Holding

Section 9 requires the deposit of 20% of the assessed tax (or the admitted tax, whichever is greater) even when no return is filed, and the appellate authority may waive or relax this requirement.

Summary

Three assessees under the U.P. Sales Tax Act appealed assessments and sought exemption from depositing tax before their appeals could be heard. The first appellate authorities and the Tribunal directed them to deposit 10% of the assessed tax, which the assessees contested. The High Court held that where no returns were filed and no turnover was admitted, no deposit was required, and allowed the appeals to proceed without deposit. The Supreme Court examined the language of Section 9, as amended, and held that the provision mandates a deposit of either the admitted tax or 20% of the assessed tax, whichever is higher, even when no return is filed, while also affirming the appellate authority’s power to waive or relax this requirement. Consequently, the Supreme Court dismissed the appeals, disagreeing with the High Court’s interpretation but not altering the High Court’s orders on the merits.

Issues considered

Whether Section 9 of the U.P. Sales Tax Act obliges an assessee who has not filed any return and made no admission of turnover to deposit 20% of the assessed tax before an appeal can be entertained.
Whether the appellate authority has the discretion to waive or relax the deposit requirement under clause (b) of Section 9.

Legislation cited

U.P. Sales Tax Acts. 9

Subjects

sales taxassessmentappealdeposit requirementSection 9U.P. Sales Tax Actwaiverappellate authority

Judgment

COMMISSIONER OF SALES TAX, U.P. LUCKNOW
A
v.
ATMA RAM MISRA ETC.

MARCH 19, 1990

[S. RANGANATHAN AND A.M. AHMADI, JJ.] B

U. P. Sales Tax Act: Section 9-Appeal against assessment-
Whetha obligatory on assessee to pay admitted tax. ·

The respondents in each of these three cases was subjected to
assessment under the U.P. Sales Tax Act. In each of these cases the
assessee preferred an appeal to the first appellate authority and moved c
an ;ipplication for the waiver of any deposit of the tax which was neces-
sary before the appeal could be entertained. The first appellate autho-
rity in two of the cases dismissed the application and in the third directed
the assessee to deposit 10% of the disputed tax within ten days from the
date of the order. Dis-satisfied with the orders of the first appellate D
authority each of the assessees preferred an appeal to the Tribunal. The
Tribunal in all the three cases directed the assessee to pay 10% of the
assessed tax before the appeal could be entertained. Each of the assessees
preferred a revision petition before the High Court.

The High Court held that the condition requiring deposit of tax E
was not applicable in the instant case of M/s Atma Ram Misra as no
returns at all had been filed by the assessee for the relevant assessment
year and no turnover stood admitted by the assessee at any stage of the
assessment proceedings which was followed in the other two cases with
the result that the first appellate authority was held bound to em.<tain
the appeals of the assessee without calling upon it for deposit of any F
portion of tax. The department has preferred these appeals by special
leave against the decision of the single judge of the High Court in all the
three cases.

This Court while dismissing the appeals made it clear that it did
not agree with the High Court's interpretation of the statutory provi- G
sions and,

--~ HELD: The provision in question makes two relaxations. It does
not make it obligatory ou the assessee to deposit the entire amount of
assessed tax. It restricts the deposit to 20% of the assessed tax. [1039C]
H

1031
-
1032 SUPREME COURT REPORTS [1990] 1 S.C.R.

It empowers the appellate authority to waive or relax the require-
A
ments of clause (b). [ l039C]

The deposit contemplated under clause (b) also covers cases where
no returns have been filed and no admission of any turnover has come
from the assessee. [ l039E]
B
This, however, does not in any way affect the power of the appel-
late authority to waive or reduce the amount to be deposited, depending
on the circumstances of each case, under the proviso to the above sub-
section. [1039G]

Vishamber Nath v. Commissioner of Sales Tax, U.P., [1979]
c U.P.T.C. 1276.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1465
of 1990. etc. etc.

D From the Judgment and Order dated 13.3.1987 & 27.2.1989 of
the Allahabad High Court in S.T.R. Nos. 522/86, 202/89 & 203 of
1989.

S.C. Manchanda and A.K. Srivastava for the Appellant.

E The Judgment of the Court was delivered by

RANGANATHAN, J. These three Special Leave Petitions can
be disposed of together as they involve a common point. Notices of
these petitions have been duly sent but there is no appearance on
behalf of the respondents. After hearing the counsel for the petitioner
F we grant leave and also proceed to dispose of the appeals.

The respondents in each of these cases was subjected ?e assess-
ment under the U .P. Sales Tax Act. The assessment years are different
for the three cases being assessment years 1981-82, 1983-84 and 1982-
83 respectively but this does not make any material difference. In each
c of the cases, the assessee preferred an appeal to the first appellate
authority and, along with the appeal, moved an application praying for
the waiver of any deposit of tax which was necessary before the appeal
could be entertained. But the first appellate authority, in two of the
cases, dismissed the application. Jn the third he directed the assessee
to deposit 10% of the disputed tax within ten days from the date of the
H order. Dis-satisfied with the orders of the first appellate authority,
C.S.T. v. A.P. MISRA [RANGANATHAN, J.J 1033

each of the assessees preferred an appeal to the Tribunal. The Tri- A
bunal, in all the three cases, directed the assessee to pay 10% of the
assessed tax before the appeal could be entertained.

Each of the assessees preferred a revision petition before the
High Court. The learned Single Judge who heard the revision petition
B
in the main appeal preferred by Atma Ram Misra distinguished the
earlier judgment of the Court in Vishamber Nath v. Commissioner of
Sales Tax, U.P., [1979] U.P.T.C. 1276 and held that the condition
requiring deposit of tax was not applicable in the instant case as no
returns at all had been filed by the assessee for the relevant assessment
year and no turnover stood admitted by the assessees at any stage of
the assessment proceedings. This was followed in the other two cases c
with the result that the first appellate authority was held bound to
entertain the appeals of the assessee without calling upon it for deposit
of any portion of the tax. It is this conclusion of the learned Single
Judge that is the subject matter of the present appeals.
D
The question at issue turns upon the language of s. 9 of the U .P.
Sales Tax Act. Since this section has been amended from time to time,
it is necessary to extract the provisiOns of this section, in so far as it is
relevant for the present purposes, as it stood from time to time:

The section, when originally enacted read as follows:
E
"Sec. 9 Appeals.

(1) Any assessee objecting to an assessment made on him
r may, within thirty days from the date on which he was
served with notice of the assessment, appeal to such
authority as may be prescribed: F

Provided that no appeal shall be entertained under
this sub-section unless it is accompanied by satisfactory
proof of the payment of the tax admitted by the appellant·
to be due or of such instalments thereof as might have
become payable as the case may be." G

xxx xxx xxx

This provision made it obligatory on an assessee to pay up the admit-
ted tax before his appeal against the assessment could be entertained.
H
1034 SUPREME COURT REPORTS 11990] I S.C.R.

A There were amendments to the above sub-section by Amend-
ment Act No. 8 of 1954, Amendment Act No. 7 of 1959 and Amend-
ment Act No. 11 of 1968. These are not material for the present
purposes. Next came an amendment by Amendment Act No. 3 of 1971
which took effect from 1.10.1970. This substituted the foJJowing provi-
sion in place of the original sub-section (I):
B
"( 1) Any dealer objecting to any order made by the asses-
sing authority other than an order mentioned in section
10-A, may within thirty days from the date of service of the
copy of order, appeal to such authority as may be pres-
cribed:
c
Provided that no appeal against an assessment order
under this Act shall be entertained unless the appellant has
furnished satisfactory proof of the payment of not less
than:
D (a) When return is filed-the amount of tax or fee
due under this Act on the turnover of sales or purch-
ases, as the case may be, admitted by the appellant in
the return filed by him or at a later stage in proceed-
ing before the assessing authority, whichever is
greater.
E
(b) Where no return is filed-the amount of tax or
fee due under this Act on the turnover of sales or
purchases, as the case may be admitted at any stage in
proceedings before the assessing authority, or 20 per
cent, of the amount of tax of fee assessed whichever is
F greater.

Provided further that the appellate authority may, for special
. and adequate reasons to be recorded in writing, waive or relax the
requirements of clause (b) of the proceeding proviso."

G This provision, it will be observed, effected two important changes:

(a) The assessee had to deposit the highest amount of tax due on
his admitted turnover. However, if he had filed no return and
had been assessed to tax, he had to deposit 20% of the assessed
tax, if that was higher than the admitted tax; and
H
C.S.T. v. A.P. MISRA [RANGANATHAN, J.[ 1035

(b) A discretion was conferred on the appellate authority to
A
waive or relax the above requirement in appropriate cases.

The next amendment was by U.P. Act No. 12 of 1979 with effect
from 1-11-1978. The provision, as now amended, stood as follows:

"( 1) Any dealer or other person aggrieved by an order B
made by the assessing authority, other than an order
mentioned in section 10-A may, within thirty days from the
date of service of the copy of the order, appeal to such
authority as may be prescribed:

Provided that no appeal against an assessment order
under this Act shall be entertained unless the appellant has c
furnished satisfactory proof of the payment of not less
than-

(a) Where all the returns for the assessment year
have been filed, the amount of tax or fee due under D
this Act on the turnover of sales or purchases, as the
case may be, admitted by the appellant in the returns
filed by him or at any stage in any proceeding under
this Act, whichever is greater; or

(b) Where some the returns for the assessment year E
' have not been filed or no return has been filed for
such year, the am.ount of tax or fee due under this Act
on the turnover of sales or purchases, as the case may
be, admitted by the appellant in the returns, if any,
filed by him or at any stage in any proceedings under
this Act or 20 per cent of the amount of tax or fee F
assessed whichever is greater; and

Provided further that the appellate authority may, for
special and the adequate reasons to be recorded in writing,
waive or relax the requirements of clause (b) of the preced-
ing proviso. G
xxx xxx xxx
This provision was in substance the same as the earlier one, but a
change in language was necessitated by the fact that the Act contemp-
lated not one but several returns from an assessee in the course of an
assessment year and the earlier provision,. which l'fOCeeded on the H
1036 SUPREME COURT REPORTS I1990] I S.C.R.
A basis of a single return due from an assessee for the year having been
filed or not filed, needed to be clarified. ~

Finally came Amendment Act No. 22 of 1984 on the heels of
earlier ordinances which effected an amendment in Section 9 with
effect from 12.2.1983. The new sub-section reads as follows:
B
'
"( 1) Any dealer or other person aggrieved by an order
made by the Assessing Authority, other than an order
. mentioned in Section 10-A, may, within thirty days from
the date of service of the copy of the order, appeal to such
authority as may be prescribed:
c
Provided that where the disputed amount of tax, fee
or penalty does not exceed one thousand rupees, the appel-
lant may, at his option, request the Appellate Authority in A.
writing for summary disposal of his appeal, whereupon the
Appellate Authority may decide the appeal accordingly.
D
( 1-A) The manner and procedure of summary dis-
posal of appeal shall be such as may be prescribed.

(1-B) No appeal against an assessment order under
this Act shall be entertained unless the appellant has
E
furnished satisfactory proof of the payment of not less
than-

(a) the amount of tax or fee due under this Act on
the turnover of sales or purchases, as the case may
be, admitted by the appellant in the returns filed by
F
him or at any stage in any proceedings under this Act, "'
whichever is greater, where all the returns for the
assessment year have been filed, or

(b) the amount of tax or fee due under this Act on
the turnover of sales or purchases, as the case may
G be, admitted by the appellant in the returns, if any,
filed by him or at any stage in any proceedings under
this Act, or twenty per cent, of the amount of tax or ,r
fee assessed, whichever is greater, where some of the
returns for the assessment year have not been filed or
no return has been filed for such year:
H
C.S.T. v. A.P. MISRA [RANGANATHAN, J.} 1037

,. Provided that the Appellate Authority may, for special and
adequate reason to be recorded in writing, waive or relax the require-
A
ment of the Clause (b) of this sub-section in so far as it relates to
deposit of twenty per cent of the amount of tax or fee assessed."

Except for shifting the contents of the relevant provision to new sub-
section (1-B) and for a recasting of the section, the new provision has B
.A brought about no material change in the position so far as the issue
before us is concerned.

4
It may be mentioned here that the· assessment years before us
being 1981-82 to 1983-84 appear to be governed by the provisions of
the Act as they stood before the amendment in 1983. However this
does not make much of a difference since, as already pointed out, the .
c
... effect of the provisions before and after amendment is the same .

The section, as it stands since 1-11-78, provides for two sets of
situations. Clause (a) deals with a case where all the returns for the
assessment year have been filed by the assessee. This means that there D
is a figure of turnover admitted by the assessee. Again, in the course of
the assessment proceedings, it is possible that he may have admitted a
). different figure of turnover from that disclosed in his returns. In such a
situation the provision requires the assessee to deposit the amount of
the tax admitted by him (either in the returns or at any subsequent
stage of the proceedings before the officer, whichever is greater). E
--.
~

Clause (b) deals with the situation where (a) some, though not all, the
returns due from the assessee have been filed and (b) no return at all
has been filed. In this eventuality, the requirement of deposit turns not
merely on the admitted amount of tax (as there may be no such admit-
;.. ted tax where no return at all has been filed) but is also made to turn
on the assessed tax. The provision requires the assessee to deposit the F
amount of tax admitted in the returns or at any stage of the proceed-
ings under the Act or 20% of the amount of tax assessed whichever was
greater. In other words, the provision contemplates a comparison of (i)
the admitted tax and (ii) 20% of the assessed tax. Whichever of these
two figures is higher has to be deposited by the assessee before his
appeal against the assessment can be entertained. G
-~

\, There are perhaps two ways of reading clause (b). One is that, in
\ a case where no return at all has been filed and no admission had at all
has been made by the assessee of any figure of turnover, then the first
figure to be computed under clause (b) will be zero. If, however, there
is an assessment made on the assessee of any tax higher than nil, that H
1038 SUPREME COURT REPORTS [1990] I S.C.R.

A will be the greater of the two figures to be computed under the clause 1
and the assessee will have to deposit 20% of the assessed tax. The """I
other way of interpreting the sub-section, which appears to have com-
mended itself to the High Court, is to say that clause (b) will be
attracted only if two figures are available for comparison: (1) a figure
of turnover admitted in a return or in subsequent proceedings; and (2)
B a figure of assessed tax. If the assessee has filed no return at all and if
he has made no admission regarding his turnover at any stage of the
proceedings, then figure (1) above cannot be computed. Hence it is
not possible to make a comparison between the two figures indicated
above and therefore the provisions of deposit contained in clause (b)
- will not at all apply. '
...
c We think it is manifest that the first of the two constructions
referred to above is the correct one. The interpretation accepted by
the High Court, is, in our view, erroneous for two reasons. In the first "'
place, it does not give full effect to the last few words of clause (b)
which clearly cover a case where no return at all has been filed for the
D assessment year in question. True, even on this interpretation, the
provision will govern a case where no return has been filed but the
assessee has, in the course of the assessment proceedings, made some
admission regarding his turnover but such cases are likely to be very l_
few. When the provision clearly contemplates a deposit of tax in cases
where no return has been filed or where only some returns have been
E filed, it would be running in the teeth of the provision to interpret it
in such a manner as to exclude the majority of such cases. Secondly,
the High Court's interpretation leads to a clear anomaly. For, it would
indeed be odd to suggest that a deposit is necessary where an assessee
has filed his returns or admitted his turnover in the course of assess-
-
ment proceedings but that an assessee who has not filed any return at ..I._
F all or made any admission at all can be allowed the privilege of an
appeal ev~n without making any deposit at all. Such an interpretation
will only result in putting a premium upon recalciirant and dishonest
assessees. We do not think that this is the correct and proper way of
interpreting the statutory provision. The clear intent of the clause is
that an assessee should be asked to pay up the admitted tax or 20% of
G the assessed tax, whichever is greater, before an appeal could· be
entertained and the provision should be interpreted in such. a way as to
give effect to this intent. r
In this context, it is significant that the provision does not call(
upon the assessee to pay up the entire amount of assessed tax. The
H Legislature fully appreciates that an ass~ssment made, in the absence
C.S.T. v. A.P. MISRA [RANGANATHAN, J.[ 1039

of any return or admission, may not always reflect the correct figure of
tax leviable on the assessee. It could be that the assessed figure A
involves an ·estimate which takes it beyond the figure which may be
ultimately determined in the case. But, at the same time, it cannot be
said, merely because an assessee has not filed any return or made any
admission expressly, that he necessarily disputes the entirety of the
assessed tax. It could well be that he has not done either of these things B
just to postpone the payment of even the tax which he may not be in a
position to contest.

Realising this situation, the provision in question makes two
relaxations. It does not make it obligatory on the assessee to deposit
the entire amount of assessed tax. It restricts the deposit of 20% of the
assessed tax (a figure which can be treated as an ad hoc statutory c
quantification, on an average, of the tax demand in such cases on
which there could be no quarrel). Added to this, it empowers the
appellate authority to waive or relax the requirements of clause (b).
This is because the appellate authority will be in a position to, prima
facie, judge the extent to which, in the circumstances of a particular
case, there is a real dispute in the appeal and to insist upon the deposit
of such percentage of the assessed tax (not exceeding 20%) as it may
consider appropriate. If the intention of the legislature were only that
the deposit should be confined cinly to the admitted tax in all cases, the
second part of clause (b) referring to deposit of 20% of the assessed
tax and, .indeed, even the bifurcation made in clauses (a) and (b) E
would be redundant. We are, therefore, of opinion that the deposit
contemplated under clause (b) also covers cases where no returns have
been filed and no admission of any turnover has come from the
assessee.

We would like to make it clear that we modify the judgment of F
the High Court only in so far as it directs that an assessee who has not
made any return at all and has not admitted any figure of turn over in
the course of the assessment proceeding is relieved of the requirement
to deposit 20% of the assessed tax under section 9( 1) or 9(1-B), as the
case may be. What we have held, however, does not in any way affect
the power of the appellate authority to waive or reduce the amount to G
be deposited, depending on the circumstances of the each case, under
the proviso to the above sub-section.

We should also like to make it clear· that, despite our above
conclusion, we do not propose to interfere in any of the three appeals,
with the ultimate result of the High Court's decision. This is because H
1040 SUPREME COURT REPORTS [1990] 1 S.C.R.

A the High Court has already permitted the appeals to be disposed of
without requiring any deposits. The learned counsel for. the appellants
is not in ·a position to state whether the appeals are still pending or
whether they have since been disposed of /
pursuant to the directions of
the High Court. It would not be proper, in this situation, to modify the
decretal position of the High Court's order. We, therefore, dismiss
8 these appeals but make it clear that we do not agree with the High
Court's interpretation of the statutory provisions for the reasons set
out above. We make no order as to costs in the circumstances of the
case.

R.N.J. Appeals dismissed.
c