1993 (4) TMI 67 - SC - VAT and Sales Tax

Whether the mandate under Section 20(3) of the Karnataka Sales Tax Act, 1957 (the Act), to pay the undisputed tax before the appeal is entertained, is also applicable to the additional tax payable under Section 6B of the Act? Held that - The additional tax is nothing but an enhancement in the rate of the sales tax, purchase tax under the Act. As soon as the assessing authority determines the levy of sales tax/purchase tax the additional tax under Section 6B becomes part of the assessment order. Similarly if the main impost under Section 5(1) is successfully challenged, the reasoning sustaining the challenge would also ipso facto affect the validity of the additional impost under Section 6B of the Act. Thus the High Court was not justified in holding that additional tax under Section 6B was not a tax for the purposes of Section 20(3) of the Act. Appeal allowed.

Summary

Issues:
1. Interpretation of Section 20(3) of the Karnataka Sales Tax Act, 1957 regarding the payment of undisputed tax before entertaining an appeal.
2. Distinction between tax under Section 6B and other imposts under the Act.
3. Whether non-payment of additional tax under Section 6B bars the entertainment of an appeal.

Detailed Analysis:
1. The Supreme Court considered the issue of whether the mandate under Section 20(3) of the Karnataka Sales Tax Act, 1957, requiring payment of undisputed tax before entertaining an appeal, also applies to the additional tax under Section 6B of the Act. The case involved a challenge to a best judgment assessment for the year 1972-73 where the respondent failed to pay the undisputed additional levy under Section 6B but had paid the undisputed tax under Section 5(1) of the Act. The High Court had allowed the revision petition, holding that non-payment of additional tax does not bar the appeal. The Court analyzed the provisions of the Act and concluded that the additional tax under Section 6B is part of the "tax" to be deposited before an appeal is entertained.

2. The Court delved into the distinction between the additional tax under Section 6B and other imposts under the Act. It noted that the additional tax is levied at a specific rate on the sales or purchase tax payable by the dealer, becoming part of the assessment order automatically. The Court emphasized that the additional tax is essentially an enhancement in the rate of sales or purchase tax under the Act. It clarified that the additional tax is included in the definition of "tax" under the Act and must be paid before an appeal is entertained, as per Section 20(3) of the Act.

3. The Court disagreed with the High Court's interpretation that the additional tax under Section 6B was not considered a tax for the purposes of Section 20(3) of the Act. It held that the High Court's reasoning was not justified and set aside the judgment, dismissing the revision petition filed by the assessee. The Court emphasized that the payment of both the undisputed tax and additional tax is mandatory before an appeal can be entertained, as per the plain language and intent of the relevant provisions of the Act.