State of Bihar vs. Rat Bahadur Hurdut Roy-Mott Lall Jute Mills and Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 678 of 1957

Decision Date: 26 November 1959

Coram: P.B. Gajendragadkar, Bhuvneshwar P. Sinha, K.C. Das Gupta, J.C. Shah

In this case the matter was styled The State of Bihar versus Rat Bahadur Hurdut Roy-Mott Lall Jute Mills and Another and the judgment was delivered on 26 November 1959 by the Supreme Court of India. The opinion was authored by Justice P B Gajendragadkar and the bench comprised Justices P B Gajendragadkar, Bhuvneshwar P Sinha, K C Das Gupta and J C Shah. The petition was filed by the State of Bihar and the respondents were Rat Bahadur Hurdut Roy-Mott Lall Jute Mills together with another party. The official citation of the decision is 1960 AIR 378 and 1960 SCR (2) 331, and it is also listed in the citator as C 1984 SC1194 (28). The substantive issue concerned the Bihar Sales Tax Act of 1947 (Act 111 of 1947), specifically sections 5, 6, 7, 8, 14A with its proviso, section 33 and rule 19 of the Bihar Sales Tax Rules, and the meaning of allowable deductions from gross turnover.

The respondent mills were a registered dealer under the Bihar Sales Tax Act, 1947, and were engaged in the manufacture and sale of gunny bags, hessian and other jute products in Katihar. During the fiscal year from 1 April 1950 to 31 March 1951 the mills sold and dispatched goods valued at approximately Rs 92,24,386-1-6 to dealers located outside the State of Bihar. From those out-of-State sales the mills collected a sum of Rs 2,11,222-9-6 as sales tax. When the Superintendent of Sales Tax in Purnea assessed the tax liability for that period, he held that the amount of sales tax collected had been realized in violation of section 14A of the Act read with rule 19 of the Bihar Sales Tax Rules. Consequently, the Superintendent ordered the forfeiture of the collected tax amount under the proviso to section 14A.

The respondents challenged the forfeiture order on the ground that it violated their constitutional rights, invoking Articles 226 and 227 of the Constitution. The High Court examined the constitutional challenge and concluded that the proviso to section 14A was beyond the competence of the State Legislature because it infringed Articles 20(1) and 31(2) of the Constitution. As a result, the High Court set aside the forfeiture order and quashed the proceedings instituted under section 14A. The State of Bihar appealed this decision to the Supreme Court.

On appeal the respondents raised a preliminary objection, contending that the proviso to section 14A did not apply to the facts of the present case and therefore there was no need for the Court to consider its constitutional validity. The State argued that the proviso did apply because the respondents had breached the conditions and restrictions prescribed in the proviso to rule 19. The central question for determination was whether the respondents could be said to have realized any tax amount with respect to the portion of their turnover that was permitted to be deducted from their gross turnover for the purpose of computing taxable turnover under the Act or the rules, as contemplated by the latter part of the proviso.

The Supreme Court held that the preliminary objection raised by the respondents must prevail. The Court further held that before a dealer could be subjected to the penalty of forfeiture under the proviso to section 14A, it must be established that the dealer had acted contrary to the specific conditions and restrictions prescribed by the Rules; it was insufficient merely to demonstrate that the collection of the tax was otherwise illegal or improper.

In applying the proviso to section 14A of the Bihar Sales Tax Act, 1947, the Court required proof that the dealer had acted in breach of the conditions and restrictions laid down in the Rules; it was insufficient merely to demonstrate that the dealer’s collection of sales tax was otherwise illegal or improper. The Court held that only a violation of the statutory provisions contained in section 14A or a breach of the Rules prescribing the relevant conditions and restrictions could serve as the basis for imposing the forfeiture penalty specified in the proviso. The Court further observed that the later insertion of section 33 into the Act, which operated retrospectively to prohibit the levy of tax on sales occurring outside the State, together with the authority of the decision in State of Bombay v. The United Motors (India) Ltd. (1953) S.C.R. 1069, required the proviso to rule 19 to be interpreted as indicating that the sales in question fell outside the scope of the Act and therefore could not be taxed. Consequently, the Court concluded that the portion of the respondent’s turnover that was in dispute could not be treated as an allowable deduction within the meaning of the proviso. The Court explained that allowable deductions contemplated by the proviso are derived expressly from sections 6, 7 and 8 of the Act, as clarified by the explanation to section 5. In the judgment of State of Bombay & Another v. The United Motors (India) Ltd., the Court reiterated that an allowable deduction under the proviso is distinct from the exclusion of a portion of turnover under section 33(1)(a)(1) of the Act; the latter operates on a completely different basis. Transactions covered by section 33 are, in substance, outside the Act and no tax may be imposed upon them. Accordingly, the transaction under consideration did not fall within the ambit of rule 19, the proviso to section 14A was not triggered, and the order of forfeiture against the respondent was deemed unjustified and illegal. The matter proceeded on civil appeal No. 678 of 1957, arising from the Patna High Court judgment dated 1 August 1956, and related appeals No. 546 of 1958 and No. 115 of 1959, stemming from Patna High Court judgments dated 8 March 1957. Counsel for the appellant presented the case. Counsel for respondent No. 1 in civil appeal 678 of 1957 represented that party. Counsel for the intervener appeared on behalf of the intervening party. Counsel for respondent No. 1 in civil appeal 546 of 1958 represented that respondent, and counsel for respondent No. 1 in civil appeal 115 of 1959 represented that respondent. The judgment was delivered on 26 November 1959.

In this matter, the State of Bihar filed three separate appeals, each against a different registered dealer who held a certificate issued by the Patna High Court under Article 132(1) of the Constitution. The State claimed that each appeal raised a substantial question of law concerning the interpretation of Article 20(1) of the Constitution. Although the factual circumstances in each of the three appeals were not identical, they were sufficiently similar to present a common legal issue arising under the proviso to section 14A of the Bihar Sales Tax Act, 1947 (Act XIX of 1947). In each case a forfeiture order had been passed against the respective dealer, and the validity of those orders was the central point of dispute. By mutual consent the appeal designated as Civil Appeal No. 678 of 1957 was treated as the principal or lead appeal, and the parties agreed that the judgment rendered on that appeal would be binding on the remaining two appeals. Consequently, the Court first set out the factual background of Civil Appeal No. 678 of 1957 and then proceeded to consider the merits of the legal questions presented in that appeal. The first respondent, identified as Rai Bahadur Hurdut Roy Motilal Jute Mills, located at Katihar, was at the relevant time a dealer registered under the Bihar Sales Tax Act. The mill was engaged in the manufacture and sale of oil-treated gunny bags, Hessian cloth and other jute products in the district of Purnea. During the fiscal year spanning 1 April 1950 to 31 March 1951, the mill sold and dispatched goods to buyers located outside the State of Bihar, amounting to a turnover of approximately Rs 92,24,386. From these out-of-state sales the mill collected sales tax totalling Rs 2,11,222-9-6. The assessment of this turnover for the stated period was taken up by the Superintendent of Sales Tax for Purnea, who is referred to as the second respondent, on 31 May 1953. As a result of the assessment proceedings, the impugned order of forfeiture was issued against the first respondent.

While examining the points raised, the Court also referred to a prior decision in which Article 286 of the Constitution, together with related provisions, was interpreted in the case of State of Bombay & Anr. v. United Motors (India) Ltd. & Ors. (1). That earlier case dealt with the constitutional validity, or “vires,” of certain provisions contained in the Bombay Sales Tax Act, 1952 (Act XXIV of 1952). For the purpose of deciding that question, the Court was required to consider the scope and meaning of Article 286. According to the majority opinion in the United Motors case, Article 286(1)(a), read together with its explanatory clause and in the context of Articles 301 and 304, prohibits any State from levying tax on sales or purchases that involve inter-State elements, except for the State in which the goods are delivered for the purpose of consumption. The State where the goods are finally consumed retains the authority to tax such transactions, and this authority is derived not from the explanatory note to Article 286(1) but from Article 243(3) of the Constitution. This interpretation was significant for understanding the power of a State to tax inter-State trade and formed part of the legal backdrop against which the present appeals were assessed.

The Court observed that the explanation to Article 286, read together with Entry 54 of List II, does not leave the State in which the title to the goods passes without its power to levy tax; consequently, it is incorrect to say that both the State where the title passes and the State where the goods are delivered for consumption may tax the same transaction. When the assessment of the first respondent was examined by the second respondent, the latter was directed to consider the Supreme Court’s decision in United Motors (India) Ltd. & Ors., reported in [1953] S.C.R. 1069. Following that precedent, the second respondent held that the turnover of Rs 92,24,386-1-6 earned from dispatching manufactured jute products to buyers outside the State was exempt from tax, and therefore that amount should be deducted from the total turnover shown by the first respondent in his return filed under the provisions of the Act.

Subsequently, the second respondent initiated proceedings against the first respondent under section 14A of the Bihar Sales Tax Act and issued a notice on 18 June 1954. That notice required the first respondent to show cause why the sum of Rs 2,11,222-9-6, which he had collected as sales tax from dealers, should not be forfeited to the Government. The first respondent filed a response, but the second respondent was not satisfied with the explanation offered. Consequently, the second respondent ordered the first respondent to deposit the entire amount in the Government treasury and to produce proof of payment within one month of receiving the order. The order was dated 10 February 1955.

The second respondent reasoned that the issue was straightforward: the first respondent had collected the tax amount from his customers on behalf of the State and therefore could not retain it; the amount had to be remitted to the State coffers. Moreover, the second respondent found that the first respondent had represented to purchasers that the amount was chargeable as sales tax under the Act, thereby violating the explicit provisions of section 14A of the Act read with rule 19 of the Bihar Sales Tax Rules. On this basis, the second respondent issued the impugned order of forfeiture.

Thereafter, the first respondent filed a petition before the Patna High Court under Articles 226 and 227 of the Constitution, challenging the validity of the forfeiture order. He contended that the proviso to section 14A, under which the order was purportedly made, was not applicable to his case, and therefore the order was not justified by that proviso. He further argued that if the proviso were held to justify the order, it would be ultra vires the State legislature because it would contravene Articles 20(1) and 31(2) of the Constitution.

In this case, the Court observed that the order was ultra vires the State Legislature because it contravened Article 20(1) and Article 31(2) of the Constitution. The High Court, however, did not address the first contention raised before it; instead it examined only the two constitutional points raised by the first respondent and ruled in his favour on both. Consequently, the petition filed by the first respondent was allowed, the impugned order of forfeiture was set aside, and the proceedings initiated against the first respondent under section 14A were quashed. Following that decision, the appellant applied to the High Court for a certificate under Article 132(1) of the Constitution, and the High Court issued such a certificate. Counsel for the appellant then argued that the High Court erred in holding that the proviso to section 14A violated either Article 20(1) or Article 31(2). He submitted detailed reasons to demonstrate that neither constitutional provision was infringed by the contested proviso. On the opposite side, the Solicitor General sought to uphold the High Court’s findings on those two constitutional issues and advanced a preliminary argument that, when the proviso is given a fair and reasonable construction, it cannot be applied to the facts of the first respondent’s case. The Court therefore decided to consider that preliminary point first. It noted that whenever the validity of a statutory provision is challenged on constitutional grounds, the material facts must first be clarified to ascertain whether the impugned provision is attracted; only if the facts bring the provision within scope should the constitutional challenge be examined. If, however, the established facts do not fall within the provision, there is no occasion to decide the constitutional issue, and any such decision would be purely academic. Courts, therefore, should be reluctant to decide constitutional questions that are merely academic. Before turning to the first respondent’s preliminary argument, the Court briefly outlined the relevant scheme of the Act. The Act was originally enacted in 1947 because the Legislature considered it necessary to augment Bihar’s revenue by imposing a tax on the sale of goods within the State. The provisions of the Act, together with the statutory Rules framed under it, have been amended from time to time. For the present discussion, the Court referred to the provisions and Rules that were in force at the material time. Section 2(d) of the Act defines the goods whose sale is taxable as all kinds of movable property except those specifically exempted. Section 2(g) defines “sale” to include any transfer of property in goods for cash or other consideration, and the second proviso to that definition provides that the sale of

In the provision relating to “any goods,” the Court explained that a sale of goods was deemed to have taken place in Bihar when either of two conditions was satisfied. First, the goods had to be physically present in Bihar at the time the contract of sale, as defined in section 4 of the Act, was made. Second, the goods could be produced or manufactured in Bihar by the producer or manufacturer. The Court held that, regardless of where the delivery or the contract itself was effected, such sales were to be treated as having occurred in Bihar for the purposes of the Act.

The Court then turned to the definition of the tax that could be levied under the Act. Section 2 (hh) defined the tax as including a fee fixed in place of the tax under the first proviso to section 5. Section 2 (i) defined “turnover” as the total amount of sale prices that a dealer had received or was entitled to receive for the sale or supply of goods, or the performance of any contract, within the relevant period, or, where turnover was to be measured in a prescribed manner, the amount so determined. Section 4, which was the charging provision, stipulated that any dealer whose gross turnover during the prescribed period, counting sales made both inside and outside Bihar, exceeded Rs 10,000 was liable to pay tax on sales that occurred in Bihar from the date the Act came into force. This provision indicated that the tax liability arose only when a dealer’s gross turnover surpassed the Rs 10,000 threshold, and that the calculation of gross turnover included both intra-state and inter-state sales.

Section 5 prescribed that the tax rate on taxable turnover would be six pies per rupee. The first proviso to this section conferred a specific power on the State Government: by way of notification, the Government could fix a higher rate of tax not exceeding one anna per rupee, or a lower rate, for the sale of any specified goods or class of goods, subject to conditions that the Government might impose. The explanation to section 5 clarified the meaning of “taxable turnover.” According to the explanation, taxable turnover was the portion of a dealer’s gross turnover that arose from sales made in Bihar, after deducting the items enumerated in clauses (a) and (b) of the explanation. One of the deductible items was the sale of any goods that had, from time to time, been declared as tax-free under section 6. Section 6 authorized the State Government to exempt the sale of any goods or class of goods from the tax, subject to conditions laid down in that section. Section 7 empowered the Government to exempt certain dealers from tax, and section 8 authorized the Government to prescribe the points at which goods might be taxed or exempted. Finally, section 9 dealt with the registration of dealers, providing that no dealer liable to tax under section 4 could carry on business unless he was registered under the Act and possessed a valid registration certificate.

In this case, the Court explained that under section 11 a list of dealers who have been registered under the Act must be published. Section 12 then obliges those registered dealers to file returns on the dates and to the authorities prescribed by the statute. Section 13 sets out the procedure for assessing tax liability. Section 14 states that tax payable under the Act must be paid in the manner prescribed later, at intervals that may be prescribed. Sub-section (2) of section 14 requires a registered dealer who files a return to pay the full amount of tax shown in that return into the Government treasury and to attach to the return a receipt issued by the treasury confirming that the payment has been made. Having therefore provided a mechanism for recovering the tax charged under section 4, section 14A authorises a registered dealer to collect the tax from the purchaser, subject to the restrictions and conditions that may be prescribed. Section 14A further provides that a person who is not a registered dealer may not receive any amount as tax on the sale of goods, and that a registered dealer may collect tax only in accordance with the prescribed restrictions and conditions. The Court then turned to the proviso of section 14A, which is the precise point of dispute in the present appeal. The proviso reads: “Provided that if any dealer collects any amount by way of tax, in contravention of the provision of this section or the conditions and restrictions prescribed thereunder, the amount so collected shall, without prejudice to any punishment to which the dealer may be liable for an offence under this Act, be forfeited to the State Government and such dealer shall pay such amount into the Government treasury in accordance with a direction issued to him by the Commissioner or any officer appointed under section 3 to assist him and in default of such payment, the amount shall be recovered as an arrear of land revenue.” The Court observed that the effect of this proviso is clear. A dealer may collect tax from purchasers only if he complies with section 14A and with the conditions and restrictions laid down in the Rules made under the Act. Those conditions and restrictions are contained in the material Rules framed under the Act. If a dealer collects tax in breach of those conditions and restrictions, the penalty of forfeiture specified in the proviso becomes applicable. The Court emphasized that before the forfeiture penalty can be imposed, it must be established that the dealer acted contrary to the conditions and restrictions prescribed by the Rules. It would not be sufficient merely to show that the collection was illegal or improper in some other respect; the penalty springs only from a breach of the statutory provision of section 14A or the Rules governing it. The Court noted that this principle is not contested before it.

In this matter the Court observed that it was not enough to show that the dealer’s collection of the amounts in question was merely illegal or improper. The mere violation of the statutory provision contained in section 14A, or of the Rules that prescribe the conditions and restrictions applicable to such collection, was sufficient to justify the imposition of the penalty prescribed in the proviso. The parties did not dispute this principle before the Court. The appellant argued that the proviso applied to the present controversy because the first respondent had breached the conditions and restrictions laid down by the proviso to Rule 19. By contrast, the first respondent contended that a correct construction of that same proviso would not support the appellant’s claim. Consequently, the preliminary issue raised by the first respondent turned on a narrow question of how to interpret the proviso to Rule 19.

Before attempting to interpret the proviso, the Court found it necessary to turn to section 33 of the Act. Section 33 was enacted on 4 April 1951, but it was expressly given retrospective effect from 26 January 1950; therefore, at the relevant time, the provision was deemed to be in operation. Section 33(1)(a)(i) provides, notwithstanding anything else in the Act, that a tax on the sale or purchase of goods shall not be levied under the Act when such a sale or purchase occurs outside the State of Bihar. Section 33(2) makes the explanation to clause (1) of Article 286 of the Constitution applicable for the interpretation of sub-clause (i) of clause (a) of sub-section (1). Both parties agreed that, when read in light of the Court’s decision in United Motors, the cited provision made it clear that the transactions forming the subject-matter of the present proceedings could not be taxed under the Act. For this reason the appellant placed strong reliance on section 33 and maintained that, in construing the proviso to Rule 19, the true legal position concerning the transactions must be kept in mind.

The Court then examined the wording of the proviso to Rule 19. Rule 19 itself sets out the procedure that a registered dealer must follow when realizing any amount by way of tax on the sale of goods to purchasers; the rule requires the issuance of a cash memo or a bill as prescribed. The proviso to that rule stipulates that no registered dealer shall realize any amount by way of tax at a rate higher than the rate at which the dealer is liable to pay tax under the Act, nor shall the dealer realize any amount by way of tax in respect of that portion of his turnover which is allowed to be deducted from his gross turnover for the purpose of determining his taxable turnover under the Act or the Rules. The appellant relied particularly on the latter part of this proviso and argued that the portion of the first respondent’s turnover which formed the basis of the dispute fell within the portion that could be deducted, thereby invoking the proviso’s limitation.

The Court observed that the first respondent’s transactions fell within the scope of section 33(1)(a)(1), and consequently those transactions were not liable to tax. Because the transactions were outside the chargeable base, the Court held that the first respondent had no justification for collecting any tax from his purchasers under section 14A. Section 14A was intended to allow a registered dealer to collect from his purchasers only those tax amounts which the dealer himself was required to remit to the State. Thus, the power to collect tax presupposes that the dealer has a corresponding liability to pay an equal amount to the State. Accordingly, the Court concluded that the first respondent’s act of collecting tax from his buyers amounted to a direct violation of section 14A. The respondent further contended that, in view of section 33(1)(a)(i), he was entitled to deduct the transactions in question from his gross turnover under the second part of the proviso to rule 19. He claimed that this interpretation meant the first part of the proviso applied to him and therefore prohibited him from realizing the tax amounts. The Court therefore found that his collection of tax from purchasers also breached the conditions laid down in the proviso to rule 19. In evaluating these arguments, the Court noted that, at the relevant time, there existed considerable confusion among the public and the State authorities regarding the true scope and effect of article 286(1) of the Constitution.

The Court acknowledged that it was not contested that, during the material period and the years preceding it, registered dealers frequently paid tax on transactions that, under section 33(1)(a)(i), were actually exempt from tax, and that such tax was collected by the State. It was further pointed out that section 14 of the Act imposes a duty on a registered dealer to attach, along with his return, a receipt evidencing payment of the tax shown in the return. Payments of this nature were made by registered dealers for similar transactions and were accepted by the State. The Court observed that, by coincidence, the assessment proceedings against the first respondent were taken up by the second respondent only after this Court had rendered its judgment in United Motors. The Court remarked that, had the question of the first respondent’s liability to pay tax under the Act been decided before that precedent, there would have been no doubt that he would have been required to pay tax on the transactions in dispute. The Court also noted that it was common ground that the notification issued for the material period imposed a tax of three pies on the goods, provided the sales tax authority was satisfied that the goods had been dispatched by or on behalf of the dealer to a person outside the Province of Bihar. The Court further explained that this notification was consistent with the then-existing definition of the term “sale.”

In this case, the Court observed that at the relevant time the appellant had believed that transactions like those under dispute were subject to tax at the rate of three pies according to the applicable notification. The registered dealers shared this belief, and consequently the appellant collected tax from the dealers, and the dealers passed the tax on to their purchasers. However, after section 33 was enacted, the Court said that a legal presumption of its retrospective operation had to be applied. Interpreting the proviso to rule 19 on that basis required assuming that the transactions were outside the Act’s scope and that no tax could be imposed on them. The Court then asked whether, for the portion of the first respondent’s turnover that was contested, a deduction could be allowed under the meaning of the proviso. The Court held that the answer could not be given in favour of the appellant. It noted that rule 19 had been framed in 1949 and had not been amended after the introduction of section 33. At the time of its framing, the rule’s reference to allowable deductions was clearly based on sections 6, 7 and 8 of the Act. Reading the words of the proviso together with the explanation to section 5 made this point unmistakable. The explanation listed the deductions that must be made in computing the taxable turnover of a registered dealer, and those deductions were the ones specified in the three sections mentioned in the explanation, which the latter part of the proviso to rule 19 referred to. Therefore, a claim to exclude part of the first respondent’s turnover on the basis of section 33(1)(a)(i) could not be treated as an allowable deduction under the proviso. The Court also considered the issue from another perspective. It explained that provisions permitting deductions or granting exemptions presupposed that, but for such provisions, the transactions would be taxable under the Act, so a dealer could claim the appropriate deduction when filing the return. By contrast, the effect of section 33 was different: transactions falling within its provisions were essentially outside the Act, and no tax could be levied on them at all. If that view was correct, the claim made by a registered dealer regarding such transactions could not be characterised as a claim for an allowable deduction or exemption; rather, it amounted to a claim that the Act itself did not apply to those transactions.

The Court held that because the statute expressly excluded the transactions in question, it could not be said that the provision applied to them; accordingly, interpreting the second part of the proviso to rule nineteen as covering those transactions would stretch the language beyond its intended meaning. The Court then turned to the format prescribed for filing returns under section twelve, namely Form VI, which requires the gross turnover to be stated at the beginning and thereafter lists the various deductions that may be allowed by the Act. Form VI had been issued in 1949 and had not been altered after section 33 was inserted into the legislation. In examining this form, the Court found it difficult to accept the argument that a claim for the complete exclusion of the disputed transactions could be lodged under any of the headings that the form provides. The appellant argued that the first item, which asks for “gross turnover,” should be interpreted to mean the total turnover of the dealer, encompassing all sales whether made inside Bihar or outside, and relied on the definition of “turnover” in section 2(1) to support this view. The appellant further contended that if the entire turnover had to be reported in item 1, the exclusion of the transactions falling under section 33 could then be accommodated by adjusting the amounts under one of the deduction categories listed later in the form. The Court was not persuaded by this reasoning. It observed that, when the form is read together with the substantive provisions of sections 6, 7 and 8, there is no indication that the legislature intended the items on the form to first display the transactions covered by section 33 and subsequently exclude them through the deduction entries. Moreover, the Court pointed out that Chapter VII, which governs the filing of returns by dealers, is titled “return of taxable turnover,” suggesting that the “gross turnover” mentioned in Form VI is intended to refer to “gross taxable turnover” rather than the total turnover that would also include transactions outside the scope of the Act. Regarding the contention that the proceedings violated section 14A, the Court found it difficult to see how any provision of that section could have been infringed. Section 14A consists of two negative-phrased provisions; the second part, which is the focus of the discussion, merely stipulates that a registered dealer may collect tax only to the extent that he is liable to pay it, subject to the restrictions and conditions prescribed. If the argument is that the first respondent was not liable to pay any tax and therefore was not entitled to collect any corresponding amount, then any collection made by him would fall outside the ambit of section 14A but would not constitute a breach of that section.

The Court observed that while a collection made by the first respondent could be considered unjustified or improper, such a collection does not amount to a breach of any provision of section 14A. In fact, section 14A itself refers to the restrictions and conditions that may be prescribed, and those conditions and restrictions are laid down generally by the Rules and specifically by rule 19. Consequently, the argument presented under section 14A leads back to the question of whether the proviso to rule 19 has been violated. In addressing that question, the Court noted that the provisions applicable in the present appeal impose a serious penalty on a registered dealer; therefore, even if the position advocated by the appellant might be a conceivable view, the Court saw no reason to reject the alternative position advanced by the first respondent, which appeared more reasonable. Accordingly, the Court held that the proviso to section 14A could not be invoked against the first respondent and that the forfeiture order issued against him by the second respondent was therefore unjustified and illegal. Because of this conclusion, it was unnecessary to examine the first respondent’s objections to the validity of the proviso on the ground that it contravened articles 20(1) and 31(2) of the Constitution. The Court also noted that counsel for both sides had been heard on whether the same proviso violated article 19(1)(f). In the final analysis, the appeal was dismissed with costs, and the decision was held to govern civil appeals numbered 546 of 1958 and 115 of 1959, which were likewise dismissed with costs. The appeal was thereby dismissed.