1970 (2) TMI 91 - HC - VAT and Sales Tax

Summary

Issues:
1. Appealability of an order passed by the Deputy Commissioner refusing to entertain an appeal unless disputed tax is paid.
2. Judicial review of the Deputy Commissioner's order rejecting appeals for non-payment of tax.
3. Disputed levy of tax at a penal rate of 10% and the opportunity to produce C Forms.
4. Exercise of power under the proviso to sub-section (3) of section 20 by the Deputy Commissioner.
5. Entertaining appeals based on substantial questions and offering security to the satisfaction of the appellate authority.

Analysis:

The judgment by the High Court of Mysore involved two revision petitions under the Mysore Sales Tax Act and the Central Sales Tax Act. The petitioner, a dealer in tiles, was assessed to tax at a penal rate of 10% for not producing C Forms related to sales. The Deputy Commissioner rejected the applications for stay of collection of disputed tax amounts, leading to appeals before the Sales Tax Appellate Tribunal. The Tribunal dismissed the appeals, stating the Deputy Commissioner's orders were not appealable. The main issue was whether the Deputy Commissioner's order refusing to entertain an appeal without payment of disputed tax was appealable under section 22 of the Act.

The Court analyzed section 20(3) of the Act, which mandates proof of tax payment for entertaining an appeal against an assessment order. The proviso to sub-section (3) empowers the appellate authority to entertain appeals without tax payment on furnishing security. The Deputy Commissioner's orders were deemed as rejecting appeals under section 20(3) and hence appealable under section 22. The Court held that the power under the proviso must be exercised judiciously, especially when substantial questions are raised, and security can be provided.

Regarding the disputed tax levy at 10% penal rate and the opportunity to produce C Forms, the Court noted the petitioner's contention of not being given a reasonable opportunity. Citing precedent, the Court emphasized the need for judicial exercise of power under the proviso to section 20(3). The Deputy Commissioner should have entertained the appeals upon the petitioner furnishing security, especially when disputing only the penal rate of taxation and producing the C Forms.

In conclusion, the Court allowed the revision petitions, setting aside the Deputy Commissioner and Tribunal's orders. It directed the Deputy Commissioner to entertain the petitioner's appeals upon furnishing satisfactory security, treating it as furnished under section 20(3). The petitioner was instructed to provide security to the Deputy Commissioner before the appeals are entertained, and no costs were awarded.

This detailed analysis of the judgment highlights the key legal issues addressed by the High Court in the context of appealability, judicial review, tax levy disputes, and the exercise of statutory powers by the Deputy Commissioner.