1973 (2) TMI 3 - SC - Income Tax

It is beyond doubt that where a taxing statute provides for a summary mode of recovery and is not exhaustive, it will be open to the State to have recourse to any other mode open to it under the general law - revenue s appeal is dismissed

Summary

Issues:
1. Interpretation of Section 32 of the U. P. Agricultural Income-tax Act, 1948 regarding recovery of arrears of tax.
2. Whether the State can recover arrears of tax through a suit or only through the mode prescribed under Section 32.

Analysis:

The Supreme Court addressed the issue of the State of Uttar Pradesh filing a suit against the appellant for the recovery of agricultural income-tax arrears. The appellant had been assessed to pay tax in instalments, but failed to pay the second and third instalments, leading to a legal dispute. The appellant argued that the State could only recover arrears under Section 32 of the Act, and not through a regular suit. The Board initially held that proceedings for the third and fourth instalments were time-barred but allowed the recovery of the second instalment. The High Court reversed the trial court's judgment and decreed the suit, leading to the appeal before the Supreme Court.

The main contention revolved around the interpretation of Section 32 of the Act, which deals with the recovery of penalties and arrears of tax. The appellant argued that the State could only recover arrears through the mode prescribed under this section and not through a suit. The Court analyzed the provisions of Section 32 and compared them to similar provisions in the Indian Income-tax Act. It was established that once a debt is created in favor of the State for tax arrears, it can be recovered through various methods available under the general law, unless the law specifically prescribes a single mode of recovery. The Court emphasized that Section 32 does not preclude the State from recovering arrears through a suit, as it is a general right conferred on the State under the law.

The Court referred to previous judgments by various High Courts, including the Madras High Court and the Patna High Court, which supported the view that where a taxing statute provides a summary mode of recovery but is not exhaustive, the State can resort to any other method available under the general law for recovery. The Court affirmed the judgment of the High Court, dismissing the appeal and upholding the State's right to recover arrears through a suit if necessary. The appellant's argument that recovery could only be made under Section 32 was rejected, emphasizing the State's general right to recover tax arrears through various legal avenues.