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PETITIONER: M/S. HOTEL DARPAN,MUSSOORIE

       Vs.

RESPONDENT: SUB-DIVISIONAL MAGISTRATE,MUSSOORIE & ANOTHER

DATE OF JUDGMENT27/11/1995

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) MAJMUDAR S.B. (J)

CITATION:  1996 SCC  (1) 323        JT 1995 (8)   414  1995 SCALE  (6)637

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Leave granted. Heard counsel for both the parties.      This appeal arises from the order of the Division Bench of the  Allahabad High  Court dismissing  the writ petition, filed by  the appellant herein, with certain directions. The matter arises  under the  Uttar Pradesh  Taxation  and  Land Revenue Laws Act, 1975.      The appellant  is the  proprietor of  a  hotel,  Hotel- Darpan, at  Mussoorie. Section  4 of  the U.P. Act imposes a luxury tax  at the  prescribed  rate  on  every  person  who occupies  rented  room  or  suite  or  rooms  provided  with luxuries in  hotel. The appellant-hotel is, without a doubt, subject to  the levy  of the  said tax. Section 5 of the Act sets out  the manner  in which the tax has to be paid by the proprietor of  the hotel.  In case  of failure to pay within the prescribed  period, interest  at the  prescribed rate is charged. Section  6 provides  for  assessment  of  tax.  The authority competent to make the assessment and the procedure to be  followed in  that behalf  is to  be prescribed by the rules. The  next provision to be noticed is Section 10 which provides for  levy of  penalties. It would be appropriate to set out the Section in full:      "10. Penalty. - (1) Without prejudice to      the provisions  of  sub-section  (2)  of      Section 5 if any person fails to pay any      sum payable under Section 5 or Section 7      within the  prescribed period  he shall,      on conviction  be liable  to pay  a fine      not exceeding  rupees five  thousand and      when the  offence is  a continuing  one,      with a further fine not exceeding rupees      one hundred  per day  during  which  the      offence continues.      (2)  Whoever   fails   to   supply   any      information  which  he  is  required  to

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    supply under  any rules  made under this      Chapter  or   knowingly  supplies  false      information  shall  be  punishable  with      fine which  may extend  to five thousand      rupees."      Section 13  empowers the State Government to make rules to carry out the purpose of the Act.      The rules framed under Section 13 are called "The Uttar Pradesh Luxuries  (In  Hotels)  Tax  Rules,  1975."  Rule  3 provides that  the amount  of tax  payable by  a  proprietor under Section 5(1) of the Act shall be paid within five days after the end of the month to which the tax collected by the proprietor relates. Rule 4 provides for filing of returns in the prescribed   from.  Rule 6  prescribes the procedure for assessment of  tax. According to this rule, the Collector is the Assessing  Authority and  the assessment  is made  half- yearly. Sub-rule  (3)  provides  that  for  the  purpose  of assessing the  tax, the  Collector shall serve notice on the proprietor to  attend in-person  or through  an agent on the prescribed date  and to  produce such documents and evidence as may  be specified in the notice or as he may wish to rely upon, as  the case  may be. Sub-rule (4) provides for making an order  of assessment  after examining the evidence placed before the  Assessing Authority.  Sub-rule (5)  of Rule 6 is relevant for  our purposes.  It provides  for making  a best judgment assessment in case a return is not filed within the prescribed period. The sub-rule reads:      "(5) If  the proprietor  fails to submit      the returns  within the period mentioned      in sub-rule (1) of Rule 4, the Collector      shall assess to the best of his judgment      the amount  of  the  tax  payable  under      Section 5  of the Act in accordance with      the provisions of Section 4 of the Act."      Rule 7  provides for Appeal while Rule 8 prescribes the Appellate Authority.  It is  not necessary to refer to other Rules.      The writ  petition from  which this  appeal arises  was filed  by   the  appellant   questioning  the   validity  of notices/orders dated June 28, 1993 and July 14, 1993. In the notice dated  June 28,  1993 the  Assessing Authority stated that the appellant was "called upon to deposit the amount of luxury tax  on the monthly lodging and boarding by the fifth date of the next month" as provided by the said Act but that the appellant  has failed  to deposit  the same  inspite  of repeated reminders.  The appellant  was,  therefore,  called upon to  produce all  documents and to deposit the tax under intimation to  the Assessing  Authority. The  notice further stated: "(1) In  default of  filing of  returns regarding Luxury Tax for the  period 01-10-91  to 30-09-92 you are called upon to deposit of  Rs.5,000/- (Five  Thousand) under  Section 10 of Luxury Tax  within 3  days from  the date of receipt of this letter in  the Government  Treasury after verifying the head of Account. (2) You  are called  upon to  produce all  documents to  the above period  which were  demanded from you through previous letters of  Luxury Tax  Assessing Authority,  within 10 days before the court of undersigned.      An exparte  proceeding for  Assessment of  Hotel  under Section 7  of Luxury  tax will  be taken  against you in the case of  failure to  produce the documents or if records are not found satisfactory."      On the  ground that  the said  amount of Rs.5,000/- was not deposited  in time,  the order  dated July  14, 1993 was

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passed calling upon the appellant to deposit the said amount of Rs.5,000/- within one week. It was stated that in default of such  deposit, the  appellant would  be liable  to pay  a further fine  of Rs.100/- per day in addition to 10 per cent collection charges.      The appellant  contended before  the High Court that no the or  penalty could have been imposed under Section 10 for not filing  the returns. This contention was rejected by the High Court in the following words:      "If the return has not been furnished by      the petitioner,  indeed,  the  authority      concerned may  proceed under  Section 10      of the  Act to  impose penalty and after      proceeding  in   accordance   with   the      provisions of Section 10 of the Act only      the   Sub-Divisional    Magistrate   has      imposed the fine. .....           As far  as imposition of penalty is      concerned this  court does  not see  any      illegality  in   it  and   upholds   the      imposition of penalty."      The High  Court also  took note of the statement of the appellant’s counsel  that the  appellant had deposited a sum of Rs.10,000/-  in advance  and,  therefore,  there  was  no occasion for  depositing a  further sum  of Rs.5,000/-,  and observed: "If  that is so, indeed, the petitioner may, if so advised, approach  to the  authority concerned  by filing an appropriate application  to settle the account accordingly." The Court  finally observed:  "if appropriate application is made by the petitioner before the sub-divisional Magistrate, Mussorie within  a month from today, the same shall be taken into consideration  and be  disposed of  within three months thereafter."      In this  appeal, the main contention put forward by the learned counsel  for the appellant is that no penalty can be levied under  Section 10  of the  Act  for  not  filing  the return. If  a return  is not  filed  within  the  prescribed period, the  learned counsel says, the only course available to the  Assessing Authority  is  to  make  a  best  judgment assessment as  provided by  Rule  6(5)  of  the  Rules.  The learned counsel  says that  in the present case, penalty has been levised  not for  the failure to pay any amount due nor for  the   failure  to  supply  any  information  which  the appellant was  called upon to supply but only for non-filing of the return within the prescribed period. As a proposition of law, the learned counsel is right. Section 10 is the only provision in  the Act  providing for  levy  of  taxes.  Sub- section (1)  provides for  levy of penalty on conviction for failure to  pay any sum payable under Section 5 or Section 7 within the  prescribed period.  Sub-section (2) provides for levy of  penalty on two grounds, viz., failure to supply any information which  the person  concerned is  called upon  to supply  under  the  rules  or  where  the  person  knowingly supplies false information. For not filing the return, it is true, no  penalty can  be levied  under Section  10. But the more important question in this case is, whether any penalty has been levied in this case, and if so, on what ground. The two  notices/orders   impugned  in  the  writ  petition  are ambiguous and  do not  make it  clear whether  the amount of Rs.5,000/- mentioned  therein is  a tax  or a  penalty.  The impugned notice  also speak  of fine  but do  not say, under which provision are they levied. In these circumstances, the proper  course,   in  our  opinion,  is  to  quash  the  two orders/notices  impugned   in  the   writ  petition  with  a direction to  the Assessing  Authority to  pass  appropriate

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orders afresh  in accordance  with law,  after  hearing  the assessee, keeping  in view  the position of law explained in this judgment.  The authority can also ascertain whether the appellant’s  case  that  he  has  deposited  Rs.10,000/-  in advance is  correct and,  if so, what is its effect in law - and its  relevance in the matter of levy of penalty, fine or interest. It  is made  clear that  in the  proceedings which shall now  be taken  by the  Assessing Authority pursuant to this order,  the assessee shall not be entitled to raise any objection on  the ground of limitation. He shall, of course, be free  to raise  all such other grounds as are open to him in law.      The appeal  is allowed  with the  above directions. The order of the High Court shall stand modified accordingly. No costs.