http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: THE STATE OF MYSORE

       Vs.

RESPONDENT: SHANTA VEERAPPA CHANNA MALLAPPABOMMANAHALLI & ORS.

DATE OF JUDGMENT: 04/03/1966

BENCH: MUDHOLKAR, J.R. BENCH: MUDHOLKAR, J.R. SARKAR, A.K. BACHAWAT, R.S.

CITATION:  1966 AIR 1635            1966 SCR  (3) 611

ACT: Mysore Sales Tax Act (25 of 1957), ss. 13 (3) and 29 (1) (d) Assessee  filing  appeal  against  order  of   assessment-No interim stay of proceedings for recovery of  tax-Prosecution for non-payment of tax-Maintainability.

HEADNOTE: The respondent was assessed to sales tax and was served with a notice requiring him to pay the amount within 21 days.  He preferred an appeal against the order of assessment but  did not  pay  the  tax, nor did he obtain an order  of  stay  of proceedings  from teh appellate authority. While the  appeal was  pending  a  complaint was filed against  him  under  s. 29(1)(d)  of  the Mysore Sales tax Act,  1957,  because  the demand  was not complied with, but the trial court  and  the High Court acquitted In appeal to this Court by the State, HELD:     The acquittal of the respondent was unwarranted as his action in  not  paying the tax within the time  allowed, was deliberate and therefore  wilful and such failure to pay is rendered an offence under s. 29(1)(d). [814 D, E]    The  liability  to  pay tax is created by  the  order  of assessment.   Where the tax so assessed is not paid  despite service of notice of demand, the tax may be recovered  under s. 13(3)(a) as an arrear of land revenue or under s. 13  (3) (b)  on an application to a magistrate as if it were a  fine imposed on the assessee.  Under the proviso to s. 13(3), the assessee  has been afforded interim protection  from  action under  s.  13 (3) (a) or (b), provided he obtains  from  the appropriate  appellate or revisional authority mentioned  in the  proviso,  an  order of  stat  of  proceedings.   Merely because  an appeal has been preferred, the liability of  the assessee  to  pay the tax cannot be deemed to  be  suspended under  s. 20(5).  This provision requires that if the  order of  such appropriate authority lays down any condition,  the proviso requires that the assess must comply with it  before he can obtain interim relief.  Apart from these two  methods of obtaining interim relief, the proviso to s. 13(3)  cannot be an answer to a prosecution under s. 29(1)(d). (813 E-G]

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

JUDGMENT: CRIMINAL APPELLATE JURISDICTION:  Criminal Appeals Nos. 150- 152 of 1965. Appeals  by special leave from the judgment and order  dated March 17, 1965 of the Mysore High Court in Criminal  Appeals Nos. 93 to 95 of 1965. B.   R. L. Iyengar and B. R. G. K. Achar, for the appellant. K.   R. Chaudhury, for the respondents. 812 The Judgment of the Court was delivered by Mudholkar,  J. This judgment will also govern  Criminal  Ap- peals  Nos. 151 and 152 of 1965.  The respondent was at  the relevant time a dealer at Bijapur in groundnuts, cotton seed and  other commodities and was registered as a dealer  under the  Mysore  Sales Tax Act, 1957.  For  the  period  between November  12, 1958 and October 31, 1959 he was  assessed  to sales  tax amounting to Rs. 9,864-31 ps. by  the  Commercial Tax  Officer, Bijapur in his order dated December  4,  1963. On January 3, 1964 the Commercial Tax Officer served on  him a notice of payment requiring him to pay the tax assessed on him  within 21 days.  He was similarly assessed to  pay  tax for two subsequent periods by two separate orders passed  by the Commercial Tax Officer.  Two separate notices of  demand were  served  on him requiring him to pay the  tax  assessed within 21 days.  It is common ground that the respondent did not  comply with any of the three notices.   Three  separate complaints  were,  therefore, preferred against him  by  the Commercial Tax Officer before the Judicial Magistrate, First Class,  second court, Bijapur for offences punishable  under s.  29(1)(d)  of  the Act.   The  respondent  had  preferred appeals  against  each of the three  orders  ,of  assessment under sub-s. (1) of s. 20 of the Act.  He did not,  however, pay  the tax assessed against him or any portion thereof  as contemplated-in  the second proviso of sub-s. (1) of  s.  20 nor  did he seek or obtain from the appellate authority  any order under the proviso to sub-s. (5) of s. 20.  The learned Magistrate  held  that since the  respondent  had  preferred appeals  against the orders of assessment and those  appeals were still pending when the complaints were made before  him the  respondent was not liable for offences under s. 29  (1) (d).   On this ground the learned Magistrate  acquitted  the respondent in all the three cases.  Appeals preferred by the State  of Mysore against the orders of acquittal  passed  in favour of the respondent were rejected by the High Court  on the  ground  that as the State could avail itself  of  other remedies  under  the Act for enforcing the  payment  of  tax levied on the respondent it did not think it fit to exercise its  discretion  under s. 421 (1) of the  Code  of  Criminal Procedure and entertain the appeals. Mr.  Chaudhuri refers to the proviso to sub-s. (3) of s.  13 and contends that unless the requirements of the proviso are satisfied he is not liable to be proceeded against under  s. 29  (1)  (d).   In order to appreciate his  argument  it  is desirable  to  reproduce the provision relied upon  by  him. Sub-section (3) of s. 13 reads as follows               "Any  tax  assessed, or any other  amount  due               under  this  Act from a  dealer,  may  without               prejudice to any other mode of collection,  be               recovered-               (a)   as if it were an arrear of land revenue,               or                                    813               (b)   on  application  to any  Magistrate,  by               such  Magistrate as if it were a fine  imposed

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

             by him:               Provided that no proceeding for such  recovery               shall be taken or continued as long as he has,               in regard to the payment of such tax or  other               amount,  as the case may be, complied with  an               order  by any of the authorities to  whom  the               dealer has appealed, or applied for  revision,               under sections 20, 21, 22- 23 or 24." The  matter dealt with by s. 13 is "payment and recovery  of tax".   The  substantive part of the  provision  renders  an assessee  in arrears of tax liable to be  proceeded  against under  either  cl.  (a) or cl. (b) of  the  provision.   Mr. Chaudhury,  however, contends that by virtue of the  proviso an  assessee  will  not be liable to  be  proceeded  against unless  it  is shown that he has failed to  comply  with  an order  made  by the appropriate authority under one  of  the sections  refered  to in the proviso.  He  points  out  that though  he has preferred appeals under s. 20 of the  Act  no order has been made by the appellate authority in any of the appeals dealing with the question of payment or otherwise of the tax and that,the refore,there has been no failure on the part  of the respondent to comply with an order made by  the appropriate authority.  Mr. Chaudhury in effect wants us  to construe  the proviso as if it contemplated the creation  of liability  to  pay the tax by an order  of  the  appropriate authority  under  one  of  the  sections  specified  in  the proviso.  There is no warrant for such a construction.   The liability to pay tax is created by the order of  assessment. Where tax so assessed is not paid despite service of  notice of  demand  the substantive portion of sub-s. (3) of  s.  13 renders  the assessee liable to be proceeded  against  under cl. (a) or cl. (b) of that provision.  The assessee who  has moved the appropriate authority under one of the  provisions referred  to  in  the proviso has,  however,  been  afforded interim  protection  from action under cl. (a)  or  cl.  (b) provided  that he approaches the appropriate  authority  and obtains from that authority an order of stay of  proceedings under cl. (a) or cl. (b).  That, however, is not enough.  If the  order  of  the  appropriate  authority  lays  down  any condition the proviso requires that the assessee must comply with  those conditions before he can obtain  interim  relief under the proviso.  Apart from that, we fail to see how  the proviso to sub-s. (3) of s. 13 can at all be an answer to  a prosecution  under  s.  29 (1) (d).   What  is  rendered  an offence  under s. 29 (1) (d) is the failure of the  assessee to pay the tax within the time allowed.  But where, as here, the assessee has not paid the tax within the time allowed by a notice of demand he immediately renders himself liable  to be proceeded against under s. 29 (1) (d). Mr.  Chaudhury then contended that in view of the fact  that an  appeal has been preferred the liability of the  assessee to pay 814 the  tax  must be deemed to have been suspended  during  the pendency of the appeal.  This argument ignores the  specific provisions  of sub-s. (5) of s. 20 and the proviso  thereto. They read thus :               "Notwithstanding  that  an  appeal  has   been               preferred under sub-section (1), the tax shall               be paid in accordance with the assessment made               in the case :               Provided that the appellate authority may,  in               its  discretion  give such  directions  as  it               thinks fit in regard to the payment of the tax               before  the  disposal of the  appeal,  if  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

             appellant furnishes sufficient security to its               satisfaction  in such form and in such  manner               as may be prescribed." The  provision we have just quoted is a complete  answer  to Mr.  Chaudhuri’s contention.  Mr. Chaudhury  then  contended that  there  was  no  wilful default  on  the  part  of  the respondent.  It is difficult to appreciate what he means  by saying  that  there was no wilful default.   The  respondent knew that he was required to pay the tax within certain time and  also knew that he had not complied with the  notice  of demand.  His action in not paying the tax was quite  clearly deliberate and, therefore, wilful.  There is no substance in this contention. We are, therefore clear that the acquittal of the respondent for  offences  in  the  case  was  unwarranted.   We  would, therefore,  have, after setting aside his acquittal in  each of the three cases, convicted and sentenced him under s.  29 (1) (d) of the Act but for the fact that when special  leave was  granted  an  undertaking was given by  the  State  that irrespective  of  the result of the  appeal  the  respondent would  not be prosecuted.  Probably what was meant was  that the State would not press for conviction and sentence of the respondent.  Therefore, though we allow the appeals and  set aside the acquittal of the respondent in the three cases  we leave the matter just there. Appeals allowed. 815