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PETITIONER: STATE OF KARNATAKA

       Vs.

RESPONDENT: SUNAGAR BROS.

DATE OF JUDGMENT13/04/1993

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) JEEVAN REDDY, B.P. (J)

CITATION:  1993 SCR  (3)  81        1993 SCC  (3)  16  JT 1993 (3)   186        1993 SCALE  (2)558

ACT: Karnataka  Sales  Tax  Act, 1957: Ss. 20  (3)  and  6B-Held, undisputed tax to be deposited before appeal is  entertained includes additional tax under S. 6B.

HEADNOTE: The respondent-assessee challenged the best judgment assess- ment  for the %,ear 1972-73.  The First Appellate  Authority dismissed  it its limine on the ground that  the  respondent had failed to pay the tax " not disputed In appeal". A  second  appeal was dismissed by the  Karnataka  Appellate Tribunal.The High Court allowed the revision petition of the assessee on the ground that the additional tax payable under S.  6B was distinct from the tax in S.20 (3) on the  payment of which the right of appeal is made dependent. In  the appeal by the State to this Court the  question  was whether the mandate unders. 20(3) to pay the undisputed  tax before  the  appeal  is entertained is  also  applicable  to additional tax payable under s.6B of the Act. Allowing the appeal, this Court, HELD:     1. The expression ’tax’ has been defined to mean a tax  leviable  under the provisions of the Act and  as  such includes  the additional tax levied under section 6B of  the Act.   When Section 20 (3) talks of "payment of the tax  and penalty  not disputed in the appeal" it  obviously  includes the additional tax. (85-B) On  the  plain language of S. 20 (3),  the  only  conclusion which  can  he  drawn is that  the  undisputed  ’tax’  which includes  additional  tax  has to he  deposited  before  the appeal is entertained. (85-C) 82 2.   The  fact that the quantum in of the additional tax  is determined  with  reference to the sales tax,  purchase  tax imposts would not alter its character.The additional tax  is nothing  but  an  enhancement  in  the  rate  of  the  sales tax/purchase  tax under the Act.  As soon as  the  assessing authority determines the levy of sales tax/purchase tax  the additional  tax  under  Section 6B  become--.  part  of  the assessment  order.   Similarly  if  the  main  impost  under Section  5  (1) is successfully  challenged,  the  reasoning sustaining  the challenge would also-ipso  facto-affect  the validity  (if the additional impost under Section 6B of  the

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Act. (85-D-E)

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 228 (NT)  of 1987. From the Judgment and Order dated 8.4.1982 of the  Karnataka High Court in S.T.R.P.No. 100/81. M. Veerappa and K.H. Nobin Singh for the Appellant. The judgment of the Court was delivered by KULDIPSINGH,J.The question for consideration in this  appeal is  whether  the  mandate,  under  Section  20  (3)  of  the Karnataka  Sales  Tax  Act,  1957  (the  Act),  to  pay  the undisputed  tax  before the appeal is entertained,  is  also applicable to the additional tax payable under Section 6B of the Act.  In other words whether it is obligatory under  the Act  to  deposit the tax and the additional tax  before  the appeal is entertained. The respondent-assessee challenged the best judgment assess- ment made against him for the year 1972-73 before the  First Appellate  Authority  which was dismissed in limine  on  the ground  that  the  respondent failed to  pay  the  tax  "not disputed  in  appeal".   The  second  appeal  filed  by  the assessee  before the Karnataka Appellate Tribunal  was  also dismissed.   On  a  revision  petition  under  the  Act  the Karnataka   High   Court  reversed  the  findings   of   the authorities  below on the ground that unpaid "not  disputed’ tax was the additional tax which was different than the  tax envisaged  under Section 20 (3) of the Act.  The High  Court allowed the revision petition of the assessee and remanded 83 the  matter  to the appellate authority to  dispose  of  the appeal  in  accordance  with law.  This  appeal  by  way  of special  leave against the judgment of the High Court is  by the State of Karnataka. Before  the appellate authority it was the admitted case  of the parties that no part of the undisputed tax levied  under Section  5 (1) of the Act had remained unpaid.  It was  only the  undisputed additional levy under Section 6B of the  Act which had not been paid. Section  20 (1) of the Act confers a right of appeal.   Sub- section 2 of Section 20 refers to the period of  limitation. Sub-Section 3 (A) of section 20 is as under:-               "No  appeal  against an  order  of  assessment               shall   be   entertained  by   the   appellate               authority   unless   it  is   accompanied   by               satisfactory  proof of the payment of the  tax               and penalty not disputed in the appeal." The  High court on the interpretation of various  provisions of  the Act came to the conclusion that the  additional  tax under  Section 613 is a levy distinct from the impost  under section  5 (1) of the Act.  The High Court thus came to  the conclusion  that the nonpayment of the additional tax  would not bar the entertainment of the appeal under the Act.   The findings  of  the  High Court are based  on  the  following- reasoning:-               "Though the tax under section 6B is and impost               of  a  similar nature, it is a  levy  distinct               from  the impost under Section 5(1)  or  under               Section  6. This is the clear outcome  of  the               scheme of Section 6B and the effect of Section               6B(2) of the Act.  Section 6B(2) by  providing               for  the application of the provisions of  the               ’Act’  to  the tax under Section  6B  as  they

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             apply  to the sales or purchase tax under  the               Act,  recognises the distinction  between  the               additional  tax on the one hand and the  other               imposts    under    the    ’Act’    on     the               other............  Section 20(1)  creates  and               confers a right of appeal.  Sub-Section (3) of               Section  20 seeks to restrict that  right  and               subject it to certain conditions.  It  appears               us               84               that  the  "tax"  in Section  20  (3)  on  the                             payment  of which the right of appeal  is  mad e               dependent should receive a construction  which               would  advance that right and one which  would               not make that right dependent upon or  subject               to  payment of a "tax" which is distinct  from               the tax constituting the subject matter of the               appeal.............  In the present case,  the               appeal is one directed against the main impost               and no part of the assessment relating to  the               additional  tax, is the subject matter of  the               appeal.   That  being so, the view  that  non-               payment  of the additional tax would  bar  the               entertainment    of   the   appeal   is    not               unjustified." We are not inclined to agree with the view taken by the High Court,  Section  6B of the Act as it stood at  the  relevant time reads as under:-               "6-B.   Levy  of additional  tax.  -(1)  There               shall  be  levied  and  collected  from  every               dealer  liable to pay tax under section  5  or               under section 6 (and from every dealer  liable               to  pay tax under Section 25 B) an  additional               tax  at the rate of ten paise in the rupee  on               the sales tax or purchase tax or both  payable               by such dealer;               Provided  that  in  respect  of  the  sale  or               purchase   of  any  of  the   declared   goods               mentioned  in  the Fourth  Schedule,  the  tax               together  with  the additional tax  shall  not               exceed  four percent of the sale  or  purchase               price thereof.               (2)The  provisions of this Act and  the  rules               made  thereunder including those  relating  to               refund or exemption from tax shall, so far  as               may  be,  apply  in  relation  to  the   levy,               assessment  and collection of  the  additional               sales  tax  or purchase tax or both,  as  they               apply  in relation to the levy assessment  and               collection of sales tax or purchase tax  under               this Act."                85 It  is  obvious that the additional tax is leviable  at  the rate of ten paise in the rupee on the sales tax or  purchase tax or both, payable by such dealer.  The additional tax  is computed  with reference to the tax payable by  the  dealer. When  once the assessing authority determines the sales  tax or  purchase tax under the Act the additional tax is  levied automatically and becomes part and parcel of the  assessment order.  The expression "tax" has been defined to mean a  tax leviable  under  the  provisions  of the  Act  and  as  such includes  the additional tax levied under section 6B of  the Act.   When Section 20(3) talks of "payment of the  tax  and penalty  not disputed in the appeal" it  obviously  includes

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the additional tax.  On the plain language of Section  20(3) of  the  Act  it is not possible  to  make  any  distinction between the tax and the addition tax and the only conclusion which  can  be  drawn is that  the  undisputed  "tax"  which includes  additional  tax  has to be  deposited  before  the appeal is entertained. The  fact  that  the  quantum  of  the  additional  tax   is determined  with  reference to the  sales  tax/purchase  tax impost would not alter its character.  The additional tax is nothing  but  an  enhancement  in  the  rate  of  the  sales tax/purchase  tax under the Act.  As soon as  the  assessing authority determines the levy of sales tax/purchase tax  the additional   tax  under  Section  6B  become  part  of   the assessment  order.   Similarly  if  the  main  impost  under Section  5  (1) is successfully  challenged,  the  reasoning sustaining  the challenge would also-ipso  facto-affect  the validity  of the additional impost under Section 6B  of  the Act. We  are, therefore, of the view that the High court was  not justified  in holding that additional tax under  Section  6B was not a tax for the purposes of Section 20 (3) of the Act. We  allow  the appeal , set aside the judgment of  the  High court  and  dismiss  the  revision  petition  filed  by  the assessee before the High Court.  No costs. U.R. Appeal allowed. 86