1972 (9) TMI 128 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the proviso to section 38(3) of the M.P. General Sales Tax Act, 1958 regarding the payment demanded by the appellate authority.

Analysis:
The judgment of the High Court of Madhya Pradesh involved a reference under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, to determine the interpretation of the proviso to section 38(3) of the Act. The question before the court was whether the part payment demanded by the appellate authority related to the gross tax and penalty or the net demand of tax and penalty after assessment. The facts of the case revealed that the respondent was assessed to sales tax for a specific period and had already deposited an advance amount. However, upon additional assessment, a balance amount was due, which the respondent did not pay, leading to the rejection of the appeal by the Appellate Assistant Commissioner of Sales Tax. Subsequently, the Board of Revenue allowed the appeal, stating that the deposit of advance tax was sufficient compliance with the requirements of section 38(3) of the Act.

The court examined the provisions of section 38(3) both before and after the amendment dated 15th April 1968. The section, as amended, required the payment of the balance due from the dealer under the order of assessment with penalty for the appeal to be entertained. The court emphasized that the entire amount of assessed tax and penalty must be deposited initially by the assessee, with the appellate authority having the discretion to reduce the amount required to be deposited to at least one-third of the disputed amount. The court opined that the amendment was a clarification, and the essence of the provision remained unchanged.

Referring to a previous Division Bench decision, the court reiterated that the assessee must pay the tax or a smaller amount not less than one-third thereof to have the appeal admitted. The court agreed with the observations made in the previous case and upheld the requirement for payment before admission of the appeal. Consequently, the court answered the reference by stating that the part payment demanded by the appellate authority was relatable to the net demand of tax and penalty remaining due after assessment, not the gross amount. The reference was to be returned to the Board of Revenue for further action, with no order as to costs due to the respondent's absence in court.

In conclusion, the judgment clarified the interpretation of the proviso to section 38(3) of the M.P. General Sales Tax Act, 1958, emphasizing the necessity for the assessee to deposit the entire assessed tax and penalty initially, with the appellate authority having the discretion to reduce the amount required for admission of the appeal.