Case: Raja Jagdish Pratap Sahi Vs. State Of Uttar Pradesh

1. The State of Uttar Pradesh filed a suit against the appellant for the recovery of a sum of Rupees 26,548-62 being two instalments of the Agricultural Income-tax due from him under the U. P. Agricultural Income-tax Act (III of 1948) (hereinafter referred to as the Act). The appellant was assessed to Agricultural Income-tax for the year 1359 Fasli, in a sum of Rupees 53,097-25 and was directed to pay the same in four instalments of Rupees 13,274-31 each payable on December 9, 1952, February 9, 1953, April 9, 1953 and June 9, 1953, and accordingly the first instalment was recovered from him with penalty. Notice to pay the second and third instalments by April 21, 1953 was served on him but this amount was not paid. Instead, the appellant filed a Writ Petition in the Allahabad High Court and obtained a stay order which was subsequently vacated. Thereafter the State sought to recovery the amount but the appellant filed a revision challenging the proceedings for recovery on the ground that they had become time barred under Section 32 (2) of the Act. The Board accepted the contention and held that no proceedings could be commenced for the recovery of third and fourth instalments which fell due on April 9, 1953 and June 9, 1953, but in respect of the proceedings for the recovery of the second instalment it was held that those proceedings could be continued. An application to the Board for reference to the High Court was dismissed. The appellant then paid the second instalment.2. In view of the decision of the Board, the State of Uttar Pradesh filed a suit for the recovery of the amounts aforesaid in which the appellant pleaded that the only remedy open to the State was that permitted under S. 32 (2) of the Act, and that no regular suit was maintainable. This plea was sustained, and the suit was dismissed as not maintainable. The High Court, however, in an appeal reversed the judgment of the Trial Court and decreed the suit. Against that judgment, his appeal is by certificate.

Reasoning: It is true that Section 232 of the Income-tax Act of 1961 provides that the modes of recovery under that Act are not exhaustive, but this clarification, which it is, does not imply that it is only by virtue of a specific provision that the legislature has conferred this right upon the Revenue where it did not earlier possess. Under S. 46 (2) of the Act of 1922, the Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount the arrears due from an assessee, and the Collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue. Sub-section (7) of the said section prescribes a period of limitation of one year from the last day of the financial year in which any demand is made under the Act, and thereafter no proceedings for the recovery can beis manifest that this explanation does not in any way confer a right on the Revenue to recover arrears of tax by any mode other than those provided under that Act. That right which the State or the Revenue has for recovering arrears of tax which is a debt due to it, is a general right conferred on it under the law either by a suit or by some other method open to it. Section 32, though it does not have an Explanation analogous to S. 46 nonetheless does not preclude either specifically or by necessary implication a right to recover the arrears of tax due by a suit. The method prescribed in this section is one of the modes of recovery which is a summary remedy. It is, however, open to the State to adopt any method available to it for the recovery of tax in the same way as it would be open to it to recover ordinary debt due to it. It can institute a suit and obtain a decree with costs against the assessee or other persons liable to pay.It could also probably, without obtaining a decree or attachment, apply to a Court for the payment of dues if there are funds lying to the credit of the assessee in the Court, or it may perhaps demand payment in the hands of the receiver appointed in respect of any property of the assessee, if due notice to all the parties interested in the funds is given. On these aspects, however, we do not propose to express any views. As already observed, after an assessment is made upon the assessee quantifying the tax due from him and a demand for the payment thereof is issued within the period specified therein, it creates a debt payable by the assessee in favour of the State. It is well established that once a debt is created, the State has the right to recover it by any of the modes open to it under the general law, unless as a matter of policy only a specific mode to the exclusion of any other is prescribed by the law. No such prohibition is enhanced in S. 32 of theJ., had expressed a doubt as to the procedure for recovery, but he had however no doubt that the Crown had a priority for the recovery of debt due to it, and consequently agreed in favour of the view expressed by Leach, C. J. Mockett, J., also agreed with this view. This case was considered by Harris, C. J. and Chatterjee, J. of the Patna High Court in Inder Chand v. Secretary of State, AIR 1942 Pat 87  . In this case the Patna High Court was considering whether the Crown as a Creditor has the ordinary right of suit against the assessee. Following the Full Bench judgment of the Madras High Court, it was held that a suit was maintainable. The contention of Mr. P. R. Das, learned counsel for the appellant, that the only method by which income-tax may be recovered is that laid down in Section 46, was repelled by Chatterjee, J. In Chaganti Raghava Reddy v. State of Andhra Pradesh, AIR 1959 Andh Pra 631 the Andhra Pradesh High Court also took a similar view. On principle as well as on the consistent view of the High Courts, it is beyond doubt that where a taxing statute provides for a summary mode of recovery and is not exhaustive, it will be open to the State to have recourse to any other mode open to it under the general law.