IMPORTANT POINT
The term "unable to pay the whole of the amount of tax assessed" used in proviso to sub-section (5) of Section 39 of the Haryana General Sales Tax Act refers to inability to pay the amount is referable to the paying capacity of the person concerned and not his legal or actual liability to pay the amount demanded.

Headnote:Haryana General Sales Tax Act, 1973-Section 39(5), proviso-Appeal-Stay of recovery of tax-Condition precedent- Unable to pay whole amount of tax assessed -Meaning of-Inability mentioned in proviso refers to paying capacity and financial position of assessee and his legal or actual liability to pay amount demanded-Plea that assessee had not collected any additional tax from customers and is unable to deposit amount of additional demand-Cannot be made basis for insisting to entertain appeal without prior payment of tax demand.
       Sub-section (5) of Section 39 of the Act vests a discretion in the appellate authority to entertain the appeal if it is filed within sixty days and the amount of tax assessed along with penalty and interest, if any, recoverable from the persons has been paid. The aforesaid restriction is subject to the proviso conferring discretion upon the appellate authority to dispense with the deposit of the amount only on proof of the fact that the appellant was unable to pay the amount. Before deciding the appeal, the appellate authority affords an opportunity to the party concerned to either pay the amount or make out a case for the stay in terms of proviso to sub-section (5) of Section 39 of the Act. Once the conditions specified under sub-section (5) of Section 39 are complied with, the appeal is born for being disposed of on merits after hearing both the sides. (Para 7)
       The object of sub-section (5) of Section 39 of the Act is to ensure the deposit of amount claimed from an assessee in case of an appeal filed against the tax demanded. However, power is given to the Appellate Tribunal to relieve him from the rigor of above restriction under the circumstances spelt out in the proviso of the aforesaid Section. Sub-section (5) regulates the exercise of right of appeal conferred upon an assessee under Section 39 of the Act, the object being to keep in balance the right of the aggrieved person and the right of the State to speedy recovery of tax. (Para 9)
       The inability mentioned in the proviso refers to the paying capacity and financial position of the Company and its scope cannot be widened to the extent as suggested by Mr. Nariman. The word "pay" with its grammatical variation and cognate expressions, when used with reference to the tax amount, means "deliver and render" the amount, it indicates the discharge of an obligation rather than an investment of money. "To pay" is a generic term and the rest of the proviso refers to the modes of payment. It may mean the payment of the amount of tax assessed. The dictionary meaning of the "payment" is the performance of an obligation for the delivery of money. In legal contemplation "payment" is the discharge of an obligation by the delivery of money or its equivalent. The word "unable" used in the proviso has been defined to mean `not having sufficient strength, power and means . In relation to money, it means insufficiency of funds. It follows, therefore, that the inability to pay the amount is referable to the paying capacity of the person concerned and not his legal or actual liability to pay the amount demanded. It has to be kept in mind that the payment made under the proviso only enables the appellate court to entertain the appeal for adjudication and does not decide the rights of the parties. (Para 10)
       In the instant case the prayer was made to grant stay on the ground that "the petitioner has not collected any additional tax from the customers and is unable to deposit the amount of additional demand created by patently illegal orders". The respondent Company nowhere mentioned to or referred its inability to pay the amount on account of its alleged financial difficulties or incapacity to make the requisite payment. The legality of the additional demand created could not be made the basis for insisting to entertain the appeal without prior payment, as that would have required the determination on the merits of the appeal. (Para 12)

JUDGMENT

Sethi, J.-Leave granted.

2. What is the ambit and scope of the words "unable to pay the whole of the amount of tax assessed" used in proviso to sub-section (5) of Section 39 of the Haryana General Sales Tax Act, 1973, is the question of law requiring our interpretation in this appeal by special leave. It is contended on behalf of the appellant that the inability mentioned in the proviso refers to the financial position of the assessee, whereas the respondents contend that the words "unable" used in the Section is of wider amplitude being not restricted to only financial position of the assess.

3. In order to determine the rival contention it is necessary to have a resume of the facts leading to the filing of the present appeal. The respondent, M/s. Maruti Udyog Limited a public limited company (hereinafter referred to as "the Company"), having its factory at Gurgaon in the State of Haryana is engaged in the business of manufacture and sale of various types of cars, namely, Maruti 800, Omni and Esteem, etc. along with their spare parts. The Company is a registered dealer under the Haryana General Sales Tax Act, 1973 (hereinafter referred to as the "Act") and the Central Sales Tax Act, 1956 (hereinafter referred to as the "Central Act") with the Excise and Taxation Officer, Gurgaon. For the Assessment Year 1986-87, the Company was assessed to tax by the Excise and Taxation Officer, Gurgaon vide his orders dated 20th November, 1990 under the Act and the Central Act. On 16th March, 1992, the Deputy Excise and Taxation Commissioner (I), Gurgaon served a noticed on the Company proposing to suo motu revise the assessment orders of the Excise and Taxation Officer, Gurgaon dated 20th November, 1990 on the grounds that the orders were illegal and improper for the reasons specified in the notice served. Subsequently, the suo motu revised assessment orders were passed enhancing the gross turnover of the Company by adding excise duty in the turnover returned by it and assessed by the Excise and Taxation Officer, Gurgaon disallowing part of the amount of rebate allowed by the Assessing Authority. The turnover of Omni product was taxed at the rate of 10% instead of 6% treating the same as "Vans". Aggrieved by the aforesaid order, the Company filed an appeal before the Haryana Sales Tax Tribunal (hereinafter referred to as the "Tribunal"), challenging the enhancement of turnover along with an application for stay of recovery of demand and entertainment of appeal without prior payment of tax and interest as required under sub-section (5) of Section 39. The application was rejected on 29th June, 1992 and the Company given time to deposit the entire amount within a period of one month.

4. Feeling aggrieved, the Company filed writ petition No. 10088 of 1992 in the High Court of Punjab and Haryana at Chandigarh which was disposed of on 7.8.1992 directing the Company to furnish bank guarantee for the additional demand for entertainment of appeal, instead of depositing the whole amount in terms of sub-section (5) of Section 39 of the Act. The appeal filed by the Company was disposed of by the Tribunal by remanding the case to Deputy Excise and Taxation Commissioner for fresh decision after giving the Company a reasonable opportunity of being heard. The Deputy Excise and Taxation Commissioner vide its order dated 29th March, 1994 again revised the orders and created additional demand of Rs. 23,10,995/- under the Act and Rs. 78,44,607/- under the Central Act.

5. Feeling aggrieved, the Company again filed an appeal before the Tribunal along with application for stay of recovery of demand and entertainment of appeal without prior demand of tax and interest. Such application was rejected on 7.9.1994 giving the Company time to deposit the entire demand by 30th November, 1994. The Company again filed writ petition No. 16537 of 1994 in the High Court against the order of the Tribunal rejecting its application. On 5.12.1994, the High Court quashed the or

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2000 Supreme(SC) 1478

Cases Referred (2)