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PETITIONER: M/S.  KANPUR VANASPATI STORES, KANPUR

       Vs.

RESPONDENT: THE COMMISSIONER OF SALES TAX, U.P. LUCKNOW

DATE OF JUDGMENT22/01/1973

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. REDDY, P. JAGANMOHAN KHANNA, HANS RAJ

CITATION:  1973 AIR 2373            1973 SCR  (3) 424  1973 SCC  (4) 110

ACT: U.P.  Sales Tax Act, Sec. 3A : "Successive Dealer".  whether includes  an importer who is the first dealer.   U.P.  Sales Tax   Act,   Sec.  9(1)  proviso;   "tax   admitted"-Whether restricted to admission in memorandum of appeal only.

HEADNOTE: The  assessee, among other things, imports  and  distributes vanaspati as agent of certain companies.. For the year 1957- 58, he filed a return on a turn over of Rs. 1,66,387.3 P and paid tax of Rs. 1060.30. Before the assessing authority,  he accepted  the  liability of Rs. 10,339.19p.  On  independent enquiries, the Sales Tax Officer came to the conclusion that the turn over was Rs. 58,06,132.30 and the tax liability was to the extent of Rs. 3,62,691.62P. The tax authority had  to resort to best assessment, as the assessee failed to appear, although 30 adjournments were given.  The assessee filed  an appeal  to  the appellate authority without  depositing  the tax,  as  required  by proviso to Sec. 9 of  the  Act.   The appeal  was dismissed for non-compliance of Sec. 9.  At  the instance of the assessee, the question of maintainability of appeal was referred to the High Court.  During the  pendency of  the  reference,  the  assessee  ’filed  writ   petitions challenging  the validity of the Notification  issued  under section  3A and the legality of the proceedings.   The  High Court held that the appeal was properly dismissed.   Before this  Court, the following questions were raised : (i)  that the   assessee-appellant  being  an  ’importer   cannot   be considered  as one of the successive dealers in the series of  sales as contemplated by Section 3A and, therefore,  the Notification  under section 3(A) was ultra vires,  and  (ii) that  the dismissal ,of appeal, for want of payment  of  the admitted tax under section 9(1) of the Act was illegal. Dismissing the appeal, HELD  :  (i) An importer is one of the dealers.  He  is  the first dealer  in the State.  Chain of  successive  dealers begins  from  the  first dealer and it  goes  to  the  last dealer.   In  view  of this, dealer in  this  chain  can  be considered  as a "successive dealer".  The series  does  not begin in the middle.  The notification under section 3 is  a valid notification  Ram    Kumar   Rajendra   Swaroop    Vs.

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Commissioner  of Sales Tax (19 S.T.C. 241.) approved.  [4266 C-D) (ii) The assessee had accepted the liability of Rs. 10,339/- before the tax authorities.  Under Rules 41(2) read with  12 he was bound lo submit the quarterly return and also deposit the tax due in, accordance with the return.  The  expression "tax,’  admitted"  in  proviso to  Section  9(1)  means  tax admitted  before the assessing authority and not before  the appellate authority.  As payment of the admitted tax is  one ,,of  the conditions for the maintainability of the  appeal, Section  9(1) would be rendered wholly useless, if  it  is interpreted  to  mean  tax ,admitted in  the  memorandum  of appeal.  Ordinarily, no interpretation should be placed  on a  provision  which  would have the  effect  of  making  The provision either otiose or a dead letter. [426G-H; 427A-D]                425 Chanshyam  Dass  Balmukand v. The State of U.P. &  Ors.  (23 S.T.C. 282) and United Timber & Cashew Products (P) Ltd.  v. Sales Tax Officer.  Cannanore (28 S.T.C. 526), overruled.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2300 to 2302 of 1969 and 14 & 15 of 1970. Appeal by a special leave from the judgment dated August  7, 1968 and 18th August 1969 in Sales Tax Reference No. 574  of 1963, and Special appeal No. 330 of 1963, Misc.  Application No.  177 of 1963 and S.A. Nos. 423 and 424 of 1968  respect- ively. S. V. Gupte, K. L. Arora, S. K. Bagga and S. Bagga, for  the appellant. N. D. Karkhanis and O. P. Rana, for the respondent. The Judgment of the Court was delivered by HEGDE,  J.  These are appeals by special  leave.   They  are filed by the same assessee.  They arise from the decision of a Division Bench of the Allahabad High Court.  The  judgment under  appeal not only deals with references made under  the U.P. Sales Tax Act 1948 (hereinafter referred to as the Act) but also the two Writ Petitions filed by the assessee. The  assessee  who is a registered dealer under the  Act  is having  his business at Kanpur.  It carries on  business  in hydrogenated  oil  and washing soap.  It  also  imports  and distributes  vanaspati  as an agent of Malwa  Vanaspati  and Chemical Company Ltd., Indore. In  these  appeals  we are  concerned  with  the  assessee’s assessment  of  sales tax for the assessment  year  1957-58. Its return for that year  disclosed a gross as well  as  net turnover  of  Rs. 1,66,387.03 P. Along with its  return  the assessee  paid Rs. 1,060.30P. towards the tax  due.   Before the  assessing authority the assessee admitted that its  tax liability  was  Rs. 10,339.19P. It is admitted  as  well  as proved  that the assessee had collected from its  purchasers the  said  amount of Rs. 10,339.19P. The Sales  Tax  Officer after  making certain enquiries came to the conclusion  that the  total  turnover of the assessee during  the  assessment year  in  question was Rs. 58,06,132.30P. The  assessee  was given  opportunity,  to show that the estimate made  by  the Sales Tax Officer was not correct.  From the records of  the case  we find that as many as 30 adjournments were given  to the assessee to establish its case but the assessee did  not take advantage of those opportunities.  The case was finally posted  for  bearing  on 24th March,  1962.   That  day  the assessee  was  absent;  but  it  made  an  application   for adjournment  of the case by 15 days.  That  adjournment  was

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not  granted and it could not have been granted because  the assessment  would  have  been  barred  by  the  end  of  the financial year 1961-62.  Hence the 426 assessing  authority,  on  the basis of  its  best  judgment determined   the   turn-over   of  the   assessee   at   Rs. 58,06,132.30P.  and  determined  its tax  liability  at  Rs. 3,62,691.62P. under section 3A of the Act. Against the order of assessment the assessee filed an appeal within 30 days from the date of the order of assessment.  At the time of filing the appeal the assessee deposited only  a sum  of  Rs.  1,600.   It appears that  the  office  of  the Appellate   Judge   raised  some  objections   as   to   the maintainability   of  the  appeal.   After  receiving   some explanation from the assessee the appeal was entertained and notice  issued to the assessing authority.  When  the  Sales Tax Officer put in his appearance in the appeal he  objected to the maintainability of the appeal on the ground that  the Priviso to Section 9 of the Act had not been complied  with. That objection was accepted and the appeal was dismissed  as not  maintainable.   Thereafter  at  the  instance  of   the assessee  certain questions were referred to the High  Court for  ascertaining its opinion.  During the pendency of  that reference  the assessee filed a Writ Petition under  Article 226  of  the Constitution challenging the  validity  of  the Notification  issued under Section 3A.   Thereafter  another application  was made under Article 227 of the  Constitution challenging  ’the  recovery  proceedings.   Both  the   Writ Petitions  were  dismissed.  In the reference  made  by  the Appellate  Judge the High Court came to the conclusion  that the appeal was properly dismissed. Mr.  Gupte, the learned counsel for  the  assessee-appellant advanced the following contentions before us;-               (1)   That the appeal was illegally dismissed;               (2)   That  the  assessee-appellant  being  an               importer  cannot be considered as one  of  the               successive  dealers in the series of sales  as               contemplated by Section 3A; and               (3)   That   the  Notification  issued   under               Section  3A was ultra vires the power  granted               on the government. In  order  to  appreciate the contentions  advanced,  it  is necessary to refer to certain provisions of the Act. Section 3(1) of the Act provides :               "Subject  to the provisions of this Act  every               dealer shall, for each assessment year, pay  a               tax at the rate of three pies per rupee on his               turnover   of  such  year,  which   shall   be               determined  in such manner as may be  prescri-               bed."  (Remaining portion of the provision  is               not relevant for our purpose).               42 7               Section 3A(1) reads thus :               "Notwithstanding anything contained in Section               3,  the State Government may, by  notification               in  the,  official Gazette, declare  that  the               turnover  in respect of any goods or class  of               goods  shall  not be liable to tax  except  at               such  single point in the series of  sales  by               successive dealers as the State Government may               specify." (Remaining portion of Section 3A  is               not relevant for our purpose).               Now  we come to Section 9(1) and this  section               provides               "Any dealer objecting to an order allowing  or

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             refusing   an   application   for    exemption               certificate  under clause (b)  of  sub-section               (1)  of Section 4 or to an order  refusing  an               application  under  Sec.  30 or  to  an  order               imposing  a penalty under Section 15-A  or  an               assessment  made under Section 7, 7-A, 7-B  18               or  21,  may within 30 days from the  date  of               service of the copy of the order or notice  of               assessment, as the case may be, appeal to such               authority as may be prescribed               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  payment :  (emphasis  supplied)"               (Second  proviso  is  not  relevant  for,  our               present purpose).  We  may now turn to, rules 12 and 41(2).  Rule 12  provides for the submission of: the quarterly returns by an importer. Rule  41 prescribes the, mode of submission of  returns  and assessment.  Sub2 of Rule 41 prescribes               "Before submitting the return  under   sub-               rule  (1),  the dealer shall  deposit  in  the               treasury  the amount of tax calculated by  him               on the turnover shown.in such return and shall               submit the treasury challan with the return or               submit  with  the  return  a  cheque  for  the               amount,   so  calculated."  (Proviso  is   not               relevant for our present purpose). Having  referred to the material provisions in the  Act  and the  Rule, let us now turn back to the contentions  advanced before us. We shall take up the last two contentions  first, namely, that the assessee who is an importer, not being  one of  the "successive dealers" could not have been brought  to tax under section 3A and as such the notification issued  by the  Government under section 3A bringing to tax the  import of vanaspati made by the assessee from Indore under  Section 3-A, is ultra vires.  It may be noted that Section 3 is  the general provision.  It provides for multipoint tax. 2-L796Sup.  CI/73 428 To this general Rule cartain exceptions are, provided.   One of the ,exceptions is that provided under Section 3A.   That Section  permits the Government to Select certain  items  of goods  for  a single point levy.  Vanaspati is  one  of  the items of goods for a single point levy.  The  appellant_does not  contest  the  competence of the  legislature  to  enact Section  3A.  It also does not contest the validity ,of  the power conferred on the Government to select sale of  certain ,goods for single-point taxation.  What is contended on  its behalf  to that section 3A provides that  single-point  levy can  be  imposed  only on the "successive  dealers"  in  the series  of dealers; an importer is not one such  dealer;  he being  the very first dealer in the State.  Undoubtedly,  an importer is one of the, dealers.  He is the first dealer  in the State.  The chain of successive dealers begins from  the first  dealer and it goes upto the last dealer.  Any one  of the dealers in this chain can be considered as a "successive dealer".   The series do not being in the middle.   It  must necessarily  begin at the very beginning.  This is also  the view taken by the Allahabad High Court in Ram Kumar Rajendra Swaroop  vs.   Commissioner  of Sales Tax  (1).   It  is  an obvious   conclusion.   If  an  importer  is  one  ,of   the successive dealers, which undoubtedly he is, necessarily the

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notification issued by the Government must be considered  to be  a valid notification.  In this view we reject  the  last two contentions :advanced by Mr. Gupte. Now  turning our attention to the first contention  advanced by Mr. Gupte, we find there are several difficulties in  the way  of  accepting  the  same.   As  mentioned  earlier  the assessee  in his return has shown what its turnover was  and at  what  rate the tax is pay,able by it.  It  had  admitted before  the  assessing  authority  what  its  turnover  was. Further it had also admitted before that authority ,that  it was  liable to pay tax at the rate of one anna per rupee  on its  turnover  which comes to Rs. 10.339.19p.  It  had  also admitted  before  the same authority that it  had  collected that amount from its purchasers.  It did not dispute  before the  assessing  authority the validity of  the  notification issued under section 3A.  Under Rule 41(2) read with Rule 12 it  was bound to submit quarterly returns.  We take it  that it must have submitted its, quarterly returns.  Under  ,sub- rule 2 of Rule 41 the assessee was bound to deposit the  tax ,due from it according to its returns.  In other words  even according  to the assessee it was bound to deposit into  the Treasury  or  pay cheque to the assessing authority  of  Rs. 10,339.19p.  Admittedly, it had not done so.  What is  urged by  the learned counsel is that whatever might be the  facts admitted in the return and whatever might be the  admissions made  before  the  assessing authority it was  open  to  the assessee  to  take a different stand in its  memorandum  ,of appeal and what is relevant for the purpose of Section 9  is the (1) 19 S.T.C. 241. 429 stand taken by the assessee in the memorandum of appeal.  In support  of  that  contention  two  decisions;  One  of  the Allahabad  High Court in Ghanshyam Dass Balmukund  vs.   The State  of  Uttar  Pradesh & Ors. (1) and the  other  of  the Kerala  High  Court in United Timber & Cashew  Products  (P) Ltd.  vs.   Sales Tax Officer, Cannanore,  (2)  were  cited. Those  decisions undoubtedly support the contention of  the, Appellant but we find it difficult to accept the conclusions reached  by  the Allahabad High Court and  the  Kerala  High Court.   In  his decision the learned single Judge  of  the, Kerala  High  Court has merely followed the  Allahabad  High Court’s  decision.   If we come to the conclusion  that  the expression  "tax admitted" in the proviso to Section  9  (1) means  that admitted in the memorandum of appeal, section  9 can be made wholly use less. All that an assessee has to do is  not to admit his liability in the memorandum of  appeal, whatever his stand might have been beforethe   assessing authority.  Ordinarily no interpretation should be placed on a  provision  which  would have the  effect  of  making  the provision either otiose or a dead letter.  Further, to  find out  the  true meaning of the expression "tax  admitted"  we must  take  into consideration the remaining  words  of  the proviso  namely "or such instalments thereof as  may  become payable".  Those words furnish a key to the  interpretation. If  one of the conditions for maintainability of the  appeal is  payment  of the instalments which  have  become  payable under Rule 41 (2).  It means that the admission that has got to  be  taken  into consideration is that  made  before  the assessing  authority and not before the appellate  authority That  apart  we  do not think that the stand  taken  by  the Appellant  before the appellate authority can be  considered as  a  bona  fide stand.  We are of  the  opinion  that  the contention  taken  by the appellant,  before  the  appellate authority  that  it cannot be brought within  the  scope  of

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section  3A  of  the  Act  was  an  afterthought.   No  such contention was taken before the assessing authority.  If the assessee  believed that contention to be true it  would  not have  collected  from its purchasers the tax @  1  anna  per Rupee Further it is now well settled by the decision of this court t‘at no one can challenge the validity of a  provision of  an  Act or Rule made thereunder or even  a  notification issued  either under the Act or under the Rules made  before the  authorities constituted under the Act.  It is  true  as contended  by Mr. Gupte that. these decisions were  rendered long  after 1962 but the fact remains that the decisions  in question merely interpret what the law is. We  find neither merit nor equity in these  appeals.   Hence these appeals are dismissed with costs; hearing fee one set. SBW                           Appeals dismissed. (1) 23 S.T.C. 282.               (2) 28 S.T.C. 526. 431