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Allahabad High Court · body

1987 DIGILAW 318 (ALL)

ATMA RAM MISRA v. COMMISSIONER OF SALES TAX

1987-03-13

OM PRAKASH

body1987
OM PRAKASH, J. ( 1 ) THIS is a revision by the assesses for the assessment year 1981-82, against the Tribunals order dated 15th July, 1986, granting waiver, only to the extent of 10 per cent of the assessed tax within the meaning of the proviso to Clause (b) of Section 9 (l-B) of the U. P. Sales Tax Act, 1948 (for short "the Act, 1948" ). ( 2 ) THE assessee is a wholesale grain dealer and a commission agent. The assessee denied having made inter-State sales of foodgrains. The contention before the assessing officer was that the foodgrain was purchased from the farmers for ex-U. P. principals and that no inter-State sale of foodgrains was made by the assessee. Such contention was rejected and the assessing officer held that the assessee had made inter-State sales in foodgrain. This is how the assessment was made under the Central Sales Tax Act, 1956, on the inter-State sales in foodgrain. It is averred by the assessee that for the first time, the purchase of foodgrain made for ex-U. P. principals, was held as inter-State sales and in the past, the case of the assessee that he made purchases of foodgrain on behalf of ex-U. P. principals, was always accepted. It is against such assessment, that the assessee preferred an appeal before the Assistant Commissioner (Judicial), on 21st April, 1986. No return was filed by the assessee in respect of purchase of foodgrain, made for ex-U. P. principals. While filing the appeal before the Assistant Commissioner (Judicial), the assessee also made an application seeking waiver in regard to deposit of 20 per cent of the amount of tax assessed, under the proviso to Clause (b) of Section 9 (1-B ). The contention of the assessee that its financial position was not sound, did not find favour with the Assistant Commissioner (Judicial ). He, therefore, directed the assessee to deposit 20 per cent of the amount of tax assessed within 15 days from the date of his order. The assessee further appealed to the Tribunal, which observed : "we are of the opinion that it is a fit case in which 50 per cent waiver should be allowed. He, therefore, directed the assessee to deposit 20 per cent of the amount of tax assessed within 15 days from the date of his order. The assessee further appealed to the Tribunal, which observed : "we are of the opinion that it is a fit case in which 50 per cent waiver should be allowed. " ( 3 ) THIS is how in the operative portion, the Tribunal said that the order of the Assistant commissioner (Judicial), is modified to the extent that 10 per cent of the assessed tax is waived for entertaining the appeal. ( 4 ) NOT being satisfied with the waiver granted by the Tribunal, the assessee has come up in revision. ( 5 ) I have heard Sri Asthana, learned counsel for the petitioner, and the learned Standing Counsel. Sri Asthana, learned counsel for the assessee, has raised a legal objection which goes to the root of the matter, that the assessee having filed no return and he having admitted no tax liability at any stage in any proceedings under the Act, is not required to deposit any part of the assessed tax before the entertainment of appeal. In short, the submission is that 20 per cent of the amount of tax assessed shall have to be deposited under Clause (b) of Sub-section (1-B) of Section 9, only when that is greater than the admitted liability. There being no admitted liability in this case, Sri asthana argues that the assessee is under no legal obligation to make any deposit for getting the appeal entertained. ( 6 ) ON the other hand, the contention of learned Standing Counsel is that, Clause (b) of sub-section (1-B) of Section 9 comes into operation, when some of the returns or no return has been filed and when no return is filed and no tax liability is admitted, then 20 per cent of the amount of tax assessed is always greater and that will have to be deposited by the appellant before the entertainment of the appeal. ( 7 ) ALSO, it was argued by the Standing Counsel that this was not the argument of the assessee before the Tribunal or the appellate authority, and that, before them, the assessee merely requested for waiver of the condition to deposit 20 per cent of the assessed tax on the ground that its financial position was not sound. ( 7 ) ALSO, it was argued by the Standing Counsel that this was not the argument of the assessee before the Tribunal or the appellate authority, and that, before them, the assessee merely requested for waiver of the condition to deposit 20 per cent of the assessed tax on the ground that its financial position was not sound. In a revision, a legal question can be raised and the assessee could not be estopped from raising the legal objection, sought to be raised now, simply because that was not raised before the authorities below. ( 8 ) LET us dissect the anatomy of Sub-section (1-B) of Section 9, which is reproduced below : 9 (1-B ). No appeal against an assessment order under this Act shall be entertained unless the appellant has furnished satisfactory proof of the payment of not less than- (a) the amount of tax or fee due under this Act on the turnover of Sales or purchases, as the case may be, admitted by the appellant in the returns filed by him or at any stage in any proceedings under this Act, whichever is greater, where all the returns for the assessment year have been filed, or (b) the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns, if any, filed by him or at any stage in any proceedings under this Act, or twenty per cent, of the amount of tax or fee assessed, whichever is greater, where some of the returns for the assessment year have not been filed or no return has been filed for such year : provided that the appellate authority may, for special and adequate reasons to be recorded in writing, waive or relax the requirement of Clause (b) in so far as it relates to deposit of twenty per cent of the amount of tax or fee assessed. " ( 9 ) SUB-SECTION (1-B) raises a complete prohibition against an appeal being entertained, unless the appellant has furnished satisfactory proof of the payment of not less than the amount, as mentioned in Clause (a) or Clause (b) of Sub-section (1-B ). " ( 9 ) SUB-SECTION (1-B) raises a complete prohibition against an appeal being entertained, unless the appellant has furnished satisfactory proof of the payment of not less than the amount, as mentioned in Clause (a) or Clause (b) of Sub-section (1-B ). Clause (a) is attracted in those cases where all the returns have been filed and Clause (b) comes into operation only when some of the returns have been filed or no return has been filed. Clause (a) requires that before entertainment of appeal, an appellant shall have to deposit the amount of tax due under the Act on the turnover, either admitted by him in his returns, or at any stage in any proceedings under the Act. If the amount of tax due on the turnover as shown in the returns or on the turnover admitted at any stage in any proceedings under the Act, is at variance, then the greater admitted amount shall have to be deposited. Clause (b), which is germane in the instant case, requires that either the amount of tax due under the Act on the turnover admitted by the appellant in the returns, if any, filed, or at any stage in any proceedings under the Act or 20 per cent of the amount of tax assessed, whichever is greater, will have to be deposited, before the appeal is entertained. ( 10 ) THE question is whether an appellant will be required to deposit 20 per cent of the amount of tax assessed, when no return is filed fay him and no tax liability is admitted at any stage in any proceedings under the Act. As already pointed out, the submission of Sri Asthana is that Clause (b) of Sub-section (1-B) enjoins upon an appellant to deposit 20 per cent of the amount of tax assessed, only when that is greater than the admitted tax liability. In other words, he urges that 20 per cent of the tax assessed cannot be said to be greater, when there is no admitted liability. The submission of the Standing Counsel is that when no return is filed and no tax liability is admitted at any stage in any proceedings, then 20 per cent of the amount of tax assessed will always be greater, because in that situation, admitted liability would be "nil". The submission of the Standing Counsel is that when no return is filed and no tax liability is admitted at any stage in any proceedings, then 20 per cent of the amount of tax assessed will always be greater, because in that situation, admitted liability would be "nil". ( 11 ) THE question for consideration is, as to with reference to which liability, 20 per cent of the amount of tax assessed should be greater within the meaning of Clause (b ). Upon careful perusal of Clause (b) which is attracted only in those cases where no return has been filed, or where only some of the returns have been filed, it appears that 20 per cent of the amount of tax assessed is required to be deposited, if that is greater than the amount of tax due under the Act on the turnover admitted by the appellant in the returns, if any, filed, or at any stage in any proceedings under this Act. So, the question whether 20 per cent of the amount of tax assessed is greater or not, has to be seen vis-a-vis the amount of tax due under the Act on the turnover, admitted by the appellant in the returns, if any filed, or at any stage in any proceedings under the Act, that is to say, against the admitted liability. Clause (b) does not say that 20 per cent of the amount of tax assessed is required to be deposited before the entertainment of an appeal, if that is greater to nil admitted liability. The cardinal principle of law is that the provisions of fiscal laws should be given strict interpretation and their amplitude should not be liberally widened. Clause (b) so interpreted, supports the contention of Sri Asthana. The word "greater" occurring in Clause (b) is a relative term, and therefore, 20 per cent of the amount of tax assessed has to be greater with reference to the preceding portion of Clause (b) and that portion refers to only admitted liability and none else. If 20 per cent of the amount of tax assessed, is greater than the amount of tax due under this Act oil the turnover admitted by the appellant in the returns, if any, filed, or at any stage in any proceedings under this Act, then only that will have to be deposited. If 20 per cent of the amount of tax assessed, is greater than the amount of tax due under this Act oil the turnover admitted by the appellant in the returns, if any, filed, or at any stage in any proceedings under this Act, then only that will have to be deposited. Twenty per cent of the amount of tax cannot be said to be greater in the instant case, as there is no admitted liability, because no return was filed or no turnover was admitted at any stage in any proceedings under this Act. ( 12 ) THEN it was argued by the Standing Counsel that if Clause (b) is interpreted in the manner as is done on behalf of the assessee, then the expression "or no return has been filed" occurring in clause (b) will become otiose or redundant. The argument proceeds on the footing that Clause (b) enjoins upon an appellant to make deposit even in the case where no return has been filed, otherwise the above expression would not have been used in Clause (b ). It is urged by learned standing Counsel that in a case of no return, the proposition of admitted liability has to be excluded and that, since Clause (b) is attracted also in the cases, where no return has been filed, it would be reasonable to hold that existence of admitted liability is not a precedent condition to invoke Clause (b ). I do not find much force in this submission of the Standing Counsel. The amount of tax due under the Act on the turnover need not be admitted by the appellant, only in the returns filed by him, but tax liability may be admitted at any stage in any proceedings. If no return is filed, but the amount of tax due under the Act on the turnover is admitted by the appellant at any stage in any proceedings, still Clause (b) will apply. Then, it will be seen whether the amount of tax due under the Act on the turnover admitted at any stage in any proceeding is greater, or 20 per cent of the amount of tax assessed is greater. Therefore, the argument that in a case of no return, the proposition of admitted liability has to be excluded, is fallacious. Then, it will be seen whether the amount of tax due under the Act on the turnover admitted at any stage in any proceeding is greater, or 20 per cent of the amount of tax assessed is greater. Therefore, the argument that in a case of no return, the proposition of admitted liability has to be excluded, is fallacious. If there is no admission of turnover in returns, but if turnover is admitted at any stage in any proceedings under the Act, then Clause (b) would still be workable. The question whether 20 per cent of the amount of tax assessed is greater or not, cannot be considered in a void, but that has to be considered only with reference to the turnover admitted either in the returns, if any, filed, or at any stage in any proceedings under the Act. The conclusion reached at by me derives support from Clause (b) to the proviso to Sub-section (1) of Section 9, as substituted by the amending Act 3 of 1971, with effect from 1st October, 1970. Clause (b) of the proviso to sub-section (1) as substituted with effect from 1st October, 1970, which is analogous to sub-section (1-B) of the existing Section 9, reads thus : " (b) where no return is filed,--the amount of tax or fee due under this Act on the turnover of sales or purchases, as the case may be, admitted at any stage in proceedings before the assessing authority, or twenty per cent of the amount of tax or fee assessed, whichever is greater ;" ( 13 ) THE legislature was well aware that there could not be any admitted turnover when no return is filed and therefore, the legislature used the word "admitted" occurring in Clause (b) of the proviso to Sub-section (1), with reference to the turnover admitted at any stage in proceedings before the assessing authority. In that Clause (b), the question whether 20 per cent of the amount of tax assessed was greater, was to be judged with reference to the amount of tax due under the act on the turnover admitted at any stage in any proceedings. In that Clause (b), the question whether 20 per cent of the amount of tax assessed was greater, was to be judged with reference to the amount of tax due under the act on the turnover admitted at any stage in any proceedings. Clause (b) to Sub-section (1-B) of the existing Section 9 has to be given the same meaning in the cases of no return, which Clause (b) of the proviso to Sub-section (1) of Section 9, as substituted with effect from 1st October, 1970, contemplated. There is not much difference between Clause (b) of the proviso to sub-section (1) of Section 9 substituted with effect from 1st October, 1970, and Clause (b) of sub-section (1-B) of existing Section 9. The only difference between the two is, whereas the former applied only to a case of no return, but the latter, is made applicable to a case of no return, or to the cases where some of the returns have not been filed. Clause (b) of the proviso to sub-section (1) of Section 9 does not cover the cases where some of the returns have not been filed. When some of the returns have been filed, they may contain admission of turnover and there will be no difficulty in finding out, whether the amount of tax on admitted turnover is greater, or 20 per cent of the amount of tax assessed is greater. It is only when no return is filed, that the question arises as to how the fact of 20 per cent of the amount of tax assessed being greater, is to be discovered. This is evident from Clause (b) of the proviso to Sub-section (1) of section 9 that, when no return is filed, then the question whether 20 per cent of the amount of tax assessed is greater, is to be seen vis-a-vis the amount of tax due under the Act on the turnover admitted at any stage in proceedings before the assessing authority. ( 14 ) SECTION 9 has been amended from time to time. Firstly, it was amended by Amendment Act 8 of 1964 with effect from 1st April, 1956. Proviso to Sub-section (1) of Section 9, as then substituted, required that no appeal shall be entertained unless satisfactory proof of the payment of admitted tax was furnished. ( 14 ) SECTION 9 has been amended from time to time. Firstly, it was amended by Amendment Act 8 of 1964 with effect from 1st April, 1956. Proviso to Sub-section (1) of Section 9, as then substituted, required that no appeal shall be entertained unless satisfactory proof of the payment of admitted tax was furnished. Then it was amended with effect from 1st October, 1970, as already stated above, and then again the requirement was that either, the tax admitted at any stage in the proceeding, or 20 per cent of the amount of tax assessed, whichever is greater, must be deposited. Again, Section 9 was amended with effect from 1st November 1978, by the U. P. Sales Tax (Amendment and Validation) Act, 1979. Clause (b) as amended with effect from 1st november, 1978, and Clause (b) of Sub-section (1-B) of existing Section 9, almost remain the same with a little difference that whereas in the former, the expression "where some of the returns for the assessment year have not been filed, or no return has been filed for such year" was used in the beginning, in the latter, the said expression has been put at the tail-end of Clause (b ). There is no other difference, much less, substantial, between the two. The legislative history of section 9, so far as it relates to the precedent condition of deposit before entertaining the appeal, shows that the appellant, was always required to deposit admitted tax when returns were filed, and when no return was filed, the amount of tax due under the Act on the turnover admitted at any stage in any proceedings was required to be deposited. At no stage in the past or in the existing Section 9, the appellant, who filed no return and who disputed the tax liability from the beginning, has been required to deposit 20 per cent of the amount of tax assessed ; rather, the requirement has been that, either 20 per cent of the amount of tax assessed, or the amount of tax due under the Act on the turnover admitted, either under the returns, if any filed, or at any stage in any proceedings under this Act, shall have to be deposited. ( 15 ) CONSIDERING the legislative history and taking the semantic view of Clause (b) of Sub-section (1-B) of Section 9, I am of the considered view that the assessee having filed no return, and having disputed the tax liability from the very outset on the purchases of foodgrain, said to have been made for ex-U. P. principals, is not required under Clause (b) of Sub-section (1-B) of section 9, to deposit 20 per cent of the amount of tax assessed before the entertainment of appeal. This being so, the question of seeking waiver under the proviso to Clause (b) of sub-section (1-B) of Section 9 does not arise. ( 16 ) THE Revenue to support its contention that when no return is filed, then, 20 per cent of the amount of tax being always greater has to be deposited before the entertainment of appeal, relied on a decision of the learned single Judge of this Court in the case of Vishwambhar Nath v. Commissioner of Sales Tax, U. P. [1980] 45 STC 349 ; 1979 UPTC 1276. In page 360 of STC (paragraph 3 at page 1276 of UPTC), the learned single Judge observed : "the assessee had not filed any return with the result that Sub-clause (b) of the first proviso to section 9 (1) was attracted to the case, and before an appeal could be entertained, he had to deposit 20 per cent of the amount of tax assessed. " ( 17 ) THE Revenue relied on these observations. This case is clearly distinguishable, inasmuch as, no direct question was raised therein before the court, whether under Clause (b) to Sub-section (1-B) of Section 9, the appellant who filed no return and who did not admit any liability at any stage in any proceedings, will be liable or not, to deposit 20 per cent of the amount of tax assessed. The questions before the learned single Judge, as reproduced in page 350 of STC (paragraph 1 at page 1276 of UPTC), were entirely different. ( 18 ) IN the result, the revision succeeds and is allowed. Let a copy of this order be sent to the tribunal to pass an order under Section 11 (8), directing the appellate authority to entertain the appeal of the assessee, without calling upon him to deposit any portion of 20 per cent of the amount of tax assessed. .