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TMI Blog1997 (2) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the aforementioned case as they emerged from the orders of the Assessing Authority, Deputy Excise and Taxation Commissioner (hereinafter called "the appellate authority") and the Tribunal are that the sales tax including penalty and interest (hereinafter referred to as "the tax amount") to the tune of Rs. 24,80,464 was imposed upon the petitioner by the Assessing Authority vide annexure P3. The order, annexure P3, was appealed against before the appellate authority. Along with the appeal an application under section 20(5) of the Punjab General Sales Tax Act, 1948 (for short, "the Punjab Act") was filed for entertaining the appeal without prior payment of tax amount on the ground that the petitioner was unable to pay the same. The appellate authority, Patiala, by his order dated June 17, 1993 directed the petitioner to deposit a sum of Rs. 10,00,000 (rupees ten lacs) before August 9, 1993 failing which the appeal was to be dismissed as not maintainable. The order of the appellate authority was subjected to a further challenge in appeal before the Tribunal under section 20(2) of the Punjab Act. The Tribunal upheld the order of the appellate authority, Patiala. The orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scretion, inter alia, after taking into consideration whether the tax in question was prima facie illegal as contended by the appellant or revisionpetitioner. On the other hand, the observations in Food Corporation of India's case [1989] 73 STC 241, made by a division Bench of this Court, convey the impression that it is not open to the appellate authority to consider the prima facie merits of the appeal. We are unable to subscribe to the view expressed by the learned Judges of the division Bench in the aforesaid case. This is a very important question and it keeps arising in a large number of writ petitions filed by those aggrieved by the orders of the authorities under section 20(5) of the Punjab General Sales Tax Act or an analogous provision of the Haryana General Sales Tax Act. We are prima facie in agreement with the view expressed by the learned single Judge in Kisan Workers Transport Co-operative Society Ltd.'s case 1982 UTR 345 (P H). We, therefore, direct that the papers be laid before honourable the Chief Justice for referring the matter to a Full Bench for decision on this question. For the purposes of the present petition, it is made clear that we do not find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons to be recorded in writing. (5) No appeal shall be entertained by an Appellate Authority unless such appeal is accompanied by satisfactory proof of the payment of the tax or of the penalty, if any, imposed or of both as the case may be: Provided that if such authority is satisfied that the dealer is unable to pay the tax assessed or the penalty, if any, imposed or both, he may, for reasons to be recorded in writing, entertain an appeal without the tax or penalty or both having been paid or after part payment of such tax or penalty or both. (6) Subject to such rules or procedure, as may be prescribed, an appellate authority may pass such order on appeal as it deems to be just and proper." "Haryana Act: 39.. Appeal.-(1) An appeal from every original order, including an order under section 40, passed under this Act or the Rules made thereunder shall lie,- (a) if the order is made by an Assessing Authority ; officer-incharge of a check-post or barrier or an officer below the rank of a Deputy Excise and Taxation Commissioner, to the Deputy Excise and Taxation Commissioner or such other officer as the State Government may, by notification, appoint ; (b) if the order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 4 and subject to such rules of procedure as may be prescribed in relation to an appellate authority other than the Tribunal, an appellate authority may pass such order on appeal as it deems to be just and proper, including an order enhancing the amount of tax or penalty or interest or all under this Act: (Proviso............................) (7) An assessing authority may challenge in appeal before the Tribunal, the order of the officer on whom the State Government has conferred the powers of the Commissioner under sub-section (2) of section 40, within one year from the date of the order appealed against." 4.. On behalf of the petitioner-assessee Emerald International Ltd. v. State of Punjab, Mr. K.L. Goyal, Advocate, addressed arguments whereas on behalf of other assessees in other writ petitions Mr. A.K. Mittal and Mr. S.S. Saron, Advocates, advanced arguments. Mr. S.K. Sharma, Deputy Advocate-General, Punjab, represented the State, whereas the State of Haryana was represented by Mr. S.K. Kapoor and Mr. J.S. Duhan, Assistant Advocate-Generals. 5.. Counsel for the petitioners argued that the power to grant stay should be held to be incidental or ancillary to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Shyam Kishore v. Municipal Corporation of Delhi AIR 1992 SC 2279, Lakshmiratan Engineering Works Ltd. v. Assistant Commissioner (Judicial) I, Sales Tax, Kanpur Range, Kanpur [1968] 21 STC 154 (SC); AIR 1968 SC 488, Uptron Power Tronics v. Collector of Central Excise (1987) 28 ELT 61 (Delhi), Excise and Taxation Commissioner, Patiala v. Guranditta Mall Shadi Parkash Rice and Oil Mills [1971] 27 STC 391 (P H) and Kisan Workers Transport Co-operative Society Ltd., Amritsar v. Assessing Authority 1982 UTR 345. 6.. On the other hand, the counsel for the State of Punjab, Mr. S.K. Sharma, Deputy Advocate-General, has argued that the right of appeal has been given to the assessee in a statute and if the assessee wants to avail of the same, he has to accept the conditions prescribed in the same. It has further been argued that in view of the wording of the two provisions in the Punjab Act and Haryana Act, the appellate authority can grant stay only on the ground of inability to pay and on no other ground. Mr. Sharma has further argued that if the argument of Mr. Ajay Mittal that the assessee is entitled to the consideration of his stay application at two stages, i.e., at the time of fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraphs 3 and 4 read as under: "3. The relevant provisions of the Act may be first noticed. Section 156 provides that when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Act, the Income-tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. Under section 220(1) any amount specified in the notice of demand under section 156 has to be paid within 35 days of the service of the notice or within such lesser period as may be specified under the proviso to sub-section (1). If the amount is not paid within the period limited or extended (the assessee can ask for an extension) the assessee shall be deemed to be in default. Sub-section (6) of section 220 provides that where an assessee has presented an appeal under section 246 the Income-tax Officer may, in his discretion and subject to such conditions as he may think fit, treat the assessee as not being in default so long as the appeal remains pending. Section 221 provides for the imposition of penalty when the assessee is in default. Sections 222 to 224 relate to the issuance of a certificate to the Tax Recovery Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (V of 1898).' Section 131 may at this stage be referred to. It gives to the Income-tax Officer, the Appellate Assistant Commissioner and the Commissioner the same powers as are vested in the court under the Code of Civil Procedure when trying a suit in respect of the matters specified in the section. But these powers relate to discovery and inspection; enforcing the attendance of witnesses; compelling production of books of account, etc., issuing commissions and allied matters. 4.. There can be no manner of doubt that by the provisions of the Act or the Income-tax Appellate Tribunal Rules, 1963 powers have not been expressly conferred upon the Appellate Tribunal to stay proceedings relating to the recovery of penalty or tax due from an assessee. At the same time, it is significant that under section 220(6) the power of stay by treating the assessee as not being in default during the pendency of an appeal has been given to the Income-tax Officer only when an appeal has been presented under section 246 which will be to the Appellate Assistant Commissioner and not to the Appellate Tribunal. There is no provision in section 220 under which the Income-tax Officer or any of his su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and it is only at the earlier stage of appeal before the Appellate Assistant Commissioner that the statute provides for such a matter being dealt with by the Income-tax Officer. It is a firmly established rule that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective (Sutherland Statutory Construction, Third Edition, Articles 5401 and 5402). The powers which have been conferred by section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective. In Domat's Civil Law, Cushing's Edition, Vol. 1, at page 88, it has been stated: 'It is the duty of the Judges to apply the laws, not only to what appears to be regulated by their express dispositions but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it.' Maxwell on Interpretation of Statutes, Eleventh Edition contains a statement at page 350 that 'where an Act confers a jurisdiction, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference. It was further held that the High Court could exercise its power of stay under articles 226 and 227 of the Constitution of India, in appropriate cases. Of course, the apex Court was dealing with the question whether an assessee is entitled to the grant of stay or not during the pendency of a reference under Income-tax Act, yet the ratio of law to the effect that the power of stay is neither incidental nor ancillary to the jurisdiction of the appellate powers, is fully applicable to the facts of the instant case. However, the aforementioned case does go in favour of the assessees to the extent that the High Court in appropriate cases can grant stay under articles 226/227 of the Constitution of India. 9.. Shyam Kishore case AIR 1992 SC 2279 does not help the assessees for the proposition of law that the appellate authority can grant stay on the basis of prima facie nature of the case. However, the observations of the apex Court to the extent that the High Court can under article 226 of the Constitution of India grant appropriate relief in a given case, does help the assessee. It is necessary to have a look at the bare provisions of the Delhi Municipal Corporation Act b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 247 [Punj Sons (P) Ltd. v. Municipal Corporation of Delhi] that the Appellate Authority had powers to have recourse to the provisions of order 41, rule 5 of the Code of Civil Procedure was not approved by the apex Court in Shyam Kishore's case AIR 1992 SC 2279. 10.. There cannot be any doubt that grant of any adjournment to enable the assessee to pay the tax assessed does grant some relief in appropriate cases where undue hardship is there, but under no circumstances the Appellate Authority has been invested by the apex Court any power to put a restraint upon the corporation from recovering the tax amount. In view of the aforementioned discussion it can safely be observed that while the observations of the apex Court are absolutely of no help to the assessees for laying down the proposition of law that the Appellate Authority can grant stay but it does help the assessees to the extent that the High Court can grant stay in rare cases keeping in view the peculiar facts and circumstances of the case under article 226 of the Constitution of India. 11.. The observations of the honourable Supreme Court in paragraphs 7 and 10 (page Nos. 159 and 161 of 21 STC) in Lakshmiratan Enginee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accompanied, etc.; in section 17 of the Small Causes Courts Act, the expression is 'at the time of presenting the application'. In section 6 of the Court fees Act, the words are 'file' or 'shall be received'. It would appear from this that the Legislature was not at a loss for words if it had wanted to express itself in such forceful manner as is now suggested by counsel for the State. It has used the word 'entertain' and it must be accepted that it has used it advisedly. This word has come in for examination in some of the cases of the Allahabad High Court and we shall now refer to them. ...................................... 10.. In our opinion these cases have taken a correct view of the word 'entertain' which according to dictionary also means 'admit to consideration'. It would, therefore, appear that the direction to the court in the proviso to section 9 is that the court shall not proceed to admit to consideration an appeal which is not accompanied by satisfactory proof of the payment of the admitted tax. This will be when the case is taken up by the court for the first time. In the decision on which the Assistant Commissioner relied, the learned Chief Justice (Desai, C.J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be construed harmoniously and the only conclusion which can be drawn is that an appeal is maintainable either under sub-section (1) of section 20 or 39 of the two Acts but the same shall not be entertained until and unless the same is accompanied by a satisfactory proof of payment of tax or of the penalty amount. In other words, the Appellate Authority is debarred from entertaining the appeal for consideration in the absence of proof of deposit unless the assessee brings his case within the meaning and purview of the proviso. The ratio of law, in our considered view, as laid down in Lakshmiratan Engineering Works's case [1968] 21 STC 154 (SC); AIR 1968 SC 488, does not go in favour of the assessees rather the same goes against them. 12.. In Uptron Power Tronics v. Collector of Central Excise (1987) 28 ELT 61, a Division Bench of the Delhi High Court set aside the order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, directing the petitioner to deposit 50 per cent of the sum demanded as a condition precedent before hearing the appeal. The Delhi High Court set aside the order of the Tribunal wherein it was mentioned that it need not go into the prima facie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under the proviso in favour of assessee, has implied power to stay the proceedings for the recovery of the tax. It is noteworthy that in the instant case the Appellate Authority not only got the part payment of the tax made but also secured the payment of the remaining amount by getting the property of the assessee hypothecated." The aforementioned observations clearly indicate that the Appellate Authority had implied power to grant stay in a situation where the assessee is unable to pay the tax amount and if inability to pay is not shown then there is no power to grant stay. 14.. Coming to the last case, i.e., Kisan Workers Transport Co-operative Society Ltd.'s case 1982 UTR 345 on the basis of which reference has been made to the Full Bench, the analytical examination of the said case does reveal that the observations made by the learned single Judge, in the aforementioned case, do support the proposition of law canvassed by the learned counsel for the assessees. However, the question arises whether the view taken by learned single Judge in the aforesaid case that the authorities should find out amongst other things whether the impugned tax was prima facie legal or not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited by them, the arguments of counsel for the State and the judicial pronouncements cited by them need to be adverted to. The precise arguments have already been noticed by us in the earlier part of the judgment and we hasten to add that the same have got force in view of the law laid down in several judicial pronouncements to be noticed hereinafter. 17.. In Anant Mills' case AIR 1975 SC 1234 a Constitution Bench of five Judges of the honourable Supreme Court while dealing with the Constitutional validity of certain provisions of the Bombay Provincial Municipal Corporations Act (59 of 1949) and section 406 (59 of 1949) of Bombay Provincial Municipal Corporations Act as amended by Gujarat Act (5 of 1970) held as under: "After hearing the learned counsel for the parties, we are unable to subscribe to the view taken by the High Court. Section 406(2)(e) as amended states that no appeal against a rateable value or tax fixed or charged under the Act shall be entertained by the Judge in the case of an appeal against a tax or in the case of an appeal made against a rateable value after a bill for any property tax assessed upon such value has been presented to the appellant, unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt. The above provision in our considered opinion, has not the effect of making invidious distinction or creating two classes with the object of meting out differential treatment to them; it only spells out the consequences flowing from the omission and default of a person who despite the fact that the deposit of the amount found due from him would cause him no hardship, declines of his own volition to deposit that amount. The right of appeal is the creature of a statute. Without a statutory provision creating such a right the person aggrieved is not entitled to file an appeal. We fail to understand as to why the Legislature while granting the right of appeal cannot impose conditions for the exercise of such right. In the absence of any special reasons there appears to be no legal or constitutional impediment to the imposition of such conditions. It is permissible, for example, to prescribe a condition in criminal cases that unless a convicted person is released on bail, he must surrender to custody before his appeal against the sentence of imprisonment would be entertained. Likewise, it is permissible to enact a law that no appeal shall lie against an order relating to an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our considered view, be equated with the words "unable to pay" as have been used in the statute. 19.. The discussion on Anant Mill's case AIR 1975 SC 1234 straightway brings us to the examination of Shyam Kishore's case AIR 1992 SC 2279 once over again as this judgment of the apex Court was sought to be relied upon not only by the counsel for the assessees but by the counsel for the State as well. In view of the observations made by us in the earlier part of the judgment, it is not understandable as to how the ratio of law of the apex Court helps the assessees. In our considered view the ratio of law of the apex Court in Shyam Kishore's case AIR 1992 SC 2279 as a whole goes against the assessees except to the extent that the High Court can always interfere in writ jurisdiction in a particular given case, as has been observed by the apex Court. 20.. In Navin Chandra Chhotelal's case AIR 1971 SC 2280 the question arose whether the appeal of a person against whom penalty has been imposed could be dismissed in case of non-compliance of order of deposit as provided in section 129(1) of the Customs Act. In the abovesaid case the honourable Supreme Court ruled that in case of non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations. The following observation of the apex Court clearly supports the arguments of the learned counsel for the State that right to appeal was a statutory and that it could be circumscribed by conditions: "Right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi-judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant." In our considered view, the observations of the apex Court as reproduced above are fully applicable to the facts of the instant case. The provisions in the statute being dealt with herein are similar except that words "undue hardship" has been used in the proviso in the customs Act whereas the words "unable to pay" has been used in the Punjab and Haryana Acts. 22.. In addition to the law laid down by the honourable Supreme Court in various judicial pronouncements noticed above, two judgments of Calcutta and Punjab and Haryana High Court which have got direct bearing can be quoted with advantage. The Calcutta High Court in Chatter Singh Baid's case AIR 1984 Cal 283 was discussing section 183(3-A) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that unless the appellate authority is given discretionary powers to relax or modify such condition for deposit of the disputed amount, the condition precedent ought to be pronounced as unreasonable. In my view, the observations made in para 40 of the Supreme Court decision in Anant Mills v. State of Gujarat AIR 1975 SC 1234, are directly against the above submission of the petitioners. With reference to section 406(2) of the Bombay Provincial Municipal Act, the Supreme Court upheld the power of the Legislature to impose similar condition for deposit while granting right of appeal. According to the Supreme Court, there was no legal or constitutional impediment to imposition of such a condition. I respectfully agree and apply the aforesaid observations in upholding the validity of section 183(3-A) of the Calcutta Municipal Act. I am unable to accept Mr. Dipankar Ghosh's submission, that, the court's power under section 406(2) of the Bombay Provincial Municipal Act to relax the condition for deposit the tax due had at all weighed with the Supreme Court in making the aforesaid observations in Anant Mills v. State of Gujarat AIR 1975 SC 1234. The ratio of the said decision is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be interfered in proceedings under article 226 of the Constitution of India. In an appropriate case, the High Court as has been observed in the earlier part of the judgment can interfere in writ jurisdiction and can grant stay in rare cases keeping in view the peculiar facts of a given case. 24.. As a sequal to our discussion on the question of law referred to us the following conclusions can be deduced: (a) The appeal is a creation of a statute and in case a person wants to avail of the right of appeal, he has to accept the conditions imposed by the statute. (b) The right of appeal being a creature of statute, the Legislature could impose conditions for exercise of such a right. Neither there is a constitutional nor legal impediment for imposition of such a condition. (c) The right of appeal is neither natural nor inherent attaching to a litigation and such a right neither exists nor can be assumed unless expressly given by the statute. (d) Even if, this Court was to interpret the bare provisions of two statutes, i.e., the Punjab General Sales Tax Act, 1948 and the Haryana General Sales Tax Act, 1973, it could safely be held that there is a complete bar to the enter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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