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PETITIONER: COMMISSIONER OF SALES TAX, U.P. LUCKNOW

       Vs.

RESPONDENT: ATMA RAM MISRA ETC.

DATE OF JUDGMENT19/03/1990

BENCH: MUKHARJI, SABYASACHI (CJ) BENCH: MUKHARJI, SABYASACHI (CJ) PUNCHHI, M.M.

CITATION:  1990 AIR 1138            1990 SCR  (1)1031  1990 SCC  (2) 388        JT 1990 (1)   490  1990 SCALE  (1)536

ACT:     U.P.  Sales Tax Act: Section 9--Appeal  against  assess- ment-Whether obligatory on assessee to pay admitted tax.

HEADNOTE:     The  respondents in each of these three cases  was  sub- jected  to assessment under the U.P. Sales Tax Act. In  each of these cases the assessee preferred an appeal to the first appellate authority and moved an application for the  waiver of  any  deposit of the tax which was necessary  before  the appeal  could be entertained. The first appellate  authority in  two  of the cases dismissed the application and  in  the third  directed the assessee to deposit 10% of the  disputed tax  within ten days from the date of the order.  Dis-satis- fied  with the orders of the first appellate authority  each of  the assessees preferred an appeal to the  Tribunal.  The Tribunal in all the three cases directed the assessee to pay 10%  of the assessed tax before the appeal could  be  enter- tained. Each of the assessees preferred a revision  petition before the High Court.     The High Court held that the condition requiring deposit of  tax was not applicable in the instant case of  M/s  Atma Ram Misra as no returns at all had been filed by the  asses- see  for the relevant assessment year and no turnover  stood admitted  by  the assessee at any stage  of  the  assessment proceedings  which was followed in the other two cases  with the result that the first appellate authority was held bound to  entertain  the appeals of the assessee  without  calling upon  it for deposit of any portion of tax.  The  department has  preferred  these appeals by special leave  against  the decision  of the single judge of the High Court in  all  the three cases.     This  Court while dismissing the appeals made  it  clear that  it did not agree with the High Court’s  interpretation of the statutory provisions and,     HELD:  The provision in question makes two  relaxations. It  does not make it obligatory on the assessee  to  deposit the entire amount of assessed tax. It restricts the  deposit to 20% of the assessed tax. [1039C] 1032     It  empowers the appellate authority to waive  or  relax

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the requirements of clause (b). [1039C]     The  deposit contemplated under clause (b)  also  covers cases  where no returns have been filed and no admission  of any turnover has come from the assessee. [1039E]     This,  however, does not in any way affect the power  of the appellate authority to waive or reduce the amount to  be deposited,  depending  on the circumstances  of  each  case, under the proviso to the above subsection. [1039G]     Vishamber  Nath  v.  Commissioner of  Sales  Tax,  U.P., [1979] U.P.T.C. 1276.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1465  of 1990. etc. etc.     From the Judgment and Order dated 13.3. 1987 & 27.2.1989 of the Allahabad High Court in S.T.R. Nos. 522/86, 202/89  & 203 of 1989. S.C. Manchanda and A.K. Srivastava for the Appellant. The Judgment of the Court was delivered by     RANGANATHAN, J. These three Special Leave Petitions  can be  disposed  of together as they involve  a  common  point. Notices of these petitions have been duly sent but there  is no  appearance on behalf of the respondents.  After  hearing the  counsel  for  the petitioner we grant  leave  and  also proceed to dispose of the appeals.     The respondents in each of these cases was subjected  to assessment  under  the U.P. Sales Tax  Act.  The  assessment years  are  different for the three cases  being  assessment years 1981-82, 1983-84 and 198283 respectively but this does not make any material difference. In each of the cases,  the assessee preferred an appeal to the first appellate authori- ty and, along with the appeal, moved an application  praying for  the  waiver of any deposit of tax which  was  necessary before the appeal could be entertained. But the first appel- late authority, in two of the cases, dismissed the  applica- tion.  In the third he directed the assessee to deposit  10% of  the disputed tax within ten days from the, date  of  the order. Dis-satisfied with the orders of the first  appellate authority, 1033 each  of the assessees preferred an appeal to the  Tribunal. The Tribunal, in all the three cases, directed the  assessee to  pay 10% of the assessed tax before the appeal  could  be entertained.     Each  of  the assessees preferred  a  revision  petition before  the High Court. The learned Single Judge  who  heard the  revision petition in the main appeal preferred by  Atma Ram Misra distinguished the earlier judgment of the Court in Vishamber  Nath v. Commissioner of ’Sales Tax, U.P.,  [1979] U.P.T.C. 1276 and held that the condition requiring  deposit of tax was not applicable in the instant case as no  returns at  all  had  been filed by the assessee  for  the  relevant assessment year and no turnover stood admitted by the asses- sees  at any stage of the assessment proceedings.  This  was followed  in  the other two cases with the result  that  the first  appellate authority was held bound to  entertain  the appeals of the assessee without calling upon it for  deposit of  any  portion of the tax. It is this  conclusion  of  the learned  Single  Judge  that is the subject  matter  of  the present appeals.     The question at issue turns upon the language of s. 9 of the U.P. Sales Tax Act. Since this section has been  amended from time to time, it is necessary to extract the provisions

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of this section, in so far as it is relevant for the present purposes, as it stood from time to time: The section, when originally enacted read as follows: "Sec. 9 Appeals. (1) Any assessee objecting to an assessment made on him may, within thirty days from the date on which he was served with notice of the assessment, appeal to such authority as may be prescribed:           Provided that no appeal shall be entertained under this  sub-section unless it is accompanied  by  satisfactory proof of the payment of the tax admitted by the appellant to be  due or of such instalments thereof as might have  become payable as the case may be." This  provision made it obligatory on an assessee to pay  up the  admitted tax before his appeal against  the  assessment could be entertained. 1034     There were amendments to the above sub-section by Amend- ment  Act  No. 8 of 1954, Amendment Act No. 7  of  1959  and Amendment Act No. 11 of 1968. These are not material for the present  purposes. Next came an amendment by  Amendment  Act No. 3 of 1971 which took effect from 1.10.1970. This substi- tuted the following provision in place of the original  sub- section (1): "(1) Any dealer objecting to any order made by the assessing authority other than an order mentioned in section 10-A, may within  thirty days from the date of service of the copy  of order, appeal to such authority as may be prescribed:           Provided  that  no appeal  against  an  assessment order under this Act shall be entertained unless the  appel- lant has furnished satisfactory proof of the payment of  not less than: (a) When return is filed--the amount of tax or fee due under this Act on the turnover of sales or purchases, as the  case may be, admitted by the appellant in the return filed by him or  at  a  later stage in proceeding  before  the  assessing authority, whichever is greater. (b)  Where no return is filed--the amount of tax or fee  due under this Act on the turnover of sales or purchases, as the case may be admitted at any stage in proceedings before  the assessing authority, or 20 per cent, of the amount of tax of fee assessed whichever is greater.      Provided further that the appellate authority may,  for special  and  adequate reasons to be  recorded  in  writing, waive  or relax the requirements of clause (b) of  the  pro- ceeding proviso." This provision, it will be observed, effected two  important changes: (a)  The assessee had to deposit the highest amount  of  tax due  on his admitted turnover. However, if he had  filed  no return  and had been assessed to tax, he had to deposit  20% of  the assessed tax, if that was higher than  the  admitted tax; and 1035 (b) A discretion was conferred on the appellate authority to waive or relax the above requirement in appropriate cases.     The  next amendment was by U.P. Act No. 12 of 1979  with effect from 1-11-1978. The provision, as now amended,  stood as follows: "(1)  Any dealer or other person aggrieved by an order  made by the assessing authority, other than an order mentioned in section 10-A may, within thirty days from the date of  serv- ice  of the copy of the order, appeal to such  authority  as may be prescribed:           Provided  that  no appeal  against  an  assessment

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order under this Act shall be entertained unless the  appel- lant has furnished satisfactory proof of the payment of  not less than-- (a) Where all the returns for the assessment year have  been filed,  the amount of tax or fee due under this Act  on  the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns filed by him or at any stage in any proceeding under this Act, whichever is greater; or (b) Where some the returns for the assessment year have  not been  filed or no return has been filed for such  year,  the amount  of tax or fee due under this Act on the turnover  of sales  or  purchases, as the case may be,  admitted  by  the appellant  in  the returns, if any, filed by him or  at  any stage  in any proceedings under this Act or 20 per  cent  of the amount of tax or fee assessed whichever is greater; and          Provided further that the appellate authority  may, for  special  and  the adequate reasons to  be  recorded  in writing,.  waive or relax the requirements of clause (b)  of the preceding proviso.                 XXX            XXX              XXX This provision was in substance the same as the earlier one, but  a change in language was necessitated by the fact  that the  Act  contemplated not one but several returns  from  an assessee in the course of an assessment year and the earlier provision, which proceeded on the 1036 basis  of a single return due from an assessee for the  year having been filed or not filed, needed to be clarified.     Finally  came Amendment Act No. 22 of 1984 on the  heels of earlier ordinances which effected an amendment in Section 9  with effect from 12.2.1983. The new sub-section reads  as follows: "(1)  Any dealer or other person aggrieved by an order  made by the Assessing Authority, other than an order mentioned in Section  10-A,  may,  within thirty days from  the  date  of service  of the copy of the order, appeal to such  authority as may be prescribed:          Provided that where the disputed amount of tax, fee or  penalty does not exceed one thousand rupees, the  appel- lant may, at his option, request the Appellate Authority  in writing  for summary disposal of his appeal,  whereupon  the Appellate Authority may decide the appeal accordingly.          (I-A) The manner and procedure of summary  disposal of appeal shall be such as may be prescribed.          (I-B)  No appeal against an assessment order  under this  Act  shall  be entertained unless  the  appellant  has furnished  satisfactory  proof of the payment  of  not  less than-- (a)  the  amount  of tax or fee due under this  Act  on  the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns filed by him or at any stage in  any  proceedings under this Act, whichever  is  greater, where  all  the returns for the assessment  year  have  been filed, or (b)  the  amount  of tax or fee due under this  Act  on  the turnover of sales or purchases, as the case may be, admitted by the appellant in the returns, if any, filed by him or  at any  stage in any proceedings under this Act, or twenty  per cent,  of  the amount of tax or fee assessed,  whichever  is greater,  where some of the returns for the assessment  year have  not  been filed or no return has been filed  for  such year: 1037     Provided  that the Appellate Authority may, for  special and  adequate  reason to be recorded in  writing,  waive  or

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relax the requirement of the Clause (b) of this  sub-section in so far as it relates to deposit of twenty per cent of the amount of tax or fee assessed." Except  for shifting the contents of the relevant  provision to new subsection (1-B) and for a recasting of the  section, the  new provision has brought about no material  change  in the position so far as the issue before us is concerned.     It  may  be  mentioned here that  the  assessment  years before us being 1981-82 to 1983-84 appear to be governed  by the provisions of the Act as they stood before the amendment in  1983.  However this does not make much of  a  difference since, as already pointed out, the effect of the  provisions before and after amendment is the same.     The  section, as it stands since 1-11-78,  provides  for two  sets of situations. Clause (a) deals with a case  where all  the returns for the assessment year have been filed  by the assessee. This means that there is a figure of  turnover admitted  by the assessee. Again, in the course of  the  as- sessment proceedings, it is possible that he may have admit- ted  a different figure of turnover from that  disclosed  in his returns. In such a situation the provision requires  the assessee  to deposit the amount of the tax admitted  by  him (either  in  the returns or at any subsequent stage  of  the proceedings  before  the  officer,  whichever  is  greater). Clause  (b) deals with the situation where (a) some,  though not  all, the returns due from the assessee have been  filed and (b) no return at a11 has been filed. In this  eventuali- ty,  the  requirement  of deposit turns not  merely  on  the admitted amount of tax (as there may be no such admitted tax where  no return at all has been filed) but is also made  to turn on the assessed tax. The provision requires the  asses- see to deposit the amount of tax admitted in the returns  or at any stage of the proceedings under the Act or 20% of  the amount  of  tax  assessed whichever was  greater.  In  other words,  the provision contemplates a comparison of  (i)  the admitted tax and (ii) 20% of the assessed tax. Whichever  of these  two  figures  is higher has to be  deposited  by  the assessee  before  his appeal against the assessment  can  be entertained.     There are perhaps two ways of reading clause (b). One is that, in a case where no return at all has been filed and no admission  had at all has been made by the assessee  of  any figure  of  turnover, then the first figure to  be  computed under  clause  (b) will be zero. If, however,  there  is  an assessment made on the assessee of any tax higher than  nil, that 1038 will be the greater of the two figures to be computed  under the clause and the assessee will have to deposit 20% of  the assessed tax. The other way of interpreting the sub-section, which appears to have commended itself to the High Court, is to say that clause (b) will be attracted only if two figures are  available  for  comparison: (1) a  figure  of  turnover admitted in a return or in subsequent proceedings; and (2) a figure of assessed tax. If the assessee has filed no  return at  all and if he has made no admission regarding his  turn- over at any stage of the proceedings, then figure (1)  above cannot  be  computed.  Hence it is not possible  to  make  a comparison  between  the  two figures  indicated  above  and therefore the provisions of deposit contained in clause  (b) will not at all apply.     We  think it is manifest that the first of the two  con- structions referred to above is the correct one. The  inter- pretation  accepted  by  the High Court, is,  in  our  view, erroneous  for two reasons. In the first place, it does  not

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give  full effect to the last few words of clause (b)  which clearly  cover a case where no return at all has been  filed for  the  assessment year in question. True,  even  on  this interpretation,  the provision will govern a case  where  no return has been filed but the assessee has, in the course of the  assessment proceedings, made some  admission  regarding his turnover but such cases are likely to be very few.  When the provision clearly contemplates a deposit of tax in cases where  no return has been filed or where only  some  returns have  been  filed, it would be running in the teeth  of  the provision to interpret it in such a manner as to exclude the majority of such cases. Secondly, the High Court’s interpre- tation leads to a clear anomaly. For, it would indeed be odd to suggest that a deposit is necessary where an assessee has filed his returns or admitted his turnover in the course  of assessment  proceedings  but that an assessee  who  has  not filed any return at all or made any admission at all can  be allowed  the privilege of an appeal even without making  any deposit  at all. Such an interpretation will only result  in putting a premium upon recalcitrant and dishonest assessees. We  do not think that this is the correct and proper way  of interpreting  the statutory provision. The clear  intent  of the clause is that an assessee should be asked to pay up the admitted tax or 20% of the assessed tax, whichever is great- er, before an appeal could’be entertained and the  provision should  be  interpreted in such a way as to give  effect  to this intent.     In  this context, it is significant that  the  provision does not call upon the assessee to pay up the entire  amount of  assessed tax. The Legislature fully appreciates that  an assessment made, in the absence 1039 of  any  return  or admission, may not  always  reflect  the correct figure of tax leviable on the assessee. It could  be that the assessed figure involves an estimate which takes it beyond the figure which may be ultimately determined in  the case.  But,  at  the same time, it cannot  be  said,  merely because  an  assessee has not filed any return or  made  any admission  expressly, that he necessarily disputes  the  en- tirety of the assessed tax. It could well be that he has not done either of these things just to postpone the payment  of even the tax which he may not be in a position to contest.     Realising  this  situation, the  provision  in  question makes two relaxations. It does not make it obligatory on the assessee  to deposit the entire amount of assessed  tax.  It restricts  the deposit of 20% of the assessed tax (a  figure which can be treated as an ad hoc statutory  quantification, on  an  average, of the tax demand in such  cases  on  which there  could be no quarrel). Added to this, it empowers  the appellate  authority to waive or relax the  requirements  of clause (b). This is because the appellate authority will  be in a position to, prima facie, judge the extent to which, in the  circumstances  of a particular case, there  is  a  real dispute in the appeal and to insist upon the deposit of such percentage of the assessed tax (not exceeding 20%) as it may consider  appropriate. If the intention of  the  legislature were  only that the deposit should be confined only  to  the admitted  tax  in all cases, the second part of  clause  (b) referring to deposit of 20% of the assessed tax and, indeed, even  the bifurcation made in clauses (a) and (b)  would  be redundant.  We are, therefore, of opinion that  the  deposit contemplated  under  clause (b) also covers cases  where  no returns have been filed and no admission of any turnover has come from the assessee.     We would like to make it clear that we modify the  judg-

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ment of the High Court only in so far as it directs that  an assessee  who  has not made any return at all  and  has  not admitted  any figure of turn over in the course of  the  as- sessment proceeding is relieved of the requirement to depos- it 20% of the assessed tax under section 9(1) or 9(1-B),  as the case may be. What we have held, however, does not in any way affect the power of the appellate authority to waive  or reduce the amount to be deposited, depending on the  circum- stances  of  the each case, under the proviso to  the  above sub-section.     We  should also like to make it clear that, despite  our above  conclusion, we do not propose to interfere in any  of the  three  appeals, with the ultimate result  of  the  High Court’s decision. This is because 1040 the  High  Court  has already permitted the  appeals  to  be disposed  of  without requiring any  deposits.  The  learned counsel  for  the appellants is not in a position  to  state whether  the appeals are still pending or whether they  have since  been  disposed of pursuant to the directions  of  the High  Court. It would not be proper, in this  situation,  to modify the decretal position of the High Court’s order.  We, therefore,  dismiss these appeals but make it clear that  we do  not  agree with the High Court’s interpretation  of  the statutory provisions for the reasons set out above. We  make no order as to costs in the circumstances of the case. R.N  .J.                                       Appeals  dis- missed.