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2023 (5) TMI 6 - SC - VAT and Sales TaxSeeking deletion of adverse entries regarding the sales tax liability of Regent and Eastman - seeking direction upon the tehsildar to mutate the subject property, after quashing of the order dated 22nd December 2006 - declaring the action of the excise and taxation officer as illegal, unjust and without the authority of law. Whether, in view of dismissal of the special leave petition qua PNB by the order dated 8th April, 2011, the judgment and order outlawing section 16-B of the HPGST Act can at all be examined? - HELD THAT - A law, which the State legislature had the competence to enact, has been outlawed by the High Court while hearing a writ petition which was rendered infructuous due to developments subsequent to its filing and prior to its disposal but such developments had not been brought to the notice of the High Court - A reading of the affidavit reveals that during the pendency of the writ petition (filed by PNB) before the High Court, the borrower had offered a compromise proposal which PNB had accepted. In terms thereof, the borrower paid to PNB an amount of Rs.36 lakh towards full and final settlement of the loan liability. Upon receipt of the compromise amount, the title deed of the mortgaged property was duly returned to the borrower. Pursuant thereto, PNB filed an application for withdrawing the execution case before the Recovery Officer, DRT, Chandigarh on 13th August, 2002 and the case, upon being disposed of as withdrawn, was consigned to the record room. The High Court by its judgment and order dated 2nd January, 2008 decided an infructuous writ petition and, in the process, outlawed section 16-B of the HPGST Act when the same was not at all warranted - it was also a clear but inadvertent error on the part of this Court to dismiss only the special leave petition against PNB as infructuous; the appropriate course for this Court ought to have been to dismiss the writ petition of PNB itself as infructuous having regard to the clear stand taken by PNB in its aforesaid affidavit dated 30th September, 2010 that nothing survived for a decision on the writ petition on the date it was decided in view of release of the property from mortgage - this issue is answered in affirmative. Should the answer to the above question be in the affirmative, whether section 16-B of the HPGST Act should have been outlawed by the High Court on the ground that it is ultra vires the Constitution or the Banking Companies Act? - HELD THAT - The High Court while seized of the writ petition of PNB 2008 (1) TMI 836 - HIMACHAL PRADESH HIGH COURT was not at all concerned with the SARFAESI Act as such. The matter had travelled to the High Court from proceedings under the DRT Act. There was, thus, no occasion for the High Court to pronounce on the validity of section 16-B of the HPGST Act based on what was held by its coordinate Bench in M/s A.J. Infrastructures Pvt. Ltd. 2007 (9) TMI 563 - HIMACHAL PRADESH HIGH COURT . The High Court was therefore in clear error. Thus, section 16-B of the HPGST Act is a perfectly valid piece of legislation and is not ultra vires the Constitution and/or the Banking Companies Act as erroneously held in the decision of the High Court dated 2nd January, 2008. Also, following the decision in Central Bank of India 2009 (2) TMI 451 - SUPREME COURT , it is held that any observation in the decision dated 7th September, 2007 touching upon section 16-B of the HPGST Act vis- -vis section 35 of the SARFAESI Act is of no effect. Whether having regard to the facts and circumstances triggering the writ petitions, the High Court was justified in returning the findings that the State s claim of first charge on the subject properties is not substantiated? - HELD THAT - Section 14 of the HPGST Act postulates assessment of tax. The cumulative effect of the several sub-sections of section 14 is that after returns are furnished by a dealer in respect of any period, the duty of the assessing authority is to assess the appropriate quantum of tax required to be paid by the dealer, in terms of the procedure laid down therein; and to initiate steps, also in terms of the laid down procedure, to recover any amount of unpaid tax, penalty or interest payable under the enactment. Section 16 envisages that any amount of tax, penalty or interest payable under the HPGST Act remaining unpaid after the due date shall be recoverable as arrears of land revenue. Section 16-A, starting with a non-obstante clause, confers power on the Commissioner or any officer other than the one excluded to initiate a special mode of recovery. While adopting such a stand, the State and its department either overlooked or were ignorant of the requirement of law that section 16-B would be attracted only after determination of the liability and upon any sum becoming due and payable; and that, it is only thereafter that the charge, if any, would operate - no relevant documentary evidence having been placed before the High Court, when CWP 306 of 2007 was being heard, to indicate that necessary steps under the HPGST Act had been initiated by the State and its officers, the third issue has to be answered by holding that the State not having taken steps as required by law for realization of its dues, there was no determination of liability, a fortiori, question of taking recourse to the HPLR Act for recovery of dues as arrears of land revenue did not arise. Without such determination of liability, no red entry marks could have been inserted in the revenue records and the High Court was right in holding that the State ought not to have refused mutation. Whether dismissal of the review petition/application for recall instituted by the State by the High Court suffers from any infirmity, legal or otherwise? - HELD THAT - No error apparent on the face of the record was pointed out, which is the first ground for seeking a review. Documents were annexed to the application, which were in existence when the reply to CWP 306 of 2007 was filed by the State and no case had been set up that despite discharge of due diligence, such documentary evidence, which were in existence, could not be annexed to the said reply. Much indulgence is shown to the State Governments when they carry judgments/orders in time-barred appeals/revisions, having regard to the impersonal machinery being involved. However, undue indulgence cannot be shown to the State Governments either when they do not file a proper reply or when, despite there being a provision for review, such remedy is not pursued and a different one pursued presumably to overcome the restrictions the provision for review imposes - High Court was justified in rejecting the application for recall. Relief - HELD THAT - The appellants (State and its officers) are not entitled to any relief except the declaration that section 16-B of the HPGST Act is not ultra vires any provision of law. In view of section 16-B having been outlawed by the High Court on 2nd January, 2008, this declaration shall not enure to the benefit of the State in respect of cases that are old and have been closed but would be effective once again from this day. Appeal disposed off.
Issues Involved:
1. Validity of Section 16-B of the HPGST Act. 2. Determination of the State's first charge on the subject properties. 3. Legitimacy of the High Court's dismissal of the review petition/application for recall. 4. Relief entitlement for the appellants. Summary: Issue 1: Validity of Section 16-B of the HPGST Act The Supreme Court examined whether the judgment and order outlawing Section 16-B of the HPGST Act could be revisited despite the dismissal of the special leave petition against PNB. The Court concluded that the High Court's decision was rendered on an infructuous writ petition and thus was inconsequential. The Supreme Court held that Section 16-B of the HPGST Act is a valid piece of legislation and not ultra vires the Constitution or the Banking Companies Act. The decision in Central Bank of India vs. State of Kerala (2009) 4 SCC 94 was pivotal, which clarified that the non obstante clauses in the DRT Act and SARFAESI Act do not override State legislations creating a first charge on property for tax dues. Issue 2: Determination of the State's First Charge on the Subject Properties The Court found that the State had not taken the necessary steps under the HPGST Act to determine the liability of the defaulters, rendering the red entries in the revenue records and the refusal of mutation improper. The High Court was correct in holding that the State's claim of first charge was not substantiated due to the absence of proper adjudication and determination of the amount due. Issue 3: Legitimacy of the High Court's Dismissal of the Review Petition/Application for Recall The Supreme Court upheld the High Court's dismissal of the State's application for recall under Section 151 of the CPC. The application was not maintainable as the writ petition had been decided on merits in the presence of the State. The proper remedy was a review petition, not a recall application under Section 151 of the CPC. The High Court was justified in rejecting the application for recall due to the lack of an error apparent on the face of the record and the existence of documentary evidence that was not presented earlier. Issue 4: Relief Entitlement for the Appellants The Supreme Court declared that Section 16-B of the HPGST Act is not ultra vires any provision of law. This declaration does not benefit the State in old and closed cases but will be effective from the date of the judgment. Consequently, all civil appeals were disposed of on these terms, with parties bearing their own costs.
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