The main legal point established is that the appellants, by submitting false returns and producing false accounts, were deemed to be acting under the provisions of the Sales Tax Act, and therefore fell within the protection of Section 26(2) which limits the time for prosecution.

Headnote:
Sales Tax Act - Prosecution for False Returns - Interpretation of Section 26 - The court held that the appellants, by submitting false returns and producing false accounts, were acting under the provisions of the Act and therefore fell within the protection of Section 26(2) which limits the time for prosecution. The High Court's rejection of the Reference was erroneous, and the proceedings in the trial court were quashed.
Fact of the Case:

A firm of which the appellants were partners submitted false sales tax returns, leading to a complaint against them for contravening the Sales Tax Act.
Finding of the Court:

The High Court's rejection of the Reference was erroneous as the appellants were deemed to be acting under the provisions of the Act when submitting false returns and producing false accounts.
Issues: Interpretation of Section 26 of the Sales Tax Act, applicability of the time limitation for prosecution, and whether the appellants were acting under the Act when submitting false returns.
Ratio Decidendi: The court held that the appellants, by submitting false returns and producing false accounts, were acting under the provisions of the Act and therefore fell within the protection of Section 26(2) which limits the time for prosecution.
Final Decision: The appeals were allowed, the High Court's order was set aside, and the proceedings in the trial court were quashed.

Judgment

KAPUR, J. : These are two appeals directed against the order of the High Court of Madhya Pradesh rejecting a Reference made by the Sessions Judge against the prosecution of the appellants for contravening the provisions of the C. P. & Berar Sales Tax Act (XXI of 1947), hereinafter called the Act .

2. A firm of which five brothers including the two appellants were partners submitted, their sales tax returns for the quarter beginning June 1, 1947 to the quarter ending December 31, 1951. A complaint was filed against the partners on July 19, 1957 on the ground that the returns filed by them were false and the accounts produced were incorrect and therefore an offence under S. 24 (1)(b) & (g) of the Act was committed.

3. On December 12, 1958, an objection was taken by the accused persons that under S. 26(2) of the Central Act, the prosecution could not be instituted as it was barred by time, having been instituted more than three months after the commission of the offence. The learned Magistrate did not go into the objection on the ground that it was not the proper forum for raising the objection. Four revisions were taken to the Sessions Judge who on May 4, 1959, made a reference to the High Court for quashing the proceedings. But the High Court rejected the reference on the ground that a person making a false return neither acts nor purports to act under the Act and therefore S. 26(2) is not applicable to him. It is against that order that these appeals were brought by Special Leave.

4. In order to decide this question, it is necessary to refer to the relevant provisions of the Act. Under S. 10 of the Act every dealer is required to furnish a return when called upon to do so and every registered dealer is required to furnish returns by such dates as may be prescribed. The appellants are registered dealers and they have made returns under that section. Section 15 deals with production and inspection of accounts and S. 24 enumerates the offences under the Act. The alleged offence of the appellants falls under S. 24.(1)(b) & (g), i.e. failing without sufficient cause to submit any return or furnishing false returns and knowingly producing incorrect accounts, registers or documents or knowingly furnishing incorrect information. Section 26 relates to the protection of persons acting in good faith and limitations for suits and prosecutions. The section when quoted is as follows :

"Section 26(1) No suit prosecution or other legal proceedings shall lie against any servant of the Government for anything which is in good faith done or intended to be done under this Act or rules made thereunder.

(2) No suit shall be instituted against the Government and no prosecution or suit shall be instituted against any person in respect of anything done or intended to be done under this Act unless the suit or prosecution has been instituted within three months from the date of the act complained of."

5. For the appellants, it was contended that the words no prosecution or suit shall be instituted against any person in respect of anything done" in sub-sec. (2) of S. 26 cover their cases also and they fall within the words "any person". The respondent s submission on this point was that the two sub-sections of S. 26 should be read together and the intention of the Legislature was to give protection to Government servants in regard to prosecutions or other legal proceedings. That, in our opinion, is not what the words used in sub-s. (2) mean. They are words of wider import and would cover cases of all persons including persons other than Government servants. There are no words restricting the meaning of "any person" and no reason has been shown why those words should not include the appellants.

6. The ground on which the High Court rejected the Reference was that in its opinion the appellants neither acted nor purported to act under any of the provisions of the Act when they filed false returns or produced false accounts & in fact they were rendering

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Judicial Analysis