MC DOWELL & CO. LTD. v. ASST. COMMISSIONER — 1985 DIGILAW 89 (KER)

Judgment :- 1. The petitioner is a company registered under the Indian Companies Act. It is engaged in the business of manufacture and sale of Indian made Foreign liquor. It is an assessee on the files of the Ist respondent The Assistant Commissioner of Agricultural Income-tax & Seles-tax (Assessment), Special Circle, Alleppey. The petitioner was assessed under the Kerala General Sales-tax Act and the Central Sales-tax Act for the years 1976-77 to 1979-80. It was also assessed under the Central Sales-tax Act for the year 1975-76. There are in all 9 assessments for these years. They are evidenced by Exts. P13 to P21 orders. According to the petitioner, these assessments were made arbitrarily and without affording sufficient opportunity to the petitioner to substantiate its case. The notice calling for verification of accounts was issued on 16-4-1984. There were subsequent notices to similar effect on 3-5-1984, 3-8-1984 and 8-10-1984. Finally Ext.Pl pre-assessment notice dated 25-1-1985 was received by the petitioner on 2-2-1985. The petitioner was given 7 days time to file its objections. The petitioner made an attempt to get extension, of time by Ext. P2. By Ext. P3 order dated 6-2-1985 it was rejected. So, the petitioner filed, objections dated 8-2-1985, on 11-2-1985. Since 9th February, 1985 was a 2nd Saturday and a declared holiday and 10th was a Sunday, the objections could be filed only on 11-2-1985.Assessment orders dated 9-2-1985, evidenced by Exts. P13 to P21, were served on the petitioner on 16-2-1985. The petitioner filed appeals against all the nine assessment orders before the Deputy Commissioner of Agricultural Income-tax & Sales-tax (Appeals), Quilon-2nd respondent herein-on 28-2-1985. Petitions for stay of recovery proceedings were also filed. Since the matter was urgent, the petitioner moved a petition for early hearing of the stay petitions. The petitioner was heard on 7-3-1985 and Ext. P6 order dated 11-3-1985 was passed in all the petitions by the 2nd respondent. By the said order, the petitioner was directed to pay 50 per cent of the balance amount and sur-charge that remained payable under the orders and to furnish adequate security for the balance 50 per cent of the amount within seven days from the date of receipt of the order. In the meanwhile, by Exts. P7, P8 and P9 garnishee proceedings were set in motion by the assessing authority. In the meanwhile, by Exts. P7, P8 and P9 garnishee proceedings were set in motion by the assessing authority. As could be seen from Exts.P10 and P11, revenue recovery proceedings were set in motion for recovering a sum of Rs. 32,81, 623.97(?) and Rs. 6,44,65,410.08. In para 27 of the O. P., the petitioner has stated that the total amount now demanded is Rs. 9,75,70,119.60. (Rs. 9 crores and odd). The assessing authority also initiated proceedings under S.23(2) of the Kerala General Sales-tax Act against the petitioner before the Sub Divisional Magistrate, Alleppey (Ext P12). In this Original Petition, the main grievance of the petitioner are two fold. (1) The assessment orders (Exts.P13 to P21) dated 9-2-1985 were passed in undue haste, without proper notice and without affording sufficient opportunity to the petitioner. It is contended that the said orders are violative of the principles of natural justice and so void and illegal. On that hypothesis, the petitioner further contends that the recovery proceedings in pursuance to such orders are equally bad in law and infirm. (2) Regard being had to the inordinate delay, in completing the assessments and in passing the assessment orders for the various years (Exts. P13 to P21) simultaneously, and also setting in motion, more than one of the recovery proceedings simultaneously have resulted in irreparable injury and harm to the petitioner. The petitioner has been asked to deposit 50 per cent of the balance of the tax due which is nearly Rs. 5 crores. It is impossible for any person, regularly doing business to deposit nearly 5 crores of rupees. So, it is contended that the recovery proceedings are also arbitrary and without bona fides. 2. Learned Advocate General invited our attention to the fact that the petitioner has filed appeals from Exts. P13 to P21 before the second respondent and that they are still pending. The learned Advocate General contends that in view of the pendency of the appeals, it is not open to the petitioner to simultaneously invoke the discretionary jurisdiction of this court under Art.226 of the Constitution of India as a parallel remedy and assail the assessment orders. That will in effect deprive the appellate authority of its jurisdiction to dispose of the appeals pending before it. That will in effect deprive the appellate authority of its jurisdiction to dispose of the appeals pending before it. Strong reliance was placed on a Division Bench decision reported in Kunjahammad Haji & others v. State of Kerala and others (1960 KLT 930) and also on the Supreme Court decision reported in Jai Singh v. Union of India (AIR 1977 SC 898) to contend that it is not open to the petitioner to invoke the extraordinary jurisdiction of this court under Art.226 of the Constitution and assail the assessment orders when such orders are pending in appeals before the statutory authorities. Learned Advocate General also brought to our notice the decision reported in Assistant Collector of Central Excise v. Dunlop India Ltd. and others (AIR 1985 SC 330) wherein the Supreme Court has adverted to its earlier decisions, Siliguri Municipality v. Amalendu Das (AIR 1984 SC 653) and Titaghur Paper Mills Co. Ltd. v. State of Orissa (AIR 1983 SC 603) and other decisions, wherein the guidelines in the matter regarding the scope of interference under Art.226 of the Constitution in taxation matters have been laid down. It is contended that this Original Petition is not maintainable. The petitioner does not deserve any relief at the hands of this court at this stage. The recovery proceedings initiated in this case are authorised and valid. 3. Mr. M. Rajasekharan Nair, Advocate has filed C.M.P. No. 9408 of 1985 to implead the General Secretary of Mc. Dowell & H R.B. Employees Congress and another in the Original Petition. We indicated to counsel that the petitioners have no locus standi, in these proceedings to get themselves impleaded. However, we intimated the counsel that we will hear him also in exercise of the powers under R.152(2) of the Rules of the High Court of Kerala, 1971. Accordingly, we heard Mr. Rajasekharan Nair also in the O.P. 4. We shall bear in mind the guidelines laid down by the Supreme Court, regarding the scope of the jurisdiction of this court in exercise of the powers vested in it under Art.226 of the Constitution, in taxation matters in a number of recent decisions. They are, Siliguri Municipality v. Amalendu Das (AIR 1984 SC 653), Titaghur Paper Mills Co. Ltd. v. State of Orissa (AIR 1983 SC 603) and Asst. Collector of Central Excise v. Dunlop India Ltd. and others (AIR 1985 SC 330). 5. They are, Siliguri Municipality v. Amalendu Das (AIR 1984 SC 653), Titaghur Paper Mills Co. Ltd. v. State of Orissa (AIR 1983 SC 603) and Asst. Collector of Central Excise v. Dunlop India Ltd. and others (AIR 1985 SC 330). 5. We heard counsel at length. Bearing in mind the principles laid down by the Supreme Court referred to above, and the other decisions mentioned hereinafter, we are of opinion that the preliminary objection taken by the Advocate General is entitled to acceptance. Delivering the judgment of the Bench, in Kwjahammad Haji and others v. State of Kerala and others (1960 KLT 930) Ansari, C. 3. held: "But the party complaining must not invoke the extraordinary jurisdiction of this Court, and at the same time exercise his statutory right of appeal; for, where such a right of appeal has been availed of, the appellate authority becomes vested with the legal jurisdiction of adjudicating on the complaint, and the authority should not, by our issuing certiorari, be divested of its jurisdiction of adjudication on the order, which becomes the subject-matter of appeal before it. Nor there is, in such case, overriding equity in favour of the petitioner." The Supreme Court in Jai Singh v. Union of India (AIR 1977 SC 898) observed as follows: "It has also been brought to our notice that after the dismissal of the writ petition by the High Court, the appellant has filed a suit, in which he has agitated the same question which is the subject-matter of the writ petition. In our opinion, the appellant cannot pursue two parallel remedies in respect of the same matter at the same time." These decisions certainly support the arguments of the learned Advocate General, that at this stage when the appeals filed by the petitioner are pending before the 2nd respondent, we should not exercise the discretionary jurisdiction of this court under Art.226 of the Constitution of India. We may also add, that the Ist appellate authority exercising jurisdiction under the Kerala General Sales Tax Act, has got the power even to "enhance" an assessment. (S. 34(3)(a)(i) of the Act.) This is a special jurisdiction, unlike ordinary, appellate authorities. We may also add, that the Ist appellate authority exercising jurisdiction under the Kerala General Sales Tax Act, has got the power even to "enhance" an assessment. (S. 34(3)(a)(i) of the Act.) This is a special jurisdiction, unlike ordinary, appellate authorities. "His competence is not restricted to examining those aspects of the assessment which are complained of by the assessee; his competence ranges over the whole assessment and it is open to him to correct the Income-tax Officer not only with regard to a matter raised by the assessee but also with regard to a matter which has been considered by the Income-tax Officer and determined in the course of the assessment. It is also well-established that an assessee having once filed an appeal cannot withdraw it. In other words, the assessee having filed an. appeal and brought the machinery of the Act into working cannot prevent the Appellate Assistant Commissioner from ascertaining and settling the real sum to be assessed, by intimation of his withdrawal of the appeal. Even if the assessee refuses to appear at the hearing, the Appellate Assistant Commissioner can proceed with the enquiry and if he finds that there has been an under-assessment, he can enhance the assessment." CIT v. Rai Bahadur Hardutroy Motilal Chamaria (66 ITR 443 at pp. 449 and 450-Supreme Court). This is a special power or jurisdiction conferred by the statute and if this court were to annul the assessment orders, it will disable the 1st appellate authority from exercising "its statutory duty" which it is bound to carry out. (See Lord Wright in King v. Income-tax Special Commissioner-1936 (1) K.B. 487) quoted with approval in 66 ITR 443 at P. 450). (1936(1) K.B.487;1935 All. E.R. Reprint 808-See also Simon's Taxes (1976 Edn.) Third Edition Vol. (A)(pages 612 & 620). For these reasons, we are not inclined to exercise our discretionary jurisdiction under Art.226 of the Constitution of India and to examine the validity or legality of the various assessment orders impugned, Exts. P13 to P21, which are pending in the appeals. We hold that, in so far as the appeals assailing the above assessment orders (Exts. P13 to P21) are pending before the 2nd respondent, it is not open to the petitioner to invoke the extraordinary jurisdiction of this court under Art.226 of the Constitution of India at this stage. We decline jurisdiction on this sole ground. 6. We hold that, in so far as the appeals assailing the above assessment orders (Exts. P13 to P21) are pending before the 2nd respondent, it is not open to the petitioner to invoke the extraordinary jurisdiction of this court under Art.226 of the Constitution of India at this stage. We decline jurisdiction on this sole ground. 6. Petitioner's counsel next contended that the initiation of more than one mode of recovery as done in this case, is unauthorised. Even assuming that the statute permits the assessing authority to invoke simultaneously more than one mode of recovery, it has been set in motion in this case, without regard to the repercussions it may have on a company with employs a big labour force. Counsel for the trade Union, Mr. Rajasekharan Nair, supported the petitioner's contention and argued that the effect of continued recovery proceedings in this case will result in the crippling of the company itself and throw out of employment the innumerable workmen. Counsel argued that public interest requires that this is a matter in which the petitioner should be allowed sufficient time to pay the huge amount demanded, in instalments. S.23(2) of the Kerala General Sales Tax Act provides as follows: "(2) Any tax assessed or any other amount due under this Act from a dealer or other person may, without prejudice to any other mode of recovery, be recovered (a) as if it were an arrear of land revenue; (b) on application to any Magistrate, by such Magistrate, as if it were a fine imposed by him." Further mode of recovery is provided in S.25 of the Act. // is common ground, that the recovery proceedings inflated at present, are sanctioned by the relevant statute. No arguments were addressed attacking recovery proceedings as "ultravires" or "unauthorised". Nor was it urged, that initiation of more than one mode of recovery proceedings, simultaneously, as such is illegal. We are of the view, that, primarily it is for the Revenue to resort to any one or more of the modes of recovery, as authorised by the statute, in its discretion. The arrears due here is very huge-nearly 10 crores of rupees. The resort to, more than one mode of recovery, simultaneously, in the context of huge arrears, in this case, was not shown to be in any way illegal or unuatho-rised. On motion by the petitioner, the appellate authority by Ext. The arrears due here is very huge-nearly 10 crores of rupees. The resort to, more than one mode of recovery, simultaneously, in the context of huge arrears, in this case, was not shown to be in any way illegal or unuatho-rised. On motion by the petitioner, the appellate authority by Ext. P6 dated 11-3-1985 granted a conditional order of stay. The petitioner was directed to pay 50 per cent of the balance tax and further directed to give security for the balance of 50 percent. In the Original Petition, there is a complaint that the 2nd respondent in passing Ext.P6 order has acted "mechanically" and "failed to act judicially", and has failed to state "any reason" etc. (Paras 18 & 19 of the O.P.). But there is no prayer to quash Eut. P6. The averments are very general and vague and lack particulars. The "discretion" to stay recovery of tax assessed or due, pending the first appeal, is contained in the proviso to S.34(5) of Kerala General Sales Tax Act. The Revenue has filed detailed counter-affidavits dated 21-3-1985 and 28-3-1985 controverting the averments contained in the Original Petition. It is useful to refer to the decision of the Supreme Court in Third Income-tax Officer v. M. Damodar Bhat (71 ITR 806 at pp. 814 and 815), wherein the scope of a somewhat similar provision occurring in S.220(6) of the Income-tax Act was considered. It was held: "We proceed to consider the next question arising in this appeal, viz., whether the High Court in taking the view that the Income- tax Officer did not properly exercise the statutory discretion in issuing the impugned notice with regard to the first item, viz., tax for the assessment year 1960-61 amounting to Rs. 7,056.15. It was argued on behalf of the respond-that there was an appeal pending with the Appellate Assistant Commissioner against the order of assessment and, therefore, it was incumbent upon the Income-tax Officer to exercise the statutory discretion properly under S.220(6) of the new Act in treating the assessee as being in default. The finding of the High Court is that the Income-tax Officer "was not shown to have applied his mind to any of the facts relevant to the proper exercise of his discretion". The finding of the High Court is that the Income-tax Officer "was not shown to have applied his mind to any of the facts relevant to the proper exercise of his discretion". In our opinion, the finding of the High Court cannot be upheld, because, the respondent has not alleged in his writ petition any specific particulars in support of his case that the Income-tax Officer has exercised his discretion in an arbitrary manner. In Para.12 (b) of the writ petition the respondent had merely said that "the order" of the Income-tax Officer made under S.220 was arbitrary and capricious". No other particulars were given by the respondent in his writ petition to show in what way the order was arbitrary or capricious. In the counter-affidavit the allegations of the respondent, have been denied in this respect. We are of opinion that, in the absence of specific particulars by the respondent in in his writ petition, it is not open to the High Court to go into the question whether the Ineom-tax Officer has arbitrarily exercised his discretion." In the light of the above, the general and vague complaint in the Original Petition that the 2nd respondent has acted "machanically" and "tailed to act judicially" and has failed to state any reason etc., is without force. Moreover, there is no prayer in the Original Petition to quash or annul. Ext. P6 order. We consider that this is also relevant in the context. So long as Ext. P6 order passed by the statutory authority stands, the petitioner is bound to comply with it. The learned Advocate General brought to our notice that on motion by the petitioner, Government modified Ext.P6 order and allowed some concession, (vide Ext. Rl(a)). Recovery proceedings are not attacked on any other ground. 7. We are of opinion that when once we are not in a position to interfere with the assessment orders, it is not within our province to give any direction, regarding the manner or method by which the tax assessed should be recovered by the Revenue unless recovery proceedings themselves are independently shown to be vitiated or illegal in any manner. This has not been urged or proved in this case. It is for the Revenue to decide, in which form or by which mode of recovery, it will realise the tax due to it as per the statute. This has not been urged or proved in this case. It is for the Revenue to decide, in which form or by which mode of recovery, it will realise the tax due to it as per the statute. But, we dare say that the circumstances pointed out by the petitioner's counsel as also Mr. Rajasekharan Nair are worthy of consideration by the (Government and) Revenue, if they are inclined to consider the petitioner's case sympathetically. We should make it clear that it is not within our province to consider all such matters. It is entirely a matter to be considered by the Government or Revenue. We leave it there. 8. No other point was argued by petitioner's counsel. 9. The Original Petition is dismissed. There shall, however, be no order as to costs. Issue carbon copy of this judgment to counsel for the parties, on usual terms.