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1965 Supreme(All) 28
Allahbad High Court
GYANENDRAKUMAR
Babulal - Appellant
Versus
State - Respondent
Decided On : 02/17/1965
J.N. Chaturvedi, Ram Shanker and D.S. Tewari, for Appellants; Addl. Govt. Advocate, for Respondent.
The accused were not liable under Section 403 IPC for dishonestly misappropriating or converting to their own use the money received back from the Government because it was their own money, which they were entitled to receive under Section 72 of the Contract Act.
Headnote:
CRIMINAL REVISION - SECTION 403 IPC - CHARGE - FRAMING OF CHARGE - JUDICIAL DISCRETION - EXPLANATION OF ACCUSED - SECTION 251-A(2) CR. P.C. - MONEY RECEIVED BACK FROM GOVERNMENT - NOT THE SAME AS REALISED FROM CUSTOMERS - NO DISHONEST MISAPPROPRIATION OR CONVERSION TO OWN USE - CHARGE UNDER SECTION 403 IPC NOT JUSTIFIED.
Fact of the Case:
Accused dealers had realized sales tax from customers on forward contracts during 1948-54 under a bona fide mistake of fact and law. They deposited the tax with the Government. Later, a writ petition challenging the relevant provisions of the Sales Tax Act was allowed, and the accused claimed a refund of the tax. The Sales Tax Officer referred the matter to the High Court, which held that the accused were entitled to the refund. The accused were charged under Section 403 IPC for dishonestly misappropriating or converting to their own use the money received back from the Government.
Finding of the Court:
The court held that the money received back from the Government was not the same as that realized from the customers. The accused were not liable under Section 403 IPC because they had not dishonestly misappropriated or converted to their own use any money belonging to the customers. The court also held that the Magistrate had erred in framing the charge under Section 403 IPC without examining the accused under Section 251-A(2) Cr. P.C. to explain the evidence against them.
Issues: 1. Whether the money received back from the Government was the same as that realized from the customers? 2. Whether the accused were liable under Section 403 IPC for dishonestly misappropriating or converting to their own use the money received back from the Government? 3. Whether the Magistrate had erred in framing the charge under Section 403 IPC without examining the accused under Section 251-A(2) Cr. P.C. to explain the evidence against them?
Ratio Decidendi: 1. The court held that the money received back from the Government was not the same as that realized from the customers because the accused were liable to deposit the tax with the Government irrespective of whether they had realized it from the customers. The money deposited with the Government was the accused's own money and did not belong to the customers. 2. The court held that the accused were not liable under Section 403 IPC because they had not dishonestly misappropriated or converted to their own use any money belonging to the customers. The money received back from the Government was their own money, which they were entitled to receive under Section 72 of the Contract Act. 3. The court held that the Magistrate had erred in framing the charge under Section 403 IPC without examining the accused under Section 251-A(2) Cr. P.C. to explain the evidence against them. The Magistrate should have exercised his discretion judicially and examined the accused if there was prima facie evidence against them from the documents referred to in Section 173(4) Cr. P.C.
Final Decision: The court allowed the revisions and quashed the charge and proceedings against the accused in each case.
A Division Bench of this Court allowed that writ petition by its judgment dated 27th February, 1952 and held that Explanation III to Section 2(H) of the U.P. Sales Tax Act was ultra vires the U.P. Legislature. This case is reported in, Budh Prakash Jai Prakash v. Sales Tax Officer, Kanpur, 1952 All LJ 332 : (AIR 1952 All 764). Being dissatisfied with the judgment of the High Court, the Sales Tax Officer filed Civil Appeal No. 23 of 1954 before the Supreme Court of India which was also dismissed by the Supreme Court by its judgment and order dated 3rd May, 1954 Sales Tax Officer Pilibhit v. M/s. Budh Prakash Jai Prakash, AIR 1954 SC 439. Thereafter the accused persons appeared to have claimed refund of the Sales Tax charged from them for the years 1948-54. The learned Judge Sales Tax made a reference to the High Court of Judicature at Allahabad which was registered as Sales Tax Reference No. 2549 of 1956 and was decided by a Division Bench of this Court on 30th October, 1958, (the case is reported in Sales Tax Commr. U.P. v. Sada Sukh Vyopar Mandal, (1959) 10 STC 57 (All).) Dayal, J. delivering the judgment of the Bench observed as follows :
"It is not correct to say that the assessee collected the tax from the customer as an agent of the State. The Sales Tax Act in a way ignores the customer altogether. Section 3 of the Act makes a dealer liable to the payment of the tax on the basis of his turnover of the previous year. There is no provision in the Act, which says that the customer will have to pay a sales tax at such and such rate. There is not even a provision to the effect that the dealer shall charge this amount from the customer. Section 8-A(2) of the Act prohibits an unregistered dealer from realising any tax as such on sale of goods from the purchaser. A registered dealer is not so prohibited, but he too is not bound to realise the tax from his purchaser. In case, however, he does realise the tax from his purchaser Sub-Section (5) of Section 8-A requires him to act in a certain manner. He is required to issue a signed cash memo showing separately the price for which the goods are sold and the amount realised as tax from the purchaser. He is required to keep a counterfoil and to maintain a true and correct account of all moneys realised by him as tax in the prescribed manner. We do not agree with the contention of the Commissioner of Sales Tax that the dealer collects this amount from the customer under the authority given to him under Sub-Section (3) of Section 8-A. This sub-section gives no authority to realise it. The authority, if any, is a general authority of a dealer to charge what he likes from his customer. It is only when he realises the tax as a tax from his purchaser that he has to comply with the requirements of Sub-Section (3).
The other question, that it would be inequitable to make a gift of this money to the assessee whe
