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Commissioner, Sales Tax Vs. R.P. Gupta and Company - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case Number Sales Tax Revision No. 405 of 1981
Judge
Reported in[1984]55STC218(All)
AppellantCommissioner, Sales Tax
RespondentR.P. Gupta and Company
Appellant Advocate The Standing Counsel
Respondent Advocate A.K. Gupta and ; G.R. Gupta, Advs.
DispositionRevision dismissed
Cases ReferredIn Phudki v. State of U. P.
Excerpt:
.....refused to sign the survey note as well. -(1) if the assessing authority is satisfied that any dealer or other person- (a) .(j) obstructs or prevents an officer empowered under section 13 or the officer-in-charge of a check-post or barrier established under section 28 from performing any of his functions under this act, or. the dealer clearly obstructed or prevented an authorised officer in performance of his functions under the act. the minimum requirement of reasonable opportunity envisaged by sub-section (3) of section 15-a, in the context, is that the person proceeded against must be clearly told the accusation which is to be met by him. the imposition of penalty, in the circumstances, is unsustainable on account of the failure of the assessing authority to afford an opportunity..........this act, or....it may, after such inquiry, if any, as it may deem necessary, direct that such dealer or person shall pay, by way of penalty, in addition to the tax, if any, payable by him....(vi) in a case referred to in clause (h) or clause (j), a sum not exceeding rs. 5,000; and.(2) ...(3) no order shall be made under sub-section (1) unless the dealer or other person concerned has been heard or has been given a reasonable opportunity of being heard.(4) ...(5) ....6. section 13 of the act, inter alia, provides that an authorised officer may require any dealer to produce before him any book, document or account relating to his business and may inspect, examine and copy the same. he may seize them too where he has reasonable grounds for believing that any dealer is trying to evade.....
Judgment:

V.K. Mehrotra, J.

1. The Commissioner of Sales Tax, U. P., has assailed in this revision under Section 11(1) of the U. P. Sales Tax Act an order passed by the Sales Tax Tribunal, Allahabad, setting aside the penalty imposed upon M/s. R. P. Gupta and Company, a dealer who is the opposite party in this revision.

2. The dealer carries on business in furniture. On 2nd September, 1973, a survey was made of his business premises and one Tilak Raj was present at the shop. He gave out that he was the brother of one of the partners (Sri R. P. Gupta). It is said that while accounts were being scrutinised, Sri R. P. Gupta also reached there. He was asked to affix his signatures upon two copy books which were found at the time of survey and had been signed by the Surveying Officer. Instead, however, of signing and returning them to the Surveying Officer Sri R. P. Gupta is said to have handed over those copy books to a munim and asked him to fun away with them. The munim did so. The copy books contained entries relating to business transactions of the dealer. Sri Gupta refused to sign the survey note as well.

3. A notice was served upon the dealer to show cause why penalty should not be imposed upon him under Section 15-A(1)(j) and (vi). The dealer showed cause which was not found satisfactory by the assessing authority which imposed the maximum permissible penalty of Rs. 5,000. In appeal, the Assistant Commissioner (Judicial), Sales Tax, upheld the penalty order but reduced the amount to Rs. 4,000.

4. The Tribunal, while dealing with the matter in a second appeal filed by the dealer, took the view that the penalty order could not be upheld, firstly, because the notice issued to the dealer did not communicate to him the exact nature of the accusation which was to be considered against him, and secondly, that the conduct of the dealer did not amount to an obstruction or prevention by him of an officer in performance of any of his functions under the Act. It therefore, set aside the order. This is how the Commissioner has approached this Court for redress.

5. Section 15-A of the Act, in so far as it is material, reads thus :

Section 15-A. Penalty in certain cases.-(1) If the assessing authority is satisfied that any dealer or other person-

(a) ...

...

(j) obstructs or prevents an officer empowered under Section 13 or the officer-in-charge of a check-post or barrier established under Section 28 from performing any of his functions under this Act, or....

It may, after such inquiry, if any, as it may deem necessary, direct that such dealer or person shall pay, by way of penalty, in addition to the tax, if any, payable by him....

(vi) In a case referred to in Clause (h) or Clause (j), a sum not exceeding Rs. 5,000; and.

(2) ...

(3) No order shall be made under Sub-section (1) unless the dealer or other person concerned has been heard or has been given a reasonable opportunity of being heard.

(4) ...

(5) ....

6. Section 13 of the Act, inter alia, provides that an authorised officer may require any dealer to produce before him any book, document or account relating to his business and may inspect, examine and copy the same. He may seize them too where he has reasonable grounds for believing that any dealer is trying to evade the liability for tax or other dues under the Act and if something necessary for purposes of investigating into his liability may be found therein, he may retain them for the periods mentioned in the provision.

7. It is clear that an authorised officer may, in bond fide exercise of his functions as empowered under Section 13 be obstructed or prevented by an action of a. dealer or other person where a necessary document is rendered out of his reach by the dealer or that person by his action. There is no inflexible concept of obstruction or prevention. It has to be judged in the context of the provisions of a statute which makes the conduct of a person in that regard punishable. An ingredient necessary for making an action liable to penalty under one statute may not be necessary in another. The U. P. Sales Tax Act is an enactment concerned with the levy, quantification and realisation of tax upon sale or purchase by a dealer. The powers and functions of the various authorities thereunder being directed to the achievement of that object, it is clear that in interpreting the various clauses of Section 16-A(1) of that Act, regard will have to be given to it. Thus viewed, not only an overt act on the part of a dealer or any other person of physically obstructing or preventing an authorised officer in performing any of his functions under the Act but also an action which has the effect of disabling an authorised officer from utilising a book, document or account relating to the dealer's business for purposes of enquiry into his liability for payment of tax would be included within the ambit of obstruction or prevention by him of an officer from performing his functions under the Act.

8. In Phudki v. State of U. P. AIR 1955 All 104 this Court was called upon to decide whether running away of a person from arrest would amount to voluntary obstruction by him of any public servant in the discharge of his public functions within the meaning of Section 186, Indian Penal Code. This Court took the view that it did not. For, in the opinion of Mukerji, J., who decided that case, merely running away from arrest did not amount to obstruction and that 'obstruction connotes some positive act, which would deter the man obstructed from carrying out his intentions'.

To be or come in the way of; hinder from...action of operation; To impede' is to 'obstruct' according to Webster's III New International Dictionary (page 1559). 'To deprive of power or hope of acting, operating or succeeding in a purpose; To frustrate' is to 'prevent' (Webster's III New International Dictionary, page 1798). This is the concept of obstruction or prevention implicit in Sub-clause (j) of Section 15-A(1) in the context of the objects and the provisions of the U. P. Sales Tax Act.

9. The facts found in the case being that the appellant's partner Sri R. K. Gupta handed over the copy books to a munim and asked him to run away with it, it is obvious that he rendered them out of the reach of the assessing authority for purposes of scrutiny and utilisation with a view to determine the dealer's liability to payment of tax under the Act. The dealer clearly obstructed or prevented an authorised officer in performance of his functions under the Act.

10. However, the question that still needs consideration is whether the order imposing penalty can be sustained in the instant case. The answer appears to be in the negative and the reason for it is not far to seek.

11. Sub-section (3) of Section 15-A postulates a reasonable opportunity of hearing to the person sought to be penalised. Proceedings for imposition of penalty undoubtedly are quasi-criminal in character. The minimum requirement of reasonable opportunity envisaged by Sub-section (3) of Section 15-A, in the context, is that the person proceeded against must be clearly told the accusation which is to be met by him. The act or omission on the basis whereof he is said to have rendered himself liable for imposition of penalty must be specifically disclosed to him. Then alone would he be able to put forward his defence. In other words, the opportunity contemplated by Sub-section (3) has to be an effective one. That it can only be when the person sought to be penalised knows what is the lapse attributed to him for rendering himself liable for penalty.

12. The Tribunal has found that all that was contained in the notice served upon the applicant was that he had not rendered proper co-operation at the time of the survey. The words used were these :

Sarvekshan dinank 2-9-78 ke samaya uchit sahyog nuheen diya hai.

13. Obviously, the applicant was not called upon to explain any accusation about having obstructed or prevented an officer empowered under Section 13 from performing any of his functions under the Act. The notice was, thus, not only vague but wholly unrelated to the accusation for which penalty was imposed upon the applicant. The imposition of penalty, in the circumstances, is unsustainable on account of the failure of the assessing authority to afford an opportunity to the applicant in terms of Sub-section (3) of Section 15-A of the Act. The Tribunal was, to that extent, right in the view taken by it.

14. In consequence, the revision fails and is dismissed but parties are left to bear their own costs.


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