1990 (3) TMI 310 - SC - VAT and Sales Tax

Modify the judgment of the High Court only in so far as it directs that an assessee who has not made any return at all and has not admitted any figure of turnover in the course of the assessment proceeding - Held that - As the High Court has already permitted the appeals to be disposed of without requiring any deposits. The learned counsel for the appellants is not in a position to state whether the appeals are still pending or whether they have since been disposed of pursuant to the directions of the High Court. It would not be proper, in this situation, to modify the decretal position of the High Court s order.

Summary

Issues Involved:
1. Requirement of tax deposit before entertaining an appeal under the U.P. Sales Tax Act, 1948.
2. Interpretation of Section 9 of the U.P. Sales Tax Act, particularly clauses (a) and (b).
3. Power of the appellate authority to waive or relax the requirement of tax deposit.

Detailed Analysis:

Issue 1: Requirement of Tax Deposit Before Entertaining an Appeal
The respondents were assessed under the U.P. Sales Tax Act for different years (1981-82, 1983-84, and 1982-83). They appealed to the first appellate authority, requesting a waiver of the tax deposit required before their appeals could be entertained. The first appellate authority dismissed two applications and directed a 10% deposit in the third case. The Tribunal also required a 10% deposit. The High Court ruled that the condition requiring a tax deposit was not applicable because no returns had been filed, and no turnover was admitted by the assessees. This judgment was challenged in the present appeals.

Issue 2: Interpretation of Section 9 of the U.P. Sales Tax Act
The core issue revolved around the interpretation of Section 9, which had undergone several amendments. The relevant provisions required an assessee to deposit a certain amount of tax before an appeal could be entertained. Specifically, the section as amended in 1978 and 1984 required:
- Clause (a): Deposit of the tax admitted in the returns or at any stage in proceedings, whichever is greater, if all returns were filed.
- Clause (b): Deposit of the tax admitted in returns or proceedings, or 20% of the assessed tax, whichever is greater, if some or no returns were filed.

The High Court interpreted clause (b) to mean that if no returns were filed and no admissions made, the provision for deposit did not apply. The Supreme Court found this interpretation erroneous, stating that clause (b) clearly covered cases where no returns were filed. The correct interpretation required a comparison between the admitted tax and 20% of the assessed tax, with the higher amount to be deposited.

Issue 3: Power of the Appellate Authority to Waive or Relax the Requirement
The appellate authority had the discretion to waive or relax the deposit requirement for special and adequate reasons. The Supreme Court emphasized that the legislative intent was to ensure some tax deposit before entertaining an appeal, even if no returns were filed. The provision did not obligate the assessee to deposit the entire assessed tax but only 20%, which could be waived or reduced by the appellate authority based on the case's circumstances.

Conclusion:
The Supreme Court held that the High Court's interpretation was incorrect. The requirement to deposit 20% of the assessed tax applied even if no returns were filed or no admissions were made. However, the appellate authority retained the power to waive or relax this requirement. Despite this conclusion, the Supreme Court did not interfere with the High Court's ultimate decision, allowing the appeals to proceed without deposits, as it was unclear whether the appeals were still pending or had been disposed of. The Supreme Court dismissed the appeals but clarified its disagreement with the High Court's interpretation. No order as to costs was made.