- (1.) THE dealer, Kanpur Vanaspati Stores, carries on business in hydrogenated oil and washing soap. He also imports and distributes vanaspati as an agent of Malwa Vanaspati and Chemicals Limited, Indore. For the assessment year 1957-58 the dealer filed returns of his turnover under the U.P. Sales Tax Act for successive quarters of the year. Together they disclosed a gross turnover of Rs. 1,66,387.03 and a net turnover in the same figure. During the assessment proceedings a statement of account was filed by the dealer showing a net turnover of Re. 1,66,387.05 in respect of imported vanaspati and washing soap. He admitted that he had realised an amount of Rs. 10,207.54 as sales tax from his customers at the rate of one anna per rupee on imported vanaspati and six pies per rupee on washing soap. When the figures were worked on before the Sales Tax Officer the dealer admitted that the tax liability in respect of the turnover should be Rs. 10,339.19. The Sales Tax Officer issued a notice under rule 41(5) fixing a date for hearing to enable him to make an annual assessment. Repeated adjournments were taken by the dealer, and as the dealer was absent on the date ultimately fixed for hearing the Sales Tax Officer proceeded ex parts. He estimated the turnover of imported vanaspati at Rs. 58,00,000 and calculating the ate of tax at one anna per rupee computed the tax liability at Rs. 5,62,500. He estimated the turnover of washing soap at Rs. 6,152.50 and taking the rate at six pies per rupee he calculated the tax liability at Rs. 191.62. The total turnover was thus estimated at Rs. 58,06,132.30 and the tax liability was determined at Rs. 3,62,691.62. As the dealer had deposited a sum of Rs. 1,060.43 only towards the tax liability the Sales Tax Officer Issued a notice of demand for the balance, namely, Rs. 3,61,631.19.
(2.) THE dealer preferred an appeal under section 9 of the Act. In the memorandum of appeal he admitted the turnover at Rs. 1,66,387.03. One of the grounds taken in the memorandum of appeal was that the dealer, being an importer, was not a "successive" dealer within the meaning of section 3-A of the Act and therefore the higher rate of tax at single point was not attracted. It was said that it was liable to tax under section 3 at the multi-point rate at 3 pies per rupee only. The appellate authority at first returned the memorandum of appeal on the ground that the admitted tax had not been deposited but subsequently accepted it and ordered its registration. When the appeal came on for hearing, an objection was raised on behalf of the Sales Tax Officer that the appeal was not entertainable because the admitted tax had not been deposited. The objection was opposed by the dealer who pointed to the ground taken in the memorandum of appeal that it was liable to tax under section 3 at 3 pies per rupee only and referred to a pending writ petition in this Court in which a similar ground had been taken. It contended that upon the rate of tax admitted by it the "admitted tax" was covered by the amount already deposited by it. However, an application was also died by the dealer praying for time to deposit the balance in case the appellate authority held that for the purpose of the appeal the dealer was liable to deposit a larger sum as the admitted tax. The application was rejected by the appellate authority on the ground that the admitted tax had not been deposited on or before the date of being the appeal and there was no valid reason justifying the grant of further time to deposit the admitted tax. The appellate authority, in the circumstances, declined to entertain the appeal and it was dismissed. The dealer then applied in revision and the revision application was also dismissed. At the instance of the dealer the revising authority has made the instant reference inviting the opinion of this Court on the following questions :- (1) Whether "admitted tax" is that which is found to be due on the net turnover declared by the dealer on calculating at the rate prescribed under the U.P. Sales Tax Act and the notification issued thereunder ? (2) Whether the assessee could take a plea in the grounds of appeal so as to vary the tax admitted by him at the time of assessment by contending that the goods were liable to tax at a rate lower than that prescribed in the notification issued under the U.P. Sales Tax Act ? (3) Whether the plea of the assessee admitting a lower rate of tax in the grounds of appeal as against the rate prescribed in the notification issued under the U.P. Sales Tax Act could be examined on merits to see if it was a bone face plea or a bona fide plea, for the purpose of entertaining an appeal under the first proviso to clause (1) of section 9 of the U.P. Sales Tax Act ? (4) Whether the plea of the assessee that a dealer making the first sale would not come within the term "successive dealer", occurring in section 3-A of the U.P. Sales Tax Act, is a bona fide or frivolous plea in the circumstances of the case ? (5) Whether an assessee can be permitted to raise frivolous pleas and avoid payment of tax which he himself had considered to be due and had realised ? (6) Whether the objection to the entertainability of the appeal could be raised after the appeal had been registered in accordance with rule 67 of the U.P. Sales Tax Rules ? Special Appeal No. 330 of 1963 arises in the following circumstances. When the revision application mentioned above was dismissed by the revising authority, the dealer filed a petition under Article 226 of the Constitution praying for certiorari against the assessment order, the appellate order and the order made in revision and for certiorari directing the Sales Tax Officer not to take recovery proceedings for realisation of the tax. That petition was dismissed by Manchanda, J., on 13th March, 1963, in the view that the U.P. Sales Tax Act provided adequate alternative remedy for obtaining relief. He did not express any opinion on the merits of the assessment or on the interpretation of the proviso to section 9(1) of the Act. The order of the learned single Judge has been challenged by the dealer in Special Appeal No. 330 of 1963.
(3.) THE other connected case. Miscellaneous Application No. 177 of 1963, is an application dated 20th March, 1963, under Article 227 of the Constitution. As is apparent, it was filed within a few days after Manchanda, J, dismissed the writ petition. By the said application the dealer challenges the validity of the recovery proceedings, the ground being that they could not be taken so long as the correct tax liability was not decided in appeal. We shall first consider the sales tax reference. Section 9(1) of the Act provides : "Any dealer objecting .............. to an assessment order made under section 7, ............. may within 30 days from the date of service of the ............ notice of assessment ......... appeal to such authority as may be prescribed : Provided that no appeal against an assessment shall be entertained unless it is accompanied by a satisfactory proof of the payment of the amount of tax admitted by the appellant to be due, or of such instalments thereof as may have become payable : Provided ................................." ;