MOHANLAL BRIJLAL Vs. STATE OF BOMBAY

JUDGEMENT

(1.) THE period of assessment in this case is from 1st April, 1949, to 31st October, 1952. The applicants sell milk, curds, sweets etc. The Sales Tax Officer assessed the tax to Rs. 13,433 -12 -0 and levied a penalty of Rs. 1,301 -3 -6 under Sub -section (3A) of Section 12 of the Bombay Sales Tax Act, 1946. The applicants appealed on the question of the penalty levied under Sub -section (3A) of Section 12, and they did not dispute the assessment. The Assistant Collector dismissed the appeal observing, "It must be observed that the penalty under Section 12 (3A) is leviable on the tax payable under the Act which need not necessarily be the tax payable according to the dealer's returns. This has happened in the case of the present appellant". There was a revision application against the order of the Assistant Collector. The applicants contended that they could be asked to pay the difference in the amount of tax payable and paid and that they could not be asked to pay any penalty thereon particularly as there was no deliberate withholding of the tax payable by them. As the applicants did not dispute the assessment, the Additional Collector of Sales Tax who heard the revision application regarded such admission as an indirect admission that the returns which had been filed by them had no basis and that they had been only arbitrarily filed; and he observed, "If the applicant had taken some care to estimate his liability on some reasonable basis, such a state of affairs would not have arisen. In addition I should like to mention that the applicant had not submitted any return for the period from 1st April, 1952, to 30th October, 1952. I am of the opinion that the applicant has tried to submit the quarterly returns just for the sake of submitting them by claiming the deductions in a very arbitrary manner". On this ground he rejected the revision application.

(2.) SUB -section (3A) of Section 12 of the Bombay Sales Tax Act, 1946, which was inserted by the Bombay Act 1 of 1949 and came into operation with effect from 1st April, 1949, is in these terms : "If the tax payable under this Act is not paid by any dealer within the prescribed time, the dealer shall pay, by way of penalty in addition to the amount of tax a sum not exceeding three -fourth per cent, of the amount of tax for every month after the expiry of the prescribed period during which he continues to make default in the payment of the tax. The penalty so levied shall be without prejudice to any prosecution instituted for an offence under this Act". The period under assessment comprises 14 quarters in respect of which the applicants made payments in time except for one quarter ending on 30th June, 1951, the delay in that case having been of about 4 months. The penalty has been charged on the difference between the applicants' total liability as found, and what was paid, such difference amounting to Rs. 7,844 -11 -3. On this amount a penalty of three -fourths per cent, per month has been charged on the differences found due for the different quarters making up the above mentioned total.

(3.) SHRI Kabe for the opponent relies on Section 5 of the Bombay Sales Tax Act, 1946, as the charging section. According to him under that section whatever is ultimately found due the assessee is responsible for paying in full even before the assessment is made, and this is the meaning of the expression "tax payable" in Sub -section (3A) of Section 12. Three expressions have been used in connection with the assessee's liability in the Act, viz., "liable to pay tax" (section 5); "tax due" [section 11 (1A)], and "tax payable" [section 12, including Sub -section (3A) thereof]. The contention of the applicants is that the tax does not become payable till it is assessed by the authorities. He points out that in Sub -section (1A) of Section 11 it is laid down that if the Commissioner is satisfied, without requiring the presence of a registered dealer or the production by him of any evidence, that the returns furnished in respect of any period are correct and complete, he shall assess the amount of tax due from the dealer on the basis of such returns ; so that even in a case where the assessing authority finds it unnecessary to make any inquiry and can accept the returns as furnished, it is necessary for him to make an assessment, and thus an importance is given to the assessment which is not to be found in the corresponding Act of several States. The applicants* contention is that the mere liability to pay tax under Section 5 does not make the tax payable within the meaning of Sub -section (3A) of Section 12. In our opinion, this contention is correct. In the case of Whitney v. Commissioners of Inland Revenue [1926] A.C. 37, Lord Dunedin observed : "There are three stages in the imposition of a tax ; there is the declaration of liability) that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay". In the case of Chatturam Horilram Ltd. v. Commissioner of Income -tax [1955] : 27 I.T.R. 709, Section 3 of the Income -tax Act was referred to, and their Lordships observed, "It is by virtue of this section that the actual levy of the tax and the rates at which the tax has to be computed is determined each year by the annual Finance Acts. 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 the Act but the payability and the quantification of the tax depend on the passing and the application of the annual Finance Act". Section 3 of the Indian Income -tax Act says that "where any Central Act enacts that income -tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year", etc. This provision appears to us to correspond to the provisions of Section 5 of the Bombay Sales Tax Act, 1946, and the provisions regarding the payability and the quantification of the tax in the annual Finance Act appear to us to correspond to the provisions of Section 12 of the Bombay Sales Tax Act, 1946.