1987 (3) TMI 510 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the assessee is required to deposit 20% of the assessed tax before the entertainment of the appeal under clause (b) of sub-section (1-B) of section 9 of the U.P. Sales Tax Act, 1948.
2. Interpretation of clause (b) of sub-section (1-B) of section 9 regarding the requirement of depositing 20% of the assessed tax when no return is filed and no tax liability is admitted.

Issue-wise Detailed Analysis:

1. Requirement to Deposit 20% of the Assessed Tax:

The assessee, a wholesale grain dealer, contended that no inter-State sales were made, and the purchases were on behalf of ex-U.P. principals. The assessing officer rejected this claim and assessed the tax under the Central Sales Tax Act, 1956. The assessee appealed against this assessment and sought a waiver for the deposit of 20% of the assessed tax. The Assistant Commissioner (Judicial) denied the waiver, and the Tribunal granted a partial waiver of 10%. The assessee then raised a legal objection, arguing that since no return was filed and no tax liability was admitted, there was no obligation to deposit any part of the assessed tax for the appeal to be entertained.

2. Interpretation of Clause (b) of Sub-section (1-B) of Section 9:

The court analyzed clause (b) of sub-section (1-B) of section 9, which states that an appeal against an assessment order shall not be entertained unless the appellant furnishes satisfactory proof of the payment of either the tax admitted in the returns or 20% of the assessed tax, whichever is greater. The court concluded that 20% of the assessed tax needs to be deposited only if it is greater than the admitted tax liability. Since the assessee had not filed any return and had not admitted any tax liability, the court held that 20% of the assessed tax could not be considered greater than a "nil" admitted liability.

The court rejected the Standing Counsel's argument that 20% of the assessed tax should always be deposited when no return is filed. It emphasized that the requirement to deposit 20% of the assessed tax is applicable only when it is greater than the admitted liability, which is not the case here as there was no admitted liability.

The court referenced the legislative history of section 9, noting that previous amendments also required the deposit of admitted tax or 20% of the assessed tax, whichever was greater, and this principle applied even when no return was filed. The court concluded that the legislative intent was consistent in not requiring the deposit of 20% of the assessed tax when no return was filed and no tax liability was admitted.

Conclusion:

The court allowed the revision, holding that the assessee, having filed no return and disputed the tax liability from the outset, was not required to deposit 20% of the assessed tax before the appeal could be entertained. Consequently, the question of seeking a waiver did not arise. The court directed the Tribunal to entertain the appeal without requiring the deposit of any portion of the assessed tax. The petition was allowed.