1980 (9) TMI 286 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the High Court has jurisdiction to grant stay of recovery of tax in a reference pending or where an application has been filed under section 256(2) of the Income Tax Act or section 45(2) of the Delhi Sales Tax Act.

Detailed Analysis:

Issue 1: Jurisdiction of the High Court to Grant Stay of Recovery of Tax under Section 45(2) of the Delhi Sales Tax Act

Paragraphs 1-4: Context and Statutory Framework
The primary question is whether the High Court has the jurisdiction to grant a stay of recovery of tax when a reference is pending or an application is filed under section 45(2) of the Delhi Sales Tax Act. Section 45 details the process for referring questions of law from the Appellate Tribunal to the High Court, including the prohibition on staying tax recovery under subsection (7).

Paragraphs 5-6: Arguments and Interpretation of Subsection (7)
Counsel for the dealer argued that subsection (7) does not bar the High Court from granting a stay, as it addresses the Appellate Tribunal. However, the judgment clarifies that subsection (7) is comprehensive and prohibits both the Tribunal and the High Court from staying recovery pending the reference.

Paragraphs 7-8: Powers of the Appellate Tribunal
The Tribunal has the power to grant stay during the pendency of an appeal, as detailed in section 45(5). This power is necessary to prevent the appeal from becoming nugatory.

Paragraphs 9-12: Finality of Tribunal Decisions and Role of the High Court
The decision of the Appellate Tribunal is not final when a reference is made to the High Court. The High Court's opinion is binding, and the Tribunal must conform its decision accordingly. This process ensures that the appeal is not finally disposed of until the High Court's judgment is integrated.

Paragraphs 13-15: Distinction Between Appellate and Referential Jurisdiction
The power to stay is ancillary to appellate jurisdiction but not to referential jurisdiction. The legislature did not confer the power of stay in reference proceedings, as indicated by section 45(7), which mandates payment of tax pending the disposal of the reference.

Paragraphs 16-18: Inherent Powers and Legislative Intent
The inherent power of the High Court to stay recovery is circumscribed by statute. Section 45(7) explicitly limits this power, reflecting the legislature's intent to prevent stays during reference proceedings.

Paragraphs 19-22: Statutory Interpretation and Legislative Prohibition
The precise and unambiguous language of section 45(7) creates a positive prohibition against staying recovery. The High Court cannot extend its jurisdiction beyond what is conferred by statute.

Paragraphs 23-25: Consistency in Interpretation
Interpreting section 45(7) to apply only to references under subsection (1) and not (2) would lead to absurd and inconsistent results. The legislature intended for the prohibition to apply to all references, whether initiated by the Tribunal or directed by the High Court.

Paragraphs 26-27: Causal Relationship Between Subsections (1) and (2)
A reference under subsections (2) and (3) is a consequence of an application under subsection (1). The words "in consequence thereof" in subsection (7) encompass all references made under section 45.

Paragraphs 28-29: Inherent Jurisdiction and Statutory Provisions
Inherent jurisdiction cannot be invoked where specific statutory provisions exist. Section 45(7) explicitly prohibits the High Court from granting a stay, overriding any inherent power.

Separate Judgment by S.B. Wad, J.:

Paragraphs 32-34: Interpretation of Section 45(7)
Justice Wad disagrees with the majority opinion, arguing that section 45(7) refers only to section 45(1) and not to section 45(2). He contends that judicial interpretation cannot add section 45(2) to section 45(7).

Paragraphs 35-38: Inherent Powers and Legislative Intent
Justice Wad emphasizes that the inherent powers of the High Court under section 151 of the Civil Procedure Code allow it to grant stays. He argues that the absence of explicit prohibition in section 45(7) regarding section 45(2) indicates that the High Court retains its power to stay recovery.

Conclusion by Avadh Behari, J.:

Paragraphs 29-31: Summary of Conclusions
The High Court has no power to grant stay pending the disposal of a reference under section 45(2) of the Delhi Sales Tax Act. The matter will be placed before the division bench for further disposal.

Conclusion by S.B. Wad, J.:

Paragraphs 39-41: Affirmative Answer
Justice Wad concludes that the High Court has the power to grant stay under section 45(2) of the Delhi Sales Tax Act, invoking its inherent powers and the absence of explicit prohibition in section 45(7).

Order by the Court:
The application for stay is dismissed, and the matter will be placed before the Division Bench for further proceedings.