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1991 Supreme(AP) 471
Andhra Pradesh High Court
Judges : S.C.PRATAP, UPENDRA LAL WAGHRAY
Andhra Cement Company Ltd. - Appellant
Versus
Government Of A.P. - Respondent
Decided On : 11-05-91
A company with a history of default and abuse of court process is not entitled to relief in the form of instalments for payment of taxes.
Headnote:
ANDHRA PRADESH GENERAL SALES TAX ACT, 1957 - SECTION 17 - STATUTORY NOTICE - COMPANY DEFAULTING IN PAYMENT OF TAXES - COURT DISMISSES PETITION FOR INSTALMENTS - COMPANY ABUSING COURT PROCESS - COSTS AWARDED.
Fact of the Case:
The petitioner-company, a dealer registered under the Andhra Pradesh General Sales Tax Act, 1957, defaulted in paying state and central sales taxes for several years. Despite being granted indulgence by the court to pay the tax amount in instalments, the company failed to comply with the terms and conditions. The company also engaged in various tactics to avoid and evade payment of taxes, such as obtaining injunctions to restrain the recovery of taxes and issuing dishonored cheques.
Finding of the Court:
The court found that the company had a history of abusing the legal processes and evading payment of taxes. The company's conduct was described as "bordering on contempt" and "in piece with the general conduct of the company." The court also noted that the company's cement industry was prospering and that it had reopened its Vijayawada unit.
Issues: Whether the company was entitled to relief in the form of instalments for payment of taxes, considering its history of default and abuse of court process.
Ratio Decidendi: The court held that the company's consistent conduct of evading and avoiding payment of taxes disentitled it to any relief in the court's writ jurisdiction. The court stated that Article 226 of the Constitution was not meant for putting a premium on such conduct and that the court would not encourage invoking writ jurisdiction to evade and avoid payment of tax.
Final Decision: The court dismissed the company's petition in limine and vacated the interim order. The court also directed the company to pay costs of Rs. 5,000 to the respondents.
( 2 ) THE petitioner-company (hereafter "the company") is a dealer registered under the A. P. General Sales Tax Act. It has branches at Dachepalli, Vijayawada and Visakhapatnam. It is an assessee on the rolls of the Commercial Tax Officer, Company Circle, Vijayawada. Under rule 17 of the Andhra Pradesh General Sales Tax Rules, 1957 (for short "the Rules") every dealer whose annual total turnover exceeds rupees ten lakhs has to submit a return in form A2 showing the total and net turnover every month to the assessing authority by the 25th of the succeeding month. The return should reach the assessing authority by that date. Along with the return the dealer has to submit a receipt from a Government Treasury or crossed demand draft, or banker s cheque covering the full tax or taxes and the surcharge payable for the month to which the return relates. In the event of default the assessee is liable to pay penalty under section 15 of the Act.
( 3 ) FOR the past few years the company has been a continuous defaulter in the payment of State as also Central sales taxes. And as the history of this litigation shows, the company has been invoking every possible means of avoiding and evading the payment thereof. This petition is but one more attempt in this behalf. Taken along with the previous similar attempts either by way of a suit or writ petition it reflects abuse of the legal processes. The company has built up a rather dubious image of being in the virtual habit of not paying taxes unless coerced or compelled to do so.
( 4 ) WHEN the matter first came up, we were inclined to grant some indulgence to the company by permitting it, albeit on terms and conditions, to pay the tax amount by certain instalments with interest. After a couple of adjournments, even this indulgence was not accepted with grace which, in the process, causing further delay resulting in substantial loss of interest to the respondents. Undertakings by all concerned parties as required by this Court did not come forth. Only one party sought to give an undertaking, but the other failed to do so.
( 5 ) THE demand for sales tax dues constituting the subject-matter of this petition is Rs. 5,75,00,750 for the period up to August 1991, excluding the subsequent dues for the months of September and October 1991. On the earlier occasion we directed the company to pay current dues for the month of September 1991 by 25/10/1991. But even that direction was not complied with. Instead, suppressing the same, the company had no compunction in applying to the Commissioner for Commercial Taxes for instalments of September dues, vide copy of letter dated 22/10/1991, produced before us by the learned Government Pleader. This conduct, bordering on contempt, is in piece with the general conduct of the company. Though initially we were inclined to given benefit of doubt to the company on their bona fides, we are now convinced that the company has been taking undue advantage of the processes of the court and is out to avoid and evade payment of taxes as long as possible, in the meanwhile enjoying the benefit of recovered taxes to the detriment of public revenue.
( 6 ) THE detail counter filed by the respondents also, inter alia, elaborates on the conduct of the company. On prior occasions even electricity dues worth crores of rupees were not paid by this company despite the fact that power was consumed, business prepared and profits made. Instead, injunctions were obtained not to disconnect electric power. That process ultimately filed. Even in the present case, a civil suit was earlier filed and injunction obtained restraining the defendants from recovering taxes. And when appeal was filed to have the same vacated, the orig
