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2005 (12) TMI 528 - HC - VAT and Sales TaxMandatory pre-deposit - right of appeal - time of initiation of assessment proceedings - whether it is the date of assessment order or the date on which return is filed or required to be filed as per the statute or the date of issuance of pre-assessment notice? - HELD THAT - It is not disputed that the amended provisions of the Act are not given retrospective effect as and from an enterior date. In other words, the amended provisions are prospective. According to the appellants, the above restrictions placed on the appeals will not relate to the assessments and returns filed by the assessees prior to 14-6 -1999. It is their submission that the amendment introducing condition of pre-deposit being substantive in nature cannot have retrospective effect and that their right of appeal is governed by the provisions on the dates they filed their monthly returns, which were prior to the Act 14 of 1999, and as on the said date, there was no mandatory condition for pre-deposit of disputed tax before the appeal was lodged. We hold that the crucial date on which the right of the assessees to prefer an appeal u/s 31 or Sec.36 of the Act is the date on which the returns are filed under the Act. In all these appeals, returns were filed long prior to the date when the provisions of Sec.31 of the Act was amended by virtue of Act 14 of 1999. Further more, it is not disputed by the parties that the aforesaid amendments to the Act have not been given retrospective effect as and from an anterior date and those amendments are prospective. Therefore, the appeals are liable to be entertained without insisting of pre-deposit of 25% of the disputed tax as per the amended provisions of the Act. In the result, the order of the learned single Judge is set aside. The writ appeals preferred by the Revenue, are dismissed and the appeals filed by the assessees are allowed. The appellate authority is directed to entertain the appeals filed by the assessees/appellants without insisting for pre-deposit of 25% of the disputed tax and dispose of the same in accordance with law.
Issues Involved:
1. Whether the right of an assessee to file an appeal is a substantive right. 2. Whether such a right gets crystallized at the time of initiation of assessment proceedings. Issue-Wise Detailed Analysis: 1. Substantive Right of Appeal: The court examined whether the right to file an appeal is a substantive right. It referenced the Supreme Court's decision in *Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh* (1953 Vol. IV STC 114 SC), which established that the right of appeal is a substantive right. The court noted that the right of appeal is a vested right that accrues to the litigant from the date the lis (dispute) commences, and this right is governed by the law prevailing at the date of the institution of the suit or proceeding, not by the law that prevails at the date of its decision or the filing of the appeal. The court also cited *Garikapati Veeraya v. N. Subbiah Choudhry and Others* (AIR 1957 SC 540), which reinforced that the right of appeal is a substantive right and forms part of the legal proceedings from the initiation of the suit. 2. Crystallization of the Right of Appeal: The court discussed when the right of appeal becomes vested in a party. It considered whether this occurs on the date of filing the returns, the date of issuance of a pre-assessment notice, or the date when proceedings are initiated for reopening an assessment. The court referred to the decision in *Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur and Others* (1963[14] STC 976), which clarified that assessment proceedings commence when a return is submitted and continue until the final order of assessment is made. The court also referenced *Oswal Agro Mills Ltd. v. State of Punjab And Others* (2005 [139] STC 51), which concluded that the right of appeal is vested on the date when the return is filed or required to be filed. The court further examined the case of *Siemens India Ltd. v. The State of Maharashtra* (62 STC 40), where it was held that assessment proceedings against a registered dealer commence when the return is filed, and the right of appeal is a substantive right that gets crystallized at that point. Similarly, the court noted the decision in *Bahadur Kamakhya Narayan Singh v. State of Bihar* (1962[46] ITR 516 Pat.) and *Commissioner, Sales Tax, Uttar Pradesh v. Tika Ram Arthi* (1977[39] STC 147 All.), which supported this view. Conclusion: The court concluded that the crucial date for the right of the assessees to prefer an appeal under Sec.31 or Sec.36 of the Tamil Nadu General Sales Tax Act is the date on which the returns are filed. Since the returns in the present cases were filed before the amendments requiring a pre-deposit of 25% of the disputed tax, the appeals should be entertained without insisting on such pre-deposit. The court set aside the earlier judgment that dismissed the writ petitions and directed the appellate authority to entertain the appeals without the pre-deposit requirement. Judgment: The court dismissed the appeals filed by the Revenue and allowed the appeals filed by the assessees. The appellate authority was directed to entertain the appeals filed by the assessees without insisting on the pre-deposit of 25% of the disputed tax and to dispose of the appeals in accordance with the law.
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