1. The petitioner feels aggrieved by the order of the Appellate Assistant Commissioner of Commercial Taxes, Salem, functioning under the Madras General Sales Tax Act, 1959, dated 19th June, 1962, rejecting his application for stay of collection of tax and penalty levied upon him by the Deputy Commercial Tax Officer, Tiruvannamalai, for the year 1960-61. In this writ petition he prays for the issue of a writ of cerliorari or other appropriate writ, direction or order under Article 226 of the Constitution to quash the order of the Appellate Assistant Commissioner impleaded as the second respondent. The first respondent is the Deputy Commercial Tax Officer, Tiruvannamalai.
2. The petitioner is a dealer in fried grams. In respect of the year 1960-61, his taxable turnover under the Madras General Sales Tax Act, 1959, was estimated by the Deputy Commercial Tax Officer, Tiruvannamalai, at Rs. 1,90,063-94 and tax and penalty of Rs. 3,801-28 and Rs. 2,844 respectively have been levied. The petitioner has preferred an appeal to the Appellate Assistant Commissioner of Commercial Taxes, Salem, against the said order of assessment. He disputes the levy of tax to the extent of Rs. 2,229-30 and objects to the levy of penalty. In all the total amount disputed in the appeal is the sum of Rs. 5,073-30. The petitioner filed an application for stay dated 13th June, 1962, along with the memorandum of appeal. As required by the rules, he filed a security bond in Form No. XIX and offered as security immovable property alleged to be of the value of Rs. 8,000. By order dated 19th June, 1962, the Appellate Assistant Commissioner rejected the application for stay. The order does not contain any reason for refusing the stay and is in these terms: 'Read petition dated 13th June, 1952, from Sri E. Krishnappa Naicker. The application for stay of collection of disputed tax of Rs. 2,229-26 and a penalty of Rs. 2,844 is rejected.' The ground on which the petitioner prayed for stay of collection of tax is thus set out in his petition before the Appellate Assistant Commissioner : 'The petitioner has no liquid resources to pay the balance of demand of tax and the penalty and therefore prays that the Honourable Assistant Commissioner may be pleased to grant time for payment of the balance of demand and the penalty till disposal of the appeal. Necessary security bond with substantial security is filed.' The petitioner next moved the Deputy Commissioner by submitting a petition dated 25th May, 1962, reiterating his prayer for stay of collection of tax. There is no provision under the statute for preferring an appeal to the Deputy Commissioner from an order of the Appellate Assistant Commissioner refusing stay. But yet the petitioner approached the Deputy Commissioner as he was holding a higher rank administratively. The Deputy Commissioner by his order dated 30th June, 1962, refused to interfere with the order of the Appellate Assistant Commissioner. He observed thus : 'The petitioner is informed that the Appellate Assistant Commissioner's order relating to stay is final and that the Deputy Commissioner cannot interfere with it.' The petitioner next filed a petition dated 7th July, 1962, to the Commissioner of Commercial Taxes. But there was no favourable response. It is in these circumstances that the above writ petition has been preferred by the petitioner in this Court. The petitioner's grievance is that his application for stay has been arbitrarily rejected, and that therefore the Appellate Assistant Commissioner, the competent authority to grant the stay, has failed to discharge his statutory duties in conformity with law.
3. The appellate powers of the Appellate Assistant Commissioner are contained in Section 31 of the Act. It reads, in so far as it is material for the present purpose :-
(1) Any person objecting to an order passed by the appropriate authority under Section 12, Section 14, Section 15, Sub-sections (1) and (2) of Section 16, Section 18, Section 23, Section 27...may within a period of thirty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Assistant Commissioner having jurisdiction :...
(3) In disposing of an appeal, the Appellate Assistant Commissioner may, after giving the appellant a reasonable opportunity of being heard,
(a) in the case of an order of assessment-(i) confirm, reduce, enhance or annul the assessment or the penalty or both;...(5) Notwithstanding that an appeal has been preferred under Sub-section (1), the tax shall be paid in accordance with the order of assessment against which the appeal has been preferred :
Provided that the Appellate Assistant Commissioner may, in his discretion, give such directions as he thinks fit in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to his satisfaction, in such form and in such manner as may be prescribed.
4. The rules prescribed the form, Form No. XIX, as to the manner in which the security bond has to be executed. It is clear, therefore, that there is ample power in the Appellate Assistant Commissioner to grant stay of collection of tax and penalty in such manner as he likes during the pendency of the appeal before him. Though Sub-section (5) of Section 31 only uses the word 'tax' it is obvious that the levy of penalty is also included in that expression. Section 25 of the Act states that any penalty payable under the Act shall be deemed to be tax under the Act for the purpose of collection and recovery. Now the question is whether the Appellate Assistant Commissioner has properly exercised his statutory function in rejecting the application for stay quite summarily.
5. Reference may be made to the provisions of Section 45 of the Indian Income-tax Act. The assessee under that Act is bound to pay the tax demanded in terms of the notice of demand and failure to comply with the demand would make him a defaulter. But there is a proviso to Section 45 in these terms :
Provided that when an assessee has presented an appeal under Section 30 the Income-tax Officer may in his discretion treat the assessee as not being in default as long as such appeal is undisposed of.
6. It has been held that the discretion of the Income-tax Officer to hold in abeyance the collection of tax pending an appeal is not to do what pleases him, but to discharge a statutory duty. In Vetcha Sreeramamurthy v. Income-tax Officer, Vizianagaram : 30ITR252(AP) , Subba Rao, C.J., observed as follows:
The discretionary statutory power conferred upon an authority for the public good is coupled with a duty to perform it under relevant circumstances. The fact that the exercise of the power is left to the discretion of the authorised person does not exonerate him from discharging his duty. If the discretionary power so conferred is exercised arbitrarily, capriciously or unreasonably or by taking into consideration extraneous and irrelevant considerations, in the eye of law, the authority concerned must be deemed not to have exercised the discretion at all, that is, he has not discharged his duty. If the Court on the facts placed before it comes to a definite conclusion that a particular authority has not exercised his duty for one or other of the aforesaid reasons, it will compel the authority to discharge his duty, or, to put it differently, to exercise his discretion honestly and objectively.
7. Section 31(5) of the Madras General Sales Tax Act, 1959, is of the same pattern as the proviso to Section 45 of the Income-tax Act extracted above. Undoubtedly the Appellate Assistant Commissioner has discretion to stay the collection of tax pending the appeal on such terms as he thinks fit, if the appellant furnishes security to his satisfaction. It is however wrong to assume that the exercise of the discretion is only a naked arbitrary power to reject the applications for stay 6i recovery of tax pending the appeal. The appellate authority may be dissatisfied with the security tendered and furnished. In that event he can certainly reject the application for stay. He may not be willing to grant a wholesale and complete stay of collection; he may instead direct payment by instalments. He may consider that the tax payable is a trifling amount and that the assessee has sufficient means to pay and may reach the conclusion that there are no grounds to grant stay of any kind. All these are within the framework of the discretion conferred by the statute. He cannot, however, say that though the security is good and the assessee may not have ready resources, he would not grant the application for stay in whole or in part. Nor can he take up the position that he need not bother whether the security is good or bad or whether the assessee would be prejudiced or not by being compelled to pay the full levy in the belief that his discretion is unfettered. The statute has conferred upon him the power to grant stay. He therefore owes a duty to examine and scrutinise the grounds on which the stay is asked for by the appellant. If the duty is ignored or perfunctorily performed, it cannot be said that the power has been properly exercised. Imposition of tax and penalty on the assessees is sometimes heavy and onerous and it is but just and fair that the assessee should get some respite in a proper case until his appeal against the order of assessment is heard and disposed of.
8. The jurisdiction of this Court under Article 226 of the Constitution is plainly available to compel a public officer to discharge his statutory duties. If he overlooks a provision of law or is under a misapprehension of his duties, he can be corrected and directed to proceed in the proper legal, way. Where a Tribunal shuts its ears to the application made to it or brings; to bear on it a mind foreclosed to reason, it must be deemed to have failed to exercise its discretion and a mandamus can issue ordering it to hear and determine the application. This is well settled law and needs no citation of authorities to support it.
9. It seems to me that in the present case there has been no proper disposal of the application for stay by the Appellate Assistant Commissioner. The petitioner has submitted a security bond as required by law, tendering as security properties of an alleged value of Rs. 8,000 which would certainly cover the total amount of tax and penalty due from him even if he were to fail in the appeal. There is nothing to show that the Appellate Assistant Commissioner found the security insufficient or that he was not satisfied with the bona fides of the petitioner in moving for stay of collection of tax and penalty. In these circumstances, the petitioner is certainly well founded in his contention that his application for stay-has been rejected in limine for little or no reason whatever. In my opinion, the Appellate Assistant Commissioner has failed to exercise his jurisdiction properly, and that a mandamus must issue directing him to hear and determine the application for stay filed before him by the petitioner afresh.
10. The writ petition is allowed and a writ of mandamus directing the second respondent to dispose of the petitioner's application for stay will issue. There will be no order as to costs.