V.S. Venkatachala Chetty vs Government of Mysore

The petitioner in this case has been convicted for non-payment of sales tax in accordance with the demand notice served on him within 21 days from the date of service.

It is contended that the petitioner was not liable to any sales tax for the financial year 1948-49 in respect of which the demand notice is issued. His turnover for the financial year is admittedly below Rs. 10,000. The financial year 1948-49 consists of only eleven months. Even according to the Sales Tax Officer the turnover of the petitioner was above Rs. 9,000, but less than Rs. 10,000. Anyway it is contended that the petitioner could have filed an appeal provided in the Sales Tax Act, against the decision of the Sales Tax Officer and if necessary file a revision petition could have had recourse to the provisions of Section 16 of the Sales Tax Act. The decision in Rama Iyer v. Government of Mysore [1951] 2 S.T.C. 122 : AIR 1951 Mys. 70 has been relied upon in support of the contention "that it is not within the province of the criminal court to enter into an enquiry about the correctness of the levy or the validity thereof."

In that case the Assessing Officer had found that the turnover of the petitioner was over Rs. 10,000 but "It was argued for the assessees that they were not liable to pay the tax by reason of the fact that the turnover does not exceed Rs. 10,000 per year." It will be noticed that under the Sales Tax Act the Sales Tax Officer has jurisdiction to ascertain whether the turnover is over Rs. 10,000 or less and the tax is leviable. When the Sales Tax Officer is satisfied that the assessee is a dealer within the meaning of the word as used in the Act, that he deals in a commodity not exempt from the levy of sales tax and that his turnover exceeds Rs. 10,000 neither a civil nor a criminal court can sit in judgment over the decision of the Sales Tax Officer on the same facts over again and ascertain whether his finding is correct or not. If, however, on the facts found by the Sales Tax Officer it is seen that the person assessed is not liable for assessment at all under the Sales Tax Act on the ground that his turnover is less than Rs. 10,000 as in this case or for other reasons it cannot be said that the tax levied is one under the Sales Tax Act. It has to be remembered that u/s 22 of the Act it is only an assessment made under the Sales Tax Act that cannot called in question in any civil or criminal court. As observed in the Commentary on the Indian Income Tax Act by A. C. Sampath Iyengar while dealing with Section 67 of the Indian Income Tax Act of 1922 :

"The right to challenge in a court of law arises only where the Income Tax authority has no jurisdiction to assess on the undisputed facts, or on the facts as found by it, or as assumed by it to exist. That is to say, if on certain facts the authority should hold it has jurisdiction in law and if that ''view of the law'' should be erroneous, the civil court would be entitled to interfere and not otherwise. The distinction, in other words, is as between a jurisdiction arising on an erroneous decision of fact, as opposed to one usurped on an erroneous view of the law. In the former case, the jurisdiction of the Income Tax Officer cannot be attacked, since he is given jurisdiction to decide it, rightly or wrongly; in the latter case, it can be, on the ground that the assessment is not one ''made under the Act''."

These observations on Section 67 of the Indian Income Tax Act which states that no suit shall be brought in any civil court to set aside or modify any assessment made under that Act equally apply to Section 22 of the Sales Tax Act. The point has been dealt with at some length in dealing with K. Kariappa v. Government of Mysore [1953] 4 S.T.C. 94 : AIR 1953 Mys. 12, and I do not think it is necessary to reconsider the same aspect of the matter at greater length.

If in this case as in the case reported in Rama Iyer v. Government of Mysore [1951] 2 S.T.C. 122 : AIR 1951 Mys. 70, the Sales Tax Officer had come to the conclusion that the turnover of the petitioner was over Rs. 10,000 for the financial year, it would not have been open to the petitioner to contend either in a civil or criminal court that he is not liable to pay the sales tax. Since his turnover is admittedly less than Rs. 10,000 for the financial year 1948-49, the assessment is not one made under the Sales Tax Act. The revision petition is therefore allowed. The petitioner is acquitted of the offence of which he stands convicted. The conviction and sentence are set aside. Fine if levied will refunded.

Conviction set aside.