The State of Mysore Vs. Shanta
Veerappa Channa Mallappabommanahalli & Ors  INSC 67 (4 March 1966)
04/03/1966 MUDHOLKAR, J.R.
CITATION: 1966 AIR 1635 1966 SCR (3) 611
Mysore Sales Tax Act (25 of 1957), ss. 13 (3)
and 29 (1) (d) Assessee filing appeal against order of assessment-No interim
stay of proceedings for recovery of tax-Prosecution for non-payment of
The respondent was assessed to sales tax and
was served with a notice requiring him to pay the amount within 21 days. He
preferred an appeal against the order of assessment but did not pay the tax,
nor did he obtain an order of stay of proceedings from teh appellate authority.
While the appeal was pending a complaint was filed against him under s. 29(1)(d)
of the Mysore Sales tax Act, 1957, because the demand was not complied with,
but the trial court and the High Court acquitted In appeal to this Court by the
HELD: The acquittal of the respondent was unwarranted
as his action in not paying the tax within the time allowed, was deliberate and
therefore wilful and such failure to pay is rendered an offence under s.
29(1)(d). [814 D, E] The liability to pay tax is created by the order of
assessment. Where the tax so assessed is not paid despite service of notice of
demand, the tax may be recovered under s. 13(3)(a) as an arrear of land revenue
or under s. 13 (3) (b) on an application to a magistrate as if it were a fine
imposed on the assessee. Under the proviso to s. 13(3), the assessee has been
afforded interim protection from action under s. 13 (3) (a) or (b), provided he
obtains from the appropriate appellate or revisional authority mentioned in the
proviso, an order of stat of proceedings. Merely because an appeal has been
preferred, the liability of the assessee to pay the tax cannot be deemed to be
suspended under s. 20(5). This provision requires that if the order of such
appropriate authority lays down any condition, the proviso requires that the
assess must comply with it before he can obtain interim relief. Apart from
these two methods of obtaining interim relief, the proviso to s. 13(3) cannot
be an answer to a prosecution under s. 29(1)(d). (813 E-G]
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeals Nos. 150- 152 of 1965.
Appeals by special leave from the judgment
and order dated March 17, 1965 of the Mysore High Court in Criminal Appeals
Nos. 93 to 95 of 1965.
B. R. L. Iyengar and B. R. G. K. Achar, for
K. R. Chaudhury, for the respondents.
812 The Judgment of the Court was delivered
by Mudholkar, J. This judgment will also govern Criminal Ap- peals Nos. 151 and
152 of 1965. The respondent was at the relevant time a dealer at Bijapur in
groundnuts, cotton seed and other commodities and was registered as a dealer
under the Mysore Sales Tax Act, 1957. For the period between November 12, 1958
and October 31, 1959 he was assessed to sales tax amounting to Rs. 9,864-31 ps.
by the Commercial Tax Officer, Bijapur in his order dated December 4, 1963.
On January 3, 1964 the Commercial Tax Officer
served on him a notice of payment requiring him to pay the tax assessed on him
within 21 days. He was similarly assessed to pay tax for two subsequent periods
by two separate orders passed by the Commercial Tax Officer. Two separate
notices of demand were served on him requiring him to pay the tax assessed
within 21 days. It is common ground that the respondent did not comply with any
of the three notices. Three separate complaints were, therefore, preferred
against him by the Commercial Tax Officer before the Judicial Magistrate, First
Class, second court, Bijapur for offences punishable under s. 29(1)(d) of the
Act. The respondent had preferred appeals against each of the three orders ,of
assessment under sub-s. (1) of s. 20 of the Act. He did not, however, pay the
tax assessed against him or any portion thereof as contemplated-in the second
proviso of sub-s. (1) of s. 20 nor did he seek or obtain from the appellate
authority any order under the proviso to sub-s. (5) of s. 20. The learned
Magistrate held that since the respondent had preferred appeals against the
orders of assessment and those appeals were still pending when the complaints
were made before him the respondent was not liable for offences under s. 29 (1)
(d). On this ground the learned Magistrate acquitted the respondent in all the
three cases. Appeals preferred by the State of Mysore against the orders of
acquittal passed in favour of the respondent were rejected by the High Court on
the ground that as the State could avail itself of other remedies under the Act
for enforcing the payment of tax levied on the respondent it did not think it
fit to exercise its discretion under s. 421 (1) of the Code of Criminal
Procedure and entertain the appeals.
Mr. Chaudhuri refers to the proviso to sub-s.
(3) of s. 13 and contends that unless the requirements of the proviso are
satisfied he is not liable to be proceeded against under s.
29 (1) (d). In order to appreciate his
argument it is desirable to reproduce the provision relied upon by him.
Sub-section (3) of s. 13 reads as follows
"Any tax assessed, or any other amount due under this Act from a dealer,
may without prejudice to any other mode of collection, be recovered- (a) as if
it were an arrear of land revenue, or 813 (b) on application to any Magistrate,
by such Magistrate as if it were a fine imposed by him:
Provided that no proceeding for such recovery
shall be taken or continued as long as he has, in regard to the payment of such
tax or other amount, as the case may be, complied with an order by any of the
authorities to whom the dealer has appealed, or applied for revision, under
sections 20, 21, 22- 23 or 24." The matter dealt with by s. 13 is
"payment and recovery of tax". The substantive part of the provision
renders an assessee in arrears of tax liable to be proceeded against under
either cl. (a) or cl. (b) of the provision. Mr. Chaudhury, however, contends
that by virtue of the proviso an assessee will not be liable to be proceeded against
unless it is shown that he has failed to comply with an order made by the
appropriate authority under one of the sections refered to in the proviso. He
points out that though he has preferred appeals under s. 20 of the Act no order
has been made by the appellate authority in any of the appeals dealing with the
question of payment or otherwise of the tax and that the before there has been
no failure on the part of the respondent to comply with an order made by the
appropriate authority. Mr. Chaudhury in effect wants us to construe the proviso
as if it contemplated the creation of liability to pay the tax by an order of
the appropriate authority under one of the sections specified in the proviso.
There is no warrant for such a construction. The liability to pay tax is
created by the order of assessment.
Where tax so assessed is not paid despite
service of notice of demand the substantive portion of sub-s. (3) of s. 13
renders the assessee liable to be proceeded against under cl. (a) or cl. (b) of
that provision. The assessee who has moved the appropriate authority under one
of the provisions referred to in the proviso has, however, been afforded
interim protection from action under cl. (a) or cl. (b) provided that he
approaches the appropriate authority and obtains from that authority an order
of stay of proceedings under cl. (a) or cl. (b). That, however, is not enough.
If the order of the appropriate authority lays down any condition the proviso
requires that the assessee must comply with those conditions before he can
obtain interim relief under the proviso. Apart from that, we fail to see how
the proviso to sub-s. (3) of s. 13 can at all be an answer to a prosecution
under s. 29 (1) (d). What is rendered an offence under s. 29 (1) (d) is the
failure of the assessee to pay the tax within the time allowed. But where, as
here, the assessee has not paid the tax within the time allowed by a notice of
demand he immediately renders himself liable to be proceeded against under s.
29 (1) (d).
Mr. Chaudhury then contended that in view of
the fact that an appeal has been preferred the liability of the assessee to pay
814 the tax must be deemed to have been suspended during the pendency of the
appeal. This argument ignores the specific provisions of sub-s. (5) of s. 20
and the proviso thereto.
They read thus :
"Notwithstanding that an appeal has been
preferred under sub-section (1), the tax shall be paid in accordance with the
assessment made in the case :
Provided that the appellate authority may, in
its discretion give such directions as it thinks fit in regard to the payment
of the tax before the disposal of the appeal, if the appellant furnishes
sufficient security to its satisfaction in such form and in such manner as may
be prescribed." The provision we have just quoted is a complete answer to
Mr. Chaudhuri's contention. Mr. Chaudhury then contended that there was no
wilful default on the part of the respondent. It is difficult to appreciate
what he means by saying that there was no wilful default. The respondent knew
that he was required to pay the tax within certain time and also knew that he
had not complied with the notice of demand. His action in not paying the tax
was quite clearly deliberate and, therefore, wilful. There is no substance in
We are, therefore clear that the acquittal of
the respondent for offences in the case was unwarranted. We would, therefore,
have, after setting aside his acquittal in each of the three cases, convicted
and sentenced him under s. 29 (1) (d) of the Act but for the fact that when
special leave was granted an undertaking was given by the State that
irrespective of the result of the appeal the respondent would not be
prosecuted. Probably what was meant was that the State would not press for
conviction and sentence of the respondent. Therefore, though we allow the
appeals and set aside the acquittal of the respondent in the three cases we
leave the matter just there.