1968 (7) TMI 54 - HC - VAT and Sales Tax

Summary

Issues:
1. Competence of Deputy Commissioner to insist on the production of a bank guarantee for tax assessment.
2. Applicability of rule 30-B of the Mysore Sales Tax Rules.
3. Interpretation of the proviso under section 20(5) of the Mysore Sales Tax Act, 1957.

Analysis:
The judgment pertains to the assessment of turnover of a dealer in Doddaballapur for the years 1958-59, 1959-60, and 1960-61. The dealer, Muniswamappa, appealed the tax assessment orders and sought a stay on enforcement from the Deputy Commissioner, who directed the dealer to furnish a bank guarantee for the tax amount due. The dealer challenged this directive, arguing that the Deputy Commissioner lacked the authority to demand a bank guarantee as the relevant rule came into force after the dealer had submitted returns to the Commercial Tax Officer. The crux of the issue lies in the interpretation of rule 30-B of the Mysore Sales Tax Rules and the proviso under section 20(5) of the Mysore Sales Tax Act, 1957.

Regarding the applicability of rule 30-B, the Court held that the Deputy Commissioner was empowered under this rule to require the appellant to provide personal security, property security, or a bank guarantee when seeking a stay on tax assessment orders. Despite the rule coming into force after the dealer's initial returns, the Court emphasized that the exercise of power under the rule was valid when the appellant filed the appeal before the Deputy Commissioner. The Court referenced the principle established in Garikapati v. Subbiah Choudhry, highlighting that the right to appeal is preserved for parties throughout the proceedings, thus supporting the Deputy Commissioner's discretion in selecting the form of security.

In analyzing the proviso under section 20(5) of the Mysore Sales Tax Act, the Court concluded that the Deputy Commissioner had the authority to determine the form of security to be furnished by the appellant. The Court reasoned that the discretion granted to the Deputy Commissioner was not restricted by the rule and that the direction to provide a bank guarantee was within the Deputy Commissioner's competence. Consequently, the Court dismissed the revision petitions, upholding the Deputy Commissioner's decision to demand a bank guarantee and emphasizing the validity of the directive under rule 30-B.