1968 PLP 215 (PTD)

In the counter‑affidavit filed by the respondent in W. P. No. 221 of 1959, it is alleged that on and after the making of the assessment and the issue of the demand notice calling upon the petitioners to pay duty on 10th January 1959, by reason of the non‑compliance with that direction, the petitioners were in default and unless the time for payment was validly extended by the proper authority, it was open to the Deputy Controller to exercise his powers under section 67(4) of the Act imposing the penalty. It is claimed that till the petitioners were called upon to pay the duty on or before 5th March 1959, this order was not made in the exercise of any power conferred on the Deputy Controller under the Act. In the absence of compliance with the requirements of section 70(1), it was not competent to the Deputy Controller to postpone the collection of the duty. It is urged, accord ingly, that the order imposing the penalty under section 67(4) of the Act was rightly made by reason of the failure to pay the duty on or before the 10th January 1959, and is not liable to be quashed as beyond jurisdiction. It seems to me that the contentions of the respondent must prevail. . Under section 63 as it stood, there was a provision for appeal against the order of the Controller assess ing the estate duty payable to the Central Board of Revenue. Subsection (6) of that section stated: "Notwithstanding that an appeal has been filed before the Board, so much of the estate duty as is not in dispute shall be payable by the appellant." It is principally on the wording of the subsection that the petitioners rely in seeking to substantiate their contention that the Deputy Controller had no jurisdiction to proceed against the petitioners for the collection of the disputed duty pending the appeal. It seems to me that this provision cannot have that significance. Where a person appeals against an order of the Deputy Controller assessing the estate duty payable, even the whole order may be the subject‑matter of the appeal and the dispute might relate to the entirety of the demand of the estate duty or the appellant might dispute only a part of the estate duty levied. Subsection (6) of sec tion 63 as it stood, required the appellant to pay the undisputed part of the estate duty notwithstanding, the pendency of the appeal. There could clearly be no stay of the undisputed part of the estate duty. In so far as the disputed part of the estate duty is concerned, the position would accordingly be that there was an assessment by the Deputy Controller as authorised by the law but that the validity of that part of the assessment was sought to be canvassed in the appeal. There is no provision of the Act which suggests that there would be a stay of operation of the collection of the duty where an appeal was filed against the order impos ing the duty. Normally, therefore, any such collection of the disputed part of the estate duty should depend upon the specific orders passed in that regard either by the assessing authority or by the appellate authority. The only provision that is found in the Act is section 70 which deals with the post ponement of the collection of duty. It makes no distinction between cases where an appeal has been filed and where an appeal has not been filed. The only circumstance under which the Controller may allow postponement of payment would be those which are laid down in section 70(1) of the Act. From the wording of section 63(6) alone, it is impossible to infer that there is an automatic stay of collection of the disputed part of the duty on the filing of an appeal. Coming now to section 70, it is seen that a discretion is vested in the Controller to postpone the payment of the duty but that discretion can be brought into play only an fulfilling certain requirements embodied in that provision, and the specific condition laid down therein is that the Controller should be satisfied that the duty leviable in respect of any property cannot without excessive sacrifice be raised at once. It is seen from the counter‑affidavit filed by the Controller that he invited the petitioners to place before him evidence to establish that their case fell within the scope of section 70(1) of the Act. They failed to do so. The Controller also points out in his counter-affidavit that a sum of Rs. 2 lakhs in cash was realised by the accountable persons from the insurance companies so that this is clearly not a case where any sacrifice is involved in the raising of the money required for the payment of the estate duty. The case is not one which comes within the four corners of section 70(1) of the Act, and that being so, the Controller had in fact made no discretion which he could exercise in favour of the accountable persons by directing the postponement of the collection of the duty. It follows, therefore, that the order of the Controller, refusing to stay his hands in respect of the collection of the duty cannot be rightly attacked as illegal, ultra vires and in excess of his jurisdiction. W. P. No. 215 of 1959 is accordingly dismissed. Section 67(4) of the Act, as it stood before its amendment in 195 8, read: "If the person accountable does not pay the amount of duty due from him under subsection (1) or subsection (3) within the period specified therein, he shall be liable to a penalty of Rs. 1,000 or a sum equal to twice the amount due according as the Controller may elect : provided that the Controller may in any particular case reduce the penalty." The question is whether this section is applicable to the present case. The attack upon the order of the Controller is based on the following facts. The demand notice had been served on the petitioners on the 2nd December 1958, and the petitioners had been called upon to pay the duty on or before the 10th January 1959. They preferred an appeal to the Central Board of Revenue for a stay of the collection of the disputed duty pending the appeal. That request was refused. Their request to the Deputy Controller himself in that regard was answered by that officer by his letter dated 17th January 1959. The Deputy Controller declined to‑ postpone the collection of the duty and stated: "In the circumstances I would advise the accountable persons to pay proportionate duty on the movables immedi ately." After the petitioner's request was turned down by the Central Board of Revenue, the officer wrote on the 24th February 1959, to the petitioner in these terms: "In the absence of any specific direction from the Board, I do not propose to postpone collection of duty any further. Please note that if the duty is not paid immediately, in any case on or before the 5th March 1959, I shall be constrained to resort to the penal provisions of the Act." Thereafter, on the 5th March 1959, the Deputy Controller made an order under section 67(4) of the Act levying a penalty of Rs. 11,000 for failure to pay estate duty. It is contended on behalf of the petitioners that since the Deputy Controller had granted time for the payment on or before the 5th March 1959, it was not open to the officer to have made the order imposing the penalty on the 5th March 1959. It is claimed that they were entitled to the whole of the day, 5th March 1959, and that the Deputy Controller could validly make an order imposing the penalty only after the expiry of that day. It is urged that even assuming that the Deputy Controller had no authority under any of the provisions of the Act to extend the time for payment, the petitioners are entitled to rely upon the terms of his order and withhold payment till the end of the day stipulated in that order. I have already indicated earlier that the only provision of the Act which confers any power upon the Deputy Controller to postpone the collection of the estate duty is contained in section 10 of the Act. The conditions which would enable the Deputy Controller to exercise the discretion under that provision did not exist, so that the Deputy Controller could not validly have made any order postponing the collection of the duty. It is true that if the Deputy Controller purported to grant time till a specified day, whether he had the authority to do so or not, he could not make an order imposing the penalty in advance of the day. Such an order would certainly be open to attack on the ground that it violates the principles of natural justice. If the petitioners had been given to under stand that they could not be visited with any penal consequences till after a certain date had expired, they were entitled to rely upon the terms of the order granting time to them. Learned counsel for the petitioners relied upon Janakumara v. Periasamy (A I R 1949 Mad. 376), wherein it was held that where a court fixes a date for the fulfilment of a certain condition, the person on whom that obligation is imposed will have the whole of that day for‑ complying with that order. But the question however is whether, in the terms of the order made by the Controller, the petitioners in the present case can claim immunity from the penal provisions of the Act. In dealing with this aspect of the matter, I cannot ignore the circumstance that when the petitioners moved the Deputy Controller for postponing the collection of the duty, that officer clearly informed the petitioners that their case could fall only within the scope of section 70 of the Act and that they had not established the conditions which would warrant the postponement of the collection. The letter of the Deputy Controller dated 17th January 1959, made this posi tion perfectly clear and in that letter the Deputy Controller stated: "In the circumstances I would advise the accountable persons to pay proportionate duty on the movables immedi ately." This was again reiterated in the subsequent letter in these terms: "Please note that if 'the duty is not paid immediately, in any case on or before the 5th March 1959, I shall be constrained to resort to the penal provisions of the Act." In both of these letters, the petitioners were directed to pay the duty immediately, as it had already fallen due by the 10th January 1959. In the light of these circumstances, I am unable to attach any importance to the further expression "on or before the 5th March 1959", at any rate, to the extent of implying that the Deputy Controller had no jurisdic tion to invoke the penal provisions till after the expiry of the last date, 5th March 1959, and unless the petitioners can establish any lack of jurisdiction, the order imposing the penalty is not vitiated for any reason. In the result, this petition also fails. The petitioners will pay the costs of the respondent. Counsel's fee‑one set Rs.

200. Petitions dismissed.