Full Judgment Text
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PETITIONER:
LAKSHMI RATTAN ENGINEERING WORKS LTD.
Vs.
RESPONDENT:
ASSTT. COMMR. SALES TAX, KANPUR & ANR.
DATE OF JUDGMENT:
12/09/1967
BENCH:
HIDAYATULLAH, M.
BENCH:
HIDAYATULLAH, M.
BHARGAVA, VISHISHTHA
VAIDYIALINGAM, C.A.
CITATION:
1968 AIR 488 1968 SCR (1) 505
CITATOR INFO :
R 1970 SC1093 (10)
F 1970 SC1384 (4)
D 1972 SC 401 (4,5)
RF 1979 SC1725 (40)
R 1992 SC2277 (39,41)
ACT:
U.P. Sales-Tax Act (U.P. 15 of 1948) S. 9-Memorandum of
appeal-Challan showing deposit of tax, if necessary-U.P.
Salestax Rules, 1948, r. 66(2)-Constitution of India, Art.
136-Special leave to appeal-Other remedies not exhausted-If
can be given.
HEADNOTE:
The appellant-assessee filed a memorandum of appeal to the
Assistant Commissioner, Sales Tax, stating therein that the
amount of admitted tax had been paid and forfeited the
statement by an affidavit. Before the hearing, he produced
a certificate from the Sales-Tax Officer that the tax had
been paid. The Assistant Commissioner relying on the
Allahabad High Court’s decision in Swastika Tannery, Jaimau
v. Commissioner of Sales-tax, U.P. rejected as defective the
memorandum of appeal, holding that it was not accompanied by
the challan showing the deposit of admitted tax under s. 9
of the Uttar Pradesh Sales Tax Act, 1948 and r. 66 of the
U.P. Sales-tax Rules. Against this order the assessee
directly filed special leave to appeal to this Court without
exhausting the remedies of revision and reference provided
in the Act. This Court granted Special Leave and;
HELD:The appeal must be allowed.
(i) By the word "entertain" in-the proviso to s. 9 is meant
the first occasion on which the Court take up the matter for
consideration. It may be at the admission stage or if by
the rules of that Tribunal, the appeals are automatically
admitted, it will be the time of hearing of the appeal. But
on the first occasion when the court takes up the matter for
consideration, satisfactory proof must be presented that the
tax was paid within the period of limitation available for
the appeal. Rule 66(2) lays down one uncontestable mode of
proof which the Court will always accept but it does not
exclude the operation of the proviso when equally
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satisfactory proof is made available to the officer hearing
the appeal and it is proved to his satisfaction that the
payment of the tax has been duly made and in time. [512E-F;
513E-G]
In the present case, when the Assistant Commissioner took
tip the appeal for consideration, satisfactory proof was
available in the shape of a certificate.
Swastika Tannery of Jaimau v. Commissioner of Sales-tax,
U.P. Lucknow, (1963) 14 S.T.C. 518, disapproved.
Kundan Lal v. Jagannath Sharma, A.I.R. 1962 All. 547; Dhoom
Chand Jain v. Chaman Lal Gupta and Anr. A.I.R. 1962 All.
42: Haji Rahim Bux & Sons & Ors. v. Firm Samiullah & Sons,
A.I.R. 1963 All. 320, approved.
(ii) Though this Court would not ordinarily grant special
leave to appeal against an order when other remedies were
available and had not been exhausted, there is no inflexible
rule that this Court will never entertain such an appeal.
It would have been futile in this case for the assessee to
have gone to the court of revision which was bound by the
decision in Swastika Tannery of Jaimau v.Commissioner of
Sales-tax, U.P. and it would have been equally
506
futile to have gone to -the High Court on a reference. The
matter was more easily disposed of by giving special leave
in this Court and this was one of those extra-ordinary cases
in which the ends of justice would be better served, by
avoiding a circuity of action and by dealing with this
matter in this Court directly. [513H-514C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1283 of 1967.
Appeal by special leave from the Order dated April 2/3,
1967, of the Court of Assistant Commissioner (Judicial) 1,
Sales Tax, Kanpur Range, Kanpur in Appeal No. D.F.78 of
1966.
J. P. Goyal and Sobhag Mal Jain, for the appellant.
O. P. Rana, for the respondents.
The Judgment of the Court was delivered by
Hidayatullah, J. This is an appeal by special leave against
an order 2/3 April, 1967, of the Assistant Commissioner
(Judicial) 1, Sales Tax, Kanpur Range, Kanpur by which the
Assistant Commissioner rejected as defective the memorandum
of appeal filed by the present appellant against the
assessment order passed by the Sales Tax Officer (S-1)
Kanpur. The defect, according to the Assistant
Commissioner, was that the memorandum of appeal (which had
been filed well within time) was not accompanied by the
challan showing the deposit of admitted tax under s. 9 of
the Uttar Pradesh Sales Tax Act, 1948. The appellant did
not file an application for revision and did not also invite
a reference to the High Court of Allahabad but came direct
to this Court by special leave which was granted by us on
August 23, 1967. At the first hearing of the petition, the
State of Uttar Pradesh represented by Mr. O.P. Rana objected
to the grant of special leave inasmuch as the other
provisions under which remedy could be obtained under the
Sales-tax Act had been bypassed. At that time, we overruled
the objection and in the course of this judgment, we shall
briefly indicate the reasons which had then prevailed with
us.
The facts of the case are as follows: The appellant had
declared his turnover for the year 1964-65 at Rs. 3,70,941.7
P. on which the admitted tax under the Act came to Rs.
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11,135,58p. The Sales-tax authorities, however, assessed
his turnover at Rs. 30 lakhs on which tax was calculated at
Rs. 90.000. The appellant appealed to the Assistant
Commissioner (Judicial) 1, Sales-tax, Kanpur Range, Kanpur.
His appeal was filed on May 16, 1966, the order of
assessment and the demand notice having been served on him
on April 16, 1966. The appeal was therefore filed within
time. Section 9 of the Act provides 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. As is stated earlier,
the admitted tax came to
507
Rs. 11,135.58 P. The appellant was required under this
provisions of law to give satisfactory proof, at the time of
the entertainment of the appeal, that this tax was duly
paid. It appears that the appellant had paid a greater
portion of the tax even before the assessment order had been
made, and a balance of Rs. 99.99 P. was due from him from
the amount of admitted tax. This amount was deposited on
April 26, 1966 before the appeal was filed by him. He did
not however present any proof of such deposit, because there
is a dispute in the case whether the assessee bad shown
proof of it to the mumarim or not. As the finding is that
he had not shown it we shall proceed on the assumption that
the assessee had not furnished proof at the time of the
filing of the appeal that the balance of tax had been paid,
It is on this premise that the present appeal has proceeded
before us. On August 16, 1966 the assessee addressed a
letter to the Sales-tax Officer and asked for a certificate
of payment of tax and this certificate having been furnished
he filed it on January 24, 1967 before the Assistant
Commissioner. He also, as a matter of abundant caution,
filed an application for condonation of delay under s. 9(6)
of the Act read with s. 5 of the Indian Limitation Act. The
order against which the present appeal has been brought
before us was made on 2/3 April, 1967 and the appeal of the
assessee was rejected,. because in the opinion of the
Assistant Commissioner s. 9 of the Act read with r. 66(2)
had not been complied with since no proof had been given
along with the memorandum of appeal that the tax had been
paid. Simultaneously, the application for condonation of
delay was also dismissed. Against this order the assessee
has filed the present appeal.
The short question in this case is whether having made the
deposit even before the appeal was filed and well within the
period of limitation, the assessee could be deprived of his
right of appeal under s. 9 of the Act. Alternatively, it is
to be considered whether the proof of the payment of the
admitted tax had to accompany the memorandum of appeal as
required by r. 66(2) and on failure to furnish such proof,
the appeal itself became incompetent. In support of his
order the Assistant Commissioner relied on a decision of the
Allahabad High Court reported in Swastika Tannery of Jaimau
v. Commissioner- of Sales-tax, U.P. Lucknow(1) in which the
learned Chief Justice of that Court and another learned
Judge have laid down that the proof of payment must be as
required by the rules and, therefore. the memorandum of
appeal ouaht to be accompanied by the Challan showing
payment of tax before the appeal can be said to be
competent. We shall refer to that ruling presently.
in this appeal, learned counsel for the assessee has relied
upon a number of authorities in which the interpretation
runs
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(1) (1963) 14 S.T.C. 518.
508
counter to the decision of the learned Chief Justice just
adverted to and had contended that s. 9 of the Act does not
create the bar which the ruling and the Assistant
Commissioner’s reliance on that ruling has created in the
way of the appeal. His contention is that if satisfactory
proof is given before the appeal is heard or at any rate
before it is admitted, the requirement of law under s. 9 is
satisfied and that it is not always incumbent to produce a
challan with the memorandum of appeal, r. 66(2)
notwithstanding. It is this point which has given rise to
the great controversy before us and the matter was argued at
great length both at the time of grant of special leave and
today.
To consider the matter, we may begin by quoting s. 9 of the
Act. Section 9 which gives the power of appeal provides as
follows:
(1) Any dealer objecting to an order allowing
’or refusing an application for exemption
certificate under cl. (b) of sub-section (1)
of s. 4 or to an order refusing an application
under s. .30 or to an order imposing a penalty
under s. 15-A or to an assessment made under
s. 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 payable:
Under s. 24 of the Act power has been conferred upon the
State ,"Government to make rules to carry out the purposes
of the Act and in particular, to provide for all matters
expressly required or allowed by this Act to be prescribed.
Under sub-s. (4) of that section, it is provided that all
rules made under the section shall be published in the
Gazette and upon such publication, shall have effect
immediately as if enacted in the Act and under the 5th sub-
section, it is further provided that all rules made under
the Act shall be laid for fourteen days before the
Legislature as soon as possible after they are made and
shall be subject to such modifications as the Legislature
may make during the session in which ..they are so -laid.
In exercise of this power, the State Government has framed
the U.P. Sales-tax Rules, 1948. Rules 66 and 67 of these
rules bear, among others, upon appeals. Sub-r. 1 of r. 66
provides for the content of the appeal by stating what the
memorandum of appeal shall specify in relation to the name
and address of the appellant etc. We are not concerned with
it. Sub-r.
509
2 then states that "the memorandum of appeal shall be accom-
panied by......... a 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 payable." Rule 67
days down how the appeals have to be presented. Sub-r. 1
provides that the memorandum of appeal shall be presented by
the appellant or his lawyer or duly authorised agent to the
Assistant Commissioner (Judicial) or may be sent by
registered post addressed to the Assistant
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Commissioner,(Judicial).Sub-r-2 provides that if the
memorandum of appealis in order. the Assistant Commissioner,
(Judicial) shall admitit and on admission. the Reader of the
Assistant Commissioner (Judicial) shall endorse thereon the
date of its presentation and shall register it in a book to
be known as Register of Appeals. The third sub-rule says
that if the memorandum of appeal is not in order. it may be
rejected or returned after the necessary endorsement on its
back about the 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. Lastly sub-r. 4 provides that on admission of an
appeal. the Assistant Commissioner (Judicial) shall fix a
date for hearing of the appeal and may send for the record,.
if necessary.
The contention of counsel for the assessee is that he had
fully complied with the requirements of s. 9 although not
strictly as laid down in r. 66 which he characterised as
directory. The contention on the other side is that the
rule lays down the only manner of compliance with the
provisions of the Section and in support Counsel for the
State refers to the provisions of s. 24(4) and (5) in which
it is stated that the rules on being framed become part of
the Statute. From this, counsel for the State infers that
there is no other modeof compliance except the one stated in
the rules and as in thiscase that mode of compliance was not
followed, the appeal is rightly considered to be incompetent
and properly rejected. This in main represents the essence
of the controversy between the parties.
To begin with it must be noticed that the proviso merely
requires that the appeal shall not be entertained unless it
is accompanied by satisfactory proof of the payment of the
amount of tax admitted by the appellant to be due. A
question thus arises what is the meaning of the word
’entertained’ in this context? Does it mean that no appeal
shall be received or filed or does it mean that no appeal
shall be admitted or heard and disposed of unless
satisfactory proof is available’ The dictionary meaning of
the word ’entertain’ was brought to our notice by the
parties, and both sides agreed that it means either "to deal
with or admit to consideration". We are also of the same
opinion. The question, therefore, is at what stage can the
appeal be said to be entertained for the purpose of the
appllication of the proviso? Is it
510
entertained when it is tiled or is it ’entertained’ when it
is admitted and the date is fixed for hearing or is it
finally ’entertained’ when it is heard and disposed of?
Numerous cases exist in the -law reports in which the word
’entertained’ or similar cognate expressions have been
interpreted by the courts. Some of them from the Allahabad
High Court itself have been brought to our notice and we
shall deal with them in due course. For the present we must
say that if the legislature intended that the word -’file’
or ’receive’ was to be used, there was no difficulty in
using those words. In some of the statutes which were
brought to our .notice such expressions have in fact been
used. For example. under Order 41. rule I of the Code of
Civil Procedure it is stated ’that a memorandum shall not be
filed or presented unless it is accompanied etc.; in s. 17
of the Small Causes Courts Act, the expression is ’at the
time of presenting the application’. In sec. 6 .of the
Court Fees Act, the words are ’file’ or ’shall be received’.
It would appear from this that the legislature was not at a
loss for words if it had wanted to express itself in such
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forceful manner as is now suggested by counsel for the
State. It has used the word ’e entertain’ and it must be
accepted that it has used it advisedly. This word has come
in for examination in some of the cases of -the Allahabad
High Court and we shall now refer to them.
In Kundan Lal v. Jagannath Sharma(1) the Court was concerned
with Order 21, rule 90, of the Code of Civil Procedure which
bad been amended by the High Court by changing the pro-
visions of the original Code. The changed rule is as
follows:
"Provided that no application to set aside the
sale shall be entertained:
(a) upon any ground which should have been
taken by the applicant on or before the date
on which the sale proclamation was drawn up:
(b) Unless the applicant deposits such amount
not exceeding 12 1/2 " of the sum realised by
the sale or furnishes such security as the
court may in its discretion fix, except when
for reasons to be recorded it dispenses with
the requirements of this clause........."
The word ’entertain’ is explained by a Divisional Bench of
the Allahabad High Court as denoting the point of time at
which an application to set aside the sale is heard by the
court. The expression ’entertain’, it is stated. does not
mean. the same thing as the filing of the application or
admission of the application by the court. A similar view
was again taken in Dhoom Chand Jain v. Chamanlal Gupta &
Anr.(2) in which the learned Chief
(1) A.I.R. 1962 All. 547.
(2) A.LR. 1962 AU. 543.
511
Justice Desai and Mr. Justice Dwivedi gave the same meaning
to the expression ’entertain’. It is observed by Dwivedi J.
that the word ’entertain’ in its application bears the
meaning ’admitting to consideration’, and therefore when the
court cannot refuse to take an application which is backed
by deposit or security, it cannot refuse judicially to
consider it. In a single bench decision of the same court-
reported in Bawan Ram & Anr. v. Kunj Beharilal(1) one of us
(Bhargava, J.) bad to consider the same rule. There the
deposit had not been made within the period of limitation
and the question had arisen whether the court could
entertain the application or not. It was decided that the
application could not be entertained because proviso (b)
debarred the court from entertaining an objection unless
the requirement of depositing the amount or furnishing
security was complied with within the time prescribed. In
that case the word ’entertain’ is not interpreted but it is
held that the Court cannot proceed to consider the
application in the absence of deposit made within the time
allowed by law. This case turned on the fact that the
deposit was made out of time. In yet another case of the
Allahabad High Court reported in Haji Rahim Bux & Sons and
Ors. v. Firm Samiullah & Sons(2) a division bench consisting
of Cheif Justice Desai and Mr. Justice S. D. Singh
interpreted the words of 0. 21, r. 90, by saying that the
word ’entertain’ meant not"receive’ or ’accept’ but ’proceed
to consider on merits’ or ’adjudicate upon’.
In our opinion these cases have taken a correct view of the
word ’entertain’ which according to dictionary also means
’admit to consideration’. It would therefore appear that
the direction to the court in the proviso to s. 9 is that
the court shall not proceed to admit to consideration an
appeal which is not accompanied by satisfactory proof of the
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payment of the admitted tax. This will be when the case is
taken up by the court for, the first time. In the decision
on which the Assistant Commissioner relied, the learned
Chief Justice (Desai C.J.) holds that the words ’accompanied
by’ showed that something tangible had to accompany the
memorandum of appeal. If the memorandum of appeal had to be
accompanied by satisfactory proof, it had to be in the shape
of something tangible, because no intangible thing can
accompany a document like the memorandum of appeal. In our
opinion, making ’an appeal’ the equivalent of the memorandum
of appeal is not sound. Even under 0. 41 of the Code of
Civil Procedure. the expressions "appeal" and "memorandum of
appeal" are used to denote two distinct things. In
Wharton’s Law Lexicon, the word "appeal" is defined as the
judicial examination of the decisions by a hi-her Court of
the decision of an inferior court. The appeal is the
judicial examination; the memorandum of appeal contains the
rounds on which the judicial examination is invited.
(1) A.I.R. 1961 All. 42.
(2) A.I.R. 1963 All. 326.
512
For purposes of limitation and for purposes of the rules of
the Court it is required that a written memorandum of appeal
shall be filed. When the proviso speaks of the
entertainment of the appeal, it means that the appeal such
as was filed will not be admitted to consideration unless
there is satisfactory proof available of the making of the
deposit of admitted tax.
Now the complicating factor is the existence of the rule,
and here, the divergence of submission arises on whether the
rules can be regarded as mandatory or merely directory. It
is quite obvious that the section as it stands only requires
that at the time of the consideration of the appeal, There
should be satisfactory proof that the admitted tax has been
deposited. It only says that no appeal shall be entertained
unless accompanied by satisfactory proof of the payment of
the tax. This satisfactory proof may take any form; in fact
in the present case satisfactory proof was tendered in the
shape of a certificate from the Sales-tax Officer that the
admitted tax had been deposited and well within time. Under
section 9 and its proviso as they stand, it is quite obvious
that ’entertainment’ means the point of time when the appeal
is being considered. There was thus satisfactory proof in
the present case. No doubt, proof was not tendered
following the method required by the rules but the question
is whether the rules can make the section narrower by
prescribing a particular mode. The section is general; it
provides that the court should accept satisfactory proof.
The rule requires that the memorandum of appeal shall be
accompanied by the challan showing payment of tax. The rule
lays down one uncontestable mode of proof which the Court
will always accept but it does not exclude the operation of
the proviso when equally satisfactory proof is made
available to the officer hearing the appeal and it is proved
to his satisfaction that the payment of the tax has been
duly made and in time. In this sense, the rule can be
regarded as directory since it lays down one of those modes
which will be unquestioned for its validity. The other
modes of proof are not necessarily shut out.
It is to be remembered that all rules of procedure are
intended to advance justice and not to defeat it. Here the
right of appeal has been made subservient to the payment of
the admitted tax. If the admitted tax is paid and there is
proof available that it has been so paid, there exists no
reason to create a second impediment in the way of the
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appeal. No doubt, rule makes it easy for the assessee to
bring satisfactory proof in an uncontestable manner, but the
provision of the rule is not to the exclusion of other
satisfactory modes of proof. Suppose for instance that the
I challan was lost and the time for the filing of the appeal
was expiring, could or could not the person concerned say
that he had the certificate but had lost it and that he
would produce a copy of the challan from the Treasury or
obtain a certificate from the
513
Treasury Officer. Could he not obtain from the bank the
discharged cheque by which the amount of tax was
deposited by him and produce it as the discharged
counterfoil of payment. All those modes of proof will be
equally, irrefutable. In the -present case the,, assessee
had in his petition of appeal ’stated that the amount of tax
had been paid and had fortified the ’Statement by an
affidavit. Before the hearing he produced, a certificate
from the. Sales-tax Officer that the tax had, been paid.
The Assistant Commissioner ought therefore to have
proceeded: with the appeal because it was accompanied by
satisfactory proof of,; the payment of the tax. To hold
otherwise would put a premium upon a technicality which we
do not see will advance the case either for the -collection
of the tax or,, for the: administration of justice., The
rule, as we have stated, indicate& what :is the best and
easiest method of achieving satisfactory proof. The
certificate from the Sales-tax Officer, however, is as good
proof as the challan from the Treasury and if such
certificate was produced at the admission of the appeal, how
the memorandum of appeal can be said to be defective under
the section as it stands. In these circumstances, we hold
that the rule is merely directory and indicates only one of
the modes of satisfactory proof.
The distinction made by the learned Chief Justice between
the tangible and intangible objects does not in our opinion
fall for consideration in the present case. If one holds
that by ’entertainment’ is meant the time of admission of
the appeal, satisfactory proof may be furnished at the time
of admission of the appeal. We are of opinion that by the
word "entertain" here is meant the first occasion on which
the court takes up the matter for consideration. It may be
at the admission stage or if by the rules of that Tribunal
the appeals are automatically admitted, it will be the time
of hearing of the appeal. But on the first occasion when
the court takes up the matter for consideration,
satisfactory proof must be presented that the tax was paid
within the period by limitation available for the appeal.,
In the present case when the Assistant Commissioner took up
the appeal for consideration, satisfactory proof was
available in the shape of a certificate which even today is
not denied. In our opinion the Assistant Commissioner was
wrong in declining to consider the appeal in the presence of
such uncontestable proof.
It remains to point out why we did not insist upon the
assessee exhausting his other remedies under the Act before
coming to this Court. It was made to appear to us that
there is a right of revision and right of reference to the
High Court’ in all such cases and that this remedy was not
resorted to by the assessee before making a petition for
special leave in this Court. We were taken through a number
of cases in which it has been laid down by this Court that
this Court will not ordinarily grant special leave to appeal
against an order when other remedies are available and
L/JN)6 SCI No-7
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514
have not been exhausted. But there is no inflexible rule
that ’this Court will never entertain an appeal and numerous
instances have occurred in, this Court where such appeals
have been admitted. It would have been ,futile in this.
case for the assessee to have gone to the -court-, of
revision which was bound by the ruling of :the Allahabad
High, Court reported in Swastika Tannery of Jaimau v
Commissioner of . Sales-tax U.P. Lucknow (1’) and’ it would
have been equally futile to, have. gone to the High Court;
on a reference. The matter was more easily disposed of by
giving special leave in this Court and we therefore felt
that this was one of those extraordinary cases, in which the
ends of justice would be better served, by avoiding a
circuity of action and by dealing with this matter in this
Court directly. It is for this reason that we granted
special leave to appeal. The appeal shall therefore be
allowed and the appeal shall be remitted to the Assistant
Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur,
for disposal in accordance with law. There shall be no
order as to costs.
Y.P.
Appeal allowed and remitted.
(1) (1963) 14 S.T.C. 518.
515