1968 (5) TMI 52 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Competence of the appeal due to the non-deposit of the entire amount of admitted tax.
2. Interpretation of "the amount of tax admitted by the appellant to be due" under the proviso to section 9(1) of the U.P. Sales Tax Act.
3. Determination of the admitted tax liability for the purpose of filing an appeal.

Detailed Analysis

1. Competence of the Appeal Due to Non-Deposit of the Entire Amount of Admitted Tax
The petitioner, a dealer in toilet goods, cosmetics, and other articles, submitted a return for the assessment year 1963-64, which included the turnover of imported goods liable to tax at a single point. The Sales Tax Officer assessed the turnover of imported goods at Rs. 2,60,000. The petitioner appealed, claiming the taxable turnover was Rs. 85,000 and deposited Rs. 7,001.73 as admitted tax. The Sales Tax Officer objected, arguing that the entire amount of admitted tax had not been deposited, as the turnover disclosed in the return was Rs. 1,11,844.02. The Additional Assistant Commissioner (Judicial) upheld this objection and dismissed the appeal as incompetent. The Judge (Revisions) also dismissed the revision application.

2. Interpretation of "the Amount of Tax Admitted by the Appellant to be Due" Under the Proviso to Section 9(1) of the U.P. Sales Tax Act
The core issue is whether the admitted tax liability for the purpose of the proviso to section 9(1) should be based on the turnover disclosed in the return or the turnover claimed by the appellant in the memorandum of appeal. The petitioner argued that the amount of admitted tax should be based on the turnover admitted at the time of filing the appeal. Conversely, the respondent contended that the turnover shown in the return should be conclusive for calculating the admitted tax liability.

3. Determination of the Admitted Tax Liability for the Purpose of Filing an Appeal
The court examined section 7(1-A) and rule 41(2) of the U.P. Sales Tax Rules, which require a dealer to deposit the tax due on the turnover shown in the return before submitting it. If the dealer fails to comply, the Sales Tax Officer can make a best judgment assessment and initiate recovery proceedings. Section 9(1) allows a dealer to appeal against an assessment, provided satisfactory proof of the payment of the admitted tax is submitted.

The court distinguished between the tax liability at the return stage and the appellate stage. At the return stage, the dealer must deposit the tax due based on the turnover disclosed in the return. At the appellate stage, the dealer must deposit the tax admitted to be due, which may differ from the return if the dealer disputes the turnover or tax rate in the appeal.

The court concluded that the admitted tax liability for the purpose of the proviso to section 9(1) should be based on the position taken by the dealer in the memorandum of appeal. The appellate authority should determine the admitted tax liability by examining the grounds and relief sought in the appeal, not solely based on the return filed.

In this case, the Additional Assistant Commissioner (Judicial) erred by relying on the return's statements instead of the memorandum of appeal. The petitioner's claim that the turnover was Rs. 85,000, not Rs. 1,11,844.02, should have been considered.

The court quashed the orders of the Additional Assistant Commissioner (Judicial) and the Judge (Revisions) and directed the Additional Assistant Commissioner (Judicial) to reconsider the appeal's competence and dispose of it afresh in accordance with the law.

Conclusion
The petition was allowed, and the orders of the Additional Assistant Commissioner (Judicial) and the Judge (Revisions) were quashed. The appeal was remanded for reconsideration, with the direction to assess the admitted tax liability based on the grounds of appeal rather than the return filed.