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TMI Blog1963 (11) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... on 41 of the Andhra Pradesh General Sales Tax Act, but has held that the expression "liability already incurred" means liability to pay. The contention of Sri Choudary is that the Supreme Court decision was not brought to the notice of the learned Judges and if their attention was drawn to that, such an interpretation could not have been given to the words used "liability already incurred". As it appears that the attention of this Court was not drawn to certain observations in the Supreme Court decision, I think it better if the writ petitions are decided by a Bench. I therefore refer these two petitions to a Bench. In pursuance of the abovesaid order of reference, the case came on for hearing before a Division Bench consisting of Chandra Reddy, C.J., and Gopal Rao Ekbote, J. P.A. Choudary, for the petitioner. The Third Government Pleader, for the respondents. The Judgment of the Court was delivered by CHANDRA REDDY, C.J.-The proper interpretation of section 41 of the Andhra Pradesh General Sales Tax Act, 1957 (VI of 1957) is involved in this enquiry. This writ petition relates to the assessment year 1956-57. The petitioner, who is a dealer in tobacco, was assessed to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Chatturam Horilram Ltd. v. Commissioner of Income-tax, Bihar and Orissa [1955] 27 I.T.R. 709. In construing clause 20 of the Adaptation of Laws Order, 1950, issued by the President of India and its bearing on the liability of a dealer to taxation, the learned Judges of the Orissa High Court stated that the expression contained in the Adaptation of Laws Order which is similar to the one we are now required to interpret, namely, "obligation or liability already acquired, accrued or incurred thereunder" indicated that what was saved was an assessment already made and that if the tax was not determined and had not become payable, the liability could not be said to have been incurred. Said Panigrahi, C.J., who spoke for the Court, in the course of his judgment: "It was contended by the learned Advocate-General that the liability is incurred under section 4 of the Orissa Sales Tax Act the moment the turnover of a dealer exceeds the figure mentioned in the Act. This argument proceeds on a wrong assumption that chargeability to tax is the same thing as liability to pay. 'Liability' means no more than 'to be under an obligation' and does not necessarily connote an exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are exigible to tax, the liability to pay tax arises or is incurred. The purpose of the assessment is only to quantify that liability. With great respect to the learned Judges of the Orissa High Court who decided Chakoo Bhai Ghelabhai v. State of Orissa and Others [1956] 7 S.T.C. 36., we cannot agree that the liability to pay does not arise till the assessment has been made. As we have already stated, the obligation to pay tax is imposed by the statute itself but the enforcement of the obligation could be made only after the assessment. We also find it difficult to assent to the proposition that chargeability to tax does not imply the liability to pay the tax or that the obligation created by section 5 is a contingent one and does not arise until it is ascertained and levied on the subject. In our considered opinion, the moment a dealer makes either purchases or sales which are subject to tax, the obligation to pay the tax has arisen and taxability is attracted. All that could be posited is that till the quantification is effected by assessment proceedings, that liability could not be enforced. So, the liability for payment of tax is independent of the assessment. The expression "l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which one of us was a party (the Honourable Chief Justice) had take a similar view. The principle enunciated in the Orissa case was not accepted in both these cases. In the same trend of thought is the judgment of the Kerala High Court in Abramai v. Commissioner of Sales Tax [1958] 9 S.T.C. 780. Coming next to the Supreme Court decision in Chatturam Horilram Ltd. v. Commissioner of Income-tax, Bihar and Orissa[1955] 27 I.T.R. 709. , we are not persuaded that it renders any assistance to the petitioner. One of the questions that fell to be considered by their Lordships of the Supreme Court was whether, if the earlier assessment proceedings failed owing to the fact that the Finance Act of 1939 was not extended to Chota Nagpur it would be a case of a chargeable income escaping assessment and not a case of mere non-assessment of income-tax. It is in the context of this enquiry that Jagannadhadas, J., who delivered the opinion of the Court, made the following observations called in aid by the learned counsel for the petitioner: "Thus, under the scheme of the Income-tax Act, the income of an assessee attracts the quality of taxability with reference to the standing provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax, however, are not conditional on the validity of the notice. Suppose a person, even before a notice is published in the papers under section 22(1), or before he receives a notice under section 22(2) of the Income-tax Act, gets a form of return from the income-tax office and submits his return, it will be futile to contend that the Income-tax Officer is not entitled to assess the party or that the party is not liable to pay any tax because notice had not been issued to him. The liability to pay the tax is founded on section 3 and 4 of the Income-tax Act which are the charging sections. Section 22 etc., are the machinery sections to determine the amount of tax." The above passage makes it abundantly clear that the obligation to pay the tax is not consequent upon the assessment, the purpose of which is, as we have already pointed out, to quantify it. The liability flows from the charging section 5. The assessment merely particularizes the exact sum which the assessee will have to pay. It is unnecessary to multiply citations in this behalf. Suffice it to say that the clause under notice saves the liability imposed by section 5 and does not require, to attract it, the quantifica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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