1981 (10) TMI 165 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of sales tax by the Assessing Authority, appeal against the order, application for entertaining the appeal without prior payment of tax, orders passed by different authorities regarding payment and security, legality of demanding security by the Sales Tax Tribunal.

Analysis:
The case involved a partnership firm, Messrs. Grover Brothers, which was assessed to pay sales tax amounting to Rs. 11,346.84 for the year 1965-66 by the Assessing Authority in an ex parte order. Dissatisfied with this, the petitioner filed an appeal and applied under section 20 of the Punjab General Sales Tax Act, 1948, for entertaining the appeal without prior payment of tax due to financial constraints. The Deputy Excise and Taxation Commissioner ordered the petitioner to pay Rs. 4,000 in cash and furnish security for the balance amount. The petitioner appealed this decision, and the Joint Excise and Taxation Commissioner partly allowed the appeal, reducing the payment to Rs. 4,000 without the need for security. Subsequently, the Sales Tax Tribunal directed the petitioner to deposit Rs. 2,000 and furnish security for the balance, leading to the present writ petition challenging the demand for security.

The petitioner's counsel argued that under section 20(5) of the Act, the appellate authority can entertain an appeal without full payment if satisfied with the dealer's inability to pay the tax. However, there is no provision in the Act authorizing the Tribunal to demand security. The relevant statutory provisions were cited, emphasizing that the appellate authority can entertain an appeal without full payment or after part payment, but there is no provision for demanding security. The State's counsel argued based on section 20(6) of the Act, contending that the appellate authority can pass any order in an appeal. However, it was clarified that section 20(6) applies after the appeal has been entertained, whereas section 20(5) deals with the situation before the appeal's entertainment, without granting the authority to demand security.

Ultimately, the court allowed the writ petition, quashing the Sales Tax Tribunal's order demanding security, as there is no provision in the Act authorizing such a demand. The judgment did not award costs to any party.