Karnataka High Court
K. Venkatesh And Co. vs The Commercial Tax Officer, Arsikere ... on 5 August, 1980
Equivalent citations: 1980(2)KARLJ367, [1981]47STC115(KAR)
JUDGMENT Rama Jois, J.
1. In this revision petition presented under sub-section (4) of section 13 of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act), the following contention is urged for the petitioner :
During the pendency of an appeal preferred by the petitioner against an assessment order under section 20 of the Act, no proceedings for recovery of disputed amount of tax can be taken against him under section 13(3)(b) of the Act.
2. The petitioner is a registered dealer and he was assessed to tax under the Act for the assessment years 1970-71, 1971-72 and 1972-73. The total tax liability fixed was Rs. 28,823. The demand notices were served on 2nd June, 1978, and the amount became payable on 23rd June, 1978. The petitioner preferred an appeal before the Deputy Commissioner of Commercial Taxes on 17th June, 1978. During the pendency of the appeal, an application for recovery of the tax due was made before the Munsiff Magistrate, Arsikere, under clause (b) of section 13(3) of the Act. Before the learned Magistrate, inter alia, an objection was raised to the effect that as the appeal preferred by the petitioner was pending before the appellate authority, the recovery proceedings are not permissible in view of the proviso to clause (b) of section 13(3) of the Act. The said objection was overruled by the learned Magistrate. Aggrieved by the said order, the petitioner has presented this revision petition.
3. Elaborating the contention, Shri B. V. Katageri, the learned counsel appearing for the petitioner, submitted that the real meaning of the proviso to clause (b) of section 13(3) of the Act is that the moment an appeal is preferred by the assessee under section 20 of the Act before the appellate authority in respect of the disputed amount of tax, the tax due under the assessment order cannot be recovered until the disposal of the appeal by the appellate authority, but it can be recovered only if any condition was imposed by the appellate authority and it was not complied with by the assessee-appellant. He argued that no recovery proceedings could be instituted against the assessee until the disposal of the appeal.
4. In our opinion, the answer to the contention urged for the petitioner depends upon the language of sub-section (3) of section 20 as also the proviso to clause (b) of sub-section 13 of the Act. They read as follows :
"20. (3)(a) No appeal against an order of assessment shall be entertained by the appellate authority unless it is accompanied by satisfactory proof of the payment of the tax and penalty not disputed in the appeal.
(b) Notwithstanding that an appeal has been preferred under sub-section (1), the tax or other amount shall be paid in accordance with the order against which the appeal has been preferred :
Provided that the appellate authority may, in its discretion, give such directions as it thinks fit in regard to the payment of tax or other amount payable under clause (b), if the appellant furnishes sufficient security to its satisfaction in such form and in such manner as may be prescribed.
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13. (3) Any tax assessed, or any other amount due under this Act from a dealer or any other person may without prejudice to any other mode of collection be recovered -
(a) ...............................
(aa) ...............................
(b) notwithstanding anything contained in the Code of Criminal Procedure, 1973 (Central Act 2 of 1974), on application to any Magistrate, by such Magistrate as if it were a fine imposed by him :
Provided that where a dealer or other person who has appealed or applied for revision of any order made under this Act and has complied with an order made by the appellate or the revising authority in regard to the payment of the tax or other amount, no proceedings for recovery under this sub-section shall be taken or continued until the disposal of such appeal or application for revision.
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According to clause (a) of sub-section (3) of section 20 of the Act, an appeal cannot be entertained unless the admitted tax is paid and evidence thereof is adduced along with the appeal. Clause (b) provides the notwithstanding the fact that an appeal has been preferred under sub-section (1), the tax or other amount due shall be paid in accordance with the order against which the appeal has been preferred. The clear effect of these two clauses is that payment of admitted tax is a condition precedent for preferring the appeal and liability to pay the disputed amount of tax due exists, notwithstanding the presentation of the appeal. There is however the proviso to clause (b) which empowers the appellate authority to give such interim direction as it thinks fit in regard to the payment of tax or other amount payable if the appellant furnishes security to its satisfaction in such form and in such manner as may be prescribed. The proviso to clause (b) of section 13(3) provides that if the concerned assessee has preferred an appeal or revision against any order made under the Act and has also complied with the terms of any order made by such appellate or revisional authority regarding the payment of tax or other amount due, no proceedings for recovery under this sub-section shall be taken or continued until the disposal of such appeal or application for revision. The construction suggested for the assessee on the above proviso is that the enforcement of the recovery of the disputed tax which is the subject-matter of the appeal can be made only if there has been an interim direction given by the appellate authority and the same has not been complied with by the assessee. The further argument was if the appellate authority fails to make any interim direction, there was nothing for the assessee to comply with and even in such a situation, the recovery stands suspended by the force of the proviso itself till the disposal of the appeal.
5. In view of the plain language of the provisions we are unable to agree with the contention urged for the petitioner. The clear meaning of the proviso to clause (b) of sub-section (3) of section 13 of the Act is that if any interim direction has been issued by an appellate authority directing the assessee-appellant to pay a portion of the tax on furnishing security or that he need not pay the disputed tax which is the subject-matter of the appeal and it is sufficient that he furnishes the security as required under sub-section (3) of section 20 and the same has been complied with by the assessee, there shall be no enforcement of the recovery of the tax till the disposal of the appeal. But, if the assessee does not make any application for any interim direction before the appellate authority or if any such application made before the appellate authority is rejected, the proviso to clause (b) of sub-section (3) of section 13 does not in any way prevent the making of an application under section 13(3)(b) for enforcing recovery or for its continuation.
6. At this stage it is also necessary to mention that even the appeal presented by the petitioner before the appellate authority was dismissed during the pendency of this revision petition.
7. The learned counsel for the petitioner, however, tried to derive, support from the decision of the Kerala High Court in M. K. Mohammed Kunhi v. Income-tax Officer, Cannanore ([1966] 59 I.T.R. 171.). That was a case in which the only question for consideration before the court was whether in the absence of the conferment of a specific power to grant an interim order, the power to grant such interim order was incidental to the exercise of the appellate power. The court took the view that power to grant an interim order was incidental to the appellate power and, therefore, even in the absence of a specific provision conferring power to issue an interim to issue an interim order, an interim order can be made by the appellate authority. The ratio of that decision has no bearing on the question arising in this case.
8. The learned counsel for the petitioner also relied on a decision of this Court in P. Ganesh Nayak v. Commercial Tax Officer, 1st Circle, Bangalore (1962 Mys. L.J. 428 at 434.). In particular he relied upon the observation at page 434 that the recovery should not be resorted to if an appeal or a revision petition had been preferred or presented by a dealer, in view of the proviso to sub-section (3) of section 13 of the Act. In the said case the only question which arose for consideration was whether proceedings could be taken recovering the tax admitted in the returns filed by an assessee even before an order of assessment was made. The court held that action could be taken for recovery of the tax even before an assessment order was made. The question whether during the pendency of an appeal and in the absence of any interim direction by the appellate authority, proceedings for recovery could be instituted or continued under claused (b) of section 13(3) of the Act, was not directly in issue. Therefore, the said observation cannot be taken as an authority in support of the contention urged for the petitioner.
9. For the reasons aforesaid, we reject the contention urged for the petitioner and make the following order :
The revision petition is dismissed.
10. Petition dismissed.