caselaws
Supreme Court of India
Pradip Nanjee Gala vs Sales Tax Officer & Ors on 29 April, 2015Author: H Dattu
Bench: H.L. Dattu, S.A. Bobde, Arun Mishra
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4542 OF 2007
|Pradip Nanjee Gala | Appellant(s) |
Versus
|Sales Tax Officer & Ors. | Respondent(s) |
J U D G M E N T
H.L. Dattu, CJI
This appeal is directed against the judgment and order passed by the High
Court of Judicature at Bombay in Writ Petition No. 2226 of 1989, dated
03.02.2006, whereby and whereunder, the High Court has held that the
appellant is liable for payment of tax under Bombay Sales Tax Act, 1959
(for short, “the Act”) and dismissed the writ petition.
The question raised before us is whether the respondent-Revenue could
resile from a settlement entered into with the assessee on the basis of
which the appellant has already paid and settled his dues under the Act.
Since the protracted proceedings in the instant case have spawned over
three decades, we would only notice the most relevant facts necessary for
disposal of the appeal.
Facts in brief are as follows: The appellant had joined as a partner in the
assessee-Firm. His status as the partner of the said Firm, not being of any
consequence to the question that arises for our consideration, does not
require to be noticed by us. The relevant assessment years are Samvat 2034
(12.11.1977 to 31.10.1978) and Samvat 2035 (01.11.1978 to 24.06.1979). The
Assessing Authority had carried out the assessments and confirmed the
demand for Rs.13,33,091/- under the Act and Rs.85,878/- under the Central
Sales Tax Act, 1956 (for short, “the CST Act”) for Samvat 2034; and
Rs.28,18,202/- under the Act and Rs.44,577/- under the CST Act for Samvat
2035. The appellant had preferred appeals against the aforesaid assessments
before the first appellate authority, which were dismissed by order dated
30.09.1981.
Being aggrieved by the aforesaid orders, the appellant had approached the
Maharashtra Sales Tax Tribunal (for short, “the Tribunal”). During the
pendency of the said appeals, the appellant had addressed a letter to the
State Minister for Finance dated 23.11.1983, seeking settlement of sales
tax dues payable by him as a partner of the assessee-Firm. It is the case
of the appellant that the then State Minister for Finance accepted the
offer of settlement and accordingly, in the light of the said settlement,
the Commissioner of Sales Tax had issued a letter on 16.01.1984 quantifying
the amount due and payable by the assessee-Firm for the relevant assessment
years on the basis of the partnership deed. Before the Tribunal, the
respondents have denied the existence of such settlement and further
submitted that there has been no decision quantifying the individual
liability of the appellant and absolving him from the liability to pay for
the dues of the assessee-Firm for said assessment years. Since, the
question before the Tribunal was restricted to determination and payment of
liability by the appellant qua the assessee-Firm, the Tribunal had refused
to adjudicate upon both: (a) whether there exists any settlement between
the parties regarding the tax liability and (b) whether the appellant was
relieved of his obligation under the Act.
Aggrieved by the aforesaid, the appellant approached the Writ Court. The
assessee had contended that he had approached the State Minister for
Finance seeking settlement of his individual dues, which was accepted as
well as implemented by the order of the Commissioner dated 16.01.1984 and,
therefore, the appellant is absolved of all the liabilities confirmed
against the assessee-Firm for the relevant assessment years. The Revenue
has adopted a stand that under the Act, apart from the power of remission
of tax payable by the dealer under Section 45 of Act, there exists no other
provision which would empower the authorities to settle the liability of an
individual partner. Further, that Section 18 of the Act specifically
provides that in respect of the dues of the firm, the liability of a
partner is joint and several and, therefore, neither the State Minister for
Finance nor the Commissioner could have legally entered into any settlement
regarding the liability of individual partner in respect of the dues of the
assessee-Firm.
The High Court, after due consideration of the submissions made by both the
parties and meticulous examination of the case records as well as the
relevant provisions of law, has observed that the case of the appellant
does not require them to examine the validity of the liability confirmed
against the assessee-Firm and thus, examined the question as to whether the
settlement entered into between the Commissioner and the appellant herein
is permissible under the Act. The High Court has concluded that under
Section 18 of the Act the partners of the Firm are jointly and severally
liable to pay the tax dues of the assessee-Firm and no provision under the
Act contemplates a settlement between a partner of the assessee-Firm and
the Commissioner to determine individual liability. The High Court has
further noticed that Section 45 of the Act which speaks of power of
remission of the Commissioner also does not contemplate any settlement of
the nature claimed herein and therefore, could not be invoked to shelter
the appellant from discharging his liability under the Act. Hence, the Writ
Court has thought it fit to fix the entire liability of payment of sales
tax on the assessee and upheld the order passed by the Revenue by the
judgment and order dated 03.02.2006.
It is the aforesaid judgment and order passed by the Writ Court, which is
questioned by the assessee before us in this appeal.
Shri S. Ganesh, learned counsel for the appellant-assessee would submit
that the appellant could not be held liable to settle tax liability of the
assessee-Firm under the Act, because he has already paid his dues as a
partner of the assessee-Firm under the settlement entered into between him
and the State Minister for Finance. He would further refer to the order of
the Commissioner dated 16.01.1984 in support of the determination of his
individual dues by the respondent-Revenue and therefore submit that since
the appellant has discharged his share of the liability, he ought to be
absolved of all the liabilities confirmed against the assessee-Firm for the
relevant assessment years under the Act.
Per contra, the Revenue would support the impugned judgment and order
passed by the High Court.
Before we proceed to examine the merits of submissions advanced by learned
counsel appearing for the parties to the lis, relevant provisions of the
Act and Rules require to be noticed by us.
Section 18 of the Act provides for the liability of a firm to pay tax and
contemplates joint and several liability of the partners of the firm
towards the payment of such tax liability under the Act. Section 45 of the
Act provides for remission of tax payable by a dealer under the Act. It
reads:
“The Commissioner may, in such circumstances and subject to such conditions
as may be prescribed, remit the whole or any part of the tax payable, in
respect of any period, by any dealer:
PROVIDED that if the amount to be remitted exceeds two thousand rupees, the
remission of the excess shall not be made without the previous sanction of
the State Government.”
(emphasis supplied)
It would further be relevant to notice the appropriate circumstances and
conditions which are prescribed by the appropriate authority adherence to
which is required under Section 45 of the Act for the Commissioner to
exercise his power of remission. Rules 43A, 44 and 44A speak of remission
as provided for under the Act. Rule 43A provides for the remission of
purchase tax payable in respect of purchases of goods specified in Schedule
E of the Rules. Rule 44 speaks of certain cases where an authorised dealer
or commission agent who has become liable to pay purchase tax under section
14 of the Act could claim remission. Section 44A speaks of remission of
purchase tax payable by authorised dealer in certain cases.
The plain reading of Section 45 of the Act would indicate that the
legislature has vested the power of remission of tax only with the
Commissioner and subjected the exercise of said power in accordance with
such circumstances and conditions as prescribed by the State Government
under the Bombay Sales Tax Rules, 1959 (for short, “the Rules”). The
proviso to the provision specifies that the remission of tax amount if
exceeds Rs.2000/- ought to be made by the Commissioner after obtaining
sanction of the State Government. The Section neither speaks of any power
to enter into a settlement for such purposes by the State Minister of
Finance nor prescribes exercise of powers by the Commissioner in light of
any such settlement.
Section 18 of the Act specifically provides that the liability of a partner
in respect of the dues payable by the firm is joint and several. But for
Section 45 of the Act which permits remission of the tax payable by the
dealer, that is, the assessee-Firm, there is no provision under the Act
empowering the State Government or the Commissioner to enter into a
settlement with an individual partner regarding his liability in respect of
the dues payable by the assessee-Firm. Further, the Rules relevant to the
exercise of power of remission by the Commissioner under the Act viz.,
Rules 43A, 44 and 44A also do not provide any condition with respect to
remission of sales tax under the Act by entering into any settlement, more
so a settlement for the payment of individual liability of partners under
the partnership deed. Therefore, in our considered opinion, in the absence
of any specific provision contained in the Act or the Rules, there could be
no settlement with an individual partner so as to discharge him from his
obligation to pay the sales tax dues payable by the assessee-Firm.
Further, in our view, the submission advanced by Shri Ganesh that the
conditions prescribed under the statute at hand ought to be read
considering the facts and circumstances of the instant case to provide
beneficial meaning to the statute, also does not hold any waters. The
statute herein clearly and expressly provides for the limitation on
exercise of powers of remission by the Commissioner and mandates them to be
exercised only “in such circumstances and subject to such conditions as may
be prescribed.” Section 2(21) of the Act provides that “prescribed” under
the Act would mean as prescribed under the Rules and herein, the Rules
being silent on any settlement of the nature allegedly entered into between
the appellant and the State Government, the external circumstances
including a settlement cannot be considered by the Commissioner while
exercising power of remission of tax under the Act.
It is trite that the letter of law has to be accorded utmost respect and
strictly adhered to especially while interpreting a taxing statute. There
ought not exist any scope for impregnating the interpretation by reading
equity into taxing statutes. The classic statement of Rowlatt, J., in Cape
Brandy Syndicate v.IRC, [(1921) 1 K.B. 64, 71] still holds the field. It
reads as under:
“In a Taxing Act one has to look merely at what is clearly said. There is
no room for any intendment. There is no equity about a tax. There is no
presumption as to a tax. Nothing is to be read in, nothing is to be
implied. One can only look fairly at the language used.”
Further, the three Judge Bench of this Court in CIT v. V. MR. P. Firm Muar,
(1965) 1 SCR 815 has authoritatively observed that:
“13. …Equity is out of place in tax law; a particular income is either
exigible to tax under the taxing statute or it is not…”
[See: CIT v. Shahzada Nand & Sons, (1966) 3 SCR 379; Murarilal Mahabir
Prasad v. B.R. Vad, (1975) 2 SCC 736; CIT v. Nawab Mir Barkat Ali Khan
Bahadur, (1975) 4 SCC 360; State of M.P. v. Rakesh Kohli, (2012) 6 SCC 312;
Vodafone International Holdings BV v. Union of India, (2012) 6 SCC 613; CIT
v. Calcutta Knitwears, (2014) 6 SCC 444; CTO v. Binani Cements Ltd.,(2014)
8 SCC 319.]
The convoluted mesh of facts and the extremely protracted proceedings which
span over three decades, at the instance of appellant, indicate that the
basis of case made out by the appellant does not exist in either the
statute law or, in fact, any law applicable to the present proceedings. The
settlement, if any, reached between the appellant and the State Government
for part payment of tax liability by the partner of an assessee-Firm would
not fall under the four corners of the Act or the Rules as has been claimed
by the appellant since the beginning of the proceedings under the Act.
Therefore, in light of the aforesaid, we are of the considered opinion that
the High Court has rightly examined the issues before it and the judgment
and order passed by it does not suffer from any error, whatsoever, and
thus, the civil appeal being devoid of any merit requires to be dismissed.
The judgment and order passed by the High Court is confirmed.
In the result, the appeal is dismissed with costs of Rs.5,00,000/-.
……………….CJI
[H.L. DATTU]
………………..J.
[S.A. BOBDE]
………………..J.
[ARUN MISHRA]
NEW DELHI,
APRIL 29, 2015.
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