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1995 Supreme(MP) 404
U.L. Bhat, R Gupta
Lachhmandas Genumal And Anr.
vs
State Of Madhya Pradesh And Ors.
Decided on : 24 March, 1995
The right of appeal is a statutory right and the legislature can impose conditions for the exercise of that right, provided that the conditions are not so onerous as to amount to unreasonable restrictions rendering the right almost illusory.
Headnote:
SALES TAX - Appeal - Deposit of tax and penalty - Section 38(3)(c) of the M.P. General Sales Tax Act, 1958 - Constitutionality - Assessment - Extension of time - Section 18(9) of the Act - Validity - Notification extending time for completion of assessment - Validity.
Fact of the Case:
Petitioners challenged the validity of Section 38(3)(c) of the M.P. General Sales Tax Act, 1958, which required a deposit of 50% of the balance amount for securing admission of an appeal against an assessment order, as well as the validity of Section 18(9) of the Act, which allowed the State Government to extend the period for completion of assessment proceedings. The petitioners also challenged the validity of a notification issued under Section 18(9) extending the period for completion of assessment.
Finding of the Court:
The Court held that Section 38(3)(c) of the Act was not arbitrary or unconstitutional, as it was a regulatory provision that was not oppressive or arbitrary. The Court also held that Section 18(9) of the Act did not confer arbitrary and unguided power on the State Government, as it contained implied guidelines and the reasons for extension had to be recorded. The Court further held that the notification extending the period for completion of assessment was valid, as the reasons given were relevant and germane to the guidelines implicit in Section 18(9) and the extension was for a reasonable period.
Issues: 1. Whether Section 38(3)(c) of the M.P. General Sales Tax Act, 1958, which required a deposit of 50% of the balance amount for securing admission of an appeal against an assessment order, was arbitrary and unconstitutional. 2. Whether Section 18(9) of the Act, which allowed the State Government to extend the period for completion of assessment proceedings, was valid. 3. Whether the notification issued under Section 18(9) extending the period for completion of assessment was valid.
Ratio Decidendi: 1. The Court held that Section 38(3)(c) of the Act was not arbitrary or unconstitutional, as it was a regulatory provision that was not oppressive or arbitrary. The Court noted that the right of appeal is a statutory right and that the legislature could impose conditions for the exercise of that right. The Court also noted that the deposit required was not of the entire balance but only a part of it and that there was no discretion granted to the appellate authority to relax the condition. 2. The Court held that Section 18(9) of the Act did not confer arbitrary and unguided power on the State Government, as it contained implied guidelines and the reasons for extension had to be recorded. The Court noted that the provision required the State Government to record reasons for the extension and that the reasons must be relevant and have a foundation. 3. The Court held that the notification extending the period for completion of assessment was valid, as the reasons given were relevant and germane to the guidelines implicit in Section 18(9) and the extension was for a reasonable period.
Final Decision: The Court dismissed the writ petitions challenging the validity of Section 38(3)(c) of the M.P. General Sales Tax Act, 1958, Section 18(9) of the Act, and the notification issued under Section 18(9) extending the period for completion of assessment.
U.L. Bhat, C.J.
1. Common questions arise for consideration in these cases. Hence, common arguments are heard and the cases are being disposed of by common order.
2. Petitioner in M. P. No. 3340 of 1989 carries on business in purchase and sale of utensils. Petition relates to assessment under the M. P. General Sales Tax Act, 1958 (for short, the State Act) for the period 13-11-1985 to 2-11-1986. He is a registered dealer under the State Act. Sales Tax Officer completed the assessment on the basis of the report of the Flying Squad. According to the petitioner, though he maintained true and correct accounts and submitted true and correct returns, S.T.O. issued notice in Form-XVI dated 6-11-1987 against proposed assessment and levy of penalty under Section 43(1). Notice proposed levy of penalty under Section 17(3) and assessment under Section 18(4) of the State Act. The petitioners contended that the notice was illegal as it was issued without application of mind, that the petitioner was not supplied copy of the report of the Flying Squad and was denied opportunity to effectively meet the case of the Department. Assessment was completed by order dated 24-2-1989 levying penalty of Rs. 24,000/- under Section 43(1) for alleged concealment of turnover and submission of false return. Assessment was completed long after period of limitation under Section 18 of the Act was over. This was done on account of extension of time granted under notification dated 26-12-1988 which is challenged as illegal since the notification is ultra vires the powers of the State Government. On the basis of the above submissions, the petitioner contends that the notice and assessment are liable to be quashed. The further contention is that Section 38(3)(c) of the State Act is arbitrary and unconstitutional as also the notification dated 26-12-1988. Similar are the contentions of the petitioners in other writ petitions. On behalf of the respondents, return has been filed.
3. Learned counsel for the petitioners submitted that though the petitioners did not file appeals against assessment orders as they are required to deposit a part of the amount due and they have preferred revision petitions and the same are pending and, therefore, the contentions raised in the writ petitions regarding the invalidity of the show cause notices and the assessment order will be perused in the revision petitions and not in these writ petitions. Learned counsel confined arguments to the following points :
(i) Section 38(3)(c) of the State Act is arbitrary and unconstitutional.
(ii) Section 18(9) of the State Act is ultra vires the Constitution.
(iii) Notification dated 26-12-1988 is ultra vires the power of the State Government.
POINT NO. (i)
4. Section 38 of the State Act contains the provisions of appeal against the order of assessment under Section 18, order of reassessment under Section 19 or 19-A with or without penalty and order imposing penalty or relating to refund under Section 24 or order under Section
25. Sub-section (1) states that any dealer or person objecting to such orders may in the prescribed manner, may appeal against such order to the Deputy Appellate Commissioner of Sales Tax. Sub-section (2) of Section 38 of the State Act contains the provision for second appeal to the Tribunal. Sub-section (3) of Section 38 reads thus :
"No first or second appeal against an order of assessment, with or without penalty or against an order imposing penalty shall be admitted by the appellate authority unless out of the total balance due from the dealer -
(a) where all returns for the period to which the order appealed against relates have been filed and tax payable according to such returns has been paid, one-tenth of such balance;
(b) where one or more of the returns for the period for which the order appealed against relates have not been filed and tax has not been paid or where such return or returns have been filed but tax has not been paid -
(i) one-third of such balance; or
(ii) s
