STATE OF KARNATAKAversusSUNAGAR BROS.

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                                STATE OF KARNATAKA                                    A
"-·
~-                                            V.


                                    SUNAGAR BROS.

                                      APRIL 13, 1993
                                                                                      B
                   [KULDIP SINGH AND B.P. .JEEVAN REDDY, ,J.J.]

                Karnataka Sales Tax Act, 1957: Ss. 20 (3) and 68-Held, undis-
           pured r:a.r to be deposited before appeal is e11tertained includes addi-
           tional tax under S. 6B.
                                                                                      c
                 The respondent-assessee challenged the best judgment assess- ·
           ment for the year 1972-73. The First Appellate Authorit~· dismissed it
           in .limine on the ground that the respondent had failed to pa~· the tax
           "not disputed in appeal".
                                                       /         i
                                                           /
                A second appeal was dismissed by the Karnataka Appellate D
           Tribunal. The High Court allowed the revision petition of the assessee
           on the grotfnd that the additional tax payable under S. 68 was distinct
           from the tax in S.20 (3) on the payment of which the right of appeal
           is made dependent.
                                                                                      E
                 In the appeal by the State to this Court, the question was whether
           themandateunders.20(3) to pay the undisputed tax before the appeal
  •        is entertained is also applicable to additional tax payable under s.6B
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           of the Act.

                                                                                      F
                Allowing the appeal, this Court,

                HELD: 1. The expression 'tax' has been defined to mean a tax
           leviable under the provisions of the Act and as· such includes the
           additional tax levied under section 6B of the Act. When Section 20 (3)
                                                                                  G.
           talks of "payment of the tax and penalty not disputed in the appeal"
      "'   it obviously includes the additional tax. (85-B)

                On the plain language of S. 20 (3), the only conclusion which can
           be drawn is that the undisputed 'tax' which includes additional tax
-          has to be deposit£d before the appeal is entertained. (85-C)

                                           '81
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    82                SUPREME COl;RT REPORTS                 119931} S.C.R.


A         2. The fact that the quantum of the additional tax is determined    .r
     with reference to the sales tax, purchase tax imposts would n~t alter
    its character. The additional tax is nothing but an enhancement in the
     rate of the sales tax/purchase tax under the Act. As soon as the
    assessing authority determines the levy of sales tax/purchase tax the
    additional tax under Section 6B hecomes part of the assessment order.
8 . Similarly if the main impost under Section 5 (I) is successfully
    challenged, the reasoning sustaining the challfnge would also-ipso
    facto-affect the validity of the additional impost under Section 6B of
     the Act. (85-D-E)

C       CIVIL APPELLATE JURISDICTION: Civil Appeal No. 228
    (NT) of 1987.
                             .
        From the Judgment and Order dated 8.4.1982 of the Karnataka
    High Court in S.T.R.P.No. IQ0/81.
D
         M. Veerappa and K.H. Nobin Singh for the Appeilant.

         The judgment of the Court was delivered by

E      KULDIP SINGH,J. The question for consideration in this appeal
  is whether the mandate, under Section 20 (3) of the Karnataka Sales
  Tax Act, 1957 (the Act), to pay the undisputed tax before the appeal
  is entertained. is also applicable to the additional tax payable under       •
  Section 6B of the Act. In other words whether it is obligatory under the
  Act to deposit the tax and the additional tax before the appeal is
F entertained.

         The respondent-assessee challenged the best judgment assess-
    ment made against him for the year 1972-73 before the First Appellate
    Authority which was dismissed in limine on the ground that the
G respondent failed to pay the tax "not disputed in appeal". The second
    appeal filed by the asses see before· the Karnataka Appellate Tribunal
    was also dismissed. On a revision petition under the Act the Kamataka
    High Court reversed the findings of the authorities below on the ground
  - that unpaid "not disputed" tax was the additional tax which was
    different than the tax envisaged under Section 20 (3) of the Act. The
iI High Court allowed the revision petition of the assessee and remanded
      STATE OF KARNATAKA 1•. SUNAGAR BROS. [KULDIP SINGH. J.. J              83

    the matter to the appellate authority to dispose of the appeal in A
    accordance with law. This appeal by way of spec'ial leave against the
    judgment of the High Court is by the State of Karnataka.

         Before the appellate authority it was the admitted case of the
    parties that no part of the undisputed tax levied under Section 5 (I) of
                                                                             B
    the Act had remained unpaid. It was only the undisputed additional
    levy under Section 6B of the· Act which had not been paid.

         Section 20 (1) of the Act confers a right of appeal. Sub-section 2
    of Section 20 refers to the period of limitation. Sub-Section 3 (A) of·
    section 20 is as under:-                                                C

                "No appeal against an order of assessment shall be
                entertained by the appellate authority unless it is
                accompanied by satisfactory proof of the payment of
                the tax and penalty not disputed in the appeal."                  0

         The High court on the interpretation of various provisions of the
    Act came to the conclusion that the additional tax under Section 613 is
    a levy distinct from the impost under Section 5 (I) of the Act. The High
    Court thus came to the conclusion that the non-payment of the
    additional tax would not bar the entertainment of the appeal under the E
    Act. The findings of the High Court are ·~~s..:..J on the following
    reasoning:-

-               '.'Though the tax under section 6B is and impost of a
                similar nature, it is a levy distinct from the impost             F
                under Section 5( I) or under Section 6. This is the clear
                outcome of the scheme of Section 6B and the effect of
                Section 6B(2) of the Act. Section 6B(2) by providing
                for the application of the provisions of the 'Act' to the
                tax under s~ction 6B as they apply to the sales or
                                                                                  G
                 purchase tax under the Act, recognises the distinction
                 between the additional tax on the one hand and the
                other imposts under the 'Act' on the other.......... ..
                Section 20(1) creates and confers a right of appeal.
                Sub-Section (3) of Section 20 seeks to restrict that
                 right and subject it to certain conditions. It appears us        H




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    84                   SUPREll:IE COURT REPORTS                 [ 1993 ( 3 S.C.R.


A               ,that the "tax" in Section 20 (3) on the payment of
                 which the right of appeal is made dependent should
                 receive a construction \\;hich would advance that right
                 and one which would not make that right dependent
                 upon or subject to payment of a "tax" which is distinct
                 from the tax constituting the subject matter of the
B                appeal... ......... .In the present case, the appeal is one
                 directed against the main impost and no part of the
                 assessment relating to the additional tax, is the subject
                 matterofthe appeal. That being so, the view that non-
                 payment of the additional tax would bar the entertain-
c                ment of the appeal is not unjustified.   11




        We are not inclined to a'grce with the view taken by the High
    Court, Sectitm 6B of the Act as it stood at the relevant time r~ads as
    under:-
D               11
                 6-B. Levy of additional tax. --(I) There shalJ be
                levied and collected from every dealer liable to pay
                tax.und!!r section 5 or under section 6 (and from every
                dealer liable to pay tax under Section 25 B) an
                additional tax at the rate often paise in the rupee on the
E               sales tax or purchase tax or both payable by such
                dealer;

                Provided that in respect of the sale or purchase of any
                of the declared goods mentioned in the Fourth Sched-
F               ule, the tax together with the additional tax shall not
                exceed four percent of the sale or purchase price
                     .
                thereof.

                (2) The provisions of this Act and the rules made
                thereunder including those relating to refund or ex-
G
                emption from tax shall, so far as may be, apply in
                relation to the levy, assessment and collection of the
                additional sales tax or purchase tax or both, as they
                apply in relation to the levy assessment and collection
                                                                 11
                of sales tax or purchase tax under this Act.
H
  STATE OF KARNATAKA 1•. SUNAGAR BROS. [KULDIP SINGH. J .. ]        85

      It is obvious that the additional tax is leviable at the rate of ten A
paise in the rupee on the sales tax.or purchase tax or both, payable by
such dealer. The additional tax is computed with reference to the tax
payable by the dealer. When once the assessing authority determines
the sales tax or purchase tax under the Act the additional tax is levied
automatically and becomes part and parcel of the assessment order.
The expression "tax" has been defined to mean a tax leviable under the 8
provisions of the Act and as such includes the additional tax levied
under section 6B of the Act. When Section 20(3) talks of "payment of
the tax and penalty not disputed in the appeal" it obviously includes the
additional tax. On the plain language of Section 20(3) of the Act it is
not possible to make any distinction between the tax and the addition c
tax and the only conclusi11n which can be drawn is that the undisputed
"tax" which includes additional tax has to be deposited before the
appeal is entertained.

      The fact that the quantum of the additional tax is determined with D
reference to the sales tax/purchase tax impost would not alter its
character. The additional tax is nothingbut an enhancement in the rate
of the sales tax/purchase tax under the Act. As soon as the assessing
authority determines the levy c)f sales tax/purchase tax the additional
tax under Section 6B become part of the assessment order. Similarly
if the main impost under Section 5 ( 1) is successfully challenged, the E
reasoning sustaining the challenge would also-ipso facto-affect the
validity of. the additional impost under Section 6B of the Act.

     We are, therefore, of the view that the High court was not justified
in holding that additional tax under Section 6B was not a tax for the F
purposes of Section 20 (3) of the Act. We allow the appeal. set aside
the judgment of tJ1e High court and dismiss the revision petition filed
by the assessee before the High Court. No costs.

U.R.                                                  Appeal allowed.