Madhya Pradesh High Court
Gulshan Rai Johar vs Commissioner Of Sales Tax on 4 August, 1987
Equivalent citations: [1988]71STC258(MP)
Author: N.D. Ojha
Bench: N.D. Ojha
JUDGMENT N.D. Ojha, C.J.
1. The Tribunal constituted under the M. P. General Sales Tax Act (hereinafter referred to as "the Act") has referred the following question to this Court for its opinion under Section 44(1) of the Act:
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the second appeal of the applicant and in rejecting the contention that notwithstanding non-payment of tax as directed, he be heard on merits ?
2. The facts which are necessary for consideration of the aforesaid question, may be stated in brief. An order of assessment was passed against the applicant on 2nd May, 1966. Against that order, an appeal was preferred by the assessee which was rejected by the Appellate Assistant Commissioner of Sales Tax on 29th January, 1968. This order was communicated to the assessee-applicant on 29th March, 1968 and he preferred a second appeal on 23rd April, 1968. The requisite amount of tax which was to be deposited to entitle the appeal to be admitted as contemplated by Sub-section (3) of Section 38 of the Act was, however, deposited on 11th February, 1969, i.e., after about 10 months of the filing of the appeal. In this view of the matter, the Tribunal rejected the second appeal filed by the applicant on 29th November, 1969, as barred by time. However, certain questions were referred to this Court for its opinion. This reference was numbered as M. C. C. No. 217 of 1972. It came up for hearing before a Division Bench of this Court which reframed the questions referred to it in the following manner :
Whether, in the facts and circumstances of the case, the appeal before the Tribunal should be taken to be filed on 23rd April, 1968 when it was actually filed or 11th February, 1969, when the amount of Rs. 3,300, as directed by the Tribunal, was deposited ?
The question so reframed, was answered as follows :
In the facts and circumstances of the case, the appeal should be taken to have been filed on 23rd April 1968, when the memorandum of appeal was presented.
In view of this answer, the second appeal preferred by the applicant was taken up for hearing by the Tribunal.
3. As is apparent from para 4 of the order of the Tribunal, learned Counsel appearing for the applicant urged only one point, namely, that the applicant had made a request that the amount payable at the time of admission of the appeal, be reduced as he was not given hearing before the Appellate Assistant Commissioner who issued him the notice on 8th August, 1966 asking him to deposit Rs. 6,890. This plea was repelled by the Tribunal. It held that sufficient opportunity had been given to the applicant by the Appellate Assistant Commissioner in the matter of payment of the requisite amount of tax. The Tribunal has also held that it was really the applicant who had not availed of the various opportunities granted by the Appellate Assistant Commissioner in the matter of payment of tax. In this view of the matter, the Tribunal came to the conclusion that the Appellate Assistant Commissioner could not be said to have dismissed the appeal summarily for non-payment of tax illegally.
4. It has been urged by the learned Counsel for the applicant-assessee that the applicant deserved to be given an opportunity of hearing before rejecting the appeal summarily. Reliance on certain decisions has been placed by learned Counsel for the applicant in support of this submission. We, however, do not find it necessary to refer to those decisions inasmuch as the law seems to be that before passing an order of rejecting the appeal in the sense of not admitting it on the ground of non-payment of tax, the appellant has to be given an opportunity of hearing on the question of depositing the tax for making the appeal maintainable.
5. On the facts of the instant case, as seen above, the finding recorded by the Tribunal is that the applicant was given a hearing as also opportunities on several occasions to deposit the amount of tax, but the applicant failed to avail of the same. In this view of the matter, the view taken by the Tribunal that no exception could be taken to the order of the Appellate Assistant Commissioner rejecting the appeal summarily, is apparently correct.
6. It was then urged by the learned Counsel for the applicant that since the second appeal was maintainable, it should have been heard on merits of the controversy raised in the appeal before the Appellate Assistant Commissioner. In this connection, the Tribunal has pointed out that when an appeal is dismissed in default, the main order can be challenged on merits at the second appellate stage, but where an appeal has not been admitted as the statutory requirement of payment of tax was not fulfilled, the question of hearing the second appeal does not arise. In our opinion, no exception can be taken to this view of the Tribunal also.
7. There are two stages of an appeal contemplated by Section 38 of the Act : The first stage is of the admission of the appeal and the second stage is of hearing of the appeal. Sub-section (3) of Section 38 of the Act contemplates that no appeal shall be admitted unless the requirement of deposit of tax contemplated by the said sub-section has been fulfilled. The stage of hearing of an appeal arises only after it has been admitted. Therefore, if an appeal is not to be admitted for non-deposit of tax, the hearing contemplated at that stage is in regard to the matter of deposit of tax only. Merits of the appeal do not come up for consideration at that stage. Consequently, if an appeal has not been admitted on the ground of non-payment of tax, the plea which can be raised in second appeal is in regard to the validity of the order of the first appellate authority in not admitting the appeal. Since by that stage, the Appellate Assistant Commissioner has not applied his mind at all to the merits of the appeal, it cannot be said that the order of not admitting the appeal is an order giving any decision in regard to the merits. Apparently, therefore, the scope of enquiry in second appeal directed against an order not admitting an appeal on account of default in payment of the requisite amount of tax would, on the face of it, be confined to the question as to whether the first appellate authority was right in not admitting the appeal.
8. The legal position, however, is different if an appeal at the stage of final hearing has been dismissed in default. At that stage, it is the merits of the various pleas that have been raised by the appellant against the order of the assessing authority that come up for consideration before the first appellate authority and even if the appeal is dismissed in default, it would be taken that the various pleas raised by the appellant have been repelled, even though in his default. Consequently, if the first appellate authority has passed an order dismissing an appeal in default at the time of final hearing and second appeal is preferred against that order, the scope of enquiry in second appeal would be as to whether the various pleas raised by the appellant before the first appellate authority against the order of the assessing authority on merits were rightly repelled by the first appellate authority. In this view of the matter, in second appeal filed against the order dismissing the appeal in default, merits of the various pleas would naturally come up for consideration and can be considered by the second appellate authority.
9. In the instant case, as seen above, the stage of hearing the appeal on merits had not reached at all. The appeal was rejected summarily by the first appellate authority on the ground of non-deposit of the requisite amount of tax, notwithstanding the fact that several opportunities were given to the applicant in this behalf. In other words, it is a case where the appeal was not admitted at all.
10. In view of the foregoing discussion, our answer to the question referred to us is that on the facts and in the circumstances of the case, the Tribunal was justified in rejecting second appeal of the applicant and in rejecting the contention that notwithstanding non-payment of tax, as directed, he be heard on merits. In other words, the aforesaid question is answered in the affirmative against the assessee and in favour of the department. There shall be no order as to costs.