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Allahbad High Court
R.S.PATHAK,M.H.BEG,H.C.P.TRIPATHI
J. K. Manufacturers Ltd. - Appellant
Versus
The Sales Tax Officer, Sector II, Kanpur - Respondent
Decided On : 05/08/1969
Rule 12-A of the U.P. Sales Tax Rules, 1948, which provides for the production of a certificate in Form III-A as the only mode of proving that a sale is not to the consumer, is valid and does not go beyond the provisions of Section 3-AA of the U.P. Sales Tax Act, 1948. However, the rule does not require the assessee to file certificates in Form III-A also with his quarterly returns in Form IV or can be filed later only if time is especially obtained for the purpose of filing the certificates but not otherwise.
Fact of the Case:
The petitioner, a registered dealer, sold cotton blankets to other registered dealers. The Sales Tax Officer refused to exempt the sales from tax on the ground that the petitioner had not submitted certificates in Form III-A, showing that these goods were sold to a dealer for re-sale in the same condition, either with its quarterly returns in Form IV or within a time obtained especially for filing them although the petitioning company had submitted these certificates long before the completion of the assessment proceedings on 30th November, 1964. The petitioner filed writ petitions challenging the assessment orders and the Commissioner's order rejecting the appeals.
Finding of the Court:
The Court held that Rule 12-A of the U.P. Sales Tax Rules, 1948, is valid and does not go beyond the provisions of Section 3-AA of the U.P. Sales Tax Act, 1948. However, the rule does not require the assessee to file certificates in Form III-A also with his quarterly returns in Form IV or can be filed later only if time is especially obtained for the purpose of filing the certificates but not otherwise.
Issues: 1. Whether Rule 12-A of the U.P. Sales Tax Rules, 1948, is valid and does not go beyond the provisions of Section 3-AA of the U.P. Sales Tax Act, 1948? 2. Whether the Sales Tax Officer was right in refusing exemption to sales of yarn on the ground that the petitioner had not submitted certificates in Form III-A? 3. Whether the Commissioner, Sales Tax, U.P., rightly rejected the appeals of the petitioning assessee against the orders of the Sales Tax Officer solely on the ground that the memorandum of appeal in each case did not disclose the tax admitted to be due with the result that the memoranda of appeals were defective?
Ratio Decidendi: 1. Rule 12-A of the U.P. Sales Tax Rules, 1948, is valid and does not go beyond the provisions of Section 3-AA of the U.P. Sales Tax Act, 1948. The rule prescribes the most convenient and reasonable mode of proof, in the circumstances of the case, so as to safeguard the interests of dealers as well as of the revenues of the State, and does not unduly curtail the right to an exemption found in S. 3-AA (1). 2. The Sales Tax Officer was not right in refusing exemption to sales of yarn on the ground that the petitioner had not submitted certificates in Form III-A. Rule 12-A does not require the assessee to file certificates in Form III-A also with his quarterly returns in Form IV or can be filed later only if time is especially obtained for the purpose of filing the certificates but not otherwise. 3. The Commissioner, Sales Tax, U.P., did not rightly reject the appeals of the petitioning assessee against the orders of the Sales Tax Officer solely on the ground that the memorandum of appeal in each case did not disclose the tax admitted to be due with the result that the memoranda of appeals were defective. The memorandum of appeal, as filed in each case before the Assistant Commissioner, was not really defective on account of a wrong statement in each memorandum.
Final Decision: The Court allowed the writ petitions in part and quashed the orders of the Assistant Commissioner (Judicial) I, Sales Tax, Kanpur Range, Kanpur dated February 21, 1966 dismissing the appeals of the petitioner and directed him to hear them again and dispose them of in accordance with law. The Court also accepted the undertaking given by the learned Chief Standing Counsel for the respondents that during the pendency of the aforesaid appeals the petitioner shall not be treated as being in default in respect of the balance of the sales tax assessed against it for the assessment years 1961-62, 1962-63 and 1963-64.
PATHAK, J. :- I have had the benefit of perusing the Judgment prepared by my brother Beg, J. and I agree with the order proposed by him.
2. I agree that the preliminary objection raised by the respondents on the ground that the petitioner should be referred to his statutory remedies under the U.P. Sales Tax Act should be rejected. The writ petitions were filed against the assessment orders and while they were pending the petitioner also filed appeals against these assessment orders. The appeals were dismissed as being defective. The writ petitions were amended to include a prayer for relief against the appellate orders. One of the grounds taken in these cases before us is that Rule 12-A is ultra vires. That is a ground which cannot be entertained by the authorities constituted under the U.P. Sales Tax Act. In Behari Lal Shyam Sunder v. Sales Tax Officer, Cuttack (1966) 17 STC 508 (SC) the imposition of sales tax was challenged on the ground that a rule was ultra vires, and the Supreme Court repelled the contention that the question could have been examined and decided by the authorities constituted under the statute. Then there is the circumstance that the questions raised in these writ petitions are questions which should be decided authoritatively at the earliest as they affect a large number of cases where appeals are filed and are rejected because of apparent non-compliance with the rules. It is in the public interest that such questions should be resolved by adjudication by this Court expeditiously so that the statutory authorities are afforded adequate guidance in respect of matters which arise daily before them.
3. The appeals have been dismissed as defective because in all the three memoranda the petitioner failed to disclose the tax admittedly due. In the memoranda originally filed the petitioner stated that the tax admitted to be due was nil, and thereafter sought permission to amend the memoranda by inserting the figures of the admitted tax. The appellate authority rejected the prayer for amendment on the ground that it was not competent to permit any amendment. I agree with my brother Beg J. that the appellate authority has made an order which cannot be sustained. The right of appeal against the assessment order is conferred by Section 9(1) of the U.P. Sales Tax Act and the proviso to that sub-section declares that no appeal 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 instalment thereof as may have become payable. The Supreme Court in Lakshmi Ratan Engineering Works Ltd, v. Asst. Sales Tax Commr., AIR 1968 SC 488:21 STC 154 has laid down that it is open to an appellant to adduce satisfactory proof of such payment at any time before the appeal is entertained, and the appeal is 'entertained' when it is first taken up for judicial consideration. What the appellant has to establish is that he has paid the amount of admitted tax. There is nothing in the U.P. Sales Tax Act or Rules which requires that there should be a statement in the memorandum of appeal as to the amount of tax admitted to be due and paid. Rule 66 which mentions what should be contained in the memorandum of appeal does not contemplate such a statement. It merely requires that as regards the admitted
tax liability it shall be accompanied by the challan showing deposit in the treasury of the admitted tax. The Supreme Court has held in Lakshmi Ratan Engineering Works Ltd., AIR 1968 SC 488 : 21 STC 154 (supra) that even this requirement is directory only and that it is open to an appellant to prove by producing the challan or by any other mode available to him that the admitted tax has been paid, and he may do this at any stage before the appeal is entertained. The statement in the memorandum of appeal that the admitted tax has been paid, therefore, is not a requirement contemplated by the Act or the Rules, and if it is open to an appellant to
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