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Babulal Mohanlal Kandele Vs. Commissioner of Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 457 of 1973
Judge
Reported in1980MPLJ504
AppellantBabulal Mohanlal Kandele
RespondentCommissioner of Sales Tax
Appellant AdvocateH.S. Shrivastava, Adv.
Respondent Advocate S.L. Saxena, Government Adv.
DispositionAppeal dismissed
Cases ReferredLakshmiratan Engineering Works v. Assistant Commissioner A.I.R.
Excerpt:
.....before january, 1968, and as the assessee had deposited the tax required to be deposited by that time, the appellate assistant commissioner could not have refused to entertain or admit the appeal for failure to deposit the tax required to be deposited. on the date when the appeal was taken up for admission in january, 1968, the condition of deposit of tax was satisfied and the appeal, therefore, ought not to have been summarily rejected for want of deposit of tax. 1, a division bench of the allahabad high court after referring to 'statutory constructions' by crawford (1940 edition, pages 392-393) observed that it is well-established that statutes pertaining to the right of appeal should be given a liberal construction in favour of the right since they are remedial and the right should..........directed that a sum of rs. 6,000 out of the tax assessed be paid by 30th november, 1962. the assessee deposited rs. 1,000 on 29th november, 1962. he then deposited the balance amount of rs. 5,000 on 15th march, 1965. on 8th january, 1968, a notice was issued by the appellate assistant commissioner to the assessee as to why the appeal should not be summarily rejected on the ground that rs. 6,000 as tax was not deposited within the time allowed. the assessee replied to this notice. he referred to the various circumstances because of which the amount of rs. 6,000 could not be deposited before 30th november, 1962. the assessee also submitted that as the amount had already been deposited by 15th march, 1965, the appeal should not be dismissed simply because the amount was not deposited.....
Judgment:

G.P. Singh, C.J.

1. This is a reference made by the Sales Tax Appellate Tribunal referring for our answer the following questions of law :

'(1) Whether, in the facts and circumstances of the case, it was right to hold that the appeal before the first appellate authority could be considered to be admitted only on 15th March, 1965, by which date one-third of the amount of the tax due was deposited and, therefore, that it was time-barred.

(2) Whether, in the facts and circumstances of the case, the dismissal of the appeal by the first appellate 'authority on 22nd January, 1968, was proper, having regard to the fact that the amount directed to be deposited was paid by that time though it was paid after the time allowed for payment by the said authority.'

2. The facts briefly stated are that the period of assessment is from 1st November, 1959, to 26th October, 1960. The assessee was assessed to tax under the Madhya Pradesh General Sales Tax Act, 1958, at Rs. 14,445. The assessee had paid Rs. 841 along with the return. The assessee filed an appeal against the order of assessment before the Appellate Assistant Commissioner on 20th October, 1962. On an application made by the assessee, the Appellate Assistant Commissioner directed that a sum of Rs. 6,000 out of the tax assessed be paid by 30th November, 1962. The assessee deposited Rs. 1,000 on 29th November, 1962. He then deposited the balance amount of Rs. 5,000 on 15th March, 1965. On 8th January, 1968, a notice was issued by the Appellate Assistant Commissioner to the assessee as to why the appeal should not be summarily rejected on the ground that Rs. 6,000 as tax was not deposited within the time allowed. The assessee replied to this notice. He referred to the various circumstances because of which the amount of Rs. 6,000 could not be deposited before 30th November, 1962. The assessee also submitted that as the amount had already been deposited by 15th March, 1965, the appeal should not be dismissed simply because the amount was not deposited by 30th November, 1962. The Appellate Assistant Commissioner by order dated 22nd January, 1968, directed that the record of the appeal be consigned to the record-room. The assessee preferred an appeal which was rejected by the Tribunal by order dated 6th August, 1969. On an application made by the assessee, the questions of law which we have set out above have been referred to us by the Tribunal.

3. The relevant statutory provision is contained in Sub-sections (3) and (4) of Section 38, which read as follows :

(3) No first or second appeal against an order of assessment, with or without penalty, shall be admitted by the appellate authority unless the tax with penalty, if any, in respect of which the appeal has been preferred, has been paid :

Provided that the said authority may, if it deems fit, for reasons to be recorded in writing, entertain an appeal against such order on payment of such smaller amount which shall not be less than one-third of the amount of the tax including penalty, if any, as it may direct. (4) Every first or second appeal shall be filed within thirty days from the date of communication of the order against which the appeal is to be filed.

A reference is also necessary to rule 58, which, as then in force, was as follows :

58. Summary rejection.-(1) If the memorandum of appeal or application for revision does not comply with all or any of the requirements of rule 57 or the appellant fails to pay the tax with penalty, if any, in respect of which the appeal has been preferred or such smaller amount as the appellate authority may direct under the proviso to Sub-section (3) of Section 38, the appeal or application for revision may be summarily rejected :

Provided that no appeal or application for revision shall be summarily rejected under this sub-rule unless the appellant or applicant is given such opportunity as the appellate or revising authority thinks fit to amend such memorandum of appeal or application for revision so as to bring it into conformity with the requirements of rule 57. (2) An appeal or application for revision may also be summarily rejected on any other ground which should be reduced to writing by the appellate or revising authority :Provided that before an order summarily rejecting an appeal or application for revision under this sub-rule is passed, the appellant or applicant shall be given a reasonable opportunity of being heard.

4. A look at Sub-sections (3) and (4) of Section 38 will show that we have to make a distinction between filing of appeal and admission or entertainment of appeal. Section 38(4) says that every first or second appeal shall be filed within thirty days from the date of communication of the order against which the appeal is to be filed. The section does not provide that the tax or penalty against which an appeal is filed should also be deposited before or at the time of filing of the appeal. It is clear, therefore, that when the appeal was filed within the period of limitation on 20th October, 1962, it could not be rejected as barred by limitation simply on the ground that the amount of tax had not been deposited by the assessee. Section 38(3) and the proviso to it use the words 'admitted' and 'entertain' respectively. These words in contrast to the word 'file' mean the stage when the appeal comes up for consideration before the court: Lakshmiratan Engineering Works v. Assistant Commissioner A.I.R. 1968 S.C. 488. The appellate authority is directed not to admit the appeal unless the tax with penalty in respect of which the appeal has been preferred has been paid. This prohibition is subject to the discretion conferred on the appellate authority by the proviso. The appellate authority may entertain the appeal on payment of such smaller amount which shall not be less than one-third of the amount of the tax including penalty as it may direct. The very fact that at the stage of admission the appellate authority can reduce the amount of tax which the appellant must deposit for entertainment of his appeal shows that the appellate authority may grant time for depositing the amount of tax which it may direct the appellant to deposit. Now, in the instant case, on the application made by the assessee, the appellate authority directed that the assessee should deposit Rs. 6,000 as tax by 30th November, 1962. Thereafter although he could deposit the entire amount only by 15th March, 1965, no action was taken to summarily reject the appeal under rule 58. The assessee was issued a notice on 8th January, 1968. The assessee brought to the notice of the appellate authority that the amount of Rs. 6,000 had been deposited in 1965. The appellate authority, i.e., the Appellate Assistant Commissioner, without giving any reasons, on 22nd January, 1968, directed that the appeal be consigned to the record-room. The Tribunal in appeal decided against the assessee essentially on the ground that the appeal was barred by limitation as one-third amount of the tax was deposited after the period of limitation. The Tribunal read the proviso to Section 38(3) to mean that 'no appeal shall be admitted unless a minimum of one-third of the amount of tax assessed is deposited before or along with the appeal memo'. This in our opinion is a complete misreading of Section 38. The appellate authority cannot certainly direct admission or entertainment of an appeal unless one-third amount of the tax is deposited because it has no discretion under the proviso to relax the condition of deposit of tax below one-third of the amount of tax. But the proviso does not say that one-third amount of the tax must be deposited before or along with the memo of appeal or even within the period of limitation allowed for filing of the appeal. The condition of deposit of tax is to be complied with before the appeal is taken up for admission or entertainment. This stage as noticed earlier is subsequent to the stage of filing of the appeal. So it is not correct to say that one-third of the tax must be paid before or along with the filing of the memo of appeal or within the period of thirty days allowed for filing of the appeal. The appeal is within limitation if it is filed within thirty days. The entire amount of the tax or such smaller amount up to one-third of the amount of tax must be deposited before the appeal can be admitted or entertained. Now when the appellate authority itself on an application made by the appellant grants time for deposit of one-third of the amount of tax, it means that the appellate authority does not take up the appeal for admission or entertainment on that date and will not take it up for that purpose before the expiry of the period allowed for depositing the tax. There is nothing to prevent the appellate authority in postponing the consideration of the appeal for admission or entertainment to enable the assessee-appellant to comply with the requirement of depositing the tax before the appeal is admitted or entertained. Indeed that power is implicit in the proviso which enables the appellate authority to reduce the amount of tax up to one-third for being deposited before admission. When the appellate authority reduces the amount of tax to be deposited and grants time for depositing it, it in effect postpones the consideration of admission or entertainment of appeal. There is nothing to prevent the appellate authority in extending the time once granted and thereby further postponing the consideration of admission or entertainment of appeal. In our opinion, this power of postponing consideration of appeal is not restricted to those cases where the amount of tax required to be deposited is above one-third. It also applies where the amount of tax required to be deposited is reduced to one-third. The appellate authority should consider the question of compliance with the condition of deposit of tax on the date when it last takes up the appeal for consideration of admission. In the instant case, the Appellate Assistant Commissioner granted time up to 30th November, 1962, for depositing one-third of the amount of tax. The assessee deposited that amount after expiry of that period on 15th March, 1965. But the appeal was not taken up for admission or entertainment before January, 1968, and as the assessee had deposited the tax required to be deposited by that time, the Appellate Assistant Commissioner could not have refused to entertain or admit the appeal for failure to deposit the tax required to be deposited. On the date when the appeal was taken up for admission in January, 1968, the condition of deposit of tax was satisfied and the appeal, therefore, ought not to have been summarily rejected for want of deposit of tax.

5. The first proviso to Section 30(1) of the Income-tax Act, 1922, enacted that 'no appeal shall lie against an order under Sub-section (1) of Section 46 unless the tax has been paid'. In construing this provision it was generally held that if the tax is fully paid before the appeal against the order under Section 46(1) is heard, the appeal would be competent even if the tax had not been paid at the date of presentation of the appeal: Kamdar Brothers v. Income-tax Commissioner, Bihar and Orissa [1955] 27 I.T.R. 176 and Kashiram Bhajan Lal v. Commissioner of Income-tax [1962] 45 I.T.R. 1. These cases support our conclusion that payment of tax need not be made before or at the time of presentation of appeal. In the Kashiram's case [1962] 45 I.T.R. 1, a Division Bench of the Allahabad High Court after referring to 'Statutory Constructions' by Crawford (1940 edition, pages 392-393) observed that it is well-established that statutes pertaining to the right of appeal should be given a liberal construction in favour of the right since they are remedial and the right should not be restricted or denied unless such a construction is unavoidable and in case of doubt the same should be resolved in favour of the right of appeal. We are in respectful agreement with these observations. We will also mention the decisions of the Supreme Court in Lakshmiratan Engineering Works v. Assistant Commissioner A.I.R. 1968 S.C. 488., Lalta Prasad Khinni Lal v. Assistant Commissioner A.I.R. 1972 S.C. 401 and Kanpur Vanaspati Stores v. Commissioner of Sales Tax A.I.R. 1973 S.C. 2373, where it has been held while construing Section 9 of the U. P. Sales Tax Act, 1948, that an appeal under that section can be said to be properly filed only when tax admitted is paid. These decisions proceed on the requirement of the proviso to Section 9 of the U. P. Act which requires that no appeal shall be entertained unless it is accompanied by satisfactory proof of payment of admitted tax. Rule 66 of the U. P. Rules also requires that chalan showing deposit in the treasury of the admitted tax should accompany the memorandum of appeal. The U. P. Act and the Rules made thereunder thus clearly provide for payment of admitted tax before filing of the memorandum of appeal. The Madhya Pradesh Act and the Rules made thereunder do not contain any such specific provision and so the Supreme Court decisions mentioned above on the U. P. Act cannot be applied here to that extent. We have already referred to the decision in Lakshmiratan Engineering Works v. Assistant Commissioner A.I.R. 1968 S.C. 488 for bringing out the distinction between the word 'file' on the one hand and the words 'admit' and 'entertain' on the other. If the stage of admitting or entertaining an appeal comes later to the stage of filing the memorandum of appeal as was held in the above case, it is difficult to accept the view of the Tribunal that the tax must be paid before or at the time of riling of appeal or within the period of limitation for filing of the appeal when Section 38 does not expressly so provide and when the only prohibition is that the appeal shall not be admitted or entertained unless the whole of the amount of tax or such lesser amount not below one-third, as the appellate authority may direct, is paid.

6. For the reasons given above, we answer the questions as follows:

(1) The Tribunal was not right in holding that the appeal was time-barred.

(2) The dismissal of the appeal by the Appellate Assistant Commissioner was not proper.

There shall be no order as to costs.


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