Skip to content


V. Haridas Vs. the Assistant Commissioner, Sales Tax (Assessment), Special and Two ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case NumberWrit Appeal No. 198 of 1978
Judge
Reported in[1979]44STC26(Ker)
AppellantV. Haridas
RespondentThe Assistant Commissioner, Sales Tax (Assessment), Special and Two ors.
Appellant Advocate V. Sivaraman Nair,; V.M. Nayanar and; K. Kanakachandran
Respondent AdvocateGovernment Pleader
Cases ReferredUnion of India v. J.N. Sinha
Excerpt:
- - this is a mistake, as the petitioner prayed clearly to quash exhibits p4 to p7. thepenalty at the particular rate mentioned in the section automatically clincheson the failure to pay the amount within the time mentioned in the section......for each month or part thereof subsequent to the first three months aforesaid.24. recovery of penalty.--penalty payable under this act shall be deemed to be tax under this act for the purpose of collection and recovery, and shall be recoverable without prejudice to the institution of any proceeding for an offence under this act. it is unnecessary to refer to the rules, which provide for the form inwhich a notice of demand for penal interest is provided for. the learnedgovernment pleader is right in his submission that there is no provision inthe sales tax act, which enables the government to pass an order allowing thebenefit of instalment payment to an assessee under the provisions of the salestax act and in respect of an order of assessment passed by the sales taxofficer. the same.....
Judgment:

V.P. Gopalan Nambiyar, C.J.

1. The writ petitioner/appellant was an assessee to sales tax from whom arrears of sales tax were due in respect of assessments for the years 1970-71 to 1973-74. The arrears amounted to Rs. 1,07,667. He seems to have approached the Government for permission to pay up the arrears in instalments and exhibit P2 order dated 9th October, 1972, was passed by the Secretary to Government of the Revenue Department allowing him the facility of instalment payment of sales tax and employees provident fund at the rate of Rs. 5,000 each (total monthly payment of Rs. 10,000). The petitioner has averred that the instalments as permitted by exhibit P2 order were paid from 1972 and the arrears were liquidated by July, 1974. He has produced exhibit P3 statement showing the payments made and the dates on which they were made. The averments made in this respect have not been controverted. Exhibits P4 to P7 orders were passed by the Sales Tax Officer imposing penalty on the writ petitioner for default of payment of the arrears of sales tax. By exhibit P4, a penalty of Rs. 11,091.98 was imposed by order dated 29th November, 1973. Exhibit P5 is dated 12th November, 1974, and it imposed a penalty of Rs. 5,479.42. Exhibit P6 is dated 9th November, 1974, and the penalty imposed was Rs. 5,184.46. Exhibit P7 is dated 18th November, 1974, and the penalty imposed was Rs. 1,313.17. Exhibit P4 order was carried up in revision and dismissed by exhibit P8 dated 27th February, 1975. The writ petition, which has given rise to this appeal, was preferred to quash exhibits P4 to P8 and for consequential reliefs. The learned Judge observed in the first paragraph of the judgment that exhibit P9 was the petition for stay filed by the petitioner in revision and exhibit P10 is the order thereon, by which the stay petition was rejected and that the writ petition was to quash exhibit P10 order. This is a mistake, as the petitioner prayed clearly to quash exhibits P4 to P7. The learned Judge disposed of the writ petition in the following fashion:

3. Neither party is in a position to affirm whether the revisions are still pending. If the revisions have been disposed of, no relief need be granted to the petitioner in regard to exhibits P5 to P7. The petition will stand dismissed. In case the revisions have not been disposed of yet, then the revisions may be disposed of expeditiously and, until such disposal of the revisions against exhibits P5 to P7 orders, status quo as to collection of penalty thereunder will continue.

4. There is a challenge to exhibit P8 order. That it is time-barred is evident and the petitioner has no answer to the plea that it is time-barred. Hence the challenge to exhibit P8 cannot succeed.

The challenge to exhibit P8 order is time-barred. But exhibits P5 to P7 revisions, dismissed on 26th July, 1975, were communicated on 18th August, 1975. Limitation is not urged against these orders.

2. Counsel for the petitioner contended that, in view of exhibit P2 order, which was duly complied with, the penalty was not imposable at all and that exhibits P4 to P7 orders cannot therefore be sustained. It was also represented that by the time of the learned Judge's judgment, the revisions against exhibits P5 to P7 had been dismissed by order dated 26th July, 1975, and communicated on 18th August, 1975. The answer made on the side of the learned Government Pleader was that exhibit P2 order of the Government is not an order statutorily sanctioned or recognised and, therefore, the same cannot avail the petitioner against the liability to pay penal interest or the penalty. We may note the provisions of Section 23(3) and Section 24 of the Sales Tax Act:

23. Payment and recovery of tax.--...

(3) If the tax assessed or any other amount due under this Act or any instalment thereof is not paid by any dealer or other person within the time specified therefor in the notice of demand or in the order permitting payment in instalments or within the time allowed for its payment by the appellate or revising authority, the dealer or other person shall pay, by way of penal interest, in the manner prescribed, in addition to the amount due, a sum equal to--

(a) one per cent of such amount for each month or part thereof for the first three months after the date specified for its payment;

(b) two per cent of such amount for each month or part thereof subsequent to the first three months aforesaid.

24. Recovery of penalty.--Penalty payable under this Act shall be deemed to be tax under this Act for the purpose of collection and recovery, and shall be recoverable without prejudice to the institution of any proceeding for an offence under this Act.

It is unnecessary to refer to the Rules, which provide for the form inwhich a notice of demand for penal interest is provided for. The learnedGovernment Pleader is right in his submission that there is no provision inthe Sales Tax Act, which enables the Government to pass an order allowing thebenefit of instalment payment to an assessee under the provisions of the SalesTax Act and in respect of an order of assessment passed by the Sales TaxOfficer. The same view seems to have been taken by the Supreme Court in HajiLal Mohd. Biri Works v. State of U.P. [1973] 32 S.T.C. under the provisions ofSection 8(1-A) of the U.P. Sales Tax Act, 1948, which is almost similarlyworded. The court observed at page 499:

There is no provision in the Act which makes itobligatory on the part of the Sales Tax Officer to make an assessment inrespect of the interest which the amount of sales tax would carry underSection 8(1-A) of the Act. There is also no provision in the Act whichrequires the issue of a notice of demand in respect of the interest by theSales Tax Officer to the assessee before the Sales Tax Officer forwardsrecovery certificate to the Collector. Reference has been made by Mr. Sen toSub-section (1-A) of Section 8, according to which interest shall be added tothe amount of tax and shall be deemed for all purposes to be part of the tax.The above deeming provision, in our opinion, has been added only for thepurpose of recovery. The object apparently was that the amount of interestshould be recovered in the same manner as the amount of sales tax. The amountof sales tax and other dues under Sub-section (8) of Section 8 can berecovered as arrears of land revenue. It was with a view to put the matterbeyond any pale of controversy and to obviate any objection that the intereston sales tax cannot be recovered as land revenue that Sub-section (1-A)provided that the interest shall be added to the amount of tax and be deemedfor all purposes to be a part of the tax.

According to Section 8(1-A),simple interest at the rate of 18 per cent per annum shall run on the amountof arrears of sales tax from the date specified in that sub-section. It wouldthus appear that the liability to pay interest is automatic and arises byoperation of law...

A Division Bench ofthis Court also took the same view in Burmah Shell Co. Ltd. v. Sales TaxOfficer [1973] 32 S.T.C. 429 at 434. The court observed:

The language of Section 23(3) appears to make the payment contemplated bythe section an absolute liability on the assessee. If the tax assessed is notpaid within the time allowed, whatever be the reason for the non-payment, thedealer or other person shall pay, by way of penalty, in the manner prescribed,in addition to the amount due, a sum equal to half per cent of such amount foreach month or part thereof, for the first three months, and one per cent ofsuch amount for each month or part thereof, subsequent to the three months.There is no question of the taxing authority exercising any discretion underthe statute; no discretion is contemplated or vested in the authority; thepenalty at the particular rate mentioned in the section automatically clincheson the failure to pay the amount within the time mentioned in the section. Ifthere is no discretion left in the assessing authority by the statute itself,there is no question of the exercise of discretion being quasi-judicial and noquestion of giving notice to the assessee before the exercise of discretion.As we have stated already, the penalty is in the nature of interest by way ofdamages payable on the defaulted amount at the particular rate mentioned inthe section itself. Therefore, the decisions cited by the counsel of thepetitioner cannot have any application to the case. Looking at the case, onceagain, from the angle of natural justice, we would point out that thestatutory provision, we mean Section 23(3), excludes the application of therules of natural justice and, in such cases, we cannot ignore the mandate ofthe legislature; the mandate of the legislature is clear in the language ofthe section; we cannot read into the concerned provision the rules of naturaljustice; that will not be consistent with the language of the section: videUnion of India v. J.N. Sinha, A.I.R. 1971 S.C. 40.

Thelearned Government Pleader is therefore right in his submission that,strictly, on the provisions of the statute, there is no provision enabling theGovernment to pass an order of the type exhibit P2. But the fact remains thatsuch an order was passed and, for a period of 22 months, the assessee has beenrespecting that order and paying the instalments as required or permitted bythe order. We cannot, especially in the absence of any counter-affidavit onthe side of the department, easily take it that the department or the SalesTax Officer was not aware of the existence of such an order or of a sanctionfor the instalment payments that the assessee made for a fairly long period of22 months. Whatever that be, in the same spirit of being a stickler for theletter of the statute, counsel for the assessee argued with force, that ifthere be no provision in the statute to warrant an order by the Governmentlike exhibit P2, equally, there is no warrant for the officer to draw up aformal order of the type of exhibit P4 (or P5 to P8) imposing a penalty on thepetitioner. This position taken up by the assessee seems to be correct on thelanguage of the statute and has the support of the two decisions, which wehave noticed in regard to similarly worded statutory provisions. The decisionspoint out that the accrual of penal interest is automatic on the occurrence ofdefaults (see also the Mysore High Court's decision in Abdul Shakur UmarSahigara & Co.'s case [1968] 21 S.T.C. 77). It may be that without drawing upany formal order imposing a penalty under Section 23(3) of the Act, theauthorities may be able to recover the penalty under Section 24, as theliability to pay penal interest is automatic as explained in these decisions.If so, it would be open to the department to pursue such steps for recovery ofpenal interest as they might be advised to take. There is no provision in lawor under the statute to pass orders of the type of exhibits P5 to P7. Wecannot therefore sustain the same. (We leave out exhibit P4, as the challengeto the same is time-barred).

3. We allow this appeal and modify thejudgment of the learned Judge. O.P. No. 3575 of 1975 will stand allowed to theextent that the orders dated 26th July, 1975, on exhibits P5 to P7 revisionswill stand quashed. We repeat that nothing said in this judgment should beunderstood as precluding the sales tax authorities, if so entitled and soadvised, from proceeding to recover the penal interest in accordance with law.We affirm the finding of the learned Judge regarding exhibits P4 and P8orders. The original petition will stand dismissed as far as these ordersare concerned. There will be no order as to costs.

4. We cannothelp observing that this appeal seems really unnecessary. The learned Judgepassed his judgment on the footing that exhibits P5 to P7 revisions werepending. They had been disposed of even when the learned Judge deliveredjudgment. It might have been enough to have the matter posted before thelearned Judge 'to be spoken to', or to apply for review.

Issue carboncopy of this judgment to all counsel on usual terms.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //