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PETITIONER: LALTA PRASAD KHINNI LAL

       Vs.

RESPONDENT: ASSTT.  COMMR. (JUDL.) SALES TAX, KANPUR & ANR.

DATE OF JUDGMENT06/10/1971

BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S.

CITATION:  1972 AIR  401            1972 SCR  (1)1010

ACT: U.P. Sales Tax Act, 1948, s. 9(6)and  Limitation  Act,1908 s. 5--Sales Tax Appeal filed within periodof  limitation- Amount admitted to be due deposited in full after expiry  of limitation-Resulting  delay in filing appeal whether may  be condoned.

HEADNOTE: The appellant was a Hindu undivided      family carrying  on the business of manufacturing oils.  For the assessment year 1963-64  the appellant tied its quarterly returns under  the U.P.  Sales  Tax Act, 1948.  The Sales Tax Officer  made  an assessment enhancing the turnover which resulted in increase of  the  amount of tax.  The appellant filed  an  appeal  on October 21, 1965 which was three days’ before the period  of limitation  prescribed for filing the appeal was to  expire. There  was some difficulty about the encashment of a  cheque which  had  been deposited along with the rest of  the  cash amount  towards payment of the amount of tax  the  liability for which stood admitted.  The total payment was not made if the  entire  amount  until May 27, 1966  when  the  treasury challan  was  produced.  The assessee filed  an  application praying  for  condonation of delay, if any,  in  filing  the appeal  under s. 5 of the Indian Limitation Act  1908  which was  applicable by virtue of s. 9 (6) of the U.P. Sales  Tax Act,  1948.   The Assistant Commissioner (Judl.)  Sales  Tax rejected the memorandum of appeal as defective on the ground that  the deposit of tile amount of tax admitted to  be  due had  not been made within the period of limitation and  that the  delay in doing so could not be condoned under s.  5  of the Limitation Act.  The appellant’s petition under Art. 226 challenging   the   Assistant   Commissioner’s   order   was dismissed.  In appeal by certificate-, HELD : It is true that an appeal filed under s. 9 of the Act cannot  be  entertained by the  appellate  authority  unless satisfactory proof is adduced of the payment of tax admitted by  the appellant to be due. but in a case where the  amount of admitted tax is deposited after the period of limitation has expired all that will happen is that the appeal will  be come  entertainable  only on the day on  which  satisfactory proof of payment of that amount is produced.  In other words the appeal will be deemed to have been properly filed on the date  on which the amount of admitted tax is paid.  If  that

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is beyond the period of 30 days the appeal will be barred by time.   Section 9(6) will immediately become  applicable  to that  appeal and it will be open to the appellant  to  apply for  condonation of delay under that provision.  It was  not possible  to  accept the argument that the  deposit  of  the amount  of  admitted tax must be made within  30  days  even though the delay in filing the appeal can be condoned  under sub-s. (6).  The correct approach is to treat the appeal  as having been preferred on the date on which proof of  payment of the tax was furnished and then to see whether under  sub- s.  (6) of s. 9 there was sufficient cause for excusing  the delay in preferring the appeal. [1013 E-1014 B] Gangadharan Pillai v. Sales Tax Officer (Reserve) Ernakulam, 16  S.T.C.  578 and Raja of Venkatagiri v.  Commissioner  of Income-tax, Madras, 28 I.T.R. 188, approved.                             1011 Janta  Cycle & Motor Mart v. Asstt.  Commissioner (J.)  III, Sales Tax Kanpur Range & Anr. 22 S.T.C. 94, disapproved. Lakshmiratan Engineering Works Ltd. v., Asstt.  Commissioner (J), I Sales Tax, Kanpur, 21 S.T.C. 154, distinguished. In the present case when the assessee produced the necessary documents  which showed that the deposit of the full  amount had   been   made  by  May  27,  1966  the   appeal   became entertainable.  It only suffered from the defect that it was barred   by  time,  on  that  date.   The  assessee   could, therefore, apply under s., 9(6) for extending the period  of limitation  in accordance with s. 5 of the  Limitation  Act. The  appellate  authority  was, wrong in  disposing  of  the appeal  on the short ground that it had no, jurisdiction  to extend the period of limitation. [1015 B-D] [Appeal  allowed and case remitted to High Court for  making appropriate directions for reconsideration and rehearing  of the appeal by the appellate authority under the Act.]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2571  of 1969. Appeal  from the judgment and order dated March 25, 1969  of the  Allahabad High Court in Civil Misc.  Writ No.  2200  of 1966. S.   Markandeya, for the appellant. L.   M. Singhvi and O. P. Rana, for the respondents. The Judgment of the Court was delivered by Grover, J. This is an appeal by certificate from a  judgment of the Allahabad High Court in which the main point involved relates to the provisions of s. 9 of the U.P. Sales Tax Act, 1948, hereinafter called the ’Act’. The facts lie in a narrow compass.  Lalta Prasad Khinni  Lal a  Hindu undivided family which is the assessee  carried  on business  of  manufacturing oils.  For the  assessment  year 196364  it  was assessed to sales tax under the  Act  by  an order dated July 28, 1965.  The assessee had been filing its quarterly  returns and had deposited a sum of  Rs.  3,153.01 which  was  the admitted amount of its tax  liability.   The Sales tax Officer, however, made an assessment enhancing the turnover  which resulted in increase of the amount  of  tax. The  assessee filed an a peal on October 21, 1965 which  was three  days before the period of limitation  prescribed  for filing the appeal was to expire.  There was some  difficulty about encashment of a cheque which had been deposited  along with  the  rest of the cash amount towards  payment  of  the amount  of tax the liability for which stood admitted.   The total  payment was not made of the entire amount  until  May

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27,  1966,  when  the treasury challan  was  produced.   The assessee  filed  an  application under s. 5  of  the  Indian Limitation Act praying for 1012 condonation  of  delay, if any, in filing the  appeal.   The Assistant  Commissioner (Judicial) Sales Tax  rejected,  the memorandum  of ,appeal as defective on the ground  that  the deposit of the amount of tax admitted to be due had not been made  within the period of limitation and that the delay  in doing so could not be condoned under s. 5 of the  Limitation Act. The  assessee  filed  a  petition  under  Art.  226  of  the Constitution in the High Court challenging the order of  the Assistant Commissioner (Judicial) Sales Tax.  That petition was  dismissed  on the ground that although the  appeal  was filed  within time there was delay in making  the  necessary deposit  of  the admitted tax and that delay  could  not  be condoned under s.5 of the Limitation Act. Section  9 of the Act deals with an appeal against an  order of assessment.  It provides that any dealer objecting to  an order under the various sections mentioned in sub-s.(1)  may within   30  days  appeal  to  such  authority  as  may   be prescribed.   The proviso to sub-s. (1) is material  and  is set out below               "Provided that no appeal against an assessment               shall be entertained unless it is  accompanied               by  satisfactory proof of the payment  of  the               amount-of tax admitted by the appellant to  be               due or of such instalments thereof as may have               become payable:               Provided,   secondly,  that   the   appellate,               authority  shall  not exercise any  powers  or               perform   any  other  function  except   those               conferred  on  or  entrusted to  him  as  such               authority." Sub-s.(6) of s.9 provides that s.5 of the Indian  Limitation Act 1908 shall apply to appeals under the Act.  The relevant Rules may next be reproduced:               Rule 66(2) "The memorandum of appeal shall  be               accompanied  by adequate proof of  payment  of               the  fee payable and a certified copy  of  the               order appealed against and the challan showing               deposit in the treasury of the tax admitted by               the   appellant   to  be  due,  or   of   such               instalments thereof as might have become  pay-               able".               Rule 67(3) "If the memorandum of appeal is not               in  order it may be rejected or  be  returned,               after  the necessary endorsement on  its  back               about  its  presentation and  return,  to  the               applicant  for correction  and  representation               within  the time to be fixed by the  Assistant               Commissioner (Judicial) or be amended then and               there". 1013 A   full  bench of the Allahabad High Court  considered  the question  of the applicability of s.5 of the Limitation  Act to a case the admitted amount of tax is not deposited by the appeal  within the time prescribed for filing the appeal  in Janta Cycle and Motor Mart v. The Asstt.  Commissioner  (J.) III,  Sales  Tax  Kanpur Range & Anr.(1).  The  full  ’bench relied  on  an  observation of this  Court  in  Lakshmiratan Engineering Works Ltd. v. Asstt.  Commissioner (J.) I, Sales Tax, Kanpur & Another (2 ) with regard to the meaning of the word  "entertain".  According to that  decision  "entertain"

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meant  the  first occasion on which the court  took  up  the matter for decision.  It might be at the admission stage  or if  by the rules of the appellate Tribunal the appeals  were automatically  admitted it would be the time of the  hearing of the appeal.  The High Court considered that according  to the aforesaid decision of this Court when the first  proviso is  read  with the main provision of s.9(1) of the  Act  the deposit  also  had to be made within limitation.   The  High Court  came to the conclusion that s.9(6) of the  Act  could not  be  applied  and  s.5 of the  Limitation  Act  was  not attracted  when  the  question arose whether  the  delay  in depositing the admitted tax should be condoned. We are wholly unable to comprehend and appreciate the  above reasoning  or the conclusion of the High Court on the  point under consideration.  It is true that an appeal filed  under s.9  of  the  Act cannot be  entertained  by  the  appellate authority  unless  satisfactory  proof  is  adduced  of  the payment of tax admitted by the appellant to be due but in  a case where the amount of admitted tax is deposited after the period  of  limitation has expired all that will  happen  is that the appeal will become entertainable only on the day on which  satisfactory  proof  of payment  of  that  amount  is produced.  In other words the appeal will be deemed to  have been  properly  filed  on the date on which  the  amount  of admitted  tax is paid.  If that is beyond the period  of  30 days the appeal will be barred by time.  Section 9(6)  will, immediately become applicable to that appeal and it will  be open  to  the appellant to apply for  condonation  of  delay under  that provision.  We are wholly unable to  follow  the argument that the deposit of the amount of admitted tax must be  made within 30 days even though the delay in filing  the appeal can be condoned under subs.(6). A proper and  correct reading  of  s.9  cannot justify such  an  approach.   If  a petition  of appeal has been filed without proof of  payment of tax accompanying it that appeal can be said to have  been preferred  only when proof of payment of tax  is  furnished. Such  furnishing  of  the proof may take  place  within  the period  prescribed  for preferring the appeal or  after  the lapse (1) 22 S.T.C. 94. (2) 21 S.T.C. 154. 1014 of that period.  If the proof of payment of admitted tax  is furnished  within the period prescribed the appeal  must  be entertained.  If the furnishing of that proof is done  after the  expiry  of the period of limitation the  question  will arise  whether the appeal should be entertained or not.   In such cases s.9(6) will come into operation and the  question will  arise whether there has been sufficient cause for  not preferring  the  appeal within the  statutory  period.   The correct  approach  is  to treat the appeal  as  having  been preferred  on the date on which proof of payment of the  tax was  furnished and’ then to see whether under sub-s. (6)  of s.9  there  was sufficient cause for excusing the  delay  in preferring  the  appeal.  The decision of  the  Kerala  High Court  in Gangadharan Pillai v. Sales Tax Officer  (Reserve) Ernakulam(1)  is to this effect and we entirely  agree  with the  reasoning  and  the conclusion  therein.   In  Raja  of Vankatagiri  v.  Commissioner  of Income  tax,  Madras(2)  a division  bench of the Andhra Pradesh High Court  consisting of  Subha Rao C. J. as he then was and Bhimasankaram J.  had to consider the provisions of the Indian Income tax Act 1922 similar  to  s.9 of the Act.  According to  the  proviso  to s.30(1)  of  that Act no appeal lay against an  order  under sub-s.(1)  of s.46 unless the tax had been paid.   Sub-s.(2)

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,of  that  section  provided  that  the  appeal  was  to  be ordinarily  ,presented  Within  30 days  but  the  Appellate Assistant  Commissioner  could  admit  the  same  after  the expiration  of  the  period if he  was  satisfied  that  the appellant had sufficient cause for not presenting it  within that  period.  It was held that the payment of the  tax  was condition  precedent to the maintainability of  the  appeal. If  an appeal was filed, though after the prescribed  period of time, the Assistant Commissioner had the jurisdiction  to hear  the  appeal  after the tax due  was  paid.   The  only possible objection that could have been raised was that  the appeal  was  barred as having been filed beyond  the  period prescribed  by s.30(2). But the appellate authority had  the jurisdiction  to  excuse  the  delay.   The  ratio  of  this decision  is  that  even though the payment  of  tax  was  a condition precedent to the maintainability of the appeal the delay  could  be condoned under s.30(2)  thus  treating  the appeal as having been filed when the amount of tax was paid. The  Allahabad High Court appears to have been  greatly  in- fluenced  by  the  decision of this  Court  in  Lakshmiratan Engineering Works Ltd. v. Asstt.  Commissioner (J.) I  Sales Tax,  Kanpur(-’) and by the meaning of the word  "entertain" as  explained there.  We have found considerable  difficulty in discovering how that decision could afford any assistance to the respondents in the present case.  Indeed according to that decision the words (1) 16 S.T.C. 578. (3) 21 S.T.C. 154. (2) 28 I.T.R. 188. 1015 "no  appeal shall be entertained" in the proviso to  s.9  do not denote the filing of the memorandum of appeal but  refer to  the point of time when the appeal is  being  considered. Therefore, though the memorandum of appeal filed within time is  not accompanied by the treasury challan showing  payment of tax if before the appeal is being considered satisfactory proof of payment of tax is given then the proviso to s.9  is satisfied.   In the present case when the assessee  produced the necessary documents which showed that the deposit of the full amount had been made by May 27, 1966 the appeal  became entertainable.  It only suffered from the defect that it was barred by time on that date.  The assessee could, therefore, apply under s.9(6) for extending the period of limitation in accordance with s.5 of the Limitation Act.  It is entirely a different  matter whether on the facts of the  present  case the appellate authority would have condoned the delay or not but to say that the appellate authority had no  jurisdiction to extend the time simply because the amount of admitted tax had  been  deposited beyond the period of 30 days  would  be wholly erroneous and would not represent a true and  correct ,view  of the provisions of s.9. It may be pointed out  that the  case of Lakshmiratan Engineering Works(1) on which  the High  Court largely relied did not involve the  question  of the  extension  of the period of  limitation  under  s.9(6). Indeed  in our judgment the word "entertain" in  s.9(1)  has hardly   any   material   bearing   on   the   point   under consideration. As  the  appellate authority disposed of the appeal  on  the short  ground that it was barred by time and that it had  no jurisdiction to extend the period of limitation this- matter will  have to go back for reconsideration and redecision  of that authority.  In the result the appeal is allowed and the judgment  of  the  High Court is set  aside.   The  case  is remitted to the High Court for making appropriate directions for  reconsideration  and  rehearing of the  appeal  by  the

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appellate  authority  under the Act.  The assessee  will  be entitled to costs’ in this Court. G.C.                    Appeal allowed. (1) 21 S.T.C. 154. 1016