Summary recovery cannot enforce disputed tax liability; surcharge levy upheld, but demand under the admitted-liability provision was set aside.

The levy of surcharge under the Orissa Sales Tax Act, 1947 was upheld because earlier binding authority had already validated it, and the challenge to surcharge failed. However, section 13(4)(a) could not be used to enforce a disputed surcharge liability, since that summary recovery provision applies only to admitted tax due and does not authorise determination of contested liability. A demand issued under rule 32 on that basis was therefore defective and without jurisdiction. The demand and order founded on section 13(4)(a) were set aside, while the surcharge levy itself remained valid.

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Issues: (i) Whether the levy of surcharge under the Orissa Sales Tax Act, 1947 was valid. (ii) Whether action under section 13(4)(a) of the Orissa Sales Tax Act, 1947 was permissible when the dealer disputed the liability to pay surcharge.

Issue (i): Whether the levy of surcharge under the Orissa Sales Tax Act, 1947 was valid.

Analysis: The validity of surcharge had already been examined and concluded in earlier binding authority, which had upheld the levy. The challenge to the surcharge therefore did not survive independently.

Conclusion: The levy of surcharge was held to be valid and the challenge failed.

Issue (ii): Whether action under section 13(4)(a) of the Orissa Sales Tax Act, 1947 was permissible when the dealer disputed the liability to pay surcharge.

Analysis: Section 13(4)(a) applies only where returns are furnished without full payment of tax admitted to be due. The provision proceeds on the basis of admitted liability and does not authorise determination of disputed liability. Rule 32 of the Orissa Sales Tax Rules, 1947 contemplates a notice of demand only in respect of amounts found payable under section 13(4). Where there is a dispute as to payability, the notice of demand is defective and action under section 13(4)(a) is without jurisdiction. In such cases, the proper course is to proceed under the provision dealing with incorrect returns or information.

Conclusion: Action under section 13(4)(a) was impermissible on the disputed surcharge, and the demand based on it was unsustainable.

Final Conclusion: The surcharge levy was upheld, but the particular demand and order founded on section 13(4)(a) were set aside because that summary recovery provision could not be used to enforce a disputed liability.

Ratio Decidendi: A summary recovery provision based on admitted tax cannot be used to determine or enforce a disputed tax liability; where liability is contested, the authority must proceed under the provision applicable to incorrect or false returns.

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