COD Powers of High Court and amendments through Budget 2009 - High Court has no power to condone delay in filing of appeal u/s 260A- Bombay High Court (following judgment of the Supreme Court in relation to S. 35G(9) of the CE Act. And proposal in The Finance (no.2) Bill 2009 to amend CE Act.

[C.A. DEV KUMAR KOTHARI]

The height of complexities and ambiguities are proved:

It is said and felt that the tax laws are complex and ambiguous. However, the same are so complex that even High Courts do not really know even about their powers to admit appeals filed belatedly. The complexity is also proved that many of judgments of division benches of the Supreme Court are reviewed and many times reversed or modified by larger bench of the Supreme Court. Many times and now -a -days, as a routine affair we find that the law is amended, even with retrospective effect to unsettle settled legal position.

How can a taxpayer be assumed to know the law ?:

When the Supreme Courts judgments are doubted, reviewed, and reversed, and then law is amended to unsettle settled legal position a question arises as to how a tax taxpayer can be assumed to have full knowledge of tax law?  Presumption of such knowledge is therefore, totally wrong and is in ignorance of factual position.

High Courts:

Benches of High Courts are headed by experienced persons who join High Court as judge after having substantial post qualification experience as a part of legal services or legal profession. The matter relating to powers of High Court should therefore, be simple and known to the judges in a perfect manner without any doubt or confusion. However, many times we find that even disputes arises about power of high Courts, and the matter is then decided by the Supreme Court. Sometimes such confusions arises because of overlapping of specific provisions  under relevant law and general provisions in general law like The Code of Civil Procedures and The  Limitation Act.

Power in relation to condonation of delay in filing of appeals:

In the Income Tax Act and the Central Excise Act we find the following relevant provisions in relation to period prescribed for  filing of appeals before the High Court and applicability of the  Code of Civil Procedures.

 

Relevant sub-sections of Section 260A  of the I.T.Act	Relevant sub-sections of Section 35G of the C.E.Act	Remarks
(2) The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be—  (a)  filed within one hundred and twenty days from the date on which the order appealed against is [received by the assessee or the Chief Commissioner or Commissioner]; xxx	(2) The Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be - (a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party. xxxx	The word "shall" has been used in both provisions.
(7) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.	(9) Save as otherwise provided in this Act, the provisions of code of Civil Procedure 1908, relating to the appeals of High Court shall as far as may be apply in cases of appeals under this section.	Both provisions are similar. In both cases provisions of the  Code of Civil Procedures shall apply, save as otherwise provided in the respective Act.( IT Act, CE ACT). This means that specific  provisions of I.T. Act or CE Act, as the case may be will prevail and only in absence of such specific provisions Civil Procedure Code will apply.

Supreme Court's Rulings on S. 35G of C.E. Act:

On interpretation of the provisions of S. 35G of the C.E. Act vis a vis the Code of Civil Procedures the Supreme Court held that the High Court has no power to condone delay in filing of appeal before it in the following cases:

CCE V/s. Hongo India (P) Limited & Another [2009 -TMI - 32749 - SUPREME COURT] ; Chaudharana Steels (P) Limited V/s. CCE  [2009 -TMI - 33525 - SUPREME COURT], wherein it is held that the High Court has no power to condone the delay in seeking a reference / filing an appeal under section 35H & 35G of the Central Excise Act, 1944 ('Excise Act' for short) respectively.

Section 260A of I.T.Act is similar:

As shown in the table given earlier we find that the section 260A of the I.T.Act is similar and pari material with Since Section 35G of the CE Act. Therefore, what is applicable to C.E. appeals will also be applicable to IT appeals.

Bombay High court on COD under I.T. Act:

In CIT Vs. M/s GRASIM INDUSTRIES LIMITED 2009-TIOL-339-HC-MUM-IT in judgment dated 08.07.2009 held that section 260A is similar to S. 35 G or 35H of the C.E.Act and therefore the law pronounced by the Supreme Court in relation to those sections of CE Act is applicable to S. 260A of the I.T.Act. consequently the High Court has no power to condone delay.

Earlier in CIT V/s. Velingkar Brothers [2008 -TMI - 13248 - BOMBAY High] reported in had taken view that High Court has power to condone the delay in filing an appeal under Section 260 A of the I.T. Act. However, since subsequently judgments of the Supreme Court were rendered, though under provisions of CE Act, but on similar provisions concerning procedures and powers, the high Court was bound by the law laid down by the Supreme Court and not by its own judgment rendered earlier while dealing appeals under I.T.Act.

Analysis of the high court's judgment (in paragraph 6-7):

Court have carefully considered the rival submissions.

It is not in dispute that Section 35 G of CE Act is pari materia with Section 260 A of the I.T. Act.

 Section 260 A (7) of the I.T. Act as well as Section 35 G (9) of the CE  Act provide that the provisions of the Code of Civil Procedure, 1908 relating to appeals to the High Court shall as far as may be, apply to the appeals filed under the respective provisions.  No such provision is to be found in Section 35 H of the Excise Act. Therefore, the argument advanced by the Counsel for the revenue that Section 35 G and Section 35 H of the Excise Act are materially different cannot be said to be wholly without substance. However, once the Apex Court has held that the High Court has no power to condone delay in filing Appeal under Section 35 G of the Excise Act, we have no option but to hold that this Court has no power to condone delay under Section 260 A of the I.T. Act because Section 260 A of the I.T. Act is pari materia with Section 35 G of the Excise Act.

7. In this view of the matter, the notice of motion seeking condonation of delay in filing the Appeal under Section 260 A of the I.T. Act is liable to be dismissed.

Authors views:

As noted above, in the table, both these provisions are subject to "save as provided in the respective Act - IT Act and CE Act). Therefore, if a specific limitation is prescribed in the specific Act, then the Code of Civil Procedure  shall not apply and the specific provisions shall be applied.

Another view which can be taken is that the respective sections only provide for a limitation period for filing of an appeal. There is neither any specific denial of power to condone the delay or any upper limit has been prescribed up to which court can condone the delay. In this regard we can recall provisions of section 256 (1) of the IT Act, in relation to reference applications before ITAT. In that original limitation was sixty days and the ITAT was given a power to condone delay up to 30 days.

In the provisions of S. 260A and 35G we find that limitation to file appeal within prescribed time is mandatory by use of words "shall be filed". However, as there is no specific mention about period up to which the court can condone delay, and there is no specific denial of such powers, it can be said that in absence of any such provisions, the High Court can condone delay in filing of appeal as per general laws of the Code of Civil Procedures and the Limitation Act.

Thus controversies still remains.

Proposal in the Finance (No.2) Bill 2009:

We find the following clauses to amend CE Act to confer upon power to high Courts to condone delay:

107. In section 35G of the Central Excise Act, after sub-section (2), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2003, namely:—

"(2A) The High Court may admit an appeal after the expiry of the period of one hundred and eighty days referred to in clause (a) of sub-section (2), if it is satisfied that there was sufficient cause for not filing the same within that period.".

108. In section 35H of the Central Excise Act, after sub-section (3), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 1999, namely:—

"(3A) The High Court may admit an application or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (1) or sub-section (3), if it is satisfied that there was sufficient cause for not filing the same within that period.".

The above amendments are proposed to overcome rulings of the Supreme Court.

Retrospective amendments to promote inactions and inefficiencies of concerned authorities: 

From the above proposals in the Finance Bill it is clear that these amendments are proposed to overcome SC rulings. The amendments are being made with retrospective effect. Thus such amendments can be considered as simply allowing concerned authorities to be inactive, inefficient, with assurance that whatever wrong you do will be rectified by amending law. The lack of similar proposal in the Bill to amend the S. 260A of the I.T. Act also reconfirm that all inefficiencies and inactions of authorities can be regularized by amending law with retrospective effect.

Is it necessary that first the Supreme Court should decide an issue against the revenue then only an amendment will be brought  to nullify the judgment of the Supreme Court. Why amendments cannot be made on real time basis, when every year amendments are thoroughly made at least once by the regular Finance Bill. In this regard readers may also refer to another article titled "RETROSPECTIVE AMENDMENT - Whether, result of mistakes, carelessness, lack of vision or just bureaucratic whims? Published in CAPJ during March- April 2007.

 The Courts must rethink on allowing retrospective amendments:

Courts have held that a clarificatory amendment can be considered as retrospective, even if it is not so specifically stated. However, in name of clarifications and legislative intentions, it has become a routine for the governments in India to amend laws just to unsettle settled legal position.

The legislative intention is to be gathered as per language used. Once such intention has been ascertained, then there should not be any amendment with retrospective effect. In fact prospective amendment should also not be allowed to alter settled legal position, unless there are changes in facts and circumstances which lead to change in legislative intention.