1. Heard Mr. Rao, Advocate for Petitioner and Mr. Tapare, Advocate for Respondents.

2. Rule. Rule made returnable forthwith and heard by consent of the parties.

3. By Maharashtra Act No. 3 of 1996 Bombay Provincial Municipal Corporation Act, 1949 (hereinafter referred to as B.P.M.C. Act, 1949) was amended and various amendments were made providing for levy and recovery of cess provided in lieu of octroi. Sections 152-A to 152-O were added to the principal Act. Schedule -A and Schedule C were added to the principal Act.

4. Thereafter in exercise of powers conferred by Section 456A(1) of the B.P.M.C. Act, the Government of Maharashtra framed the B.P.M.C. (Cess On Entry Of Goods) Rules, 1996. The Rules provide for registration of dealer, assessment and levy of cess, penalty, interest etc. Rule 25 provides for assessment of cess and Sub-Rule 7 of Rule 25 reads thus:

“25(7) If the Commissioner has reason to believe that a dealer is liable to pay cess in respect of any period, but has failed to apply for registration or failed to apply for registration within time as required by rule 13, the Commissioner shall at any time within three years from the end of the year in which such period occurs, after giving the dealer a reasonable opportunity of being heard, proceed to assess, to the best of his judgment, the amount of cess, if any, due from the dealer in respect of that period and any period or periods subsequent thereto.”

Rule 41 provides for imposition of penalty and interest in certain cases.

Rule 41(2) and 41(3)(a)(i) and (ii) read thus:

“41......

(1).......

(2) If, while assessing or re-assessing the amount of cess due from a dealer or person under any provisions of the Act and the rules or while passing any order in any appeal or revision or rectification proceedings it appears to the Commissioner that such dealer or, as the case may be, person -

(a) has failed to apply for registration as required and has carried on business as a dealer without being registered in contravention of provisions of the Act and the rules;

(b) has failed to comply with any notice in respect of the proceedings in respect of assessment, re-assessment, production and inspection of accounts and documents and search of premises and revision;

(c) has failed to disclose any entry of goods on which cess is leviable in the City for consumption, use or sale therein or has failed to show in the return the appropriate liability to pay cess or has claimed inaccurate deduction, refund or has failed to disclose fully and truly all material facts necessary for the proper and correct quantification of the cess liability, the Commissioner may after giving the dealer or person a reasonable opportunity of being heard, by order in writing, impose upon the dealer or, as the case may be, person by way of penalty in addition to any cess assessed or re-assessed or found due in the appeal or revision or rectification proceedings, as the case may be,-

(i) in the case covered by clause (a), a sum not exceeding ten times of the amount of the cess payable by the dealer for the period during which he carried on business as a dealer without being registered in contravention of the provisions of the Act and the Rules;

(ii) in the case covered by clause (b), a sum not exceeding Rs. 10,000/-;

(iii) in the case covered by clause (c), a sum not exceeding five times the amount of the cess found payable under the said clause.

(3)(a) If a dealer or a person does not pay the cess within the time he is reuired by or under the provisions of these rules to pay it, then he shall without prejudice to any other action taken or proposed to be taken under other provisions of the Act and these rules for the recovery of cess due, be liable to pay by way of simple interest, in addition to the amount of such cess, a sum equal to,-

(i) two per cent. per month of such cess for the first twelve months after the last date by which he should have paid such cess; and

(ii) three per