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PETITIONER: SHRI M. P. SINGH, DY.  TRANSPORT COMMISSIONER,M.P., GWALIOR

       Vs.

RESPONDENT: ANAND TRANSPORT CO.(P) LTD.  ETC.

DATE OF JUDGMENT29/07/1971

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

CITATION:  1971 AIR 2127            1971 SCR  984

ACT: Madhya Pradesh Motor Vehicles (Taxation of Passengers)  Act, 1959--Section  7-Return filed accepted as  correct-No  order quantifying  amount of tax necessary before  issuing  demand notice.

HEADNOTE: Under  the  Madhya  Pradesh  Motor  Vehicles  (Taxation   of Passengers)  Act, 1939, where returns have been accepted  as correct nothing more need be done except to recover the  tax due which has not been paid and no assessment order need  be passed  in view of the express language of s. 7. It is  only when  the  returns have not been submitted or  when  returns submitted are found to be incorrect and incomplete that  the tax  officer  has to make an enquiry and determine  the  sum payable by the operator by way of tax.  Simmilarly if  there has  been  escapement of tax, proceedings have to  be  taken under  s.  8 and an order has to be made after  an  enquiry. The  position would be the same if penalty is sought  to  be levied under s.     9. [986F-H; 987A]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION: Civil Appeals Nos.  1449  to 1454 of 1967. Appeals by special leave from the judgments and orders dated December 15, 1966 of the Madhya Pradesh High Court in  Misc. Petitions Nos. 303 of 1966 etc. I.   N.  Shroff, for the appellants (in all the appeals). M.   N.  Phadke,  K.  L.  Hathi and P.  C.  Kapur,  for  the respondents (in C.As. Nos. 1449, 1450 and 1452 of 1967). V.S.  Desai,  K.  L.  Hathi and  P.  C.  Kapur,  for  the respondents (in C.As. Nos. 1453 and 1454 of 1967). The Judgment of the Court was delivered by Grover,  J.-All  these appeals arise out of  writ  petitions that  were  filed  in  the  High  Court  of  Madhya  Pradesh challenging  the  notices  of demand issued  by  the  Deputy Transport   Commissioner  for  payment  of  the  amount   of passenger tax said to be due under the Madhya Pradesh  Motor Vehicles  (Taxation  of Passengers) Act,  1959,  hereinafter referred  to  as  the ’Act’.  By  a  common  judgment  dated November  8, 1966 the High Court allowed the  petitions  and

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quashed the demand notices.  The appeals may be divided into two categories.  In C. As. 1449 and 1453 of 1967 returns had been  duly filed as contemplated by s. 5 of the Act  but  no tax had been deposited as required by s. 6. Demand 9 85 notices  were issued in respect of the tax payable  pursuant to  the returns some years later.  Proceedings  were  also taken  as  no payment was made for recovery of  the  tax  as arrears  of  land revenue.  In the other  four  appeals  the returns were never filed but it appears the authorities  did take  certain proceedings under S. 7 of the Act and in  some cases  accounts  of the respondents were checked  and  their liability  determined.   When demand notices were  sent  and recoveries sought to be made the writ petitions were  filed. The  High  Court  did not go in  these  matters  fully  ,and treated all the petitions as if the facts were similar. Section 3 of the Act which is the charging section provides that there shall be levied and paid to the State  Government a tax on all passengers carried by stage carriages at a rate equivalent to 15 % of the fare inclusive of the tax  payable to  the  operator of a stage carriage.  The tax  has  to  be collected  by the operator  of a stage carriage and paid  to the  State Government in accordance with the  provisions  of the  Act.  Under S. 5 the operator must deliver to  the  tax officer or to such prescribed officer as may be specified  a return in the prescribed form and manner either daily or  at such  intervals as may be prescribed.  Section 6  lays  down that the tax payable during any month in accordance with the return submitted under S. 5 shall be paid into a  Government treasury  by  the operator and the receipt  evidencing  such payment has to be forwarded to the Tax Officer.  Sections 8, 9 and 10 are in the following terms               "(8)  Fares escaping assessment.-If,  for  any               reason,  the whole or any portion of  the  tax               leviable  under  this Act, for any  month  has               escaped  assessment, the Tax Officer  may,  at               any time within, but not beyond, one year from               the expiry of that month, assess the tax which               has escaped assessment, after issuing a notice               to  the operator and making such  inquiry  as               the officer may ,consider necessary.                (9)Penalty  for non-payment  of  tax.-Where               the whole orany portion of the tax payable               to  the  State Government in  respect  of  any               stage  carriage  for  any  month  or   portion               thereof in pursuance of ss. 6, 7 and 8 has not               been  paid to it in time the Tax Officer  may,               in his discretion, levy in addition to the tax               so  payable,  a penalty not exceeding  25  per               cent of the maximum tax which would have  been               payable  to the State Government if the  stage               carriage  had carried its full  complement  of               passengers   during  such  month  or   portion                             thereof. (10)Recovery  of tax, etc,-(1 )  In               the cases referred, to in sections 7, 8 and  9               the, Tax Officer shall serve on the operator a               notice of demand for the sums payable                                    9 86               to the State Government and the sums specified               in  such  notice  may be  recovered  from  the               operator as arrears of land revenue.               (2)The  tax shall be a first charge on  the               stage  carriage in respect of which it is  due               as also on its accessories and such stage  and

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             the  accessories thereof may be  attached  and               sold  for  the recovery of the tax  under  the               appropriate  law relating to the  recovery  of               arrears of land revenue." Section  12  provides  for an appeal  against  a  notice  of demand’ served under S. 10. The  scheme of the above provisions apparently is  that  the operator  of  a  stage carriage has to submit  a  return  in accordance  with  S.  5  and pay  tax  into  the  Government treasury  every month as provided by S. 6. No  question  can arise  of any assessment order being made under S. 7 by  the Tax  Officer where the returns are found to be  correct  and complete.   It  is only where either no  returns  have  been submitted  or where the return submitted appear to  the  Tax Officer  to be incorrect or incomplete that the Tax  Officer has to follow the procedure laid down in s. 7 and  determine the tax payable by the operator.  The High Court was of  the view that even where returns had been filed and accepted  as correct  the  Tax Officer has to pass  a  proper  assessment order  holding  the operator liable for payment  of  tax  in accordance with the return submitted by him.  In other words no  notice  of demand can be issued until  the  Tax  Officer makes such an order quantifying the amount of tax. We  are unable to accede to the contention which  prevailed’ with the High Court that even where returns had been submit- ted  but the tax has not been paid the Tax Officer is  bound to,  make  an order before serving a notice of  demand  even though the demand is strictly in accordance with the returns which  have  been submitted.  Section 7 rules out  any  such course  to be followed by the Tax Officer.  It is only  when the returns have not been submitted or when return submitted are  found  to  be incorrect and  incomplete  that  the  Tax Officer  has  to  make an inquiry,  and  determine  the  sum payable  by the operator by way of tax.  Similarly if  there has  been  escapement of tax proceedings have, to  be  taken under  S.  8 and an order has to be made after  an  enquiry. The  position  would  be same if penalty  is  sought  to  be levied, under S. 9. But where returns have been accepted  as correct nothing more need be done except to recover the  tax due  which has not been paid and no asessment order need  be passed in view of the express language of S. 7. 987 We are satisfied that in the two appeals, i.e., C. As.  1449 and 1453/67 in which returns had been filed the Tax  Officer was  not bound to make any order quantifying the  amount  of tax before issuing the notice of demand.  The amount  sought to be realized was quantified in the returns themselves vide Form  IV read with Rule 4(2)(c) of the M. P. Motor  Vehicles (Taxation of Passengers) Rules.  It has not been shown  that any  penalty  was sought to be imposed in those  two  cases. The  order  of the High Court, therefore, in  these  appeals cannot  be  sustained and is hereby set aside and  the  writ petitions are ordered to be dismissed. As  regards  C. As.  Nos. 1450, 1451, 1452 and  1454/67,  it appears,  as has been stated earlier, that some  proceedings were held of the nature contemplated by S. 7 and the notices of demand were issued after orders had been duly made by the Tax Officer.  But this is a matter which was not examined in each case by the High Court and we would like to express  no opinion  with regard to it.  These appeals are also  allowed and  the orders of the High Court are set aside.   The  High Court  will rehear and redecide the same in accordance  with law.   There  will  be  no order as to  costs  in  all.  the appeals. K.  B.  N,                                           Appeals

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allowed. 988