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TMI Blog1999 (11) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... ng ships to Poompuhar Shipping Agency. O.P. No. 1245 of 1999 seeks a direction to the respondents not to insist upon 25 per cent of admitted tax before entertaining an appeal under section 31 of the Tamil Nadu General Sales Tax Act. O.P. Nos. 1325 to 1328 of 1999 relate to assessment years 1993-94 to 1996-97 and they seek to quash orders passed by the appellate authority refusing to waive the payment of 25 per cent of admitted tax under Tamil Nadu Act 14 of 1999 before entertaining the appeals. The correctness of section 3A of the Tamil Nadu General Sales Tax Act has already been decided by this Special Tribunal in favour of the Revenue and the allegations are nothing but repetitions and no arguments were in fact advanced in this regard. Similarly, no arguments were advanced with reference to the second proviso of section 31 of the Tamil Nadu General Sales Tax Act regarding satisfactory proof of payment of the tax admitted by the appellant/assessee before filing an appeal. Therefore, the one and only issue in all these petitions relates to the validity of Tamil Nadu Act 14 of 1999. Even here it has to be mentioned that at the time of arguments, no serious attempts were made to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive legislation. Thus, the arguments have been considerably narrowed down to a single issue as to the assessments or returns which would be affected by the impugned legislation. 4.. It is well-established that the right to appeal is a matter of substantive right and not merely a matter of procedure. This right of appeal from the decision of an inferior to a superior Tribunal becomes vested in a party when the lis commences. This pre-existing right of appeal cannot be destroyed by an amendment, it is not retrospective in nature by express words or necessary intendments. The question is as to when such a preexisting right of appeal becomes vested in a party? Is it on the date of filing of the returns? Is it on the date when a pre-assessment notice is issued? Is it on the date when proceedings are initiated for reopening an assessment? Is it on the date when an order of assessment is passed? Is it on the date when an appeal is actually filed? 5.. Mr. C. Natarajan, has advanced the main arguments for the petitioners. Mr. R.L. Ramani and Mr. K. Ramgopal have chipped in with useful additional points supported by decisions. Mr. K. Soundararajan, the learned Government Advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade. On November 25, 1949 an amendment was introduced that no appeal against an order of assessment shall be admitted unless the appeal is accompanied by satisfactory proof of the payment of the tax with penalty. The amendment was not retrospective, as in our case. The question therefore, was in respect of what assessment the assessees had a vested right of appeal and could escape from the said amendment. The Supreme Court observed after considering certain decisions as follows: "It was there regarded as settled that the right of appeal was not mere matter of procedure but was a vested right which inhered in a party from the commencement of the action in the court of first instance and such right could not be taken away except by an express provision or by necessary implication." On the relevant question the Supreme Court observed: "Finally, Sri Ganapathy Aiyar faintly urges that until actual assessment there can be no "lis" and, therefore, no right of appeal can accrue before that event. There are two answers to this plea. Whenever there is a proposition by one party and an opposition to that proposition by another a "lis" arises. It may be conceded, though not deciding it, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " It is in that judgment that Mr. Venkatarama Ayyar, J. gave a dissenting opinion as follows: "It is one thing to say that right of appeal is a substantive right, and quite a different thing to hold that it vests at the commencement of the proceedings. It would be perfectly logical to hold that the right of appeal is a substantive right and at the same time that it arises only when the decision which is to be appealed against is rendered. The result of that view will be that a right of appeal which arises when a judgment is given, would stand unimpaired by a subsequent legislation altering or abridging it, unless that is made retrospective, expressly or by necessary implication." We can take consolation from the said minority judgment that our earlier view in [1999] 113 STC 122 (TNTST) (Goodluck Agencies v. State of Tamil Nadu) is in consonance with the views expressed by Venkatarama Ayyar, J. 10.. In [1962] 46 ITR 516 (Pat) (Raja Bahadur Kamakhya Narayan Singh v. State of Bihar) a division Bench of the Patna High Court observed as follows: "In my opinion the right of appeal vested in the assessee on the date of initiation of the proceedings for assessment. I think that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troversy before us that the assessee's right to file an appeal and a further appeal under the earlier Act is a vested right. Such a right becomes vested in the assessee, the moment he filed his return which commenced the assessment proceedings....." 13.. In [1988] 68 STC 220 (AP) (State of Andhra Pradesh v. Hindustan Shipyard Limited), the court observed as follows: "Therefore, when the Andhra Pradesh General Sales Tax (Amendment) Act, 1985, by the introduction of sub-sections (6) and (6-A) in section 21 of the Andhra Pradesh General Sales Tax Act, 1957 with effect from 1st July, 1985, deprived the Tribunal altogether of the power of granting stay of collection of tax pending an appeal, the amendment cannot be taken to have retrospective effect. The power of the Tribunal to grant stay is preserved in respect of all appeals relating to assessment years falling prior to 1st July, 1985 and in respect of provisional assessment proceedings relating to months falling prior to 1st July, 1985." 14.. In [1977] 39 STC 147 (All.) (Commissioner, Sales Tax, Uttar Pradesh v. Tika Ram Arhti), the Allahabad High Court has observed that proceedings for assessment or reassessment are initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Sales Tax, Madhya Pradesh, Nagpur) already referred to by us. He also relies on [1970] 26 STC 10 (SC) (Hardeodas Jagannath v. State of Assam) which is also a Constitutional Bench judgment. In this case the main issue related to the extension of the Assam Sales Tax Act to Shillong administered areas and after getting a clarification from the Government of India it was decided that the extension of the laws to the said areas was correct. The second question which is of relevance to our case relates to the applicability of section 30(1) of the amended Act which prescribed that no appeal shall be entertained by the appellate authority unless he is satisfied that the amount of tax assessed or the penalty levied has been paid, if not otherwise directed by him. In respect of the retrospective operation of the said amended provision the Supreme Court observed as follows: "It was contended that the amendment came into force with effect from April 1, 1958, and it cannot be given retrospective effect so as to apply to assessment periods ending on September 30, 1956, March 31, 1957, and September 30, 1957. We are unable to accept this argument as correct because the assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment/accounting period and the assessment order antedate the amendment but the appeal is filed after the amendment has been made, and (iii) the assessment/accounting period alone antedates the amendment and the assessment order is made and the appeal filed after the amendment has been made as has happened in the case in hand." 21.. The Tribunal answered the questions in the following manner, even though they considered all the decisions including [1953] 4 STC 114 (SC). "...........the amended provisions would apply in all cases in which the assessments are made and appeals are filed after the coming into effect of the amended provisions and their remaining in force irrespective of the accounting/assessment periods to which the appeals relate as this would not amount to giving the amendments retrospective effect as has been held in Hardeodas' case [1970] 26 STC 10 (SC); AIR 1970 SC 724." 22.. Once the above cases are excluded the ratio becomes clear and explicit. To recapitulate the binding decisions, briefly, we find as follows: Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh [1953] 4 STC 114 (SC) talks of initiation of proceedings. Garikapati Veeraya v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tamil Nadu General Sales Tax Act and Rules, whichever is earlier, was prior to Tamil Nadu Act 14 of 1999, will not apply and appeals can be filed in accordance with law prevailing prior to June 14, 1999, when Act 14 of 1999 came into force. 24.. Consequently, instead of the prayers sought for in the original petitions we uphold the validity of Tamil Nadu Act 14 of 1999, but give below the following directions regarding the retrospective nature of the Act. The Act is admittedly prospective in nature. However, a right of appeal inheres in a dealer/assessee the very moment when he files a return under the Tamil Nadu General Sales Tax Act or when he is obliged to file a return within the dates prescribed under the Tamil Nadu General Sales Tax Rules, whichever is earlier. Therefore, Tamil Nadu Act 14 of 1999 cannot apply to assessment proceedings relating to such returns filed or the dates prescribed in the Rules for filing such returns whichever is earlier. In respect of those transactions and assessments the law as it existed prior to Tamil Nadu Act 14 of 1999 will alone apply. The original petitions are disposed of in the above manner. And this Tribunal doth further order th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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