2004 (3) TMI 47 - HC - Income Tax

Retrospective effect of section 52A of the Kerala Court Fees and Suits Valuation Act, 1959, inserted by the Kerala Court Fees and Suits Valuation (Amendment) Act, 2003, providing for court fee payable on memorandum of appeal filed before the High Court - We hold that in all appeals filed by the Commissioner of Income-tax or in any appeal to be filed either by the Revenue or by the assessee under the Income-tax Act and under the Wealth-tax Act against the orders of the Income-tax Appellate Tribunal from October 26, 2002, court fee is payable and has to be paid under section 52A read with Schedule II, article 3, item (iii), sub-item (C), of the Kerala Court Fees and Suits Valuation Act,

Summary

Issues Involved:
1. Retrospective effect of section 52A of the Kerala Court Fees and Suits Valuation Act, 1959.
2. Court fee payable on memorandum of appeal filed before the High Court against orders of the Appellate Tribunal under the Income-tax Act and the Wealth-tax Act.
3. Vested right of appeal and its implications.
4. Validity and interpretation of section 52A and related provisions in the Kerala Court Fees and Suits Valuation Act, 1959.
5. Legislative intent and clarity in drafting section 52A and related provisions.

Detailed Analysis:

1. Retrospective Effect of Section 52A:

The judgment addresses whether section 52A, inserted by the Kerala Court Fees and Suits Valuation (Amendment) Act, 2003, has retrospective effect. The section mandates court fees on appeals filed before the High Court against orders of the Appellate Tribunal under the Income-tax Act and the Wealth-tax Act. The court concludes that the use of the phrase "memorandum of appeal filed" indicates the Legislature's intent to apply the provision to all appeals filed after October 26, 2002, regardless of when the related assessment proceedings commenced. This interpretation is based on the principle that the right of appeal is a substantive right, and any legislative change affecting this right must be explicit or implied by necessary intendment.

2. Court Fee Payable on Memorandum of Appeal:

The court examines the specific provisions of section 52A and sub-item (C) of item (iii) of article 3 of Schedule II, which outline the court fees payable based on the assessed income. The court clarifies that the fee structure under section 52A is distinct from the general provisions of section 52, emphasizing that section 52A starts with "notwithstanding anything contained in section 52," thereby establishing a special provision for appeals under the Income-tax and Wealth-tax Acts. The court rejects the argument that the fee should be based on the date of initiation of assessment proceedings, affirming that the fee is determined by the date of filing the appeal.

3. Vested Right of Appeal:

The judgment delves into the concept of vested rights, referencing several Supreme Court decisions to establish that the right of appeal is a substantive right that vests at the commencement of the lis (legal action). The court holds that this vested right cannot be impaired or taken away by subsequent legislation unless explicitly stated or implied by necessary intendment. The court finds that the expressions used in section 52A ("fee payable on memorandum of appeal filed") clearly manifest the Legislature's intent to apply the provision to all appeals filed after its enactment, thus affecting even those appeals arising from assessment proceedings initiated before the amendment.

4. Validity and Interpretation of Section 52A:

The court addresses the objections raised by the Revenue, including the argument that the amendment is void under article 254(1) of the Constitution and the lack of Presidential assent under article 254(2). The court dismisses these objections, upholding the validity of section 52A and the related provisions. The court also considers the non obstante clause in section 52A, clarifying that it establishes a distinct basis for court fees on appeals under the Income-tax and Wealth-tax Acts, separate from the general scheme of the Court Fees Act.

5. Legislative Intent and Clarity in Drafting:

The judgment highlights potential ambiguities in the drafting of section 52A and related provisions, particularly regarding the application of court fees to appeals under the Wealth-tax Act. The court notes that while the provision refers to "total income" assessed, which is relevant to the Income-tax Act, it may not be directly applicable to the Wealth-tax Act, where the assessment is based on net wealth. The court suggests that the State Government consider amending the provisions to eliminate any ambiguity and ensure clarity. Additionally, the court raises the issue of whether the exemption from court fees granted to the State and its officers under section 73A should be extended to the Central Government and its officials, consistent with the scheme of the Income-tax and Wealth-tax Acts.

Conclusion:

The court holds that section 52A of the Kerala Court Fees and Suits Valuation Act, 1959, as amended, applies to all appeals filed after October 26, 2002, regardless of when the related assessment proceedings commenced. The court emphasizes that the right of appeal is a substantive right that cannot be impaired or taken away by subsequent legislation unless explicitly stated or implied by necessary intendment. The court also calls for legislative clarity and potential amendments to address ambiguities in the application of court fees to appeals under the Wealth-tax Act and to consider extending the court fee exemption to the Central Government and its officials.