Lalta Prasad Khinni Lal v. Asstt. Commr, (JUDL.) Sales Tax, Kanpur & Anr.
Grover, J. This is an appeal by certificate from a judg·
ment of the Allahabad High Court in which the main point in
volved relates to the provisions of s. 9 of the U.P. Sales Tax Act,
1948, hereinafter called the 'Act'.
The facts lie in a narrow compass. Lalla Prasad Khinni Lal
a Hindu undivided family which is the assessee carried on
business of manufacturing oils. For the assessment year 1963-
64 it was assessed to sales tax under the Act by an order dated
July 28, 1965. The assessee had been filing its quarterly returns
and had deposited a sum of Rs. 3,153.01 which was the admitted
amount of its tax liability. The Sales tax Officer, however, made
an assessment enhancing the turnover which resulted in increase
of the amount of tax. The assessee filed an apyeal on October
21, 1965 which was three days before the per10d of limitation
prescribed for filing the appeal was to expire. There was some
difficulty about encashment of a cheque which had been deposited
along with the rest of the cash amount towards payment of the
amount of tax the liability for which stood admitted. The total
payment was not made of the entire amount until May 27, 1966,
when the treasury challan was produced. The assessee filed an
application under s. 5 of the Indian Limitation Act praying for
l 012 SUPREME COURT REPORTS [1972] l S.C.R.
condonation of delay, if any, in filing the appeal. The Assistant
Commissioner (Judicial) Sales Tax rejected the memorandum of
appeal as defective on the ground that the deposit of the amount
of tax admitted to be due had not been made within the period
of limitation and that the delay in doing so could not be con
doned under s. 5 of the Limitation Act.
The assessee filed a petition under Art. 226 of the Constitu
tion in the High Court challenging the order of the Assistant
Commissioner (Judicial) Sales Tax. That petition was dismis
sed on the ground that although the appeal was file4 within time
there was delay in making the necessary deposit of the admitted
tax and that delay could not be condoned under s.5 of the Limi
tation Act.
Section 9 of the Act deals with an appeal against an order
of assessment. It provides that any dealer objecting to an order
under the various sections mentioned in sub-s. ( 1) may within
30 days appeal to such authority as may be prescribed. The
proviso to sub-s. (1) is material and is set out below :
"Provided that no appeal against an assessment
shall be entertained unless. it is accompanied by satis
factory proof of the payment of the amount of tax ad
mitted by the appellant to be due or of such instal
ments thereof as may have become payable:
Provided, secondly, that the appellate authority
shall not exercise any powers or perform any other
function except those conferred on or entrusted to him
as such authority."
Sub-s.(6) of s.9 provides that s.5 of the Indian Limitation Act
1908 shall apply to appeals under the Act. The relevant Rules
may next be reproduced:
Rule· 66(2) "The memorandum of appeal shall be
accompanied by adequate proof of payment of the fee
payable and a certified copy of the order appealed
against and the 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 pay
able".
Rule 67 (3) "If the memorandum of appeal is not
in order it may be rejected or be returned, after the
necessary endorsement on its back about its presenta
tion and return, to the applicant for correctfon and re
presentation within the time to be fixed by the Assistant
Commissioner (Judicial) or be amended then and
there".
I
LALTA PRASAD v. COMMR. S.T. (Grover, J.) 1013
A full bench of the Allahabad High Court considered the ques
tion of the applicability of s.5 of the Limitation Act to a case
where the admitted amount of tax is not deposited by the appel
lant within the time prescribed for filing the appeal in Janta
Cycle and Motor Mart v. The Assn. Commissioner (!.) III, Sales
Tax Kanpur Range & Anr.('). The full bench relied on an
observation of this Couvt in Lakshmiratan Engineering Works
Ltd. v. Asstt. Commissioner (!.) I, Sales Tax, Kanpur &
Aiwther(') with regard to the meaning of the word "entertain''.
According to that decision "entertain" meant the first occasion
on which the court took up the matter for decision. It might be
at the admission stage or if by the rules of the appellate Tribunal
the appeals were automatically admitted it would be the time of
the hearing of the appeal. The High Court considered that
according to the aforesaid decision of this Court when the first
proviso is read with the main provision of s.9 (l) of the Act the
deposit also had to be made within limitation. The High Court
came to the conclusion that s.9(6) of the Act could not be
applied and s .5 of the Limitation Act was not attracted when
the question arose whether the delay in depositing the admitted
tax should be condoned.
We are wholly unable to comprehend and appreciate the
above reasoning or the conclusion of the High Court on the point
under consideration. It is true that an appeal filed under s.9 of
the Act cannot be entertained by the appellate authority unless
satisfactory proof is adduced of the payment of tax admitted by
the appellant to be due but in a case where the amount of ad
mitted tax is deposited after the period of limitation has expired
all that will happen is that the appeal will become entertainable
only on the day on which satisfactory proof of payment of that
amount is produced. In other words the appeal will be deemed
to have been properly filed on the date on which the amount of
admitted tax is paid. lf that is beyond the period of 30 days
the appeal will be barred by time. Section 9(6) will immediately
become applicable to that appeal and it will be open to the appel
lant to apply for condonation of delay under that provision. We
are wholly unable to follow the argument that the deposit of the
amount of admitted tax must be made within 30 days even
though the delay in filing the appeal can be condoned under sub
s.( 6). A proper and correct reading of s.9 cannot justify such
an approach. If a petition of appeal has been filed without
proof of payment of tax accompanying it that appeal can be said
to have been preferred only when proof of payment of tax is
furnished. Such furnishing of the proof may take place within
the period prescribed for preferring the appeal or after the lapse
(1) 22 S.T.C. 94. (2) 21S.T.C.154.
1014 SUPREME COURT REPORTS [ 1972] l S.C.R.
of that period. If the proof of payment of admitted tax is fur- A
nished within the period prescribed the appeal must be enter-.
tained. If the furnishing of that proof is done after the expiry of
the period of limitation the question will arise whether the appeal
should be entertained or not. In such cases s.9(6) will come
into operation and the question will arise whether there has been
sufficient cause for not preferring the appeal within the statutory B
period. The correct approach is to treat the appeal as having
been preferred on the date on which proof of payment of the
tax was furnished and then to see whether under sub-s. ( 6) of
s.9 there was sufficient cause for excusing the delay iri preferring
the appeal. The decision of the Kerala High Court in Ganga
dharan Pillai v. Sales Tax Officer (Reserve) Ernakulam(1) is c
to this . effect and we entirely agree with the reasoning and the
conclusion therein. In Raja of Vankatagiri v. Commissioner of
Tncome tax, Madras( 2 ) a division bench of the A,ndhra Pradesh
High Court consisting of Sub ha Rao C. J. as he then was and
Bhimasankaram J. had to consider the provisions of the Indian
Income tax Act 1922 similar to s.9 of the Act. According to D
the proviso to s.30(1) of that Act no appeal lay against an order
under sub-s.(1) of s.46 unless the tax had been paid. Sub:s.(2)
of that section provided that the appeal was to be ordinarily
presented within 30 days but the Appellate Assistant Commis
sioner could admit the same after the expiration of the period if
he was satisfied that the appellant had sufficient cause for not
presenting it within that period. It was held that the payment of E
the tax was condition precedent to the maintainability of the
appeal. If an appeal was filed, though after the prescribed period
of time10 the Assistant Commissioner had the jurisdiction to hear
·the appeal after the tax due was paid. The only possible objec-
tion that could have been raised was that the appeal was barred
as having b~n filed beyond the period prescribed by s.30(2). F
But the appellate authority had the jurisdiction to excuse the
delay. The ratio of this decision is that even though the payment
of tax was a condition precedent to the maintainability of the
appeal the delay could be condoned under s.30(2) thus treat-
ing the appeal as having been filed when the amount of tax was
paid. G
The Allahabad High Court appears to have been greatly in
fluenced by the decision of this Court in Lakshmiratan Engineer-
ing Works Ltd. v. Asstt. Commissioner (!.) I Sales Tax,
Kanpur ( 3 ) amd by the meaning of the word "entertain" as explain-
ed there. We have found considerable difficulty in discovering how
that decision could afford any assistance to the respondents in H
the present case. Indeed according to that decision the words
(1) 16 S.T.C. 578. l (2) 28 I.T.R. 188.
(3) 21 S.T.C.154.
i
I A
LALTA PRASAD v. COMMR, S.T. (Grover, h) 1015
"no appeal shall be entertained" in the proviso to s.9 do not
denote the filing of the memorandum of appeal but refer to the
point of time when the appeal is being considered. Therefore,
though the memorandum of appeal filed within time is not ac
companied by the treasury challan showing payment of tax if
before the appeal is being considered satisfactory proof of pay
ment of tax is given then the proviso to s.9 is satisfied. In the
present case when the assessee produced the necessary documents
which showed that the deposit of the full amount had been made
by May 27, 1966 the appeal became entertainable. It only
suffered from the defect that it was barred by time on that date.
The assessee could, therefore, apply under s.9(6) for extending
the period of limitation in accordance with s.5 of the Limitation
Act.. It is entirely a different matter whether on the facts of the
present case the appellate authority would have condoned the
delay or not but to say that the appellate authority had no juris
diction to extend the time simply because the amount of admitt.ed
tax had been deposited beyond the period of 30 days would be
wholly erroneous and would not represent a true and correct
view of the provisions of s.9. It may be pointed out that· the
case of Lakshmiratan Engineering Works(1) on which the High
Court largely relied did nOi involve the question of the extension
of the period of limitation under s. 9 ( 6). Indeed in our judg
ment the word "entertain" in s.9(1) has hardly any material
bearing on the point under consideration.
As the appellate authority disposed of the-appeal Qn the short
ground that it was barred by time and that it had no jurisdiction
to extend the period of limitation this matter will have to go
back for reconsideration and redecision of that authority. In
the result the appeal is allowed and the judgment of the High
F Court is set aside. The case is remitted to the High Court for
making appropriate directio.ns for reconsideration and rehearing
, of the appeal by the appellate authority under the Act. The
assessee will be entitled to costs in this Court.
G.C. Appeal allowed.
(I) 21 s.r.c. 154.
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