R.S. Pathak, J.
1. The petitioner is a dealer in toilet goods, cosmetics and other articles of general merchandise. It submitted a return of its turnover for the assessment year 1963-64. That return included the turnover of imported goods liable to tax at single point under Section 3-A of the U.P. Sales Tax Act. The Sales Tax Officer made an assessment order dated 30th September, 1965, determining the turnover of imported goods at Rs. 2,60,000.00. The petitioner filed an appeal under Section 9 of the Act. In the memorandum of appeal it mentioned that the turnover of imported goods taxable at single point was Rs. 85,000 and deposited a sum of Rs. 7,001.73 towards the tax admitted by it to be due in respect of that turnover. When the appeal came on for hearing a preliminary objection was raised on behalf of the Sales Tax Officer that the entire amount of admitted tax had not been deposited by the petitioner. The objection was upheld by the Additional Assistant Commissioner (Judicial) Sales Tax, and by his order dated 19th July, 1966, he dismissed the appeal as incompetent. The petitioner applied in revision under Section 10 of the Act to the Judge (Revisions) Sales Tax, but the revision application has been dismissed by his order dated 3rd February, 1968.
2. The petitioner now prays for certiorari against the order of the Additional Assistant Commissioner (Judicial) and of the Judge (Revisions).
3. In support of the objection that the appeal was incompetent because the entire amount of admitted tax had not been deposited by the petitioner, it was pointed out before the Additional Assistant Commissioner (Judicial) that the turnover disclosed by the petitioner in its return and admitted by it during the assessment proceedings was Rs. 1,11,844.02 and not Rs. 85,000 now shown in the memorandum of appeal. It was contended that the turnover disclosed in the return represented the basis for computing the admitted tax liability. The petitioner urged in reply that the turnover of imported single point taxable goods was less than Rs. 85,000 and that the figure of Rs. 1,11,844.02 was entered in the return because some of the goods which were actually subject to multi-point tax had been erroneously entered in the turnover of imported single point taxable goods. It was pointed out that some of the goods were subject to multi-point tax and not to single point tax. The Additional Assistant Commissioner (Judicial) did not accept the plea of the petitioner and observed :
In the instant case the returns were filed. The net turnover was shown in those returns and during the assessment proceedings the appellant admitted the net turnover both of imported single point and multipoint taxable goods. Undoubtedly in the instant case the tax liability will be computed on the basis of the admissions.
4. It would appear, therefore, that in the view of the Additional Assistant Commissioner (Judicial) the turnover disclosed in the return must be taken for the purpose of determining the tax liability contemplated by the proviso to Section 9(1) of the U.P. Sales Tax Act. The Judge (Revisions) endorsed the view that the appeal was incompetent.
5. The question then is whether in computing the admitted tax liability for the purpose of the proviso to Section 9(1) of the U.P. Sales Tax Act the appealing assessee must be confined to the turnover disclosed by him in the return or whether it is open to him to adopt a different amount as the true turnover.
6. There has been considerable debate before us as to the exact meaning of the expression 'the amount of tax admitted by the appellant to be due' in the proviso to Section 9(1) of the Act. It is urged on behalf of the petitioner that the amount of admitted tax must mean the tax liability admitted by an appellant to be due at the time when he files the memorandum of appeal. On the contrary, the submission on behalf of the respondent is that the tax liability admitted by an appellant must be the tax determined on the basis of his return. It is said that the turnover shown in the return is conclusive so far as the calculation of the admitted tax liability is concerned', and it is not open to an appellant challenging the assessment order to adopt a lesser turnover for the purpose of computing the admitted tax liability.
7. We think it desirable for the purposes of the controversy raised before us to set out the relevant provisions of the Act. Section 7 provides :
7. (1) Every dealer who is liable to pay tax under this Act shall submit such return or returns of his turnover at such intervals, within such period, in such form and verified in such manner, as may be prescribed; but the assessing authority may in its discretion, for reasons to be recorded, extend the date for the submission of the return by any person or class of persons.
(1-A) Before submitting the return under Sub-section (1) or along with such return the dealer shall deposit in such manner as may be prescribed, the amount of tax due on the turnover shown in such return.
8. Rule 41(1) of the U.P. Sales Tax Rules provides that a dealer liable to pay tax under the Act must submit to the Sales Tax Officer a return of his gross turnover for the quarters ending June 30, September 30, December 31 and March 31 in Form IV. Rule 41(2) requires :
Before submitting the return under Sub-rule (1), the dealer shall deposit in the Treasury the amount of tax calculated by him on the turnover shown in such return and shall submit the Treasury chalan with the return or submit with the return a cheque for the amount so calculated.
9. Form IV is the statutory form of the return of turnover. Head No. 7 of the Form provides for particulars of the turnover. Entry No. I of that head relates to the total sale proceeds of goods in Uttar Pradesh. Entry No. II refers to sale proceeds not liable to tax. At entry No. Ill the taxable turnover is entered. It is the difference between entry No. I and entry No. II. Then, head No. 8 provides for entering the particulars from which the tax payable is to be determined. The particulars contemplated are (i) class of goods, (ii) turnover, (iii) rate of tax and (iv) amount of tax. Under head No. 9 the dealer must enter the total amount of tax realised from the customers. Under head No. 10 the dealer must enter the tax deposited in the Treasury. The number of the challan and the date of the deposit have to be mentioned.
10. It is clear that by reason of Section 7(1-A) and Rule 41(2) the dealer is under a duty to deposit the tax due on the basis of the turnover returned by him before submitting the return or along with it. If he does not do so and the return is submitted without the treasury challan or cheque, it is open to the Sales Tax Officer under Rule 41(3) to ignore the return and determine the turnover to the best of his judgment and provisionally assess the tax payable. It is followed by a notice in Form XI calling upon the dealer to pay the tax assessed within the time specified in the notice. If the dealer does not comply with the notice of demand the Sales Tax Officer is entitled to recover the tax due as arrears of land revenue. He is also liable to pay along with the tax demand a sum by way of interest at eighteen per cent, on the tax remaining unpaid. There are other penal and punitive proceedings also ensuring that the dealer pays the advance tax, namely, tax before assessment, on the basis of his return. There is for example Section 14(1)(e) which makes a person acting in contravention of the Act or the Rules liable to fine on conviction, and Section 14(2)(e) makes a person who wilfully evades payment of tax liable to imprisonment and/or fine on conviction.
11. We may now turn to the provisions providing for appeals. Section 9(1) says :
Any dealer objecting...to an assessment made under Section 7 ...may...appeal.
Provided that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due, or of such instalments thereof as may have become payable.
12. It will be noticed at once that while Section 7(1-A) requires a dealer to deposit the tax 'due on the turnover shown in such return' the proviso to Section 9(1) requires the deposit of the tax 'admitted by the appellant to be due.' The principal distinction between the two requirements is marked by the purpose for which they have been enacted. Under Section 7(1-A) the amount of tax required to be deposited is with reference to the return filed by the dealer. What is stated in the return constitutes his admission at that stage in regard to the taxable turnover and in regard to the rate of tax attracted thereto. Inasmuch as the Act is a fiscal statute, a duty has been laid upon the dealer to deposit the amount of tax which according to his return he concedes is due from him. The assessing authority may, however, find that the true taxable turnover is an amount in excess of the turnover disclosed by the dealer in the return or that the rate applicable to the turnover is greater than that conceded by the dealer. The assessing authority will, therefore, make an assessment order assessing the dealer to tax on the higher turnover or at the higher rate. The dealer may not accept the findings contained in the assessment and he may decide to appeal under Section 9(1). But his appeal will not be entertained unless he has deposited the amount of tax admitted by him to be due. The tax admitted by him to be due is the tax which is not disputed by him to be due. The words 'admit' and 'dispute' are antonymous to each other. That which is admitted when the appeal is filed remains unchallenged in appeal. The admission or dispute must relate to the appellate stage. It cannot relate back to the stage at which the return is filed. And that is clear for the following reasons. When an assessment order is made in which the turnover assessed or the rate of tax applied is in excess of that stated in the return filed by the dealer, the dealer may dispute the excess of the turnover or the higher rate in appeal. Now, he may not dispute the entire excess but may appeal only in respect of part of it. That part of the excess which is not the subject of appeal is admitted by him. That part of the excess admitted by him represents a turnover in addition to that set out in the return. The Legislature contemplates that in respect of the undisputed part of the excess also the dealer should deposit the tax before the appeal is entertained. That requirement carries the amount of deposited tax to a stage beyond the amount of tax deposited on the basis of the return. This conforms to the principle expressed in the statute that the dealer must deposit at the earlier appropriate stage the amount of tax not disputed by him. The first stage is when he files the return. He is required to deposit the tax on the basis of the return. The next stage is after the assessment order when he files an appeal. He must deposit the further amount of tax which he admits to be due and does not dispute in appeal.
13. To identify the tax admitted to be due at the stage of filing the appeal with the tax liability determined on the basis of the return will be to refuse to recognise that a higher tax liability may be admitted at the time of filing the appeal. We are reluctant to hold that the Legislature contemplated that a dealer appealing against part only of the excess turnover assessed or conceding a rate higher than that entered in his return should not be required to deposit the further undisputed tax liability when filing an appeal. That would be in line with the policy of the Legislature that the dealer should pay at successive stages the tax successively admitted by him.
14. Now it may also happen that the dealer may have erroneously entered a turnover in the return which in law is not taxable or concede a rate in the return which is in excess of the true rate. He may do so under a mistaken impression of the law, and consequently concede a higher tax liability than is really due. In the appeal against the assessment order, he may take the position that the true turnover is in reality less than the turnover returned by him or that the rate truly attracted is lower than the rate entered by him in the return. We see no reason why in the appeal against the assessment order he should not be entitled to question the taxable turnover and the rate shown by him in the return if what has been entered in the return is erroneous and due to a mistake of law. In that event, the amount of tax admitted by the appellant to be due when filing the appeal would be an amount less than that conceded by him on the basis of the return. Now, if the dealer has complied with Section 7(1-A) and Rule 41(2) he will have paid the tax on the basis of the return and no question arises of any further deposit of tax when he files the appeal. But if he has not complied with Section 7(1-A) and Rule 41(2) then for the purposes of the proviso to Section 9(1) he need deposit at the stage of filing the appeal only that amount of tax which he admits to be due and which according to the grounds taken in appeal may be less than if the tax is computed on the basis of the return. We can conceive of no reason why if at the stage of filing the appeal the dealer is liable to pay the further tax due on the additional turnover or higher rate, over and above that disclosed in the return, he should not be entitled to a corresponding advantage when he disputes in the appeal a part of the returned turnover or relies on a lower rate of tax.
15. There is another aspect from which the matter may be examined. And that arises upon the different consequences following from non-compliance with Section 7(1-A) and Rule 41(2) on the one hand and the proviso to Section 9(1) on the other. It is possible that the dealer may not comply with Section 7(1-A) and Rule 41(2). For that he will be faced with a best judgment assessment and coercive recovery proceedings, and in addition, to the punitive proceedings under the Act. Those measures bear relation to the omission of the dealer to comply with Section 7(1-A) and Rule 41(2). On the contrary compliance with the proviso to Section 9(1) relates to the stage of filing the appeal, and non-compliance with that provision has consequences different from non-compliance with the provisions of Section 7(1-A) and Rule 41(2). Non-compliance with the proviso to Section 9(1) defeats the exercise of the right of appeal because that appeal will not be entertained.
16. It was not necessary for the Legislature to impose a bar to the entertaining of the appeal in order to secure the payment of tax on the basis of the return. As we have pointed out above, sufficient provision has been made to ensure that compliance is made and to recover the tax if it is not.
17. It seems to us that having regard to the purpose for which compliance is required of Section 7(1-A) and Rule 41(2) on the one hand and the proviso to Section 9(1) on the other and the different consequences which follow in each case the conclusion is inescapable that the tax admitted to be due under the proviso to Section 9(1) cannot be identified with the tax payable under Section 7(1-A) and Rule 41(2). In our opinion, when computing the admitted tax liability for the purpose of the proviso to Section 9(1) of the Act, regard should be had to the position taken by the appealing assessee in the memorandum of appeal. The appellate authority should not be guided in the matter by what has been stated in the return filed by the assessee. The appellate authority should examine the memorandum of appeal and determine, by reference to the grounds set out in the memorandum and the relief sought in it, what is the turnover and the rate of tax admitted and not disputed by the assessee at the stage of filing the appeal. Having ascertained that, the appellate authority will then proceed to determine the admitted tax liability. In the instant case, inasmuch as the Additional Assistant Commissioner (Judicial) proceeded on the basis of the statements made in the return filed by the petitioner, he misdirected himself in law.
18. The respondents point out that the petitioner had stated during the hearing of the revision application before the Judge (Revisions) that the turnover was Rs. 1,11,844.02 and that it had mistakenly entered the turnover as Rs. 85,000 in the memorandum of appeal. We are concerned here with the position obtaining in the appeal before the Additional Assistant Commissioner (Judicial), because it is upon the facts arising at that stage that the Additional Assistant Commissioner (Judicial) had to determine what was the admitted tax liability. The case of the petitioner throughout in the appeal was that the turnover was Rs. 85,000 and that it had been erroneously shown as Rs. 1,11,844.02 in the return as the sales of some goods subject to multi-point tax had been erroneously entered as sales subject to single point tax. It is quite possible that the explanation attempted before the Judge (Revisions) was merely an after-thought resorted to by the petitioner in the belief that if he alleged an innocent error it would influence the Judge (Revisions) to take a favourable view.
19. In the result, was allow the petition and quash the order dated 1st July, 1966, of the Additional Assistant Commissioner (Judicial) and the order dated 3rd February, 1968, of the Judge (Revisions). The Additional Assistant Commissioner (Judicial) will now take up the appeal of the petitioner and dispose it of afresh in accordance with law. It will be open to him to decide whether, in the light of the foregoing observations, the appeal is competent. If he holds so, he will then dispose of the appeal on its merits. The petitioner is entitled to its costs.