M/S.
Hotel Darpan, Mussoorie Vs. Sub-Divisional Magistrate, Mussoorie & Anr
[1995] INSC 744 (27
November 1995)
Jeevan
Reddy, B.P. (J) Jeevan Reddy, B.P. (J) Majmudar S.B. (J)
CITATION:
1996 SCC (1) 323 JT 1995 (8) 414 1995 SCALE (6)637
ACT:
HEAD NOTE:
O R D
E R
Leave
granted.
Heard
counsel for both the parties.
This
appeal arises from the order of the Division Bench of the Allahabad High Court
dismissing the writ petition, filed by the appellant herein, with certain
directions. The matter arises under the Uttar Pradesh Taxation and Land Revenue
Laws Act, 1975.
The
appellant is the proprietor of a hotel, Hotel- Darpan, at Mussoorie. Section 4 of the
U.P. Act imposes a luxury tax at the prescribed rate on every person who
occupies rented room or suite or rooms provided with luxuries in hotel. The
appellant-hotel is, without a doubt, subject to the levy of the said tax.
Section 5 of the Act sets out the manner in which the tax has to be paid by the
proprietor of the hotel. In case of failure to pay within the prescribed
period, interest at the prescribed rate is charged. Section 6 provides for
assessment of tax. The authority competent to make the assessment and the
procedure to be followed in that behalf is to be prescribed by the rules. The
next provision to be noticed is Section 10 which provides for levy of
penalties. It would be appropriate to set out the Section in full:
"10.
Penalty. - (1) Without prejudice to the provisions of sub-section (2) of
Section 5 if any person fails to pay any sum payable under Section 5 or Section
7 within the prescribed period he shall, on conviction be liable to pay a fine
not exceeding rupees five thousand and when the offence is a continuing one,
with a further fine not exceeding rupees one hundred per day during which the
offence continues.
(2)
Whoever fails to supply any information which he is required to supply under
any rules made under this Chapter or knowingly supplies false information shall
be punishable with fine which may extend to five thousand rupees." Section
13 empowers the State Government to make rules to carry out the purpose of the
Act.
The
rules framed under Section 13 are called "The Uttar Pradesh Luxuries (In
Hotels) Tax Rules, 1975." Rule 3 provides that the amount of tax payable
by a proprietor under Section 5(1) of the Act shall be paid within five days
after the end of the month to which the tax collected by the proprietor
relates. Rule 4 provides for filing of returns in the prescribed from. Rule 6
prescribes the procedure for assessment of tax. According to this rule, the
Collector is the Assessing Authority and the assessment is made half- yearly.
Sub-rule (3) provides that for the purpose of assessing the tax, the Collector
shall serve notice on the proprietor to attend in-person or through an agent on
the prescribed date and to produce such documents and evidence as may be
specified in the notice or as he may wish to rely upon, as the case may be.
Sub-rule (4) provides for making an order of assessment after examining the
evidence placed before the Assessing Authority. Sub-rule (5) of Rule 6 is
relevant for our purposes. It provides for making a best judgment assessment in
case a return is not filed within the prescribed period. The sub-rule reads:
"(5)
If the proprietor fails to submit the returns within the period mentioned in
sub-rule (1) of Rule 4, the Collector shall assess to the best of his judgment
the amount of the tax payable under Section 5 of the Act in accordance with the
provisions of Section 4 of the Act." Rule 7 provides for Appeal while Rule
8 prescribes the Appellate Authority. It is not necessary to refer to other
Rules.
The
writ petition from which this appeal arises was filed by the appellant
questioning the validity of notices/orders dated June 28, 1993 and July
14, 1993. In the
notice dated June 28, 1993 the Assessing Authority stated that the appellant
was "called upon to deposit the amount of luxury tax on the monthly
lodging and boarding by the fifth date of the next month" as provided by
the said Act but that the appellant has failed to deposit the same inspite of
repeated reminders. The appellant was, therefore, called upon to produce all
documents and to deposit the tax under intimation to the Assessing Authority.
The notice further stated:
"(1)
In default of filing of returns regarding Luxury Tax for the period 01-10-91 to
30-09-92 you are called upon to deposit of Rs.5,000/- (Five Thousand) under
Section 10 of Luxury Tax within 3 days from the date of receipt of this letter
in the Government Treasury after verifying the head of Account.
(2)
You are called upon to produce all documents to the above period which were
demanded from you through previous letters of Luxury Tax Assessing Authority,
within 10 days before the court of undersigned.
An exparte
proceeding for Assessment of Hotel under Section 7 of Luxury tax will be taken
against you in the case of failure to produce the documents or if records are
not found satisfactory." On the ground that the said amount of Rs.5,000/-
was not deposited in time, the order dated July 14, 1993 was passed calling
upon the appellant to deposit the said amount of Rs.5,000/- within one week. It
was stated that in default of such deposit, the appellant would be liable to
pay a further fine of Rs.100/- per day in addition to 10 per cent collection
charges.
The
appellant contended before the High Court that no the or penalty could have
been imposed under Section 10 for not filing the returns. This contention was
rejected by the High Court in the following words:
"If
the return has not been furnished by the petitioner, indeed, the authority
concerned may proceed under Section 10 of the Act to impose penalty and after
proceeding in accordance with the provisions of Section 10 of the Act only the
Sub-Divisional Magistrate has imposed the fine. .....
As far
as imposition of penalty is concerned this court does not see any illegality in
it and upholds the imposition of penalty." The High Court also took note
of the statement of the appellant's counsel that the appellant had deposited a
sum of Rs.10,000/- in advance and, therefore, there was no occasion for
depositing a further sum of Rs.5,000/-, and observed: "If that is so,
indeed, the petitioner may, if so advised, approach to the authority concerned
by filing an appropriate application to settle the account accordingly."
The Court finally observed: "if appropriate application is made by the
petitioner before the sub-divisional Magistrate, Mussorie within a month from
today, the same shall be taken into consideration and be disposed of within
three months thereafter." In this appeal, the main contention put forward
by the learned counsel for the appellant is that no penalty can be levied under
Section 10 of the Act for not filing the return. If a return is not filed
within the prescribed period, the learned counsel says, the only course
available to the Assessing Authority is to make a best judgment assessment as
provided by Rule 6(5) of the Rules. The learned counsel says that in the
present case, penalty has been levised not for the failure to pay any amount
due nor for the failure to supply any information which the appellant was
called upon to supply but only for non-filing of the return within the
prescribed period. As a proposition of law, the learned counsel is right.
Section 10 is the only provision in the Act providing for levy of taxes. Sub-
section (1) provides for levy of penalty on conviction for failure to pay any
sum payable under Section 5 or Section 7 within the prescribed period.
Sub-section (2) provides for levy of penalty on two grounds, viz., failure to
supply any information which the person concerned is called upon to supply
under the rules or where the person knowingly supplies false information. For
not filing the return, it is true, no penalty can be levied under Section 10.
But the more important question in this case is, whether any penalty has been
levied in this case, and if so, on what ground. The two notices/orders impugned
in the writ petition are ambiguous and do not make it clear whether the amount
of Rs.5,000/- mentioned therein is a tax or a penalty. The impugned notice also
speak of fine but do not say, under which provision are they levied. In these
circumstances, the proper course, in our opinion, is to quash the two
orders/notices impugned in the writ petition with a direction to the Assessing
Authority to pass appropriate orders afresh in accordance with law, after
hearing the assessee, keeping in view the position of law explained in this
judgment. The authority can also ascertain whether the appellant's case that he
has deposited Rs.10,000/- in advance is correct and, if so, what is its effect
in law - and its relevance in the matter of levy of penalty, fine or interest.
It is made clear that in the proceedings which shall now be taken by the
Assessing Authority pursuant to this order, the assessee shall not be entitled
to raise any objection on the ground of limitation. He shall, of course, be
free to raise all such other grounds as are open to him in law.
The
appeal is allowed with the above directions. The order of the High Court shall
stand modified accordingly. No costs.
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