Full Judgment Text & Judicial Ruling

1965 P T D 238

1965 P T D 238

[Madras (India)]

Before S. Ramachandra Iyer, C. J. and Ramakrishnan, J

M. CT. MUTHIAH AND ANOTHER

Versus

DEPUTY CONTROLLER OF ESTATE DUTY, SOUTHERN ZONE, MADRAS

Writ Appeal No. 270 of 1962, decided on 13th November 1963.

Estate Duty-Penalty-Time granted for payment of duty. Penalty imposed on the last day for payment-Invalidity.

Where the Deputy Controller of Estate Duty had given time to an accounting party until March 5, 1959, to pay the balance of the estate duty found payable on the estate of the deceased, the accounting party had paid a substantial portion of the duty, and the Deputy Controller made an order on March 5, 1959, levying a penalty for non-payment of the balance:

Held, that the order levying the penalty was invalid: there could be no failure to pay when the accounting party had still time till the end of that day to pay the amount.

Penalty can be levied only on failure to pay duty and not in anticipation of it.

R. M. Seshadri and V. Thyagarajan for Appellants.

S. Ranganathan for Respondent.

JUDGMENT

RAMACHANDRA IYER, C. J.-This appeal arises out of proceedings initiated under Article 226 of the Constitution with regard to a penalty imposed on an accounting party under the provisions of the Estate Duty Act. It is unnecessary to set out in detail the history of the levy of the duty and of the payment made towards it. On the death of the father of the accounting party the estate was assessed to duty and a sum of Rs. 1,20,749.54 nP. was found due after credit being given to a payment of a small sum. This the accounting party was directed to pay before January 10, 1959. A substantial portion of the amount, viz., Rs. 1,10,965-31 nP., was paid within the time permitted. The accounting party then approached the authority for the grant of time for the payment of the balance. That authority granted time till March 5, 1959.

It will be apparent from the order granting time that the accounting party was entitled to pay the balance before the close of the day on March 5, 1959, till which date the authority itself has given time. Curiously enough on the 5th itself, the Deputy Controller made an order levying a penalty of Rs. 11,000 for non-payment of the balance of duty due. There can obviously be no failure to pay when the accounting party had still time till the end of that day to pay the amount. Therefore the order levying the penalty cannot be regarded as valid.

Srinivasan, J., appears to have thought that by an earlier letter the accounting party was directed to pay immediately and the time given till March 5, 1959, would not avail him. This view, in our opinion, is not supported by the terms of the letter of the Deputy Controller dated February 24, 1959, on which reliance has been placed, and the relevant portion of which runs thus:

"Please note that if the duty is not paid immediately, in any case on or before March 5, 1959, I shall be constrained to resort to the penal provisions of the Act."

Far from supporting the case of the authorities, it is clear that the accounting party was given time till March 5, 1959, to deposit the balance of duty payable. It will, therefore, be incompetent for the Deputy Controller to pass the order levying the penalty in the case; such an order would be tantamount to an anticipation of failure on the part of the accounting party to pay up the duty. Penalty can be levied only on failure to pay duty, not in anticipation of it. The appellants are entitled to the issue of a writ in the terms prayed for, and the order levying penalty will be quashed.

There will be no order as to costs.

Appeal allowed.

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