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TMI Blog2016 (2) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... edied at the stage of first appellate authority. As a sequel, it would follow that the provisions of Section 62(5) of the PVAT Act are directory in nature meaning thereby that the first appellate authority is empowered to partially or completely waive the condition of pre-deposit contained therein in the given facts and circumstances. It is not to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. Only when a strong prima facie case is made out will the first appellate authority consider whether to grant interim protection/injunction or not. Partial or complete waiver will be granted only in deserving and appropriate cases where the first appellate authority is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the condition of pre-deposit to continue as a condition precedent to the hearing of the appeal before it. Therefore, the power to grant interim protection/injunction by the first appellate authority in appropriate cases in case of undue hardship is legal and valid. As a result, question (c) posed is answered accordingly. - CWP No.26920 of 2013 - - - Dated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,13041, 13043, 13075, 13195, 13217, 13227, 13237, 13355, 13357, 13466, 13772, 13787, 13884, 13918, 14024, 4675, 11004, 10998, 7491, 11763, 13894, 14510, 14183, 13003, 15373, 15374, 15377, 15254, 15270, 15903, 16141, 16158, 16532, 16820, 16824, 16848, 16869, 16871, 16880, 15261, 15522, 15523, 15536, 15550, 15553, 15653, 15664, 15677, 16101, 16165, 16190, 16202, 16203, 16189, 16988, 17073, 17075, 17038, 17303, 15915, 17849, 16382, 17561, 17568, 17584, 17595, 18097, 18104, 18108, 18109, 18127, 18128, 18136, 18148, 18166, 18174, 18246, 18730, 18733, 18914, 18915, 19012,19290, 19292, 19295, 19390, 19233, 19421, 19543, 20660, 20686, 20691, 20840, 21451, 21539. 21561, 21584. 21644, 22058, 22263, 22278, 22414, 22426, 22432, 22560, 22544, 22692, 22812, 22813, 22814, 22821, 23416, 23658, 23936, 23940, 24099, 24509, 24598, 24681, 24689, 24692, 24695, 24701, 24799, 24803, 24842, 24851, 24946, 24954, 24999, 25012, 25015, 25200, 25064 and 22829 of 2015, as according to the learned counsel for the parties, the issue involved in all these petitions is identical. However, the facts are being extracted from CWP No.26920 of 2013. 2. The petitioner Punjab State Power Corporation Limited is a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the petitioner to the remedy of appeal. The petitioner approached the appellate authority i.e. the Deputy Excise and Taxation Commissioner (Appeals) by filing appeals under Section 62 of the PVAT Act for all the aforesaid assessment years. Alongwith the appeals, applications under Section 62 of the PVAT Act for stay of recovery of tax and entertainment of the appeals by dispensing with the requirement of pre-deposits had also been filed on the ground that financial position of the petitioner was very tight and there were no liquid assets so as to make payment of demand involved. Vide order dated 13.2.2013, the appellate authority directed the petitioner to make deposit of 25% of the additional demand in the government treasury by 27.2.2013 failing which the appeals would be dismissed in limine. Aggrieved by the order, the petitioner filed appeals before the Punjab VAT Tribunal (in short, the Tribunal ). It was pleaded by the petitioner that its financial position was very poor and it was not in a condition to make payment of 25% and the losses incurred by the petitioner had been duly explained to the appellate authority. Since the petitioner had already paid voluntarily tax of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and Taxation Commissioner, to the Deputy Excise and Taxation Commissioner; or (b) if the order is made by the Deputy Excise and Taxation Commissioner, to the Commissioner; or (c) if the order is made by the Commissioner or any officer exercising the powers of the Commissioner, to the Tribunal. (2) An order passed in appeal by a Deputy Excise and Taxation Commissioner or by the Commissioner or any officer on whom the powers of the Commissioner are conferred, shall be further appealable to the Tribunal. (3) Every order of the Tribunal and subject only to such order, the order of the Commissioner or any officer exercising the powers of the Commissioner or the order of the Deputy Excise and Taxation Commissioner or of the designated officer, if it was not challenged in appeal or revision, shall be final. (4) No appeal shall be entertained, unless it is filed within a period of thirty days from the date of communication of the order appealed against. (5) No appeal shall be entertained, unless such appeal is accompanied by satisfactory proof of the prior minimum payment of twenty-five per cent of the total amount of tax, penalty and interest, if any. (6) In decidin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The requirement about the deposit of the amount claimed as a condition precedent to the entertainment of an appeal which seeks to challenge the imposition or the quantum of that tax, in our opinion, has not the effect of nullifying the right of appeal, especially when we keep in view the fact that discretion is vested in the appellate judge to dispense with the compliance of the above requirement. All that the, statutory provision seeks to do is to regulate the exercise of the, right of appeal. The object of the above provision is to keep in balance the right of appeal, which is conferred upon a person who is aggrieved with the demand of tax made from him, and the right of the Corporation to speedy recovery of the tax. The impugned provision accordingly confers a right of appeal and at the same time prevents the delay in the payment of the tax. We find ourselves unable to accede to the argument that the impugned provision has the effect of creating a discrimination as is offensive to the principle of equality enshrined in article 14 of the Constitution. It is significant that the right of appeal is conferred upon all persons who are aggrieved against the determination of tax or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n no contravention of article 14 in it. A disability or disadvantage arising out of a party's own default or omission cannot be taken to be tantamount to the creation of two classes offensive to article 14 of the Constitution, especially when that disability or disadvantage operates upon all persons who make the default or omission. 9. Following judgment in Anant Mills Limited's case (supra), the Supreme Court in Seth Nand Lal and others vs. State of Haryana and others, (1980) (Supp.) SCC 574 dealing with the validity of Section 18(7) of the Haryana Ceiling on Land Holdings Act, 1972 imposing a condition of making a deposit of a sum equal to 30 times the land holdings tax payable in respect of the disputed area before any appeal or revision was entertained by the appellate or revisional authority, upheld the same with the following observations:- 21. The next provision challenged as unconstitutional is the one contained in Section 18(7) imposing a condition of making a deposit of a sum equal to 30 times the land holdings tax payable in respect of the disputed area before any appeal or revision is entertained by the appellate or revisional authority-a provision inser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s even the conditions imposed under the amended sub section (7) were so onerous in nature that they either virtually took away the vested right of appeal or in any event rendered it illusory. Both these contentions were rejected by the High Court and in our view rightly. 22. It is well settled by several decisions of this Court that the right of appeal is a creature of a statute and there is no reason why the legislature while granting the right cannot impose conditions for the exercise of such right so long as the conditions are not so onerous as to amount to unreasonable restrictions rendering the right almost illusory (vide the latest decision in Anant Mills Ltd. v. State of Gujarat. Counsel for the appellants, however, urged that the conditions imposed should be regarded as unreasonably onerous especially when no discretion has been left with the appellate or revisional authority to relax or waive the condition or grant exemption in respect thereof in fit and proper cases and, therefore, the fetter imposed must be regarded as unconstitutional and struck down. It is not possible to accept this contention for more than one reason. In the first place, the object of imposing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appeal upon certain conditions, it is upon fulfilment of those conditions that the right becomes vested and exercisable to the appellant. The proviso to Section l29E of the Act gives a discretion to the Tribunal in cases of undue hardships to condone the obligation to deposit or to reduce. It is a discretion vested in an obligation to act judicially and properly. 11. The Full Bench of the Delhi High Court in Shyam Kishore vs. Municipal Corporation of Delhi, AIR 1991 Delhi 104 was adjudicating the issue as to whether the deposit of tax amount under Section 170(b) of the Delhi Municipal Corporation Act, 1937 as a condition precedent for hearing or determination of the appeal was ultra vires. The question was answered by the majority in the negative holding as under:- 43. We may also refer to the case Chatter Singh Baid v. Corporation of Calcutta and others, AIR 1984 Calcutta 283. It was a case relating to the payment of house-tax and the right of the aggrieved party who filed an appeal. Petitioners in the said case were the owners of Premises No. 11, Indra Kumar Karnani Street. and with effect from 4th quarter, 1978-79 the Corporation of Calcutta had determined the annual v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition for deposit of tax. 49. Absence of a discretion in the appellate Court to exempt the deposit, of the amount of tax cause hardship in some cases but the Court cannot test the validity of the statutory provision on the touchstone of hardship or stringency. If a provision made in a statute is not invalid, any person desirous of availing the right of appeal has no option but to comply with the condition under which this right of appeal can be exercised. A restriction is, undoubtedly, bound to be irksome and painful to the citizens even though it may be for public good. However, important the right of a citizen or an individual may be, it has to yield to the larger interest of the country or the community., 50. Learned counsel for the petitioner submits that there may be cases where the assessing authority goes palpably wrong in the determination of the rateable value of the property and may even assess a person not even being the owner of the premises. He has also suggested that on account of clerical mistake the assessment is made ten times or hundred times more and in such like cases the aggrieved person may not be in a position to deposit the amount of tax and, thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 468, it was held by the Apex Court as under:- 8. By the Amending Act 1 of 1979 discretion of the Court in granting interim relief has now been limited to the extent of 25% of the tax required to be deposited. It is, therefore, contended that earlier decision of this Court in Anant Mills case may not have full application. We, however, do not think that such a contention can be raised in view of the law laid by this Court in Anant Mills case. This Court said that right of appeal is the creature of a statute and it is for the legislature to decide whether the right of appeal should be unconditionally given to an aggrieved party or it should be conditionally given. Right of appeal which is statutory right can be conditional or qualified. It cannot be said that such a law would be violative of Article 14 of the Constitution. If the statute does not create any right of appeal, no appeal can be filed. There is a clear distinction between a suit and an appeal. While every person has an inherent right to bring a suit of a civil nature unless the suit is barred by statute. However, in regard to an appeal, position is quite opposite. The right to appeal inheres in no one and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days of the date on which an amendment is finally made under Section 126, and, in the case of any other tax, within thirty days next after the date of the receipt of the notice of assessment or of alteration of assessment or, if no notice has been given, within thirty days after the date of the presentation of the first bill or, as the case may be, the first notice of demand in respect thereof : Provided that an appeal may be admitted after the expiration of the period prescribed therefor by this section if the appellant satisfies the court that he had sufficient cause for not preferring the appeal within that period; (b) the amount, if any, in dispute in the appeal has been deposited by the appellant in the office of the Corporation. A Full Bench of the Delhi High Court, by majority, upheld the constitutional validity of the aforesaid provision though there was also challenge to the same based on Article 14 of the Constitution. Appeal against the judgment of the Delhi High Court was taken to this Court which upheld the view of the Delhi High Court. The decision of this Court is reported as Shyam Kishore and Ors. vs. Municipal Corporation of Delhi Anr. [(1993) 1 SCC 22] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner within two months from that date and on such deposit being made, the appeals be heard and disposed of (by the Judge) and we believe by this time the appeals filed before the Judge under Section 406 must have been disposed of. 14. In Government of Andhra Pradesh and others vs. P.Laxmi Devi, (2008) 4 SCC 720, the Apex Court was considering the matter relating to pre-deposit of 50% of the stamp duty for the purpose of making a reference to the Collector under Section 47A of the Indian Stamp Act, 1899. After considering its earlier pronouncements on the subject under different statutes interpreting similar provision, it was recorded as under:- 22. In this connection we may also mention that just as the reference under Section 47A has been made subject to deposit of 50% of the deficit duty, similarly there are provisions in various statutes in which the right to appeal has been given subject to some conditions. The constitutional validity of these provisions has been upheld by this Court in various decisions which are noted below. 23. In Gujarat Agro Industries Co. Ltd. vs. Municipal Corporation of the city of Ahmedabad and Ors. (1999) 4 SCC 468, this Court refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd others, AIR 2011 SC 3748, Proviso to Section 65(1) of the Rajasthan Stamp Act, 1998 requiring deposit of 50% of demand as precondition for filing revision against the order to pay deficit stamp duty was held to be within legislative powers of the State. It was recorded as under:- 5. For appreciating the contentions of the learned counsel for the parties, we must refer to Section 65 of the Act. Section 65 of the Act is quoted hereinbelow: 65. Revision by the Chief Controlling Revenue Authority (1) Any person aggrieved by an order made by the Collector under Chapter IV and V and under clause (a) of the first proviso to section 29 and under section 35 of the Act, may within 90 days from the date of order, apply to the Chief Controlling Revenue Authority for revision of such order: Provided that no revision application shall be entertained unless it is accompanied by a satisfactory proof of the payment of fifty percent of the recoverable amount. (2) The Chief Controlling Revenue Authority may suo moto or on information received from the registering officer or otherwise call for and examine the record of any case decided in proceeding held by the Collector for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 47-A, however, states that no such reference shall be made by the registering officer unless an amount equal to fifty per cent of the deficit duty arrived at by him is deposited by the party concerned. This proviso of sub-section (1) of Section 47-A was challenged before the Andhra Pradesh High Court by P. Laxmi Devi and the Andhra Pradesh High Court held that this proviso was arbitrary and violative of Article 14 of the Constitution and was unconstitutional. The Government of Andhra Pradesh, however, filed an appeal by special leave before this Court against the judgment of the Andhra Pradesh High Court and this Court held in para 18 at page 735 of [(2008) 4 SCC 720] that there was no violation of Articles 14, 19 or any other provision of the Constitution by the enactment of Section 47-A as amended by the Andhra Pradesh Amendment Act 8 of 1998 and that the amendment was only for plugging the loopholes and for quick realisation of the stamp duty and was within the power of the State Legislature vide Entry 63 of List-II read with Entry 44 of List-III of the Seventh Schedule to the Constitution. While coming to the aforesaid conclusions, this Court has relied on The Anant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. A full Bench of this Court in M/s Emerald International Limited vs. State of Punjab and others, (2001)122 STC 382, summed up the legal position in the following terms:- 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 the Calcutta Municipal Act, 1951, which reads as under : No appeal under this section shall be entertained unless the consolidated rate payable up to the date of presentation of the appeal on the valuation determined-- (a) by an order under Section 182, in the case of an appeal to the Court of Small Causes, (b) by the decision of the Court of Small Causes, in the case of an appeal to the High Court, has been deposited in the municipal office and such consolidated rate is continued to be deposited until the appeal is finally decided. While dealing with the aforementioned section, it was held that right of appeal was not a natural or inherent r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutional 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 right of appeal is a creature of statute and while granting the right of appeal the Legislature can impose conditions for exercise of such right and there is no constitutional or legal impediment to imposition of such a condition for deposit of tax. The Supreme Court in their subsequent decision in the case of Nand Lal v. State of Haryana AIR 1980 SC 2097, had followed their earlier decision in Anant Mills v. State of Gujarat AIR 1975 SC 1234. The Supreme Court in Nand Lal v. State of Haryana AIR 1980 SC 2097 had rejected similar argument that conditions imposed on right of appeal were onerous because no discretion had been given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of property tax sought as preconditions to hearing of an appeal under Section 217 was held to be validly leviable and recoverable at the time when appeal was filed. Requirement of such payment was not held to be violative of Article 31 or 265 of the Constitution of India. 18. In Chatter Singh Baid and others vs. Corporation of Calcutta and others, AIR 1984 Calcutta 283, challenge to the validity of Section 183(3-A), 182, 183(1), 191 and 207 of the Calcutta Municipal Act, 1951 came before the Calcutta High Court. The right of appeal under Section 183(1) of the Act was not held to be nugatory or illusory by requiring to deposit consolidated rate payable before filing appeal. It was observed thus:- 15. The condition laid down by Sub-section (3-A) of Section 183 of the Calcutta Municipal Act is not something which is without any parallel. Both Mr. Dipankar Ghosh, learned advocate for the petitioner, and Mr. Pradip Kumar Ghosh, learned advocate for the respondents, has drawn my attention to nearly similar provisions for deposit of disputed tax duty and rates contained in various other taxing, municipal and fiscal laws. Mr. Dipankar Ghosh, however, submitted that unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consolidated rate determined according to the new valuation may be so high that it might be impossible for the appellant under Section 183 (1) to deposit the consolidated rate according to the said new valuation is not a relevant point for deciding the validity of the statute. It is presumed that the power to determine valuation and to assess consolidated rate would be reasonably exercised and in case said powers arbitrarily or capriciously exercised, the person aggrieved without availing of the remedy under Section 183 (i) of the Act, may seek redress in other appropriate forum. 19. In Syed Mahfooz Hussain vs. State of UP and others, AIR 2004 Allahabad 299, constitutional validity of first proviso to Section 56(1-A) as inserted by Indian Stamp (U.P. Second Amendment) Act, 2001 into the Indian Stamp Act, 1899 was under challenge before the Allahabad High Court which provided that no application or stay recovery of any disputed amount of stamp duty including interest thereon or penalty shall be entertained unless the applicant had furnished satisfactory proof of the payment of not less than one third of such disputed amount. The provision was held to be valid. 20. In Suja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of statute and such right can be conditioned in any manner as the Legislature may consider in its wisdom to be appropriate. Right of appeal is not a fundamental right guaranteed as such either by Article 14 or by Article 19 as is sought to be contended by the petitioners in the instant case. That being the legal position, an appeal provided subject to complying with certain conditions cannot be characterised or held to be unconstitutional. It is unnecessary to burden this order with various pronouncements of the apex court whereunder the similar provisions under various enactments such as the Workmen's Compensation Act, 1923 and the Payment of Wages Act, 1936 requiring the pre-deposit as a condition precedent for entertaining the appeal have been upheld. 5. In Anant Mills Co. Ltd. v. State of Gujarat the apex court in clear and categorical terms held that the Legislature while granting right of appeal can 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 . In Shyam Kishore v. Municipal Corporation of Delhi , the Supreme Court upheld the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in this proviso. There are similar provisions in many enactments and they are being upheld by the Supreme Court. For example, in the second proviso under Section 15 (1) of the Foreign Trade (Development and Regulation) Act, 1992, it is provided that the appeal against an order imposing a penalty or redemption charges shall not be entertained unless the amount of the penalty or redemption charges have been deposited by the appellant. Similarly in many other statutes, there are such similar provisions. 17. In Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of the city of Ahmedabad and Ors. , the Supreme Court referred to its earlier decision in Vijay Prakash D.Mehta v. Collector of Customs (Preventive) 1968 4 SCC 402 wherein the Supreme Court observed: The 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. 18. In Anant Mills Ltd. v. State of Gujarat the Supreme Court held that the right of appeal is a creature of the statute and it is for the Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, unconstitutional, null and void; (B) The provisions contained in Section 406 (2)(e) of the said Act impose an onerous and unreasonable condition of depositing the entire disputed tax claimed as a precondition for entertainment of the appeal. The very imposition of such an onerous and unreasonable condition renders the right of appeal illusory. There is no provision contained in Section 406 empowering the judicial authority to waive this condition in case of genuine and undue hardships. For these reasons, the provisions contained in Section 406(2)(e) are ex facie illegal, arbitrary, unconstitutional, null and void. 5) to 17) xxxxxxxxxxxxxxxxx 18) In upholding constitutional validity of clauses which provide for pre-deposit of disputed amount as a precondition for entertainment of an appeal, various courts have applied the position established in law, that the right of appeal is a creature of a statute and it is for the legislature to decide whether the right of appeal should be unconditionally given to an aggrieved party or it should be conditionally given. If the statute does not create any right of appeal then no appeal can be filed. The right of appeal is neither an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (Appeals). The said requirement was not held to be arbitrary or violative of Article 14 of the Constitution. It was recorded thus:- 9. Parliament while amending the provisions of Section 35F of the Act has required the payment of 7.5 percent of the duty in case the duty and penalty are in dispute or the penalty where such penalty is in dispute. In the case of an appeal to the Tribunal against an order passed by the Commissioner (Appeals), the requirement of deposit is 10% of the duty or as the case may be, the duty or penalty or of the penalty where the penalty is in dispute. The first proviso restricts the amount to be deposited to a maximum of ₹ 10 crores. Prior to the amendment, the Commissioner (Appeals) or the Appellate Tribunal were permitted to dispense with such deposit in a case of undue hardship subject to such conditions as may be imposed so as to safeguard the interest of the revenue. Stay applications and the issue of whether a case of undue hardship was made out, gave rise to endless litigation. There would be orders of remand in the litigative proceedings. All this was liable to result in a situation where the disposal of stay applications would consume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he constitutional validity of this provision for pre-deposit before entertaining an appeal on the ground that onerous condition has been imposed and right to appeal has become illusory must be negatived and such a provision cannot be said to be ultra vires Article 14 of the Constitution of India. The object of the provision is to keep in balance the right of appeal conferred upon a person aggrieved with a demand of tax and the right of the revenue to speedy recovery of the tax. It is, thus, concluded that the State is empowered to enact Section 62(5) of the Act and the said provision is legal and valid. The condition of 25% pre-deposit for hearing first appeal is not onerous, harsh, unreasonable and violative of the provisions of Article 14 of the Constitution of India. 25. Now question (c) remains to be answered. With regard to the said question whether the first appellate authority in its right to hear appeal has powers to grant interim protection against imposition of such a condition for hearing of appeals on merits, the following facets of the argument would arise for our consideration:- (a) Inherent powers of the Court to grant interim protection; (b) Whether the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 s. 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 s. 246 which will be to the Appellate Assistant Commissioner and not to the Appellate Tribunal. There is no provision in s. 220 under which the Income-tax Officer or any of his superior departmental officers can be moved for granting stay in the recovery of penalty or tax. It may be that under s. 225 notwithstanding that a certificate has been issued to the Tax Recovery Officer for the recovery of any tax (the position will be the same with regard to penalty) the Income tax Officer may grant time for the payment of the tax. In this manner he can probably keep on granting extensions until the disposal of the appeal by the Tribunal. It may also be that as a matter of practice prevailing in the department the Commissioner or the Inspecting Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 p. 350 that where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui jurisdiction data est, ea quoqe concessa esse vindentur, sine quibus jurisdictio explicari non potuit. An instance is given based on Ex. parte Martin that where an inferior court is empowered to grant an injunction, the power of punishing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be useless if it could not be enforced. 5. xxxxxxxxxxxx 6. It is well known that an Income-tax Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an express power of granting a stay of realisation of the tax, though the effect of an order in favour of the assessee under section 45 of the Act is a stay. Nor is there a provision for allowing the tax to be paid in instalments or for taking security for deferred payment. Neither the Appellate Assistant Commissioner nor the Appellate Tribunal is given the power to stay the colletion of tax. Whether the law should not be made more, liberal so as to enable an assessee who has preferred an appeal, to obtain from the appellate forum, a stay of collection of the tax, either in whole or in part, on furnishing suitable security, is a matter for the legislature to consider. It is interesting that in another case Pollisetti Narayana Rao v. Commissioner of Income-tax, Hyderabad, (1956) 29 ITR 222, the same High Court held that stay could be granted by it pending reference of a case by the Appellate Tribunal to the High Court. This power the High Court had under s. 151 of the Civil Procedure Code and under Art. 227 of the Constitution. 7. xxxxxxxxxxxxxx 8. Section 255(5) of the Act does empower the Appellate Tribunal to regulate its own procedure, but it is very doubtful if the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inary and efficient exercise of jurisdiction already conferred.... The inherent powers of a Court are such as result of the very nature of its organization and are essential to its existence and protection and to the due administration of justice, and the inherent power of a Court is the power to do all things that are reasonably necessary for administration of justice within scope of Court's jurisdiction ..The inherent powers of a Court are an unexpressed quantity and undefinable term, and Courts have indulged in more or less loose explanations concerning it. It must necessarily be that the Court has inherent power to preserve its existence, and to fully protect itself in the orderly administration of its business. Its inherent power will not carry it beyond this. That Courts possess certain inherent powers means that when the constitution declares that the legislative, judicial and executive powers shall remain separate, it thereby invests those officials charged with the duty of administering justice according to law with all necessary authority to efficiently and completely discharge those duties and to maintain the dignity and independence of the Courts. 9. x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the Incometax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Appellate Tribunal is entirely helpless in the matter of stay of recovery, the entire purpose of the appeal can be defeated if ultimately the orders of the departmental authorities are set aside.... 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. 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 dully effective ..... (emphasis supplied) 12. In COMMISSIONER OF INCOME TAX, DELHI v. BANSI DHAR , (1986) 157 ITR 665 (SC), the Supreme Court considered whether the incidental or inherent power to grant stay in appellate jurisdiction will extend to reference jurisdiction also. It referred to the following passage from HUKUM CH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. One another aspect may be noticed at this juncture. When the appeal is filed under Section 20, the assessee is required to pay the admitted tax in full. He may obtain a stay of the disputed tax subject to furnishing security to the satisfaction of the Appellate Authority in respect of the disputed tax. When he files a second appeal to the Tribunal, Section 22 provides for stay of 50% of the disputed tax on payment of 50% of the disputed tax. Thus, by the time the matter comes up before the High Court under Section 23, admitted tax would have been paid, 50% of the disputed tax would have been paid and remaining 50% of the disputed tax would be covered by adequate security. Further, the High Court will not grant stay in a routine way. It will grant stay only when a strong prima facie is made out. The High Court may also make the grant of stay subject to conditions in appropriate cases. 20. In view of the above, we answer the question as follows: High Court has the power to grant stay during the pendency of a Revision Petition under Section 23 or appeal un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mately arise in the minds of the authorities administering the Act that if the Appellate Tribunals proceed to stay recovery of taxes or penalties payable by or imposed on the assessees as a matter of course the Revenue will be put to great loss because of the inordinate delay in disposal of appeals by the Appellate Tribunals. It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the tribunal will consider whether to stay the recovery proceedings and on what conditions and the stay will be granted in most deserving and appropriate cases where the tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal. 29. In Debasish Moulik N. vs Dy. Commissioner Of Income Tax, (1998) 150 CTR Cal 387, the Calcutta High Court observed as under:- 4. Admittedly an appeal has been preferred by the petitioner and the same is pending adjudication. The power to grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is mandatory or directory, the same depends upon the intent of the legislature and not upon the language in which the intent is clothed. The issue has been considered by a Full Bench of this Court in CIT vs. Punjab Financial Corporation, (2002) 254 ITR 6 wherein it was noticed that the meaning and intention of the legislature must govern and these are to be ascertained not only from the phraseology of the provision but also by considering its nature, design and the consequences which would follow from construing it one way or the other. The use of the word shall in a statutory provision, though generally taken in a mandatory sense does not necessarily mean that in every case it shall have that effect, that is to say, unless the words of the statute are punctiliously followed, the proceeding or the outcome of the proceeding would be invalid. On the other hand, it is not always correct to say that where the word may has been used, the statute is only permissive or directory in the sense that non compliance with those provisions will not render the proceedings invalid. The relevant portion reads thus:- 6. Before proceeding further, we may notice some of the principles of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil Law Cushing's Edition, Volume I at page 88 as under:- 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 . Further relying on the maxim Cui jurisdiction date est, ea quoque concessa essee videntur, sinequibus jurisdictio explicari non potuit, which means 'where an inferior court is empowered to grant an injunction, the power of pushing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be useless if it could not be enforced. In Principles of Statutory Interpretation by Justice G.P.Singh (12th Edition, 2010), the learned author has stated as under:- In selecting out of different interpretations 'the court will adopt that which is just, reasonable and sensible rather than that which is none of those things' ...A construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency or uncertainty and friction in the system which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases where the first appellate authority is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the condition of pre-deposit to continue as a condition precedent to the hearing of the appeal before it. Therefore, the power to grant interim protection/injunction by the first appellate authority in appropriate cases in case of undue hardship is legal and valid. As a result, question (c) posed is answered accordingly. 34. In some of the petitions, the petitioners had filed an appeal without filing an application for interim injunction/protection which are still pending whereas in other petitions, the first appellate authority had dismissed the appeal for want of pre-deposit and further appeal has also been dismissed by the Tribunal on the same ground without touching the merits of the controversy. Where the appeals are pending without an application for interim injunction/protection before the first appellate authority, the petitioner may file an application for interim injunction/protection before the appeals are taken up for hearing by first appellate authority and in case such an application is filed, the same shall be decided b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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