068-NLR-NLR-V-57-DE-JONG-Appellant-and-COMMISSIONER-OF-INCOME-TAX-Respondent.pdf
Present: Weorasoorlya, J.1955
DE JONG, Appellant, and COMMISSIONER OF INCOME TAX,
Respondent
5. C. G (with Application 1-50)—31. O. Colombo South, 3S.322
Income Tax Ordinance (Cap. 18S)—Proceedings under s. 80 (1)—Omission of Magis-trate to order imprisonment in default of payment of tax—Effect thereof—Insolvency of asscssce—Sections 73 (2), 81—Criminal Procedure Code, s. 312( /) (6)—Payment of pines {Courts of Summary Jurisdiction) Ordinance So. JOof 193S, s. 12 (2).
In proceedings under Section SO (1) of tho Incomo Tax Ordinance, wherotbo defaulter appears in Court in answer to tho summons and has no cause toshow why further proceedings for the recovery of the tax should not bo takenagainst him, but tho Magistrate makes no direction at tho time that tho de-faulter should suffer a term of imprisonment in default of payment of thotax due, it is not open to the Magistrate to make such a direction subsequently.
j^^PPEAL from a judgment of the Magistrate’s Court, Colombo South.
G. E. Chilli/, with J. V. C. Nathaniel and Daya Perera, for the appellant.Shiva Pasupali, Crown Counsel, for the Attorney-General. .
Cur. ado. vult.
December 13, 1955. Weerasooriya, J.—
On the 25th January, 1952, the appellant appeared before the ColomboSouth Magistrate’s Court in obedience to a summons issued on him inCase No. 3S.322 to show cause why further proceedings should not betaken against him for the recovery of a sum of Rs. 9,993 certified by theCommissioner of Income Tax in terms of si SO (I) of the Income TaxOrdinance to be due from him as income tax. On the appellant admit-ting that this amount was due from him the Magistrate made the followingorder: “ I fine the accused Rs. 9,993. Time till 1.2 for fine”. Thetime given under this order to pay the “ fine ” was further extendedas a result of instalments paid by the appellant on various subsequentoccasions in liquidation of the amount due. On "the 27th November,1954, the original liability had been reduced to Rs. 4,645 and the Courtwas informed that the appellant had been adjudicated an insolvent.
It appears from the copy, of the proceedings (Rl) in the insolvencycase that the adjudication took place on the 2nd July, 1952. On the10th December, 1952, the Commissioner of Income Tax filed in thoseproceedings a notice uuder s. 81 of the Income Tax Ordinance claiming
payment of a sum of Rs. G.445 as tax clue from the appellant for theyear 1949/1950. S. 7S (2) of the Income Tax Ordinance provides thata receiver shall pay out of the assets of the insolvent under his controlthe. tax charged or chargeable for one complete year of assessment priorto the‘date' of the insolvency, to be selected bj- the Commissioner ofIncome Tax, as a first charge on such assets and that any other laxcharged or chargeable for periods prior to such date shall be an unsecureddebt. The claim of the Commissioner of Income 'Tax was, however,not satisfied, even in part, as there were no assets of the insolvent in thereceiver’s hands.
On the 23rd June, 1953, the appellant was granted a certificate ofconformity of the third class under the Insolvency Ordinance.
On the ground of the appellant’s adjudication as an insolvent and theissue to him of the certificate of conformity an application was made tothe Magistrate on the 11th December, 1954, for an order of discharge ofthe appellant from the proceedings in Case Mo. 38,322. After inquirythe learned Magistrate rejected the application and ordered the appellantto pay the balance sum of Rs. 4,G45 giving him time to do so until the31st December, 1954. The present- appeal has been filed from that order.
>S. 80 (1) of the Income Tax Ordinance provides that if a person whohas been summoned to show cause fails to do so the amount of the taxin default shall be deemed to be a fine imposed by a sentence of a Magis-trate on such defaulter for an offence punishable with fine 011I3- and theprovisions of s. 312 (1) of the Criminal Procedure Code (except paragraphs(a), (c) and (h) thereof) then become applicable, and the Magistrate isempowered to make any direction which, by the provisions of that sub-section, lie coidd have made at the time of imposing such sentence, lt-is clear, I think that- the tax due is deemed to be a fine only7 for the purposeof invoking the provisions of s. 312 (1) of the Criminal Procedure Coderelating to the imposition of a term of imprisonment in default- of paymentof the tax.
While the appellant's admission when he appeared on the 25th January,1952, in obedience to the summons may be regarded as meaning that hehad no cause to show why further proceedings should not- be taken forthe recovery of the tax due, the Magistrate made no order under therelevant provisions of s. 312 (1) of the Criminal Procedure Code althoughit was open to him to direct that the appellant shall suffer imprisonmentfor a term not exceeding six months in default of payment of the tax.Instead, he gave the appellant tune, in the first instance till the 1stFebruary, 1952, and ultimately till the 31st December, 1954, to pay theamount- due. I can sec nothing cither in s. 312 (1) of the Criminal Pro-cedure Code or s. SO (1) of the Income Tax Ordinance which authorisestin's course of action. In my opinion the power vested in a Magistalcunder s. 312 (1) (6) of the Criminal Procedure Code of directing that anoffender shall suffer a term of imprisonment in default of payment of afine to which he is sentenced can be exercised only at the- time of the
imposition of the sentence and not thereafter. Even where such adirection has been made by the Magistrate it is clear that in default ofpayment of the fine forthwith, the offender would have to be committedto prison unless time is allowed under s. 312 (4). It was, no doubt, tomeet this situation that sub-sections IB, IC and ID were enacted by asubsequent amendment of s. SO of the Income Tax Ordinance. Underthese sub-sections a Magistrate is empowered to allow time for thepayment of the tax or direct payment by instabnents, and also to enlargethe defaulter on bail, but it will be observed that these indulgences canbe granted to a defaulter only after, and not before, a direction has beenmade that on failure to pay the tax he shall suffer a term of imprisonment.
The Payment of Fines (Courts of Summary Jurisdiction) OrdinanceNo. 49 of 193S, contains provision for time being given for the paymentof a fine imposed by a Magistrate’s Court, but s. 12 (2) of that Ordinancespecifically provides that it shall have no application in a case like thepresent one.
The object of proceedings under s. SO (1) of the Income Tax Ordinanceis to ensure recovery of tax due from a defaulter by subjecting him to aterm of imprisonment should he fail to pay the tax. Where at the timewhen a defaulter appears on summons he has no sufficient cause to showagainst the further proceedings contemplated in s. SO (1) being taken,and the Magistrate merely makes an order that he should pay the tax,without giving any direction that in default of payment he should suffera term of imprisonment, the object of the juoceedings is defeated since,in my opinion, it is not open to the Magistrate to give that directionsubsequently. This is precisely the position in the present case. Inthe result, although the appellant has failed to pay the tax on or beforethe 31st December, 1952, nothing further can now be done under s. SO (1)of the Income Tax Ordinance for the recovery of the tax.
Mr. Chitty who appeared for the appellant made the submission thatin view of the steps subsequently taken by the Commissioner of IncomeTax in the insolvency proceedings the method of recovery of tax unders. SO (1) of the Income Tax Ordinance is no longer available to him.Seeing, however, that the Commissioner’s recourse to that method otrecovei ■y had al ready been rendered abortive by the failure of the learnedMagistrate to follow the correct procedure, it is not necessary to considerthe various arguments advanced by Mr. Chitty in support of hissubmission.
■ No appeal seems to lie from the Magistrate’s order dated the IlthDecember, 1954. The appellant has also filed papers applying that thisCourt, in the exercise of its powers of revision, do set aside that order,but for the reasons given by me it does not seem that any useful purposewill be served in granting this application. The appeal is rejected andthe application is refused. I make no order as to costs. …
Appeal rejected. – .