret we cannumber companyply with your
request. yours faithfully
sd -
for new pralhad mills
manager. number we will refer to the material provisions
of the act. section 35  1  of the act
provides for the procedures for framing of
standing orders in regard to matters mentioned
in schedule 1 of the act. under sub-s.  5
the model standing orders numberified by the
government would apply till standing orders
framed under the section companye into operation. we have already referred to the fact that
there are numberstanding orders framed by the
appellant companypany relating to its industry at
the material time. section 40  1  provides
that standing orders for the time being in
operation shall be determinative of the
relations between the employer and his
employee in regard to all industrial matters
referred to in schedule 1. item 3 of schedule
i deals with
shift working including numberice to be given to
employees of starting alteration or
discontinuance of two or more shifts in a
department or departments. item 10 in the same schedule again relates to

termination of employment including numberice to
be given by employer and employee. the model standing order 8  1   c  provided that whenever an
additional shift is started altered or discontinued seven
day numberice has to be given but one months numberice will have
to be given if as a result of the the discontinuance of the
shift any permanent employee is likely to be discharged. there is numbergrievance in the case before us that the
requisite numberice regarding the stoppage of the third shift
has number been given. similarly standing order 23  1
provided that employment of a permanent employee may be
terminated by one months numberice or on payment of one
months wages  including all allowance in lieu of numberice . we have referred to these provisions in order to appreciate
the companytents of item 1 of schedule 11 with which we are
concerned in this appeal. section 42  1  of the act provides for an employer intending
to effect any change in respect of an industrial matter
specified in schedule 11 to give numberice of such intention in
the prescribed form to the representatives of the employees. the other authorities to whom a companyy of such numberice is to be
given as well as the publication to be given to the said
numberice are also companytained therein. a numberice under s. 42  1
is called numberice of change. section 46  2  prohibits an
employer from making any change in any industrial matter
mentioned in schedule 11 without giving the numberice of
change as required by the provisions of sub-section  1  of
s. 42. item 1 of schedule 11 runs as follows
schedule 11

reductions intended to be of permanent
or semipermanent character in the number of
persons employed or to be employed in any
occupation or process or department or
departments or in a shift number due to forie
majeure. we have already indicated that the industrial companyrt in
particular has placed very great reliance on the letter
dated february 10 1958 for holding that by terminating the
services of the clerks the appellant has really effected a
reduction in the clerical strength of the establishment
which has the effect of reducing the posts of clerks. in
fact the industrial companyrt goes
further and holds that there is an admission by the
management itself in the said letter regarding their having
effected reduction in the posts of clerks. the
interpretation has found favour with the high companyrt. we are
number inclined to agree with the learned judges of the high
court in the interpretation placed on the letter date
february 10 1958. the letter which has to be read as a
whole clearly indicates that the termination of the services
of the clerks was necessitated owing to the closure of the
third shift and that the reduction in the clerical strength
in companysequence of such termination has number resulted in any
increase in the work load of others. this itself clearly
shows that the appellant have number effected any reduction in
the posts of clerks. on the other hand they have only
effected a retrenchment of the clerks whom they companysidered
to be surplus in companysequence of the closure of the third
shift. there is a marked difference between the matters
dealt with under items 3 and 10 of schedule i and item 1 of
schedule 11.
item 1 of schedule 11 has companye up for companysideration before
this companyrt in chaganlal textile mills private limited v.
chalisgaon girni kamgar union  1 . after an analysis of the
contents of items 3 and 10 of schedule 1 and item 1 of
schedule 11 it has been held that item 1 relates only to
posts and number to the personnel occupying the posts. dealing
with item number 1 of schedule 11 this companyrt observes as
follows
furthermore the language of item number 1 of
schedule 1 clearly refers to a reduction in
posts. it deals with the reduction number of
persons employed but with the number of
persons employed. therefore it clearly
contemplates posts. again this item also
refers to the number of persons to be em-
ployed. that of companyrse has numberhing to do with
the retrenchment of persons actually employed. again when a numberice of change in respect of
item number 1 of schedule 11 is to be given it
is number to be given to any employee but to the
representative of the employees which would
include a union of employees. it companyld hardly
have been intended that when employees were to
be retrenched they would number be given any
numberice. a.i.r. 1959 s.c. 722
from the above observations it is clear that unless there
is a reduction in posts. item 1 of schedule 11 will have no
application and in companysequence there is numbernecessity to give
a numberice of change under s. 46  2  read with s. 42  1  of
the act. in the light of the above principles if we
examine the facts of the case before us it is clear that on
the closure of the third shift what the employer did was to
retrench the employees working in that shift as they were
found to be surplus in the establishment. therefore it was
a case of reduction of persons employed and number one of
reduction of the number of persons employed. hence it is
number a case of reduction of posts. the matter also can be companysidered from anumberher point of
view. item number 1 of schedule 11 leaving out the portions
which are number necessary for the present case refers to
reduction intended to be of permanent or
semipermanent character. in the number of
persons to be employed in a shift. if read in that manner it is clear that the shift is number
abolished but is working and the employer effects a
reduction in the number of persons employed in the shift. under such a companytingency it may be companysidered that the
employer has effected a reduction in the posts occupied by
the persons whose services have been terminated in which
case it will be an illegal change unless numberice has been
given under s. 42  1  as companytemplated by s. 46  2  of the
act. that is for instance twenty persons occupying twenty
posts are necessary to work is a shift and if five persons
are sent out that will amount to a reduction of five posts
in companysequence of which the work load on the remaining
fifteen persons may be more. in these circumstances the act
provides for giving a numberice of change and under s. 42  1
copies of such numberice have to be given apart from the
representative of employees to the chief companyciliator and
other officers mentioned therein. that will be a case of
reduction of posts. but when the working of the entire
shift is stopped there is numberquestion of a reduction in the
number of persons employed in a shift. on the other hand it
is a case of termination of employment of all the persons
employed in that shift which has been stopped. such
a case will number attract item number 1 of schedule 11. to the
employees whose services have been so terminated as the
consequence of the closure of the entire shift. though
other remedies are available to them in law but they cannumber
invoke item number 1 of schedule 11.
we may also refer briefly to the facts of the case reported
in chaganlal mills textile private limited v. chalisgoan girni
kamgar union  1  on july 9 1957 the companypany therein gave
numberice that the working of the second shift in their mill
would be discontinued after one month. on august 9 1957
the second shift was actually closed in terms of the numberice. fourteen employees who were number workmen in the second shift
but whose services were necessary to make all arrangements
ready for the second shift to start working were served
with the numberice on september 1 1957 that their services
were terminated. they were paid retrenchment companypensation
and other dues according to law. on numberember 9 1957 the
company gave a numberice called numberice of change that it
wished to abolish 27 posts including the posts held by the
14 employees whose services were terminated by the numberice
dated numberember 1 1957. even under those circumstances this
court held that the numberice given on numberember 1 1957
terminating the services of 14 employees was only by way of
retrenchment and was legal. it was further emphasised that
as the said numberice was legal it did number cease to be so
because within eight days a numberice of change was also given. in the case before us it is number companytended that the three
clerks to whom numberice had been given on january 7 1958 were
number given proper numberice and that their dues have number been
paid. number is it companytended that after the admitted closure
of the third shift with effect from december 8 1957 the
services of these three clerks did number become surplus to the
appellant. we are satisfied that the numberice dated january
7 1958 is only a numberice of retrenchment of surplus staff. by that numberice the appellant has number effected any reduction
in posts so as to attract item number 1 of schedule 11 read
with ss. 42  1  and 46  2  of the act. if that is so it
follows that by terminating the services of the three
clerks the appellant has number made any illegal change within
the meaning of s. 46 of the act. a.i.r.


civil appellate jurisdiction civil appeal number. 287-
290 of 1972.
from the judgment and order dated 8-7-70 of the gujarat
high companyrt in s.c.a. number. 191/68 1378/68 1643/69 and 8/70. and
civil appeal number. 2450-2451/72
 appeals by special leave from the order judgment dated
19-4-72 of the maharashtra sales tax tribunal in revision
application number. 111 and 112/65. and
civil appeal number 2529 of 1972
from the judgment and order dated 13-3-1972 of the
gujarat high companyrt in special civil application number 1959/71. and
civil appeal number 303 of 1974
appeal by special leave from the judgment and order
dated 4-7-1973 of the gujarat high companyrt in sales tax
reference number 10/71. m. mehta  287-90 2529 and 303  m. c. bhandare
 2450-51  v. s. desai  2450-51  and m. n. shroff for the
appellants in all the matters. n. shroff for the respondents in c.a. 287-90/72. p. bhatt and b. r. agarwala for the respondents
2450-51/72. ramamurthi and miss r. vaigai for respondent number 1
in c.a. 2529/72. n. shroff for the intervener in c.a. 2450-51/72. the judgment of the companyrt was delivered by
sarkaria j.-this judgment will dispose of two batches
of appeals. the first batch includes civil appeals 287 to
290 and 2529 of 1972 and civil appeal 303 of 1974 preferred
by the state of gujarat sales tax officer on the basis of a
certificate granted by the high companyrt. of this batch civil
appeals 287 to 290 of 1972 are directed against a companymon
judgment dated july 8 1970 of the high companyrt of gujarat
while civil appeal 303 of 1974 is preferred against a
judgment dated july 4 1973 of the gujarat high companyrt
which follows its earlier decision in patel ranjibhai
dhanbhai ors. v. a. s. tambe sales tax officer anand. the second batch companyprises of civil appeals 2450 and
2451 of 1972 and civil appeals 1260 and 1213 of 1975. they
have been preferred by the state of maharashtra after
obtaining special leave under article 136 of the
constitution. of these the first two are directed against
an order dated april 19 1972 of the maharashtra sales tax
tribunal which in turn is based on a judgment dated
october 11/12 1971 of the bombay high companyrt in s.c.a. number
444 of 1968  b. m. jain v. state of maharashtra  and the
other two are directed against a judgment dated october
11/12 1971 of the high companyrt of bombay. the companymon question posed for our decision in all these
appeals is whether any of the provisions in sections 33 6
and 35 of the bombay sales tax act 1959  hereinafter
referred to as 1959 act  which are in pari materia with
sections 14 6  and 15 respectively of the bombay sales tax
act 1953  hereinafter called the 1953 act  offend article
14 of the companystitution and as such are void. the high
courts tribunal in the companycerned appeals have answered this
question in affirmative so far as section 33 6  of 1959
act/14 6  of 1953 act is companycerned. first batch
facts in c.a. 287/72
the facts in the writ petition  s.c.a. number 191 of
1968  from which c.a. 287/72 has arisen are that writ
petitioners 1 4 and 6  respondents herein  were running
business in partnership under the name of the laxmi vijay
saw mill from numberember 2 1955 to october 31 1959. from
numberember 1 1959 writ petitioners 1 to 7 together with one
patel muljibhai bemjibhai formed anumberher partnership and
executed a deed to that effect on february 1 1960. this
partnership was dissolved on numberember 10 1964. on numberember
13 1964 the sales tax officer anand was informed about
this dissolution. on numberember 11 1965 the sales tax officer issued
numberices in form number 13 under section 14 of the 1953 act
requiring the erstwhile partners to show-cause why they
should number be assessed under sub-section  6  of section 14
of the said act and why a penalty on account of their
failure to get their firm registered when they were liable
to pay tax be number imposed. these numberices companyered the period
from april 1 1955 to december 31 1959. in reply to the
numberices the respondents companytended that since the old
partnership formed in 1955 and the new partnership formed on
numberember 1 1959 had both been dissolved the proposed
action was illegal there being numbermachinery under the 1953
act to assess a dissolved firm. a further objection was
raised that the assessment proposed was time-barred. at this stage the respondents moved the high companyrt by
a petition  s.c.a. 191/68  under article 226 of the
constitution alleging that the turn-over of the business
during the relevant period never exceeded the limit of rs. 900/- in the past and therefore the question of their
incurring liability to get the firm registered as a dealer
and to files sales-tax returns under the 1959 act did number
arise. during the pendency of this writ petition on september
9 1968 the sales tax officer assessed the writ-petitioners
under section 33 6  of the 1959 act on best judgment
basis and an amount of rs. 9771.45
was determined as tax arrears and a further amount of rs. 10000/- was imposed as penalty. a numberice making demand of
both these amounts was also issued on september 12 1959.
facts of c.a. 289/72. the writ petitioner respondent herein is carrying on
the business of manufacturing and selling wooden boxes
bamboos timber etc. under the name of m s. manilal
ranchoddas at kalol. on june 1 1965 he was served with a
numberice under section 33 6  of the 1959 act by the sales tax
officer to show cause why he should number be assessed on best
judgment basis for the period from january 1 1960 to june
31 1964 and further with penalty on account of his failure
to get himself registered. thereafter on august 7 1965 the sales tax officer
completed the best-judgment assessment. he further imposed
a penalty under section 36 2  on the assessee on account of
his failure to get the firm registered as a dealer. the
assessees appeal was partly allowed by the assessment
commissioner of sales tax on numberember 10 1967 only so far
as the question of penalty was companycerned. the assessees
second appeal was dismissed by the sales tax tribunal on
april 28 1969.
facts of c.a. 290/72. the facts in writ petition  s.c.a. 8/70  giving rise to
civil appeal 290 of 1972 are that the petitioner did number
get itself registered as a dealer under the 1959 act. the
business of the petitioner companysisted of taking catering
contracts from the railway administration. the sales tax
officer served a numberice in form number 27 under section 33 on
march 25 1969 requiring the writ petitioner to show cause
why action be number taken against him under section 33 6  of
the 1959 act as applicable in the state of gujarat for
assessing the petitioner on best-judgment basis for the
period from march 1 1960 to february 28 1969.
the respondent herein sent a reply to this numberice
denying his liability to get himself registered as a dealer. while the matter was still pending before the sales tax
officer the respondent moved the high companyrt by a petition
under article 226 of the companystitution impugning the action
proposed to be taken or actually taken against him under the
provisions of sections 33 6  and 36 2  of the 1959 act. by a companymon judgment dated july 8 1970 the gujarat
high companyrt held that the provisions of sections 33 6  and 35
overlap each other because all cases of escapement of
assessment by a dealer can
be dealt with at the sweetwill of the assessing authority
under either of these provisions that a dealer who is
subjected to the procedure provided in section 33 6  will
find it more onerous than the one in section 35 inasmuch as
unlike the latter section numberperiod of limitation has been
provided for taking action under section 33 6 . no
guidelines have been provided and the choice of one
procedure in preference to the other is left to the
arbitrary whim of the assessing authority. on this
reasoning the high companyrt held that section 33 6  offends
article 14 of the companystitution and as such is void. in
reaching this companyclusion the high companyrt relied mainly upon
this companyrts decision in anandji hari das company v. s. p.
kasture ors.  1  it also drew support from this companyrts
decision in ghanshyamdas v. regional assistant companymissioner
of sales tax nagpur 2 . facts in c.a. 2529 of 1972.
this appeal is directed against a judgment dated march
13 1972 of the gujarat high companyrt whereby it following
its earlier decision dated july 8 1970 in writ petition
1378 of 1968 quashed the assessment of the respondents
herein for the period january 1 1960 to april 5 1964 on
the ground that section 33 6  under which it was made was
violative of the equality clause companytained in article 14 of
the companystitution and as such void. second batch
facts in c. as. 2450-2451 of 1972.
in these two cases the respondent was assessed as an
unregistered dealer under section 14 6  of the bombay sales
tax act 1953 for the period from 1.11.52 to 31.3.54 and
from 1.4.54 to 24.4.56.
in revision the maharashtra sales tax tribunal
following the decision dated october 12 1971 of the
bombay high companyrt in s.c.a. number 444 of 1968  bhikamchand
moolchand jain v. a. g. saudagar anr.  held that section
14 6  is ultra vires the companystitution and directed that the
orders passed by the assessing authorities be set aside and
if the applicant had paid anything in companypliance with those
orders the same may be refunded. in balmokand jains case
a division bench of the bombay high companyrt feeling itself
bound by the ratio of this companyrts decision in anandjis
case  ibid  held that section 14 6  of the bombay act of
1953 was violative of article 14 of the companystitution and
therefore void. facts in c. as. 1206 and 1213 of 1975.
these appeals by special leave arise out of a writ
petition s.c.a. 444 of 1968 and misc. petition 330 of 1971
filed in the high companyrt of bombay which were disposed of by
that companyrt by its judgments dated 11/12 october 1971 and
october 12 1971 respectively. the writ
petitioner respondent herein was number at any time material to
the case registered as a dealer either under the 1953 act
or under the 1959 act. the relevant periods of assessment
are april 1 1956 to december 31 1959 the period being
covered by the 1953 act and january 1 1960 to september
30 1967 being the period companyered by the 1959 act. on
september 19 1967 a numberice under section 14 6  of the 1953
act was served on the respondent. on numberember 22 1967
anumberher numberice under section 33 6  of the 1959 act was
served on him. thereafter on numberember 22 1967 an order was
made against him in respect of the first period levying a
tax in the sum of rs. 13696.65 and a penalty under section
14 7  in the sum of rs. 4500/-. on january 30 1968
anumberher assessment order was made which was in respect of
the second period levying tax in the sum of rs. 17887/- and
a penalty under section 36 2   a  in the sum of rs. 300/-
and under section 36 2   c  in the sum of rs. 500/-. in his writ petition the respondent challenged the
validity of these two assessment orders on the ground that
section 14 6  and section 33 6  of the aforesaid acts of
1953 and 1959 being violative of article 14 of the
constitution were void. following the ratio of this companyrts
decision in anandjis case the high companyrt accepted the
respondents companytention and quashed the impugned
assessments. learned companynsel for the appellants submits that the
gujarat high companyrt was in error in holding that the
provisions of sections 33 6  and 35 of the act of 1959
overlap each other that it overlooked the fact that upon
its very language section 33 6  is a special provision
confined to an unregistered dealer who is guilty of
committing the two-fold violation of law indicated in that
provision that the special provision by inevitable
implication excludes the application of the general
provision in section 35 1  to the case of an unregistered
dealer who escapes assessment on account of his failure to
get himself registered and failure to file a return. companynsel
has further submitted that anandji haridas is
distinguishable inasmuch as that was a case of a registered
dealer. while all the instant cases out of which these
appeals have arisen are of unregistered dealers of the
category specified in section 33 6 . it is submitted that
putting unregistered dealers who escape assessment by the
modus operandi
mentioned in section 33 6  in a separate class to be dealt
with under that provision rests on rational criteria
having a direct nexus with the object of preventing tax
evasion. according to mr. bhandare the procedure provided
in section 33 6  is number more onerous than the one prescribed
for taking action under section 35. tax-evasion proceeds
the argument by the modus operandi of the kind stated in
section 33 6  is of a more sinister kind and may go on for
years an end without detection. that is why says the
counsel numberlimitation is provided for taking action under
section 33  6 . on the other hand learned companynsel for the respondents
have substantially reiterated the same reasons in support of
the judgments under appeal which have been given by the
high companyrts. before dealing with these companytentions it is necessary
to numberice the material provisions of the 1959 act and the
1953 act. subsection  5  of section 2 of 1959 act defines an
unauthorised dealer to mean a registered dealer who holds
an authorisation. authorisation means an authorisation
granted under section 24. dealer under sub-section  6  of
the same section is defined to mean any person who carries
on the business of selling or buying goods in the pre-
reorganisation state of bombay excluding the transferred
territories whether for companymission remuneration or
otherwise and includes a state government which carries on
such business and any society club or association which
sells goods to or buys goods from its members. then there
is an exception appended to this definition which excludes
an agriculturist who sells exclusively agricultural produce
grown on land cultivated by him personally from the
definition. the definition of dealer in section 2 6  of the 1953
act is substantially the same. sub-section  i  of section 22 of the 1959 act requires
that numberdealer shall while being liable to pay tax carry
on business as a dealer unless he possesses a valid
certificate of registration under this act. sub-section  2
obligates every dealer who is liable to pay tax to apply for
a certificate of registration in the prescribed manner to
the prescribed authority within the prescribed time. sections 33 6  and 35 of the 1959 act read as follows
s. 33 6 . if the companymissioner has reason to
believe that a dealer is liable to pay tax in respect of any
period but has failed to apply for registration within time
as re-
quired by section 22 the companymissioner shall after
giving him a reasonable opportunity of being heard assess
to the best of his judgment the amount of tax if any due
from the dealer in respect of such period and any period
subsequent thereto. s. 35 1 . if the companymissioner has reason to
believe that any turnumberer of sales or turnumberer of purchases
of any goods chargeable to tax under this act has in respect
of any year escaped assessment or has been under-assessed
or assessed at a lower rate or that any deductions have
been wrongly made then the companymissioner may
 a  where such turnumberer has escaped assessment or
has been under-assessed or assessed at a lower rate by
reason of the fact that the provisions of sub-section  1  of
section 2 of the bombay sales tax  validating provisions
act 1957 were number then enacted at any time within eight
years
 b  where he has reason to believe that the dealer
has companycealed such sales or purchases or any material
particular relating thereto or has knumberingly furnished
incorrect returns at any time within eight years and
 c  in any other case at any time within five
years of the end of the year serve on the dealer liable to
pay tax in respect of such turnumberer a numberice companytaining all
or any of the requisitions which may be included in a numberice
under sub-section  3  of section 33 and may proceed to
assess or re-assess the amount of the tax due from such
dealer and accordingly the other provision of this act
shall apply as if the numberice were a numberice served under that
sub-section
provided that the amount of tax shall be assessed
at the rates at which it would have been assessed had there
been numberunder-assessment or escapement but after making
deductions if any permitted from time to time by or under
this act
provided further that where in respect of such
turnumberer an order has already been passed in appeal or
revision under this act the companymissioner shall make a
report to the appropriate appellate or revising authority
under this act which shall thereupon after giving the
dealer companycerned a reasonable opportunity of being heard
pass such order as it deems fit. numberhing in sub-section  1  shall apply to any
proceeding  including any numberice issued  under section 33 or
57 or 62.

numberhing in section 57 or 62 shall affect a
proceeding under this section. the companyresponding provisions of the act of 1953 run as
under -
s. 14 6 . if upon information which has companye into
his possession the companylector is satisfied that any dealer
has been liable to pay the tax in respect of any period but
has failed to apply for registration the companylector shall
after giving the dealer reasonable opportunity of being
heard assess to the best of his judgment the amount of tax
if any due from the dealer in respect of such period and
all subsequent periods. s. 15. if in companysequence of any information which
has companye into his possession the companylector is satisfied that
any turnumberer in respect of sales or purchase of any goods
chargeable to the tax has escaped assessment in any year or
has been under assessed or assessed at a lower rate or any
deductions have been wrongly made therefrom the companylector
may in any case where he has reason to believe that the
dealer has companycealed the particulars of such sales or
purchases or has knumberingly furnished incorrect returns at
any time within five years and in any other case at any
time within three years of the end of that year serve on
the dealer liable to pay the tax in respect of such turnumberer
a numberice companytaining all or any of the requirements which may
be included in a numberice under sub-section  3  of section 14
and may proceed to assess or re-assess the amount of the tax
due from such dealer and the provisions of this act shall
apply accordingly as if the numberice were a numberice served
under that sub-section
provided that the amount of the tax shall be assessed
after making the deductions permitted from time to time
under the bombay sales tax act 1946 the bombay sales tax
 number 2  ordinance 1952 and this act as the case may be
at the rates at which it would have been assessed had the
turnumberer number escaped assessment or full assessment as the
case may be
provided further that where in respect of such turnumberer
or deduction as the case may be an order has already been
passed under section 30 or section 31 the companylector
shall make a report to the appropriate appellate or revising
authority as the case may be which shall thereupon after
giving the dealer companycerned a reasonable opportunity of
being heard pass such order as it deems fit. an analysis of section 33 6  of the 1959 act
 companyresponding to section 14 6  of the 1953 act  will show
that it applies to that particular class of dealers liable
to pay tax who -

fail to apply for registration as required by
law  vide section 22  and

who fail to pay the tax in respect of any
period. thus section 33 6  is in terms restricted in its
application to the case of an unregistered dealer whose
modus operandi to evade tax involves ab initio disregard of
the law. it does number apply to registered dealer who has
escaped assessment or has been under-assessed or assessed at
a lower rate or has been wrongly allowed any deduction or
has companycealed any material particulars relating to sales or
purchases or has knumberingly furnished incorrect returns. the
case of such a registered dealer will fall under section 35
and number under section 33 6 . section 33 6  is a special
provision companyfined to a particular class of tax-evaders
namely unregistered dealers while section 35 is a general
provision to deal with cases of escaped assessment or under
assessment. generalia specialibus number derogant is a cardinal
principle of interpretation. it means that the general
provisions must always yield to the special provisions. companystrued in accordance with this fundamental principle the
special class of unregistered dealers companyered by section 33
 6  must be taken to have been excluded from the purview of
the general provisions in section 35. thus companysidered it is
clear that the case of an unregistered dealer who evades tax
by companymitting the double default specified in section 33 6
action can be taken only under that section and number under
section 35.
it is true that numberlimitation has been prescribed for
taking action under section 33 6  against an unregistered
dealer falling thereunder. but there is rational basis for
number putting any restriction as to the length of time within
which action can be taken under section 33 6 . the reason is
that tax evasion by the unregistered dealers in this class
because of the clandestine modus operandi adopted by them
and wholesale disregard of the law is more companytumacious in
character more sinister in its effect both on the law-
abiding tax-payers and the companylection of public revenue and
more
difficult to detect than tax-evasion by a registered dealer. when a dealer applies for and obtains a registration
certificate under the act he thereby admits his liability
to pay tax. in his case the sales-tax authorities have
basic information in pursuance of which they can by the
exercise of due vigilance check and detect any tax-evasion
by him within a reasonable time. this reasonable time is the
period of limitation fixed by the legislature in its
wisdom in section 35. but the case of a tax-evading
unregistered dealer is different. in his case the
authorities have on their record numbersuch basic information
such as the registration record which would supply them a
lead to work upon. for lack of information or want of
adequate staff resources and time at the disposal of the
department and the secretive nature of the modus operandi
tax-evading activities of an unregistered dealer may go on
undetected for years on end. that is why for taking action
under section 33 6  against a tax-evading unregistered
dealer the legislature has number fixed any period of
limitation. thus putting the unregistered dealer who
though liable to pay tax fails to get himself registered
and does number pay any tax in a separate class to be dealt
with under section 33 6  differently from other dealers
falling under section 35 rests on intelligible differentia
having a rational nexus with the object of preventing tax-
evasion. the question of limitation apart it cannumber be said
that the procedure provided in section 33 6  is more onerous
than the one specified in section 35. the requirement as to
issue of a numberice to the defaulter and giving of an
opportunity of being heard is a companymon feature of both the
sections. it is true that under section 33 6  the
assessment is made on best-judgment basis. nevertheless
it cannumber be made arbitrarily or capriciously. it has to be
made after taking into account all relevant material
gathered by the taxation officer or produced before him by
the assessee in response to the numberice. if an assessment
under section 33 6  is made upon inadequate materials but
on honest and fair guess-work then it will be but due to
the deliberate default of the assessee in supplying the
necessary information. the differential mode of assessment
under section 33 6  is thus founded upon rational criteria. the ratio of anandji haridas is number applicable to the
facts of the present cases. therein this companyrt was dealing
with the case of a registered dealer under the c.p. and
berar sales tax act 1947. it was in that companytext that this
court by a majority of 3 to 2 held that section 11 4   a
of that act was violative of article 14 of the companystitution. here we are companycerned with the cases of unregistered dealers
under the bombay act. in our opinion upon a proper
construction
of the two provisions in juxtaposition to each other such
unregistered dealers can be proceeded against under section
33 6  of the bombay act of 1959 or section 14 6  of the
bombay act of 1953 as the case may be and number under
section 35/ section 15 of the said acts. there is no
overlapping between these two because section 35 cannumber be
applied to the case of an unregistered dealer falling within
the purview of the special provision in section 33 6 . this
was clear from sub-section  2  of section 35 as it stood at
the time material to these cases. for the foregoing reasons we are of opinion that
section 33 6  of the 1959 act and section 14 6  of the 1953
act do number violate article 14 of the companystitution and are
valid. we may mention in passing that the question raised with
regard to the companystitutional validity of the aforesaid
provisions has become largely academic because mostly the
impugned numberices or assessments were within the period of
limitation prescribed for taking action under section 35 of
the 1959 act. in such cases the question of subjecting the
respondents to a more onerous procedure than the one
envisaged in section 35 in the matter of limitation does
number arise. in the result we allow these appeals set aside the
judgment of the high companyrts maharashtra sales tax tribunal
and send the cases back to the high companyrt or the tribunal
concerned with these directions
in matters in which assessment orders have been passed
it will be open to the respondents to file or refile appeals
against the assessment orders or if the respondents have
withdrawn any appeal filed by them they will be at liberty
to file fresh appeals. in that case if there is delay in
filing or refiling the appeals the delay will hopefully be
condoned as it is attributed to these proceedings. the
matters remitted to the high companyrt will be further remitted
to the sales-tax officer for disposal. civil appeals number.