Full Judgment Text
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PETITIONER:
HARDEODAS JAGANNATH
Vs.
RESPONDENT:
STATE OF ASSAM & ORS.
DATE OF JUDGMENT:
27/09/1968
BENCH:
RAMASWAMI, V.
BENCH:
RAMASWAMI, V.
SHAH, J.C.
MITTER, G.K.
HEGDE, K.S.
GROVER, A.N.
CITATION:
1970 AIR 724 1969 SCR (2) 261
ACT:
Extra Provincial Jurisdiction Act (47 of 1947), ss. 4
and 6--Jurisdiction of Central Government to extend State
Act to former Indian Princely States--Answers submitted by
Central Government to questions by Court--Conclusive
evidence.
Assam Sales Tax Act (17 of 1947) as amended by Act 6
of 1958 s. 30--Whether properly extended to Shillong
Administered Area--Appeal by assessee without paying tax or
penalty--Prayer for acceptance of security--Power of
Appellate Authority to accept security in lieu of cash.
HEADNOTE:
By a notification dated April 15, 1948 .the Government
of India extended the Assam Sales Tax Act, 1947 to the
Administered Area in Shillong under s. 4 of the Extra
Provincial Jurisdiction. Act, 1947. The instrument of
accession by which the administration of the Indian Princely
State, of Mylliem in the Shillong Administered Area was
transferred to the Central Government was accepted by the
Governor-General of India on August 17, 1948. Under s. 30
of the Assam Sales Tax Act, as amended by Act 6 of 1958, a
dealer may appeal against an order of assessment or penalty,
but the appeal shall not be entertained by the appellate
authority unless he was satisfied that the amount of tax
assessed or penalty levied, if not otherwise directed by
him, had been paid.
The sales ’tax authorities assessed the appellant to
sales-tax and imposed penalties for Various periods. Though
some of the; assessment periods were before April 1, 1958
when the Amending Act 6 of 1958 came into force, all the
orders of assessment and penalty were passed after April 1,
1958. The appellant did not pay the tax assessed or the
penalty but filed petitions along with its appeals praying
that it may be allowed to furnish security in lieu of
payment of cash on account of its financial condition. The
petitions were rejected and the appeals were consequently
dismissed. Writ petitions flied by the ’appellant in the
High Court, to quash the orders of dismissal of the appeals,
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were also dismissed.
In appeal to this Court, it was contended that; (1)
After August 15, 1947 the State of Mylliem became an
independent State and since the Central Government could
exercise extra provincial jurisdiction under the Extra
Provincial Jurisdiction Act, only if the Central Government
exercised’ such jurisdiction under a treaty, agreement, or
by other lawful means, the Central Government in the
present case, could not exercise such jurisdiction till
August 17, 1948 when the instrument of accession was
acCepted; and therefore, the notification dated April 15,
1948 was not validly issued and hence the Assam sales Tax
Act was not operative in the Shillong Administered Area; (2)
As the Amending Act of 1958 came into force on April 1,
1958 it could not be given retrospective effect so as to
apply to assessment periods anterior to that date; and (3.)
The authorities were not right in holding that there was no
provision in the Act empowering them to accept security in
lieu of cash payment.
262
As the material on the record was not sufficient to enable
the Court to determine the question whether the Dominion of
India was entitled to exercise extra provincial jurisdiction
over the Shillong Administered Area on April 15, 1948 this
Court under s. 6 of the Extra Provincial Jurisdiction Act,
forwarded to the Union Government the questions: (a) whether
the Dominion of India exercised such jurisdiction on April
15, 1948, and (b) whether the Dominion of India had such
jurisdiction to extend the Assam Sales Tax Act to, the Area
After receiving the answers,
HELD: (1) The answers submitted by the Union Government
showed that prior to April 15, 1948, the British Government
had exercised jurisdiction over the Area under the Indian
(Foreign Jurisdiction) Order-in-Council, 1902, as amended by
the Order-in-Council of 1937 that on the withdrawal of
British rule the jurisdiction continued to be exercised with
the consent of the Siem (ruler) of Mylliem State by the
Dominion of India, that the Jurisdiction was retained
thereafter by the instrument of accession signed by the
Siem, and that the exercise of the jurisdiction by the
British Government and the Dominion of India several Acts
were extended to the Shillong Administered Area. Since
under s. 6(2) of the Extra Provincial Jurisdiction Act the
answer of the Central Government is conclusive evidence of
the matter therein the Union Government was entitled to
exercise such jurisdiction over the Shillong Administered
Area on April 15, 1948 and therefore, the Assam Sales Tax
Act was properly extended to the Area. [269 F-H, 270 B-C]
(2) The assessments for periods anterior to April 1, 1958
were completed after the Amending Act came into force and
the appeals were also filed thereafter. Therefore the
Amending Act of 1958 was applicable to the appeals before
the appellate authority and was not given retrospective
effect. [271 C-D]
(3) The expression ’otherwise directed’ only means that the
appellate authority can ask the assessee to deposit a
portion of the amount and not the whole but the section
gives no power to the appellate authority to permit the
assessed to furnish security in lieu of the cash amount of
tax. [271 D-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2403 &
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2404 of 1966.
Appeals from the judgment and order dated April 4, 1963
of the Assam and Nagaland High Court in Civil Rule Nos. 90
of 1960 and 382 of 1961.
D.N. Mukherjee, for the appellant.
Naunit Lal and B.P. Singh, for the respondents.
The Judgment of the Court was delivered by
Ramaswami, J. These appeals are brought by certificate
from the judgment of the High Court of Assam and Nagaland
dated April 4, 1963, in Civil Rule No. 90 of 1960 and Civil
Rule No. 382 of 1961, whereby the High Court dismissed the
petitions under Arts. 226 and 227 of the Constitution filed
by the appellant.
Messrs. Hardeo Das Jagan Nath (hereinafter called the
’appellant’) is a partnership firm carrying on business at
Mawk-
263
har, Shillong in the District of United Khasi and Jaintia
Hills. By a notification issued under Rule 6 of the Assam
Sales Tax Rules 1947, the Commissioner of Taxes, Assam fixed
May 20, 1948 as the date by which the dealers of Shillong
administered area had to make applications for registration
under the Assam Sales Tax Act, 1947 ( 17 of 1947 ),
hereinafter called the ’Act’. By notification dated April
15, 1948, the Government of India had extended the
provisions of the Act with slight modifications to the
administered area in Shillong under s. 4 of the Extra
Provincial Jurisdiction Act, 1947. The appellant got itself
registered under the Act. Upto the half yearly return
periods ending September 30, 1957, the appellant was
assessed to sales-tax and the tax was realised by the Sales
Tax Authorities. On March 6, 1959, the Superintendent of
Taxes, Shillong, respondent No. 4 raided the business
premises of the appellant and seized the account books
etc. The appellant filed a petition under Art. 226 of the
Constitution in the High Court. By its order dated June 3,
1960, the High Court directed the Deputy Commissioner of
Taxes, Assam to return the seized books and documents within
three weeks of the date of the order to. the appellant. As
directed by the High Court, the documents were returned to
the appellant but on the basis of the information received
from the account books the Superintendent of Taxes issued
notices dated April 4, 1959 under s. 19A of the Act for
reassessment of the appellant in respect of the half yearly
return periods ending on September 30, 1956, March 31, 1957
and September 30, 1957. Thereafter, ex parte reassessment
was made for the return period ending September 30, 1956 by
an order dated July 8, 1959 and for return periods ending
March 31, 1957 and September 30, 1957 by orders dated July
24, 1959 and tax amounting to Rs. 1,22,933/- was levied for
these three periods. A further sum of Rs. 47,504.70 was
levied in respect of the return period ending March 31, 1958
by an ex parte assessment order dated March 23, 1959. For
the other return period ending September 30, 1958; a sum
of Rs. 49,427.90 was levied by an ex parte assessment order
dated April 8, 1959. For these two return periods a
penalty of Rs. 1,000/- in respect of each return was also
levied by two separate orders dated June 27, 1959. Thus the
total amount of salestax and penalty amounting to Rs.
2,19,865.60 in respect of the five return periods was
levied. The appellant paid Rs. 20,074.68 at the time of
original assessments in respect of the periods ending on
September 30, 1956, March 31, 1957 and September 30,
1957.
The appellant thereafter filed appeals against all the
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seven ex parte orders before the Assistant Commissioner of
Taxes, Assam. Along with the memoranda of appeals for the
periods ending March 31, 1958 and September 30, 1958, two
separate applications were made by the appellant alleging
that it was not
264
necessary to pay the assessed tax since the provisions of s.
30 of the Act as amended did not apply to the case and it
was prayed that appeals should be admitted without payment
of the assessed tax. The contention of the appellant was
rejected by the Assist.ant Commissioner though he reduced
the amount of deposit for the periods ending March 31, 1958
and September 30, 1958. The .appellant moved the
Commissioner of Taxes in revision, but the order of the
Assistant Commissioner was affirmed by the Commissioner of
Taxes though he reduced the amount further. On the
application of the appellant the matter was referred to the
High Court which held that the amended s. 30 of the Act was
intravires. In the meantime, the appellant also applied in
respect of the appeals relating to the periods ending
September 30, 1956, March 31, 1957 and September 30, 1957 as
well as the penalty appeals of periods ending on March 31,
1958 and September 30, 1958 and prayed for admission of
these appeals without payment of the assessed tax. In this
case also the amount was reduced by the Assistant
Commissioner of Taxes but the matter was kept pending till
the disposal of the reference by the High Court. On May 21,
1960, the appellant filed separate petitions before the
Assistant Commissioner praying that as the financial
condition of the appellant was not good the appellant may be
allowed to furnish reasonable security in lieu of cash and
the appeals may be admitted on such security. By his order
dated May 23, 1960 the Assistant Commissioner of Taxes fixed
June 8, 1960 f, or payment of the amount required for
admission of the appeals, failing which the appeals were
ordered to be dismissed. The appellant then moved the
Commissioner praying that in view of his financial
difficulty he should be .allowed to furnish reasonable
security in lieu of cash to be paid. The application was
rejected by the Commissioner on June 21, 1960. Thereafter
all the five appeals were rejected by a common order dated
June 22, 1960 and the two appeals against the imposition of
penalty were also summarily rejected by an order dated June
22, 1960. The appellant was further asked to show cause
why penalty should not have been imposed in respect of the
periods ending September 30, 1956, March 31, 1957 and
September 30, 1957. The appellant filed a petition to the
High Court under Art. 226 of the Constitution, being Civil
Rule No. 90 of 1960 praying for a writ to quash the order of
the Commissioner dismissing the appeals in respect of the
five periods and for further reliefs. The appellant also
filed another petition under Art. 226, being Civil Rule No.
382 of 1961 asking for similar reliefs with regard to the
periods ending March 31, 1959, September 30, 1959, March 31,
1960, September 30, 1960 and March 31, 1961. The writ
petitions were dismissed by the High Court by a common
judgment dated April 4, 1963.
The first question to be considered in these appeals is
whether the provisions of the Act were validly extended to
the Shillong
265
Administered Areas. By a notification dated April 15, 1948
the Central Government extended the provisions of the Act to
the Shillong Administered Areas including Bara Bazar in
exercise of powers conferred by s. 4 of the Extra Provincial
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Jurisdiction Act, 1947. It was argued on behalf of the
appellant that on April 15, 1948 when the notification was
issued, the Extra Provincial Jurisdiction Act, 1947 (Act
XLVII of 1947) was not applicable to the Shillong
Administered Areas as the instrument of accession by which
the administration of the State of Mylliem was transferred
to the Central Government was accepted by the
GovernorGeneral of India on August 17, 1948. The preamble
to the Extra Provincial Jurisdiction Act, 1947 (hereinafter
called the Act of 1947) provides:
"Whereas by treaty, agreement, grant,
usage, sufferance and other lawful means, the
Central Government has, and may hereafter
acquire, jurisdiction in and in relation to
areas outside the Provinces of India;
It is hereby enacted as follows :--"
The expression "extra provincial jurisdiction" has been
defined under s. 2 of the Act of 1947 as meaning "any
jurisdiction which by treaty, agreement, grant, usage,
sufferance or other lawful means the Central Government
has for the time being in or in relation to any area outside
the Provinces". Section 3 states:
"3. (1) It shall be lawful for the Central
Government to exercise extra provincial
jurisdiction in such manner as it thinks fit.
(2) The Central Government may delegate any
such jurisdiction as aforesaid to any officer
or authority in such manner and to such extent
as it thinks fit." Section 4 provides as
follows:
"4. (1) The Central Government may, by
notification in the official Gazette, make
such orders, as may seem to it expedient for
the effective exercise of any extra provincial
jurisdiction of the Central Government.
(2) Without prejudice to the generality of
the powers conferred by sub-section (1 ), any
order made under that sub-section may
provide--
(a) for determining the law and procedure to
be observed, whether by applying with or
without modifications all or any of the
provisions of any enactment in force in any
Province or otherwise;
(b) for determining the persons who are to
exercise jurisdiction, either generally or in
particular
2 Sup. C1/69---18
266
cases or classes of cases, and the powers to
be exercised by them;
(c) for determining the courts, judges,
magistrates and authorities by whom, and for
regulating the manner in which, any
jurisdiction auxiliary or incidental to or
consequential on the jurisdiction exercised
under this Act is to be exercised within any
Province; and
(d) for regulating the amount, collection
and application of fees."
Section 5 is to the following effect:
"Every act and thing done, whether before
or after the commencement of this Act, in
pursuance of any extra provincial jurisdiction
of the Central Government in an area outside
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the Provinces shall be as valid as if it had
been done according to the local law then in
force in that area."
The argument was stressed on behalf of the appellant
that the extra provincial jurisdiction could only be
exercised by the Central Government if by treaty, agreement,
grant, usage, sufferance or other lawful means the Central
Government has for the time ’being in or in relation to
any area outside. the provinces exercised such jurisdiction.
It was contended that after the declaration independence on
August 15, 1947 the paramountcy lapsed and the State of
Mylliem became an independent State and the Central
Government could not exercise any extra provincial
jurisdiction till the instrument of accession was signed
by the GovernorGeneral. It was pointed out that the
notification by which the Act was applied to Shillong
Administered Areas was issued after the lapse of paramountcy
and before the instrument of accession was signed by the
Governor-General. It was therefore argued that the
notification dated April 15, 1948 was not validly issued and
the provisions of the Act were not operative in the Shillong
Administered Areas. It was said that before the State of
Mylliem became an independent State on August 15, 1947 there
was no treaty, grant, usage or arrangement whereby the
British Crown enjoyed any rights to levy taxes on the sale
of goods within the Mylliem State or any right to extend to
that area any such Act without the express consent or
approval of the ruler of that State. The opposite view-point
was put forward on behalf of the respondents. It was said
that before August 15, 1947 the relations of the Crown
Representative with Khasi Hills States were conducted
through the Governor of Assam. In practice the
administration of the Hill States was in great measure
assimilated to that of the Province of Assam partly by the
application of the British Indian Laws under the Indian
(Foreign Jurisdiction) Order in Council
267
and partly by administrative measures. It was argued that
by virtue of the instrument of accession all previous
existing arrangements between Khasi Hills States and the
Government of India in the Assam Province were continued and
the Central Government could therefore exercise extra-
provincial jurisdiction by usage. To put it differently,
the argument of the respondents was that though the
instrument of accession was accepted by the Governor-
General on August 17, 1948, it recognised the fact that
there was a certain existing arrangement regulating
relations between the Government of India and the Chiefs of
the Khasi Hills States. The Central Government therefore
exercised extra provincial jurisdiction by agreement or
usage and it cannot therefore be said that the notification
of the Central Government dated April 15, 1948 was
invalid.
When the appeals were originally heard we considered
that the material on the record was not sufficient to enable
us to determine the disputed question, namely whether the
Dominion of India was entitled to exercise extra
provincial .jurisdiction over the Shillong Administered
Areas on April 15, 1948 which was the material date. The
question at issue is not purely a question of fact but a
question relating to a "fact of State" which is peculiarly
within the cognizance of the Central Government (For
expression "Fact of State" see Halsbury--Laws of England,
3rd edn. Vol. 7, p. 285). In view of the insufficiency of
material we thought it proper to avail ourselves of the
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procedure indicated by s. 6 of the Act of 1947 which enacts:
"6. (1) If in any proceeding, civil or
criminal in a Court established in India or by
the authority of the Central Government
outside India, any question arises as to the
existence or extent of any foreign
Jurisdiction of the Central Government, the
Secretary to the Government of India in the
appropriate department shall, on the
application of the Court, send to the Court
the decision of the Central Government on the
question, and’ that decision shall for the
purposes of the proceeding be final.
(2) The Court shall send to the said
Secretary, in a document under the seal of
the Court or signed by a judge of the Court,
questions framed so as properly to raise the
question, and sufficient answers to those
questions shall be returned to the Court by
the Secretary and those answers shall on
production thereof be conclusive evidence of
the matters therein contained."
By an order of this Court dated September 21, 1967
the following two questions were forwarded to the Union of
India under the seal of this Court for submission of their
answers:
268
"(1) Whether the Dominion of India
exercised extra provincial jurisdiction over
the Shillong Administered Area including Bara
Bazar, which also included Mawkhar, a part of
the erstwhile Mylliem State, on April 15,
1948;
(2) Whether the Dominion of India had
extra provincial jurisdiction on April 15,
1948 to extend the Assam Sales Tax Act, 1947
(Act 17 of 1947) to the Shillong Administered
Area including Bara Bazar under s. 4 of Extra
Provincial Jurisdiction Act (Act 47 of
1947) ."
In compliance of that order the Union of India have
submitted their answers on January 12, 1968 in the following
terms:
"Ministry of Home Affairs. Replies to the
questions mentioned in the order dated
September 21,1967 passed by the Supreme Court
of India in Civil AppeaLs Nos. 2403 and
2404/1966.
(1) The British Government in India had
by treaty, grant. usage, sufferance and other
means acquired jurisdiction over certain
territories of the erstwhile State of Mylliem.
The jurisdiction was exercised under the
Indian (Foreign Jurisdiction) Order-in-
Council, 1902 as amended by the Indian
(Foreign jurisdiction). Order-in-Council,
1937. Mawkhar was a part of the territories
of Mylliem jurisdiction over which had been
agreed to be given by the Siem of Mylliem to
the British Government. It was included in
those parts of Shillong which came, in course
of time, to, be called the Shillong
Administered Area. It has been reported that
on actual survey the small area known as Bara
Bazar area comes partly under Mawkhar proper
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and partly under South East Mawk
har and
Garikhana. Bara Bazar area was thus a part of
the area belonging to the erstwhile Mylliem
State in which the British Government in India
exercised jurisdiction under the Indian
(Foreign jurisdiction) Order-in-Council. On
the withdrawal of British Rule the
jurisdiction over the territories of the
erstwhile Mylliem State which had been
included in the Shillong Administered Area
continued to be exercised with the consent of
the Siem and the jurisdiction which was until
then exercised in those areas by the British
Government in India was assumed by the
Dominion of India and it was retained
thereafter by virtue of the instrument of
accession signed by the Siem of Mylliem
269
and the agreement annexed thereto. The Dominion of India
exercised extra provincial jurisdiction over the Shillong
Administered Area including the Barra Bazar which also
included Mawkhar a part of the Mylliem State on April 15,
1948.
(2) The jurisdiction exercised by the British
Government in India over the Shillong Administered Area was
quite extensive. In exercise of that jurisdiction that
Government had extended, with appropriate reservations, a
number of Acts--Central as well as Provincial-to the
Shillong Administered Area e.g. the Indian Income Tax Act
and the Assam Municipal Act with the consent of the Siem of
Mylliem where necessary. On the withdrawal of British rule
the Dominion of India acquired the same jurisdiction over
the Shillong Administered Area by virtue of the
instrument of accession signed by the Siem of Mylliem and
the agreement annexed thereto. The Dominion of India
therefore had on April 15, 1948 extra provincial
jurisdiction in terms of the Extra-Provincial Jurisdiction
Act, 1947 (Act 47 of 1947) to extend the Assam Sales Tax
Act, 1947 (Act 17 of 1947) to the Shillong Administered Area
including Barra Bazar. The Assam Sales Tax Act was actually
extended to the Shillong Administered Area including Barra
Bazar, .after obtaining the consent of the Siem of Mylliem,
in the Ministry. of States Notification no. 186-IB dated the
15th April,1948.
Sd. L.P. SINGH,
Secretary to the Govt. of India.
New Delhi,
January 12, 1968."
It is clear from the letter of the Union Government that
it was entitled to exercise extra provincial jurisdiction
over Shillong Administered Area on April 15, 1948. The
reason is that prior to that date the British Government had
exercised that jurisdiction under the Indian (Foreign
Jurisdiction) Order-in-Council, 1902 as amended by the
Indian .(Foreign Jurisdiction) Order-in-Council, 1937. On
the withdrawal of British rule the jurisdiction over the
territory of Mylliem State continued to be exercised with
the consent of the ruler by the Dominion of India and the
jurisdiction was retained thereafter by virtue of the
instrument of accession signed by the Siem of Mylliem and
the agreement annexed thereto. It is also manifest that the
jurisdiction exercised by the British Government over the
Shillong Administered Area was quite exten-
270
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sive and in exercise of that jurisdiction a number of
Acts--Central & Provincial--were extended to the Shillong
Administered Area, for example, the Indian Income Tax Act
and the Assam Municipal Act with the consent of the Siem of
Mylliem where necessary. On the withdrawal of the British
rule the Dominion of India acquired the same jurisdiction
which included the extension of the Act to the Shillong
Administered Area. Under s. 6(2) of the Act of 1947 the
answers of the Central Government to the questions forwarded
by this Court shall be treated as conclusive evidence of the
matter therein contained. We accordingly hold that the
argument of the appellant on this aspect of the case
should be rejected.
It was then contended on behalf of the appellant that s.
30 of the Act after the amendment was not applicable and the
Assistant Commissioner of Taxes had no authority to ask the
appellant to deposit the amount of tax assessed before
hearing the appeal. Section 30 of the Act, as it
originally stood, was to the following effect:
"30. (1) Any dealer objecting to an order
of assessment or penalty passed under this Act
may, within thirty days from the date of the
service of such order, appeal to the
prescribed authority, against such assess-
ment or penalty;
Provided that no appeal shall be
entertained by the said authority unless he is
satisfied that such amount of tax as the
appellant may admit to be due from him has
been paid;
Provided further that the authority
before whom the appeal is filed may admit it
after the expiration of thirty days, if such
authority is satisfied that for reasons beyond
the control of the appellant or for any other
sufficient cause it could not be filed within
time.
................................."
After the amending Act of 1958 the section reads as follows:
"30. (1) Any dealer objecting to an order of assessment
or penalty passed under this Act may, within thirty days
from the date of the service of such order, appeal to the
prescribed authority, against such assessment or penalty;’
Provided that no appeal shall be entertained by the
said authority unless he is satisfied that the amount of tax
assessed or the penalty levied, if not otherwise directed
by him, has been paid;
271
Provided further that the authority before whom the
appeal is filed may admit it after the expiration of thirty
days, if such authority is satisfied that for reasons beyond
the control of the appellant or for any other sufficient
cause it could not be filed within time.
..........................................."
It was contended that the amendment came into force with
effect from April 1, 1958 and it cannot be given
retrospective effect so as to apply to assessment periods
ending on September 30, 1956, March 31, 1957 and September
30, 1957. We are unable to accept this argument as correct
because the assessments for these three periods were
completed after the amending Act came into force i.e., after
April 1, 1958. The appeals against the assessments were
also filed after the amendment. It is therefore not correct
to say that the amending Act has been given a retrospective
effect and the Assistant Commissioner of Taxes was
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there.fore right in asking the appellant to comply with the
provisions of the amended s. 30 of the Act before dealing
with the appeals.
It was lastly contended on behalf of the appellant that
the Sales Tax Authorities were not right in holding that
there was no provision under the Act by which security can
be accepted in lieu of cash payment. Reliance was placed
upon the phrase "otherwise directed" in the amended s. 30 of
the Act. In our opinion, there is no substance in this
argument. The expression "otherwise directed" only means
that the appellate authority can ask the assessee to
deposit a portion of the amount and not the whole, but the
section gives no power to the appellate authority to permit
the assessee to. furnish security in lieu of cash amount of
tax. We accordingly reject the argument of the appellant on
this point.
For the reasons expressed we hold that the High Court
was right in dismissing the writ petitions and these appeals
must be dismissed with costs--there will be one set of
hearing fees.
V.P.S. Appeals dismissed.
272