1953 (6) TMI 1 - HC - VAT and Sales Tax

Summary

Issues:
Prosecution under Section 20(b) of Mysore Sales Tax Act for failure to pay assessed tax, legality of tax assessment, interpretation of "assessment made under the Act," jurisdiction of criminal courts to question tax assessment.

Analysis:
The petitioners were prosecuted under Section 20(b) of the Mysore Sales Tax Act for failure to pay the assessed tax. The trial court found them guilty and imposed a fine of Rs. 100 each, along with directions for tax recovery. The petitioners argued that the tax demanded was illegal and ultra vires the Sales Tax Act. They contended that being merchants dealing in cocoanuts, they should have been classified under fruit merchants for taxation purposes. They relied on previous cases for their defense, emphasizing the need for proper classification under the Act for taxation. The interpretation of the term "assessment made under the Act" was crucial in determining the legality of the tax demand.

The judge extensively discussed the interpretation of "assessment made under the Act," citing judicial opinions and the Privy Council decision. The principle laid down by the Privy Council emphasized that the assessing officer's activity determines the origin of assessment, regardless of any ultra vires provisions considered. The judge highlighted that if a statute provides a specific remedy and bars court jurisdiction, the remedies under the statute must be followed, and challenging assessments in criminal courts is not permissible.

The judge reiterated that Section 22 of the Mysore Sales Tax Act expressly bars questioning assessments in any court, except through the specified appeal or revision mechanisms. The judge emphasized that the Act provides machinery for challenging assessments, and questioning assessments in criminal courts is inconsistent with statutory obligations. The judge reaffirmed that criminal courts cannot question the validity of an assessment made under the Act, as discussed in previous decisions.

Regarding the petitioners' argument on subsequent amendments to the tax notification, the judge acknowledged the confusion caused by changes but reiterated that seeking relief should be done through appellate or revisional authorities, not criminal courts. Despite confirming the conviction, the judge reduced the fine imposed on the petitioners, considering their belief in non-liability for the tax and the circumstances of the cases. The petitions were dismissed with the modified fine amount.

In conclusion, the judgment addressed the legality of tax assessment, the interpretation of statutory provisions, and the jurisdiction of criminal courts in questioning tax assessments. The judge emphasized adherence to statutory remedies and the limitations on court jurisdiction in tax matters.