TMI Blog1963 (4) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... n an earlier petition filed by the Commercial Tax Officer, viz., C.C. No. 487 of 1962, it had been attempted to prosecute the respondents under section 29(1)(d) of the Mysore Act for the non-payment of this tax amount. The learned Magistrate took the view that for the non-payment of the tax under the Central Act, the defaulter could not be prosecuted under section 29(1)(d) of the Mysore Act, and acquitted the respondents. In the subsequent petition, viz , C.M.C. No. 44 of 1962, an objection was raised on the ground that section 403 of the Criminal Procedure Code was a bar to the proceedings sought to be taken in C.M.C. No. 44 of 1962. The learned Magistrate held that as the respondents in C.M.C. No. 44 of 1962 were not being prosecuted for any offence, section 403 of the Criminal Procedure Code was not applicable. But the learned Magistrate took the view that by virtue of section 9(3) of the Central Act, the Sales Tax Officer could seek the help of the Court under section 13(3)(b) of the Mysore Act for the collection of the tax due under the Central Act; therefore, he ordered the issue of the warrant for attachment of the movables of the respondents. Sri K. Srinivasan has appeared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that section 29(1)(b) of the Mysore Act did not apply to a case of nonpayment of the tax due under the Central Act, the learned Magistrate did not at all consider the other relief which had been prayed for under section 13(3)(b) of the Mysore Act. When the Magistrate had not at all applied his mind to this latter prayer, it cannot be said that it had been rejected and that it was not therefore open to the Commercial Tax Officer to pray for the same relief in a subsequent petition. When the judicial mind had not been applied to this prayer and the same remained undisposed of, the subsequent petition praying for the same relief can properly be viewed as a continuation of the previous petition in respect of this prayer. When there was no previous order at all in respect of the prayer under section 13(3)(b) of the Mysore Act, we do not find any force in the contention that in granting the prayer in C.M.C. No. 44 of 1962, the Magistrate had exercised a power of review. In regard to the second contention, the argument of Sri Srinivasan is that section 9 of the Central Act provides only for the levy, assessment and collection of the tax under that Act and the penalty under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s liable to pay the tax under this Act; and (ii) the person or persons liable to pay the tax under this Act shall pay a penalty equal to- (a) one per cent. of the amount of tax remaining unpaid for each month for the first three months, after the expiry of the time prescribed under sub-section (1) and (b) two and one-half per cent. of such amount for each month subsequent to the first three months as aforesaid. (3) * * * * Sub-section (1) of section 9 of the Central Act states that the tax payable by any dealer under that Act shall be levied and collected by the Government of India in the manner provided in sub-section (3). Sub-section (2) states that the penalty imposed on any dealer under section 10-A shall be collected by the Government of India in the manner provided in sub-section (3). The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State (hereinafter referred to as the authorities) are required by sub-section (3) on behalf of the Government of India and subject to any rules made under the Central Act, to assess, collect and enforce payment of any tax, including any pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the circumstances suggested in section 9(3) and that the applicability cannot be restricted merely to those cases in which some power has been exercised or is exercisable by the authorities. His argument is that the entire process of assessment, payment, collection and recovery of the tax payable by a dealer under the Central Act, is the same as that provided in the general sales tax law of the State. According to him, sub-section (2) of section 13 of the Mysore Act, being part of the law prescribing the manner in which the tax should be paid, that sub-section also would be applicable to the payment and collection of the tax payable by a dealer under the Central Act. It is no doubt true that as pointed out by the Supreme Court in the case of Central India Spinning and Weaving and Manufacturing Co., Ltd., The Empress Mills, Nagpur v. The Municipal Committee, WardhaA.I.R. 1958 S.C. 341 at p. 847., taxing statutes must be strictly construed and in case of doubt it must be construed against the taxing authorities and doubt resolved in favour of the taxpayer. The following passage from Bedford v. Johnson102 Colo 203., found in Crawford on Statutory Constructions, has been cited b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the imposition of penalty was a necessary concomitant or incident of the process of assessment, levy and collection of tax. The point sought to be made out by Sri Chandrasekhar is that the penalty provided for under section 13(2) of the Mysore Act, is a mere concomitant in the process of the payment and collection of the tax payable under the Mysore Act. The object of section 9(3) is the effective realisation of the tax payable under the Central Act. By the time the Central Act was enacted, there already existed in the different States, sales tax laws containing detailed provisions for the payment and collection of sales tax; there was also an elaborate machinery for enforcing the payment of the sales tax. Section 9(3) authorises the utilisation of that existing machinery and the provisions of the sales tax laws of the various States, for the effective realisation of the tax payable under the Central Act. The word "manner" in section 9(3) cannot be understood as merely meaning "form". It is much more comprehensive and really means the peculiar way a thing is done. What is stated by section 9(3) of the Central Act is that subject to any rules made under the Central Act, the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the tax under the Central Act, as something which is incidental to and part of the process of such payment and collection. Therefore, a dealer under the Central Act who defaults in making payment of the tax payable under that Act within such time as may be prescribed becomes liable to pay the penalty provided in section 13(2) of the Mysore Act, in the same way in which a defaulting dealer under the Mysore Act incurs that liability. In urging that there is a distinction between a tax and a penalty, Sri Srinivasan sought to rely on certain observations made by this High Court in the case of Amargundappa Arali v. Commissioner of Income-tax in Mysore, Bangalore[1962] 46 I.T.R. 791; 39 Mys. L.J. 761. In that case, the Court had to consider the legality of the imposition of a penalty under section 58 of the repealed Hyderabad Income-tax Act; the question was whether that section 58 was preserved by section 13(1) of the Indian Finance Act, 1950. The contention urged in that case was that although for the purpose of levy, assessment and collection of income-tax and supertax the Hyderabad Income-tax Act continued to be in force and operative, its provisions in so far as they authorise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of a penalty cannot be considered to be a mode of recovery of tax. This observation was made while considering the validity (with reference to section 46 of the Income-tax Act, of the imposition of penalty upon penalty. The said observation is in no way useful in the present case, as it is not contended that the penalty under section 13(2) of the Mysore Act is a mode of recovery of tax. Sri Srinivasan expressed a doubt as to whether a dealer whose default in payment of the tax cannot be attributed to contumacious conduct on his part, would become subjected to the penalty under section 13(2). We do not think that there could be any such doubt. The default in payment of the tax may be due to dishonesty, stubbornness, or mere whimsicality. Whatever be the reason, once the payment is not made in accordance with the requirements of sub-section (1), the liability under sub-section (2) to pay the additional amount (which is designated as a penalty) is incurred. This liability to pay the additional amount by way of penalty, being part of the law governing the payment of the tax is, by virtue of section 9(3) of the Central Act, applicable to a dealer under this Act who fails to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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