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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

1. 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.

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2. 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.

3. 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.  

4. 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

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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.  

5. 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

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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.

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6. 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

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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.

7. 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

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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.

8. It is the aforesaid judgment and order passed by the Writ Court, which is questioned by the assessee before us in this appeal.

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9. 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.

10. Per  contra,  the  Revenue  would  support the impugned judgment and order passed by the High Court.

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11. 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.

12. 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

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of the excess shall not be made without the previous sanction of the State Government.”

(emphasis supplied)

13. 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.

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14. 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.

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15. 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

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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.

16. Further, in our view, the submission ad- vanced by Shri Ganesh that the conditions pre- scribed 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 pro- vides 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 pre- scribed.” Section 2(21) of the Act provides that “prescribed” under the Act would mean as pre- scribed under the Rules and herein, the Rules being silent on any settlement of the nature al-

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legedly 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 re- mission of tax under the Act.

17.  It is trite that the letter of law has to be accorded utmost respect and strictly ad- hered to especially while interpreting a taxing statute. There ought not exist any scope for im- pregnating 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

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implied. One can only look fairly at the language used.”

18. 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  In- dia, (2012)  6  SCC  613; CIT  v.  Calcutta Knitwears, (2014) 6 SCC 444; CTO v. Binani Ce- ments Ltd.,(2014) 8 SCC 319.]

19. The  convoluted  mesh  of  facts  and  the extremely protracted proceedings which span over three  decades,  at  the  instance  of  appellant,

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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.  

20. 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.

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21. 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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