1984 (1) TMI 292 - HC - VAT and Sales Tax

Summary

Issues:
1. Petition under article 226 of the Constitution of India regarding demand notices for tax payment.
2. Interpretation of provisions of the M.P. General Sales Tax Act, 1958.
3. Consideration of liability to pay tax before the decision on exemption representation.
4. Legal validity of demand notices and liability to pay tax.

Analysis:

The petitioner, a company manufacturing sugar, filed a petition under article 226 challenging demand notices for tax payment under the M.P. General Sales Tax Act, 1958. The petitioner contended that the notices were illegal as they were issued without considering the petitioner's representation for exemption and without conducting an assessment. The State argued that the petitioner failed to pay the full tax amount before filing returns, as required by section 22(2) of the Act, justifying the issuance of notices under section 22(4)(i)(a) for tax payment. The court analyzed the relevant provisions of the Act, emphasizing the requirement for dealers to pay tax before submitting returns, as outlined in section 22(2). The court noted that the liability to pay tax arises from non-compliance with statutory obligations, not from an assessment order. Therefore, the demand for tax payment based on the failure to comply with section 22(2) was deemed legal, dismissing the petitioner's claim of illegal assessment due to lack of hearing.

Another contention raised by the petitioner was that it should not be liable to pay tax until a decision is made on its representation for exemption under section 12 of the Act. The court rejected this argument, stating that the liability to pay tax is not suspended pending a decision on exemption representation. The court found no legal basis for the petitioner's claim that tax payment was being unlawfully demanded pending the exemption decision. Consequently, the court dismissed the petition, ordering each party to bear its costs and refunding any security amount to the petitioner after verification, while vacating the interim order issued earlier.

In conclusion, the court upheld the legality of the demand notices for tax payment, emphasizing the statutory requirement for dealers to pay tax before filing returns. The judgment clarified that liability to pay tax is not contingent on the decision regarding exemption representation, rejecting the petitioner's arguments on this issue. The court's decision was based on a strict interpretation of the relevant provisions of the M.P. General Sales Tax Act, 1958, emphasizing compliance with statutory obligations for tax payment.