1983 (8) TMI 237 - SC - VAT and Sales Tax

Validity of the action taken by the authorities concerned against the petitioners for recovering the arrears of tax due and payable by them under the U.P. Sales Tax Act 1948 by the arrest and detention in civil prison of the petitioners in accordance with section 279(1)(b) read with section 281 of the U.P. Zamindari Abolition and Land Reforms Act 1950 challenged Held that - Appeal allowed in part. The petitioners cannot be detained pursuant to any warrant of arrest already issued. We have therefore to quash the warrants which are already issued in these cases and direct that the petitioners against whom such warrants have been issued should not be detained pursuant thereto. We make an order accordingly. This order is made without prejudice to the power of the authorities concerned to realise the arrears by arresting and detaining the defaulters in accordance with law by passing fresh orders in the light of the above decision. It is stated that the petitioners in some of these petitions have filed appeals or some other petitions under the U.P. Sales Tax Act against the orders of assessment and that such appeals or petitions are still pending. We do not express any opinion on the merits of those appeals or other petitions. They may be disposed of according to law by the concerned authorities.

Summary

Issues Involved:
1. Validity of arrest and detention for recovery of tax arrears under the U.P. Sales Tax Act, 1948, and the U.P. Zamindari Abolition and Land Reforms Act, 1950.
2. Whether the process of arrest and detention is arbitrary, unreasonable, and unfair, violating Articles 14, 19(1)(d), and 21 of the Constitution.
3. Applicability of Section 51 of the Code of Civil Procedure to the process of arrest and detention under the U.P. ZALR Act.
4. Compliance with procedural safeguards in issuing and executing warrants of arrest.

Issue-wise Detailed Analysis:

1. Validity of Arrest and Detention for Recovery of Tax Arrears:
The judgment addresses the validity of actions taken by authorities to recover tax arrears by arresting and detaining the petitioners under the U.P. Sales Tax Act, 1948, and the U.P. Zamindari Abolition and Land Reforms Act, 1950 (U.P. ZALR Act). Section 279(1)(b) read with Section 281 of the U.P. ZALR Act authorizes the recovery of land revenue through arrest and detention. The court examines the statutory provisions and rules, noting that the process is a coercive measure to compel payment from defaulters who have the means but refuse to pay.

2. Arbitrary, Unreasonable, and Unfair Process:
The petitioners argued that the arrest and detention process violates Articles 14, 19(1)(d), and 21 of the Constitution, being arbitrary and unreasonable. They cited Article 11 of the International Covenant on Civil and Political Rights and the Supreme Court decision in Jolly George Verghese v. Bank of Cochin. The court noted that the international covenant is not part of Indian municipal law and pertains to contractual obligations, whereas the case at hand involves statutory public dues. The court emphasized that the process must be fair and reasonable, and the statutory provisions under scrutiny include safeguards to ensure this.

3. Applicability of Section 51 of the Code of Civil Procedure:
The petitioners contended that the procedure under Section 51 of the Code of Civil Procedure, which requires an inquiry before issuing an arrest warrant, should apply. The court clarified that the U.P. ZALR Act and its rules constitute a complete code for arrest and detention processes, independent of the Code of Civil Procedure. The court cited the Allahabad High Court's decision in Sangam Lal Gupta v. Sales Tax Officer and the Supreme Court's decision in Collector of Malabar v. Erimmal Ebrahim Hajee, affirming that the process is a coercive measure for recovering public dues and not a punishment for default.

4. Compliance with Procedural Safeguards:
The court examined whether procedural safeguards were followed in issuing and executing warrants of arrest. Rule 251 of the U.P. ZALR Rules mandates an inquiry after arrest to determine if detention will compel payment. The court found that no such inquiry was conducted in the petitioners' cases, rendering the arrests invalid. The court quashed the existing warrants and directed that fresh orders could be passed in compliance with the law.

Conclusion:
The court upheld the validity of the statutory provisions for arrest and detention under the U.P. Sales Tax Act and the U.P. ZALR Act, finding them consistent with constitutional requirements. However, it emphasized the need for procedural compliance, quashing the existing warrants due to the lack of required inquiries. The petitions were allowed in part, with no costs awarded. The court also noted that pending appeals or petitions under the U.P. Sales Tax Act should be disposed of according to law.