2009 (3) TMI 949 - HC - VAT and Sales Tax

Whether the Special Committee constituted under section 16D of the TNGST Act was entitled to pass interlocutory orders during the pendency of the proceedings? Held that - While exercising the inherent jurisdiction, the Special Committee should record reasons which made them to pass such interlocutory orders during the pendency of the statutory proceedings. In case reasons are supplemented in the order, it would avoid an arbitrary exercise of power. The order should speak itself. When a challenge is made in respect of such orders, it would enable the court to ascertain the reasons which actually weighed with the authority in taking a decision. The second respondent has got the inherent powers to entertain an application to pass such interlocutory orders during the pendency of the statutory revision. In such circumstances, the petitioner should be permitted to make an application before the second respondent to stay the further proceedings during the pendency of the statutory revision. Accordingly, the petitioner is granted liberty to file a stay petition before the second respondent and in the event of filing any such application within a period of two weeks from the date of receipt of a copy of this order, the same shall be considered by the second respondent on merits and as per law within a period of four weeks thereafter.

Issues Involved:
1. Whether the Special Committee constituted under section 16D of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) has the authority to pass interlocutory orders during the pendency of proceedings.

Detailed Analysis:

1. Power to Pass Interlocutory Orders:
- Pleadings: The petitioner, a dealer in paper products, challenged the assessment orders for the years 2003-04 and 2004-05, which were revised under section 16 of the TNGST Act. During the pendency of these revisions before the Special Committee constituted under section 16D, the first respondent issued a distraint order for tax recovery, leading to the filing of these writ petitions.
- Submissions: The petitioner's counsel argued that the Special Committee does not have the power to stay recovery proceedings during the pendency of statutory proceedings under section 16D. Conversely, the respondents' counsel contended that there is no provision for such a stay and that the petitioner must pay the tax, with the possibility of a refund if the order is set aside.
- Issue to be Decided: Whether the Special Committee under section 16D of the TNGST Act can pass interlocutory orders during the pendency of proceedings.
- Scheme of the Act: Section 16D establishes a Special Committee with revisional jurisdiction to examine and potentially set aside assessment orders passed in violation of the Act or principles of natural justice. This section grants the Committee wide powers to ensure compliance with the Act.
- Statutory Tribunals-Jurisdiction: The judgment emphasizes that Tribunals, like courts, are vested with judicial powers and have inherent authority to pass orders necessary for justice, even if not explicitly provided in the statute. This principle is supported by precedents from the Supreme Court, such as in Associated Cement Companies Ltd. v. P.N. Sharma and Income-tax Officer v. M.K. Mohammed Kunhi, which affirm that Tribunals can pass incidental orders to make their powers effective.
- Supreme Court Precedents: The judgment cites multiple Supreme Court rulings, including Pareena Swarup v. Union of India and Rakesh Wadhawan v. Jagdamba Industrial Corporation, to reinforce that Tribunals and similar bodies possess inherent powers to pass procedural orders to ensure justice and proper functioning.
- Conclusion on Interlocutory Powers: The judgment concludes that the Special Committee, given its wide revisional powers, inherently possesses the authority to pass interlocutory orders, including stays on recovery during the pendency of proceedings. This power is necessary for the effective functioning of the Committee and to prevent injustice.
- Directive to Petitioner: The petitioner is granted liberty to file a stay application before the second respondent (Special Committee). If such an application is filed within two weeks, the second respondent must consider it on merits within four weeks.

Conclusion:
The High Court ruled that the Special Committee under section 16D of the TNGST Act has inherent powers to pass interlocutory orders, such as staying recovery proceedings during the pendency of statutory revisions. The petitioner is allowed to apply for a stay, and the Special Committee must consider this application expeditiously. The writ petitions were disposed of with this direction, and no costs were imposed.

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