Full Judgment Text
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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