Lakshmi Rattan Engineering Works Ltd.
Vs. Asstt. Commr. Sales Tax, Kanpur & ANR  Insc 205 (12 September
12/09/1967 HIDAYATULLAH, M.
BHARGAVA, VISHISHTHA VAIDYIALINGAM, C.A.
CITATION: 1968 AIR 488 1968 SCR (1) 505
CITATOR INFO :
R 1970 SC1093 (10) F 1970 SC1384 (4) D 1972
SC 401 (4,5) RF 1979 SC1725 (40) R 1992 SC2277 (39,41)
U.P. Sales-Tax Act (U.P. 15 of 1948) S.
9-Memorandum of appeal-Challan showing deposit of tax, if necessary-U.P.
Salestax Rules, 1948, r. 66(2)-Constitution
of India, Art.
136-Special leave to appeal-Other remedies
not exhausted-If can be given.
The appellant-assessee filed a memorandum of
appeal to the Assistant Commissioner, Sales Tax, stating therein that the
amount of admitted tax had been paid and forfeited the statement by an
affidavit. Before the hearing, he produced a certificate from the Sales-Tax
Officer that the tax had been paid. The Assistant Commissioner relying on the
Allahabad High Court's decision in Swastika Tannery, Jaimau v. Commissioner of
Sales-tax, U.P. rejected as defective the memorandum of appeal, holding that it
was not accompanied by the challan showing the deposit of admitted tax under s.
9 of the Uttar Pradesh Sales Tax Act, 1948 and r. 66 of the U.P. Sales-tax
Rules. Against this order the assessee directly filed special leave to appeal
to this Court without exhausting the remedies of revision and reference
provided in the Act. This Court granted Special Leave and;
HELD:The appeal must be allowed.
(i) By the word "entertain" in-the
proviso to s. 9 is meant the first occasion on which the Court take up the
matter for consideration. It may be at the admission stage or if by the rules
of that Tribunal, the appeals are automatically admitted, it will be the time
of hearing of the appeal. But on the first occasion when the court takes up the
matter for consideration, satisfactory proof must be presented that the tax was
paid within the period of limitation available for the appeal. Rule 66(2) lays
down one uncontestable mode of proof which the Court will always accept but it
does not exclude the operation of the proviso when equally satisfactory proof
is made available to the officer hearing the appeal and it is proved to his
satisfaction that the payment of the tax has been duly made and in time.
513E-G] In the present case, when the
Assistant Commissioner took tip the appeal for consideration, satisfactory
proof was available in the shape of a certificate.
Swastika Tannery of Jaimau v. Commissioner of
Sales-tax, U.P. Lucknow, (1963) 14 S.T.C. 518, disapproved.
Kundan Lal v. Jagannath Sharma, A.I.R. 1962
All. 547; Dhoom Chand Jain v. Chaman Lal Gupta and Anr. A.I.R. 1962 All.
42: Haji Rahim Bux & Sons & Ors. v.
Firm Samiullah & Sons, A.I.R. 1963 All. 320, approved.
(ii) Though this Court would not ordinarily
grant special leave to appeal against an order when other remedies were
available and had not been exhausted, there is no inflexible rule that this
Court will never entertain such an appeal.
It would have been futile in this case for
the assessee to have gone to the court of revision which was bound by the
decision in Swastika Tannery of Jaimau v.Commissioner of Sales-tax, U.P. and it
would have been equally 506 futile to have gone to -the High Court on a
reference. The matter was more easily disposed of by giving special leave in
this Court and this was one of those extra-ordinary cases in which the ends of
justice would be better served, by avoiding a circuity of action and by dealing
with this matter in this Court directly. [513H-514C]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1283 of 1967.
Appeal by special leave from the Order dated
April 2/3, 1967, of the Court of Assistant Commissioner (Judicial) 1, Sales
Tax, Kanpur Range, Kanpur in Appeal No. D.F.78 of 1966.
J. P. Goyal and Sobhag Mal Jain, for the
O. P. Rana, for the respondents.
The Judgment of the Court was delivered by
Hidayatullah, J. This is an appeal by special leave against an order 2/3 April,
1967, of the Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range,
Kanpur by which the Assistant Commissioner rejected as defective the memorandum
of appeal filed by the present appellant against the assessment order passed by
the Sales Tax Officer (S-1) Kanpur. The defect, according to the Assistant
Commissioner, was that the memorandum of appeal (which had been filed well
within time) was not accompanied by the challan showing the deposit of admitted
tax under s. 9 of the Uttar Pradesh Sales Tax Act, 1948. The appellant did not
file an application for revision and did not also invite a reference to the
High Court of Allahabad but came direct to this Court by special leave which
was granted by us on August 23, 1967. At the first hearing of the petition, the
State of Uttar Pradesh represented by Mr. O.P. Rana objected to the grant of
special leave inasmuch as the other provisions under which remedy could be
obtained under the Sales-tax Act had been bypassed. At that time, we overruled
the objection and in the course of this judgment, we shall briefly indicate the
reasons which had then prevailed with us.
The facts of the case are as follows: The
appellant had declared his turnover for the year 1964-65 at Rs. 3,70,941.7 P.
on which the admitted tax under the Act came to Rs.
11,135,58p. The Sales-tax authorities,
however, assessed his turnover at Rs. 30 lakhs on which tax was calculated at
Rs. 90.000. The appellant appealed to the Assistant Commissioner (Judicial) 1,
Sales-tax, Kanpur Range, Kanpur.
His appeal was filed on May 16, 1966, the
order of assessment and the demand notice having been served on him on April
16, 1966. The appeal was therefore filed within time. Section 9 of the Act
provides that no appeal against an ,assessment shall be entertained unless it
is accompanied by satisfactory proof of the payment of the amount of tax
admitted by the appellant to be due or of such instalments thereof as may have
become payable. As is stated earlier, the admitted tax came to 507 Rs.
11,135.58 P. The appellant was required under this provisions of law to give
satisfactory proof, at the time of the entertainment of the appeal, that this
tax was duly paid. It appears that the appellant had paid a greater portion of
the tax even before the assessment order had been made, and a balance of Rs.
99.99 P. was due from him from the amount of admitted tax. This amount was
deposited on April 26, 1966 before the appeal was filed by him. He did not
however present any proof of such deposit, because there is a dispute in the
case whether the assessee bad shown proof of it to the mumarim or not. As the
finding is that he had not shown it we shall proceed on the assumption that the
assessee had not furnished proof at the time of the filing of the appeal that
the balance of tax had been paid, It is on this premise that the present appeal
has proceeded before us. On August 16, 1966 the assessee addressed a letter to
the Sales-tax Officer and asked for a certificate of payment of tax and this
certificate having been furnished he filed it on January 24, 1967 before the
Assistant Commissioner. He also, as a matter of abundant caution, filed an
application for condonation of delay under s. 9(6) of the Act read with s. 5 of
the Indian Limitation Act. The order against which the present appeal has been
brought before us was made on 2/3 April, 1967 and the appeal of the assessee
was rejected,. because in the opinion of the Assistant Commissioner s. 9 of the
Act read with r. 66(2) had not been complied with since no proof had been given
along with the memorandum of appeal that the tax had been paid. Simultaneously,
the application for condonation of delay was also dismissed. Against this order
the assessee has filed the present appeal.
The short question in this case is whether
having made the deposit even before the appeal was filed and well within the
period of limitation, the assessee could be deprived of his right of appeal
under s. 9 of the Act. Alternatively, it is to be considered whether the proof
of the payment of the admitted tax had to accompany the memorandum of appeal as
required by r. 66(2) and on failure to furnish such proof, the appeal itself
became incompetent. In support of his order the Assistant Commissioner relied
on a decision of the Allahabad High Court reported in Swastika Tannery of
Jaimau v. Commissionerof Sales-tax, U.P. Lucknow(1) in which the learned Chief
Justice of that Court and another learned Judge have laid down that the proof
of payment must be as required by the rules and, therefore. the memorandum of
appeal ouaht to be accompanied by the Challan showing payment of tax before the
appeal can be said to be competent. We shall refer to that ruling presently.
in this appeal, learned counsel for the
assessee has relied upon a number of authorities in which the interpretation
runs (1) (1963) 14 S.T.C. 518.
508 counter to the decision of the learned
Chief Justice just adverted to and had contended that s. 9 of the Act does not
create the bar which the ruling and the Assistant Commissioner's reliance on
that ruling has created in the way of the appeal. His contention is that if
satisfactory proof is given before the appeal is heard or at any rate before it
is admitted, the requirement of law under s. 9 is satisfied and that it is not
always incumbent to produce a challan with the memorandum of appeal, r. 66(2)
notwithstanding. It is this point which has given rise to the great controversy
before us and the matter was argued at great length both at the time of grant
of special leave and today.
To consider the matter, we may begin by
quoting s. 9 of the Act. Section 9 which gives the power of appeal provides as
(1) Any dealer objecting to an order allowing
'or refusing an application for exemption certificate under cl. (b) of
sub-section (1) of s. 4 or to an order refusing an application under s. .30 or
to an order imposing a penalty under s. 15-A or to an assessment made under s.
7, 7-A, 7-B, 18 or 21, may within 30 days from the date of service of the copy
of the order or notice of assessment, as the case may be, appeal to such
authority as may be prescribed;
Provided that no appeal against an assessment
shall be entertained unless it is accompanied by satisfactory proof of the
payment of the amount of tax admitted by the appellant to be due, or of such
instalments thereof as may have become payable:
Under s. 24 of the Act power has been
conferred upon the State ,"Government to make rules to carry out the
purposes of the Act and in particular, to provide for all matters expressly
required or allowed by this Act to be prescribed.
Under sub-s. (4) of that section, it is
provided that all rules made under the section shall be published in the
Gazette and upon such publication, shall have effect immediately as if enacted
in the Act and under the 5th subsection, it is further provided that all rules
made under the Act shall be laid for fourteen days before the Legislature as
soon as possible after they are made and shall be subject to such modifications
as the Legislature may make during the session in which ..they are so -laid.
In exercise of this power, the State
Government has framed the U.P. Sales-tax Rules, 1948. Rules 66 and 67 of these
rules bear, among others, upon appeals. Sub-r. 1 of r. 66 provides for the
content of the appeal by stating what the memorandum of appeal shall specify in
relation to the name and address of the appellant etc. We are not concerned
with it. Sub-r.
509 2 then states that "the memorandum
of appeal shall be accompanied by......... a challan showing deposit in the
Treasury of the tax admitted by the appellant to be due or of such instalments
thereof as might have become payable." Rule 67 days down how the appeals
have to be presented. Sub-r. 1 provides that the memorandum of appeal shall be
presented by the appellant or his lawyer or duly authorised agent to the
Assistant Commissioner (Judicial) or may be sent by registered post addressed
to the Assistant Commissioner,(Judicial).Sub-r-2 provides that if the
memorandum of appealis in order. the Assistant Commissioner, (Judicial) shall admitit
and on admission. the Reader of the Assistant Commissioner (Judicial) shall
endorse thereon the date of its presentation and shall register it in a book to
be known as Register of Appeals. The third sub-rule says that if the memorandum
of appeal is not in order. it may be rejected or returned after the necessary
endorsement on its back about the presentation and return to the applicant for
correction and representation within the time to be fixed by the Assistant
Commissioner (Judicial) or be amended then and there. Lastly sub-r. 4 provides
that on admission of an appeal. the Assistant Commissioner (Judicial) shall fix
a date for hearing of the appeal and may send for the record,.
The contention of counsel for the assessee is
that he had fully complied with the requirements of s. 9 although not strictly
as laid down in r. 66 which he characterised as directory. The contention on
the other side is that the rule lays down the only manner of compliance with
the provisions of the Section and in support Counsel for the State refers to
the provisions of s. 24(4) and (5) in which it is stated that the rules on
being framed become part of the Statute. From this, counsel for the State
infers that there is no other modeof compliance except the one stated in the
rules and as in thiscase that mode of compliance was not followed, the appeal
is rightly considered to be incompetent and properly rejected. This in main
represents the essence of the controversy between the parties.
To begin with it must be noticed that the
proviso merely requires that the appeal shall not be entertained unless it is
accompanied by satisfactory proof of the payment of the amount of tax admitted
by the appellant to be due. A question thus arises what is the meaning of the
word 'entertained' in this context? Does it mean that no appeal shall be
received or filed or does it mean that no appeal shall be admitted or heard and
disposed of unless satisfactory proof is available' The dictionary meaning of
the word 'entertain' was brought to our notice by the parties, and both sides
agreed that it means either "to deal with or admit to consideration".
We are also of the same opinion. The question, therefore, is at what stage can
the appeal be said to be entertained for the purpose of the application of the
proviso? Is it 510 entertained when it is tiled or is it 'entertained' when it
is admitted and the date is fixed for hearing or is it finally 'entertained'
when it is heard and disposed of? Numerous cases exist in the -law reports in which
the word 'entertained' or similar cognate expressions have been interpreted by
the courts. Some of them from the Allahabad High Court itself have been brought
to our notice and we shall deal with them in due course. For the present we
must say that if the legislature intended that the word -'file' or 'receive'
was to be used, there was no difficulty in using those words. In some of the
statutes which were brought to our .notice such expressions have in fact been
used. For example. under Order 41. rule I of the Code of Civil Procedure it is
stated 'that a memorandum shall not be filed or presented unless it is
accompanied etc.; in s. 17 of the Small Causes Courts Act, the expression is
'at the time of presenting the application'. In sec. 6 .of the Court Fees Act,
the words are 'file' or 'shall be received'.
It would appear from this that the
legislature was not at a loss for words if it had wanted to express itself in
such forceful manner as is now suggested by counsel for the State. It has used
the word 'e entertain' and it must be accepted that it has used it advisedly.
This word has come in for examination in some of the cases of -the Allahabad
High Court and we shall now refer to them.
In Kundan Lal v. Jagannath Sharma(1) the
Court was concerned with Order 21, rule 90, of the Code of Civil Procedure
which bad been amended by the High Court by changing the provisions of the
original Code. The changed rule is as follows:
"Provided that no application to set
aside the sale shall be entertained:
(a) upon any ground which should have been
taken by the applicant on or before the date on which the sale proclamation was
(b) Unless the applicant deposits such amount
not exceeding 12 1/2 " of the sum realised by the sale or furnishes such
security as the court may in its discretion fix, except when for reasons to be
recorded it dispenses with the requirements of this clause........." The
word 'entertain' is explained by a Divisional Bench of the Allahabad High Court
as denoting the point of time at which an application to set aside the sale is
heard by the court. The expression 'entertain', it is stated. does not mean.
the same thing as the filing of the application or admission of the application
by the court. A similar view was again taken in Dhoom Chand Jain v. Chamanlal
Gupta & Anr.(2) in which the learned Chief (1) A.I.R. 1962 All. 547.
(2) A.LR. 1962 AU. 543.
511 Justice Desai and Mr. Justice Dwivedi
gave the same meaning to the expression 'entertain'. It is observed by Dwivedi
that the word 'entertain' in its application
bears the meaning 'admitting to consideration', and therefore when the court
cannot refuse to take an application which is backed by deposit or security, it
cannot refuse judicially to consider it. In a single bench decision of the same
courtreported in Bawan Ram & Anr. v. Kunj Beharilal(1) one of us (Bhargava,
J.) bad to consider the same rule. There the deposit had not been made within
the period of limitation and the question had arisen whether the court could
entertain the application or not. It was decided that the application could not
be entertained because proviso (b) debarred the court from entertaining an
objection unless the requirement of depositing the amount or furnishing
security was complied with within the time prescribed. In that case the word
'entertain' is not interpreted but it is held that the Court cannot proceed to
consider the application in the absence of deposit made within the time allowed
by law. This case turned on the fact that the deposit was made out of time. In
yet another case of the Allahabad High Court reported in Haji Rahim Bux &
Sons and Ors. v. Firm Samiullah & Sons(2) a division bench consisting of
Cheif Justice Desai and Mr. Justice S. D. Singh interpreted the words of 0. 21,
r. 90, by saying that the word 'entertain' meant not"receive' or 'accept'
but 'proceed to consider on merits' or 'adjudicate upon'.
In our opinion these cases have taken a
correct view of the word 'entertain' which according to dictionary also means
'admit to consideration'. It would therefore appear that the direction to the
court in the proviso to s. 9 is that the court shall not proceed to admit to
consideration an appeal which is not accompanied by satisfactory proof of the
payment of the admitted tax. This will be when the case is taken up by the
court for, the first time. In the decision on which the Assistant Commissioner
relied, the learned Chief Justice (Desai C.J.) holds that the words
'accompanied by' showed that something tangible had to accompany the memorandum
of appeal. If the memorandum of appeal had to be accompanied by satisfactory
proof, it had to be in the shape of something tangible, because no intangible
thing can accompany a document like the memorandum of appeal. In our opinion,
making 'an appeal' the equivalent of the memorandum of appeal is not sound.
Even under 0. 41 of the Code of Civil Procedure. the expressions
"appeal" and "memorandum of appeal" are used to denote two
distinct things. In Wharton's Law Lexicon, the word "appeal" is defined
as the judicial examination of the decisions by a hi-her Court of the decision
of an inferior court. The appeal is the judicial examination; the memorandum of
appeal contains the rounds on which the judicial examination is invited.
(1) A.I.R. 1961 All. 42.
(2) A.I.R. 1963 All. 326.
512 For purposes of limitation and for
purposes of the rules of the Court it is required that a written memorandum of
appeal shall be filed. When the proviso speaks of the entertainment of the
appeal, it means that the appeal such as was filed will not be admitted to
consideration unless there is satisfactory proof available of the making of the
deposit of admitted tax.
Now the complicating factor is the existence
of the rule, and here, the divergence of submission arises on whether the rules
can be regarded as mandatory or merely directory. It is quite obvious that the
section as it stands only requires that at the time of the consideration of the
appeal, There should be satisfactory proof that the admitted tax has been deposited.
It only says that no appeal shall be entertained unless accompanied by
satisfactory proof of the payment of the tax. This satisfactory proof may take
any form; in fact in the present case satisfactory proof was tendered in the
shape of a certificate from the Sales-tax Officer that the admitted tax had
been deposited and well within time. Under section 9 and its proviso as they
stand, it is quite obvious that 'entertainment' means the point of time when
the appeal is being considered. There was thus satisfactory proof in the
present case. No doubt, proof was not tendered following the method required by
the rules but the question is whether the rules can make the section narrower
by prescribing a particular mode. The section is general; it provides that the
court should accept satisfactory proof.
The rule requires that the memorandum of
appeal shall be accompanied by the challan showing payment of tax. The rule
lays down one uncontestable mode of proof which the Court will always accept
but it does not exclude the operation of the proviso when equally satisfactory
proof is made available to the officer hearing the appeal and it is proved to
his satisfaction that the payment of the tax has been duly made and in time. In
this sense, the rule can be regarded as directory since it lays down one of
those modes which will be unquestioned for its validity. The other modes of
proof are not necessarily shut out.
It is to be remembered that all rules of
procedure are intended to advance justice and not to defeat it. Here the right
of appeal has been made subservient to the payment of the admitted tax. If the
admitted tax is paid and there is proof available that it has been so paid,
there exists no reason to create a second impediment in the way of the appeal.
No doubt, rule makes it easy for the assessee to bring satisfactory proof in an
uncontestable manner, but the provision of the rule is not to the exclusion of
other satisfactory modes of proof. Suppose for instance that the I challan was
lost and the time for the filing of the appeal was expiring, could or could not
the person concerned say that he had the certificate but had lost it and that
he would produce a copy of the challan from the Treasury or obtain a
certificate from the 513 Treasury Officer. Could he not obtain from the bank
the discharged cheque by which the amount of tax was deposited by him and
produce it as the discharged counterfoil of payment. All those modes of proof
will be equally, irrefutable. In the -present case the,, assessee had in his
petition of appeal 'stated that the amount of tax had been paid and had
fortified the 'Statement by an affidavit. Before the hearing he produced, a
certificate from the. Sales-tax Officer that the tax had, been paid.
The Assistant Commissioner ought therefore to
have proceeded: with the appeal because it was accompanied by satisfactory
proof of,; the payment of the tax. To hold otherwise would put a premium upon a
technicality which we do not see will advance the case either for the
-collection of the tax or,, for the: administration of justice., The rule, as
we have stated, indicate& what :is the best and easiest method of achieving
satisfactory proof. The certificate from the Sales-tax Officer, however, is as
good proof as the challan from the Treasury and if such certificate was
produced at the admission of the appeal, how the memorandum of appeal can be
said to be defective under the section as it stands. In these circumstances, we
hold that the rule is merely directory and indicates only one of the modes of
The distinction made by the learned Chief
Justice between the tangible and intangible objects does not in our opinion
fall for consideration in the present case. If one holds that by
'entertainment' is meant the time of admission of the appeal, satisfactory
proof may be furnished at the time of admission of the appeal. We are of
opinion that by the word "entertain" here is meant the first occasion
on which the court takes up the matter for consideration. It may be at the
admission stage or if by the rules of that Tribunal the appeals are
automatically admitted, it will be the time of hearing of the appeal. But on
the first occasion when the court takes up the matter for consideration,
satisfactory proof must be presented that the tax was paid within the period by
limitation available for the appeal., In the present case when the Assistant
Commissioner took up the appeal for consideration, satisfactory proof was
available in the shape of a certificate which even today is not denied. In our
opinion the Assistant Commissioner was wrong in declining to consider the
appeal in the presence of such uncontestable proof.
It remains to point out why we did not insist
upon the assessee exhausting his other remedies under the Act before coming to
this Court. It was made to appear to us that there is a right of revision and
right of reference to the High Court' in all such cases and that this remedy
was not resorted to by the assessee before making a petition for special leave
in this Court. We were taken through a number of cases in which it has been
laid down by this Court that this Court will not ordinarily grant special leave
to appeal against an order when other remedies are available and L/JN)6 SCI
No-7 514 have not been exhausted. But there is no inflexible rule that 'this
Court will never entertain an appeal and numerous instances have occurred in,
this Court where such appeals have been admitted. It would have been ,futile in
case for the assessee to have gone to the
-court-, of revision which was bound by the ruling of :the Allahabad High,
Court reported in Swastika Tannery of Jaimau v Commissioner of . Sales-tax U.P.
Lucknow (1') and' it would have been equally futile to, have. gone to the High
on a reference. The matter was more easily
disposed of by giving special leave in this Court and we therefore felt that
this was one of those extraordinary cases, in which the ends of justice would
be better served, by avoiding a cir city of action and by dealing with this
matter in this Court directly. It is for this reason that we granted special
leave to appeal. The appeal shall therefore be allowed and the appeal shall be
remitted to the Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range,
Kanpur, for disposal in accordance with law. There shall be no order as to
Appeal allowed and remitted.
(1) (1963) 14 S.T.C. 518.