Raghavendra B.G. vs Entertainment Tax Officer and Another

The petitioner is the same in all these petitions.

In regard to assessment orders passed against the petitioner under the Karnataka Entertainments Tax Act 1958 (hereinafter referred to as the Act), there was default committed by the petitioner and as such respondent-1 (The Entertainment Tax Officer, Muddebihal), applied before the Judicial Magistrate First Class, Muddebihal, as provided by Sec. 9(3)(a) of the Act and requested the Magistrate to recover the arrears of tax as if it were a fine imposed by the Magistrate.

What is narrated in the preceding paragraphs is the sum and substance of these petitions.

The further fact that needs narration is, as against the concerned assessment orders the petitioner has preferred appeals before the appellate authority under the Act and it has not granted stay of recovery ofarrears of tax, but has already heard the arguments and reserved the apppeals for pronouncement of judgments. In the meanwhile the Magistrate has taken action on the application filed by respondent-1 under Section 9(3)(b) of the Act.

Sri B.V. Katageri, learned Advocate appearing on behalf of the petitioner urged that the concerned Entertainment Tax Officer was not legally empowered, according to the provisions of the Act itself to pass assessment orders in regard to levy of entertainment tax and as such the concerned assessment orders are not legal in law; because, they have been passed by an authority not empowered by law we pass such orders. He argued that this point goes to the root of the question and such an objection was raised before the Magistrate and the learned Magistrate has overruled that objection. In this very connection he submitted that when the concerned assessment orders cannot be in law called assessment orders, no question of recovery by following the procedure provided in Sec. 9(3)(a) or (b) of the Act arises and as such the Magistrate had no jurisdiction to recover the same as if it was a fine imposed by him.

Section 9(3) of the Act reads as follows: Any amount of tax, surcharge or additional tax or any other amount including penalty due under this Act may, without prejudice to any other mode of collection be recovered,- (a) as if it were an arrear of land revenue; or (b) on application to any Magistrate, by such Magistrate as if it were a fine imposed by him.

Section 9(4) of the Act reads as follows;

The High Court may, either suo motu or on any application by the prescribed authority or any person aggrieved by the order, revise any order made by a Magistrate under Cl(b) of sub-sec(3).

These revision petitions are evidently under Sec. 9(4) of the Act.

A plain reading of the aforementioned provisions shows that any amount of tax, surcharge or additional tax or any other amount including penalty due under the Act from a person can be recovered by a Magistrate, if an application to that effect is made to him, as if it were a fine imposed by him, and if in doing so, any Magistrate commits any illegality, irregularity, error or impropriety, this Court has the revisional powers to rectify the same by virtue of Sec. 9(4) of the Act Sri B.V. Katageri contended that Sec. 9(3)(b) is analogous to Sec. 13(3)(b) of the Karnataka Sales Tax Act, 1948, while Sec. 9(4) of the Act is analogous to bee 13(4) of the said Act. He further argued that the principles laid down by our High Court and other Courts while dealing with the provisions of the Sales Tax Act would govern the provisions in Sec. 9(3) and (4) of the Act.

He firstly relied on the decision in Subbn Beig v. Govt of Mysore, 4 STC. 108. This decision is under the Mysore Sales Tax Act 1948 It has been held that if, however, the assessment iff found to be not made under the Act, there was no bar in Sec. 22 of that Act pronouncing civil or criminal Courts from considering the correctness of the order In this connection Sri Katageri pointed out that under the present Karnataka Sales Tax Act the bar contemplated by Sec. 22 of the 1948 Act is contemplated by Sec. 32. The above principle has been laid down while exercising revisional powers of this Court under Sec. 439 Crl.PC 1898; because there was a conviction on Subban Beig under Sec. 20 of the Mysore Sales Tax Act, 1948, and it was during that prosecution that the contention had been raised before the Magistrate and the Magistrate had overruled the contention that he was barred from taking into consideration such a contention in view of Sec. 22 of that Act.

The main distinction is that in the present case there is no prosecution before a Magistrate. The amount of tax, surcharge etc due is| statutorily made to be fine imposed by a Magistrate, and the only question is the recovery of fine already imposed by the Magistrate. Therefore this principle cannot have any application to the present case.

It may be mentioned here itself that under Sec. 20(1) (b) of the Mysore Sales Tax Act, 1948 failure to pay, within the time allowed any tax assessed on a person or any fee due from him under the said Act, was made penal and prosecution was contemplated.

The next decision relied on by Sri Katageri in State of Mysore v. B.H. Hariraja Rao, 1961 MysLJ. 1027. Here again there was a conviction against B. H. Hariraja Rao under Sec. 20 of the Mysore Sales Tax Act, 1948 and a contention was raised before the Magistrate that in view of the subsequent amendment to the concerned provision, no tax was due by him, as such he had not failed to pay the tax and therefore he had not committed an offence and the learned Magistrate upheld that contention, but the State preferred appeals against the acquittal. Their Lordships dismissed the appeals holding that the Magistrate was right in taking into consideration the contention raised by the assessee as it was his duty to find out whether the assessee had committed any offence contemplated by Section 20 of the 1948 Act.

Sri Katageri then relied on the decision in K. Burman v. Commercial Tax Officer, Calcutta, 28 STC. 637. That was a case decided by a Divisoin Bench of this Court in exercise of its writ jurisdiction and all the remedies open to the petitioner under the Sales Tax Act had been exhausted. These facts, inmy opinion, plainly show that the decision has no bearing on the question on hand.

Sri Katageri cited the decision in M.S. Diwakar v. State of Mysore, 14 STC. 625, in support of his contention. The decision was rendered by a Division Bench of this Court in criminal revision Petitions filed under Secs. 435 and 439 of the CrlPC 1898. The facts as found in the said decision are: that an application under Sec. 13(3)(b) of the Mysore Sales Tax Act, 1957 bad been made to a Magistrate and it was resisted by the petitioner M.S. Diwakar on the ground that he was a transferee of the business and was not liable to pay the arrears of tax that became due prior to the transfer, but the Magistrate refused to entertain the objection and held that no objection could be taken in view of Sec. 32 of the said Act. It has already been pointed out that under Sec. 32 of the Karnataka Sales Tax Act, as it now stands, the civil and criminal Courts are barred from taking into consideration certain kinds of contentions. The Division Bench held that the view of the Magistrate that the contention was hit by Sec. 32 of the Mysore Sales Tax Act, 1957 is not correct; because, admittedly there had not been any assessment order to pay tax on M.S. Diwakar and as such there could not be any amount, which could be deemed to be a fine imposed on him so as to bring into application Sec. 13(3), (b) of the said Act. These facts and circumstances show the vast distinction that lies when the facts of the present case are considered.

Nextly Sri Katageri relied on the decision in Seshayya v. Asst Commercial Tax Officer, Gangavati, 28 STC. 306. In the recovery proceeding before a Magistrate under Sec. 13(3)(b) of the Mysore Sales Tax Act, 1957, an objection that the same had been taken only against some of the legal representative and not against all who represented the estate concerned in the said case, was raised before the Magistrate and the Magistrate did not entertain the objection. Therefore, the petitioners filed revision petitions under Sec. 13(4) of the said Act. A Division Bench of this Court held after taking into consideration the provisions in Rule 42 of the My sore Sales Tax Rules 1957 that recovery proceedings ought to have been thrown out, as all the representatives of the deceased assesses were not on record, that they were to be on record as holders of the assets of the deceased assessee and such assets could not be attached behind the back of the remaining legal representatives. The distinction in facts is easily seen.

The last decision relied on by Sri Katageri in State of Mysore v. S.S. Yalaman, 21 STC. 305. This Court has laid down that recovery proceedings under Sec. 13(3)(a) and (b) of the Mysore Sales Tax Act 1957, could not be taken up simultaneously and that by virtue of Sec. 32 of the said Act, the Magistrate has no jurisdiction or competence to decide the validity or otherwise of an assessment made under the said Act. Sri Katageri argued that in the absence of a provision in the Act similar or analogous to Sec. 32 of the Mysore Sales Tax Act 1957, such a bar does not operate and as such, the petitioner has liberty to raise the contention be. fore the Magistrate and the Magistrate was bound to consider the contention. This argument does not appeal to me; because, according to the plain meaning of Section 9(3)(b) of the Act once an assessment order is passed and the amount remains unpaid, and further an application is made before a Magistrate for recovery of that amount, that amount is, in law, considered to be a fine imposed by the Magistrate as in any other criminal case which has ended in conviction. The Magistrate has simply to proceed as per Sec. 421 of the CrlPC and if he commits illegality, irregularity etc, in so proceeding, a revision under Sec. 9(4) of the Act would lie to this Court.

For the foregoing reasons I do not see any substance in these petitions and dismiss them.

[1978](100)kar.l.j. 36

Karnataka Agricultural Income-tax Act 1957, Sec. 10(1)(a) & (2)(a) - Trustee - Receipt of income partly for own benefit - Assessment.

Where a person holds an agricultural land as a trustee and receives the agricultural income partly for his own benefit and partly for the benefit of others, assessment can be made in accordance with Sec. 10(1)(a) of the Karnataka Agricultural Income-tax Act, 1957 and not under Sec. 10(2)(a) or under Sec. 3(3) of the said Act. [Para 7]

Sec. 3(3) will have no application to a case where a person holds agricultural lands as a trustee and receives the agricultural income partly for bis own benefit and partly for the benefit of others. Sec. 3(3) of the Act applies only if the person holds property as tenant-in-common and derives agricultural income. If a person holds agricultural lands as a trustee and receives agricultural income partly for his own benefit and partly for the benefit of others, it is impossible to say that the property is held as tenant-in-common. [Para 1]

Having regard to the context in which the expression "is entitled to receive on behalf of any person" is used, it has to be understood as meaning "entitled to receive for the benefit of any person". It follows that Sec. 10(1)(a) will apply to the case of a person who holds agricultural lands as a trustee and receives agricultural income for the benefit of others. [Para 3]

The decision in (1966)2 Mys.LJ. 275 is not inconsistent with 60 ITR. 216 SC.