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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 ..... 26559, 26589, 11405, 22928, 22947, 24389, 24390, 24391 of 2014, 28, 149, 319, 315, 423, 456, 478, 1105, 1118, 1119, 1142, 1253, 1254, 1299, 1393 , 1813, 1817, 1998, 2059, 2090, 2184, 2334, 2345, 2346, 2406, 2407, 2409, 2412, 2416, 2628, 2483, 2633, 2635, 2858, 2944, 3043, 3073, 3096, 3099, 3561, 3605, 3615, 3573, 3196, 3132, 3038, 3302, 3462, 3501, 3504, 3526, 3554, 3567, 3649, 1932, 5337, 5338, 5341, 5471, 4791, 4860, 1931, 4100, 4101, 4104, 4106, 4167, 4245, 4407, 4426, 4429, 4697, 4704, 4707, 4874, 4906, 4907, 4919, 4949, 4970, 4992, 5043, 5074, 5084, 5098, 5168, 5229, 5520, 5522, 5547, 5076, 5548, 5551, 5736, 5758, 5772, 5790, 5803, 5910, 5918, 5920, 5926, 5937, 5943, 5967, 5986, 6065, 6097, 6104, 6123, 6209, 6407, 6408, 6522, 6847, 7036, 7185, 7188, 7205, 7216, 7242, 7447, 7498, 7520, 7526, 7537, 7576, 7779, 7882, 7883, 7884, 7886, 7887, 7888, 7891 7893, 10118, 10142, 10144, 10878, 10915, 10920, 10956, 10960, 10990, 10991, 10993, 10994, 11246, 11755, 11757, 11828, 11852, 11884, 11903, 11938, 11952, 12001, 12020, 11537, 11660, 7994, 11307, 11322, 11352, 4578, 8120, 8482, 8600, 8707, 8804, 8814, 8835, 8880, 8893, 8896, 9007, 9008, 9014, 9023, 9026, 9028, 9113, 9250, 9269, 9270, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Punjab Value Added Tax Rules, 2005 (in short, "the Rules"). Similarly, for the years 2008-09 and 2009-10, returns were filed in time and annual statements in Form VAT 20 were also filed before the last dates. The Excise and Taxation Officer cum Designated Officer (ETO) - respondent No.2 initiated assessment proceedings for the years 2007-08, 2008-09 and 2009-10 by issuing notice under section 29 of the PVAT Act. The representatives of the petitioner attended the proceedings and tendered explanation. Assessments had been framed under the PVAT Act vide orders dated 19.9.2011, 31.10.2012 and 31.11.2012 for the assessment years 2007- 08, 2008-09 and 2009-10, Annexures P.1, P.1/A and P.1/B respectively. The officer made following additions to the taxable turnover declared in the returns:- i) the receipts in respect of charges from the customers as meter rent had been brought to tax; ii)the receipts in respect of charges from the customers as service line rental had been brought to tax while treating these as meter rent. In addition to the above tax, the ETO imposed penalties under section 53 and interest under section 32 of the PVAT Act, resulting in raising demand of Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the Tribunal. Hence the instant writ petitions by the petitioner(s). 3. We have heard learned counsel for the parties. 4. From the submissions made by learned counsel for the parties, the following questions emerge for our consideration:- (a) Whether the State is empowered to enact Section 62(5) of the PVAT Act? (b) Whether the condition of 25% pre-deposit for hearing first appeal is onerous, harsh, unreasonable and, therefore, violative of Article 14 of the Constitution of India? (c) Whether the first appellate authority in its right to hear appeal has inherent powers to grant interim protection against imposition of such a condition for hearing of appeals on merits? 5. Examining questions No.(a) and (b) as noticed above, these are being taken up together as the issue involved therein is overlapping. It may be noticed that vide sub section (5) of Section 62 of the PVAT Act, the State has imposed a condition of 25% of the tax etc. to be deposited as a condition precedent for hearing of an appeal. 6. It would be expedient to notice Section 62 of the PVAT Act which reads thus:- "62. (1) An appeal against every original order passed under this Act or the rules made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd pre-deposit held as under:- "40. 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 amount claimed from the appellant has been deposited by him with the Commissioner. According to the proviso to the above clause where in any particular case the Judge is of opinion that the deposit of the amount by the appellant will cause undue hardship to him, the Judge may in his discretion dispense with such deposit or part thereof, either unconditionally or subject to such conditions as he may deem fit. The object of the above provision apparently is to ensure the deposit of the amount claimed from an appellant in case he, seeks to file an appeal against a tax or against a rateable value after a bill for any property tax assessed upon such value has been presented to him. Power at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 assessment of tax unless the tax had been paid. Such a provision was on the statute book in section 30 of the Indian Income-tax Act, 1922. The proviso to that section provided that " . . . . . no appeal shall lie against an order under sub-section (1) of section 46 unless the tax had been paid". Such conditions merely regulate the exercise of the right of appeal so that the same is not abused by a recalcitrant party and there is no difficulty in the enforcement of the order appealed against in case the appeal is ultimately dismissed. It is open to the legislature to impose an accompanying liability upon a party upon whom a legal right is conferred or to prescribe conditions for the exercise of the right. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd declared surplus to which he was not entitled under the law, a licence fee equal to 30 times the landholdings tax recoverable in respect of this area. On 6th June, 1978, the Act was further amended by Amending Act 18 of 1978 whereby the rigour of the condition imposed under sub section (7) was reduced by permitting the appellant or the petitioner to furnish a bank guarantee for the requisite amount as an alternative to making cash deposit and while retaining sub section (8) in its original form, a new sub section (9) was inserted under which it has been provided that if the appeal or revision succeeds, the amount deposited or the bank guarantee furnished shall be refunded or released, as the case may be, but if the appeal or revision fails the deposit or the guarantee shall be adjusted against the licence fee recoverable under sub section (8). In the High Court, two contentions were urged: first, that section 18(1) and (2), as originally enacted in 1972, gave an unrestricted and unconditional right of appeal and revision against the orders of the prescribed authority or the appellate authority but by inserting sub sections (7) and (8) by Act 40 of 1976, a fetter was put on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of a provision conferring discretion on the appellate/revisional authority to relax or waive the condition, cannot be regarded as onerous or unreasonable. The challenge to section 18(7) must, therefore, fail." 10. In Vijay Prakash D.Mehta and another vs. Collector of Customs (Preventive) Bombay, AIR 1988 SC 2010, the Apex Court while considering identical issue held that right to appeal was 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. If the statute gives a right to appeal upon certain conditions, it is upon fulfilment of those conditions that the right becomes vested and exercisable to the appellant. It was recorded as under:- "9. 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. Xx xx xx xx xx xx xx xx xx 13. It is not the law that adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. This argument was not accepted by observing that the observations made in para 40 of the Supreme Court decision in Anant Mills'case (supra) are directly against the above submission of the petitioners. Reliance was also placed on the case of Nand Lal v. State of Haryana (supra) holding that condition of prepayment before appeal could be heard is not onerous on account of there being no discretion left to the appellate and revisional authority so relax or waive the said condition. This case fully supports the view we are taking. 48. The proviso to S. 170 of the Delhi Municipal Corporation Act does not make the right of appeal nugatory or illusory because it is only on account of his own default to comply with the condition for deposit, the appellant himself may fail to avail of the remedy by way of appeal. We are clearly of the view that the ratio of the decision in Anant Mills' case (supra) and Nand Lal's case (supra) is that the right of appeal is creature of statute and while gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been held that as a matter of practice and procedure the Courts do not normally permit the aggrieved party to abandon the normal remedies of appeal etc. under the Act in favor of a petition under Art. 226 of the Constitution of India but if any action is taken without jurisdiction or if the Court comes to the conclusion that the alternative remedy provided under the Act is not adequate cannot inspire confidence inasmuch as it would amount to an appeal from 'Ceaser to Ceaser' then the existence of an alternative remedy is no bar to the exercise of writ jurisdiction under Art. 226 of the Constitution. These two judgments provide a complete answer to the argument of the assessing authority committing an illegality apparent on the face of the record or going beyond the jurisdiction. Except such like cases an individual has to comply with the provisions of deposit of the amount before he can be permitted to avail the right of appeal." 12. An appeal was filed against the decision of the Full Bench of Delhi High Court in Shyam Kishore and others vs. Municipal Corporation of Delhi, (1993) 1 SCC 22. The Apex Court hearing appeal in Shyam Kishore's case (supra) concurred with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t originally existed. Bombay High Court upheld the constitutional validity of Section 217 of the Bombay Municipal Corporation Act. Calcutta High Court in Chhatter Singh Baid & Ors. vs. Corporation of Calcutta & Ors. (AIR 1984 Cal. 283) also took the same view. There it was sub-section (3A) of Section 183 of the Calcutta Municipal Act, 1951 which provided: "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." Similar provisions existed in the Delhi Municipal Corporation Act, 1957. There it is Section 170 which is as under : 170. Conditions of right to appeal - No appeal shall be heard or determined under Section 169 unless (a) the appeal is, in the case of a property tax, brought within thirty days next after the date of authentication of the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der clause (c) of sub-section (2) of Section 406, a complaint lies to the Municipal Commissioner against imposition of any property tax and only after that when the complaint is disposed of that appeal can be filed. Appeal to the Court as provided in clause (e) may appear to be rather a second appeal. Then under Section 408 of the Act provisions exist for referring the matter to arbitration. Under sub-section (1) of Section 408 where any person aggrieved by any order fixing or charging any rateable value or tax under the Act desires that any matter in difference between him and the other parties interested in such order should be referred to arbitration, then, if all such parties agree to do so, they may apply to the Court for an order of reference on such matter and when such an order is made provisions relating to arbitration in suits shall apply. That apart, if a person cannot avail of the right of appeal under Section 406 of the Act, other remedies are available to him under the law. In that case, it may not be possible for the Municipal Corporation to contend that an alternative remedy of appeal exist under Section 406 of the Act. 12. When leave was granted in these appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x for the entertainment of the appeal. The Bombay High Court upheld the said provision and its judgment has been referred to with approval in the decision of this Court in Gujarat Agro Industries Co. Ltd. vs. Municipal Corporation of the city of Ahmedabad and Ors. (supra). This Court has also referred to its decision in Shyam Kishore and Ors. vs. Municipal Corporation of Delhi and Anr. (1993) 1 SCC 22 in which a similar provision was upheld. 26. It may be noted that in Gujarat Agro Industries Co. Ltd. vs. Municipal Corporation of the city of Ahmedabad and Ors. (supra) the appellant had challenged the constitutional validity of Section 406(e) of the Bombay Municipal Corporation Act which required the deposit of the tax as a precondition for entertaining the appeal. The proviso to that provision permitted waiver of only 25% of the tax. In other words a minimum of 75% of the tax had to be deposited before the appeal could be entertained. The Supreme Court held that the provision did not violate Article 14 of the Constitution. 27. In view of the above, we are clearly of the opinion that Section 47A of the Indian Stamp Act as amended by A.P. Act 8 of 1998 is constitutionally valid a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any immovable property or power of attorney given for sale, development of immovable property, has reason to believe that the market value of the property which is the subject-matter of such instrument has not been truly set forth in the instrument, or that the value arrived at by him as per the guidelines prepared or caused to be prepared by the Government from time to time has not been adopted by the parties, he may keep pending such instrument and refer the matter to the Collector for determination of the market value of the property and the proper duty payable thereon. Provided that no 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." Under sub-section (1) of Section 47-A quoted above, a reference can be made to the Collector for determination of the market value of property and the proper duty payable thereon where the registering officer has reason to believe that the market value of the property which is the subjectmatter of the instrument has not been truly set forth in the instrument, or that the value arrived at by him as per the guidelines prepared or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the proviso to Section 65(1) of the Act. We have perused the decision of the Division Bench of the High Court in M/s Choksi Heraeus Pvt. Ltd., Udaipur v. State & Ors. (supra) and we find that the Division Bench has rightly taken the view that the decision of this Court in the case of Mardia Chemical Ltd. and Others vs. Union of India and Others (supra) is not applicable to the challenge to the proviso to Section 65(1) of the Act inasmuch as the provision of sub-section (2) of Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, requiring deposit of 75% of the demand related to deposit at the stage of first adjudication of the demand and was therefore held to be onerous and oppressive, whereas the proviso to Section 65(1) of the Act in the present case requiring deposit of 50% of the demand is at the stage of revision against the order of first adjudication made by the Collector and cannot by the same reasoning held to be onerous and oppressive. In our considered opinion, therefore, the proviso to Section 65(1) of the Act is constitutionally valid and we are therefore not inclined to interfere with the order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r disposing of their objection under Section 181 of the Calcutta Municipal Act, could be lawfully amended by inserting a provision imposing the above condition for deposit for entertaining their appeal. 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 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 simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the payment of tax amount unless the authority is satisfied that the dealer is unable to pay the amount so assessed and only in that situation the appellate authority for the reasons to be recorded in writing can entertain the appeal without deposit of the payment of such amount. (e) Neither on the wording nor in view of the spirit of the Punjab and Haryana Acts it is possible to hold that the appellate authority should see the prima facie nature of the case while hearing the stay matter. (f) The factum of tax assessed being illegal cannot be a relevant consideration for grant of stay by an Appellate Authority. (g) The High Court in exercise of its jurisdiction under Article 226 of the Constitution of India in rarest of the rare cases in the given facts and circumstances, can grant stay and waive the condition of pre-deposit of tax and the existing alternative remedy in such circumstances would be no ground to refuse interference." 17. In M/s Elora Construction Company vs. The Municipal Corporation of Gr. Bombay and others, AIR 1980 Bombay 162, the validity of the provisions of amended Section 217 of the Bombay Municipal Corporation Act, 1888 (as amended in 1975) was chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls v. State of Gujarat (supra). 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 Nandalal v. State of Haryana, , had followed their earlier decision in Anant Mills v. State of Gujarat (supra). The Supreme Court in Nandlal v. State of Haryana (supra), had rejected similar argument that conditions imposed on right of appeal were onerous because no discretion had been given to the appellate or revisional authority to relax or waive the said condition in view of subjects for imposing such a condition. 16. The Sub-section (3-A) of Section 183 of the Act does not make the appellate provision under Section 183 (1) nugatory or illusory but by his own default to comply with the condition for deposit the appellant himself may fail to avail of the remedy by way of appeal under Section 183 (1) of the Act. A law cannot be declared unconstitutional because an alleged possibility which may occu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal so preferred shall not be admitted by the appellate authority concerned unless the dealer produces proof of payment of tax admitted to be due, or of such instalments as have been granted, and the proof of payment of 12.5 per cent of the difference of tax assessed by the assessing authority and the tax admitted by the appellant, for the relevant assessment year, in respect of which the appeal is preferred. 3. That a fair reading of the proviso makes it clear that deposit of 12.5 per cent of the difference of the tax assessed by the assessing authority and the tax admitted by the appellant is the pre-condition for the admission of the appeal. The proviso mandates that the appellate authority shall not admit the appeal preferred by the appellant in the absence of proof of payment of 12% per cent of the difference of the tax assessed by the assessing authority and the tax admitted by the appellant. The pre-condition of deposit as provided for under the proviso is an integral part of Section 19, which provides for an appeal against any order or proceeding recorded by the authority under the provisions of the Act other than the one excluded under Section 19 of the Act itself. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y". 7. In view of the authoritative pronouncement of the Supreme Court in Anant Mills's case that it is permissible to enact a law to the effect that no appeal shall lie against an order relating to an assessment of tax unless the tax had been paid, nothing remains for us to decide as to whether the impugned proviso suffers from any constitutional infirmities. The law is so well-settled that the Legislature in its wisdom may impose accompanying liability upon a party upon whom a legal right of appeal is conferred or to prescribe conditions for the exercise of the right." 21. In R.V. Saxena vs. Union of India and others, AIR 2006 Delhi 96, Proviso to Section 18(1) of the Securitization and reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 requiring borrower to deposit 50% of the amount of debt before hearing of appeal was held to be legal by the Delhi High Court with the following observations:- "16. The right of appeal is not an inherent right but is a creature of the statute. The Legislature can impose conditions under which this is to be exercised. Moreover, the proviso to Section 18 does not require the entire amount to be deposited, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Municipal Corporation Act which required the deposit of the tax as a precondition for entertaining the appeal. The proviso to that provision permitted waiver of only 25% of the tax . In other words a minimum of 75% of the tax had to be deposited before the appeal could be entertained. The Supreme Court held that the provision did not violate Article 14 of the Constitution." 22. In Walchandnagar Industries Limited Mumbai vs. Municipal Corporation of the City of Pune and others, AIR 2014 Bombay 47, the Bombay High Court was considering the constitutional validity of Section 406(2)(e) of the Bombay Provincial Municipal Corporations Act, 1949 which provided that no appeal shall be entertained unless the amount was deposited by the appellant with the Commissioner. It was noticed as under:- "4) Mr. S. G. Aney, the Senior Advocate appearing for the Petitioner made the following submissions in support of the Petition: (A) That styling the proceedings under Section 406 of the said Act as an 'Appeal' is misnomer, since the said proceedings are in fact 'original proceedings before a judicial authority'. The imposition of any precondition of deposit of entire disputed ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense, we are concerned with a statute dealing with an economic matter. There is always a presumption in favour of the constitutionality of a statute. Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call-trial and error method. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot be converted into tribunals for relief from such crudities and inequities. The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. The Court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to be palpably arbitrary." 23. In Ganesh Yadav vs. Union of India and others, 2015 Law Suit (Allahabad) 1541, the Allahabad High Court was considering the provisions of section 35F of the Central Excise Act, 1944 requiring the deposit of 10% of the duty or penalty in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose conditions for exercise of such right and there is no constitutional or legal impediment to imposition of such a condition. The requirement about the deposit of the amount claimed as a condition precedent to the entertainment of an appeal does not nullify the right of appeal. All that the statutory provision seeks to do is to regulate the exercise of the right of appeal. The object of the provision is to keep balance between the right of appeal and the right of the revenue to speedy recovery of the amount. The conditions imposed including prescription of a pre-deposit are meant to regulate the right of appeal and the same cannot be held to be violative of Article 14 of the Constitution of India unless demonstrated to be onerous or unreasonable. To put it differently, right of appeal being a statutory right, it is for the legislature to decide whether to make the right subject to any condition or not. In the light of the above enunciation, we proceed to examine Section 62(5) of the PVAT Act. A perusal of sub section (5) of Section 62 of the PVAT Act shows that pre-deposit of twenty five percent of the total amount of tax, interest and penalty is a condition precedent for hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power of doing all such acts, or employing such means as are essentially necessary to its execution." Learned counsel for the petitioners vehemently argued that the provision has to be read down to include the right to waive the condition by the appellate authority in an appropriate case. Main emphasis was laid by the learned counsel for the petitioners on the judgment of the Apex Court in Income Tax Officer, Cannanore vs. M.K. Mohamad Kunhi, AIR 1969 SC 430, wherein the question was whether the Income Tax Appellate Tribunal had the power under the relevant provisions of the Income Tax Act, 1961 to stay recovery of the realization of the penalty imposed by the departmental authorities on an assessee during the pendency of an appeal before it. After considering the matter, the Apex court held that the Appellate Tribunal has power to grant stay as incidental or ancillary to its appellate jurisdiction subject to there being a strong prima facie case and satisfaction 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. The relevant observations read as under:- "4. There can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate 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 or recovery the entire purpose of the appeal can be defeated if ultimately the orders of the departmental authorities are set aside. It is difficult to conceive that the Legislature should have left the entire matter to the administrative authorities to make such orders as they choose to pass in exercise of unfettered discretion. The assessee, as has been pointed out before, has no right to even move an application when an appeal is pending before the Appellate Tribunal under section 220 (6) 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, Arts. 5401 and 5402). The powers which have been conferred by section 254 on the Appellate Tribunal with widest p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal". There are certain decisions, however, in which difficulty was felt that the Appellate Tribunal did not possess the power to stay recovery during the pendency of an appeal. In Vetcha Sreeramamurthy v. The Income Tax Officer Vizianagram & Another, (1956) 30 ITR 252, the assessee had to file a writ petition because the realisation of the tax assessed had not been stayed during the pendency of an appeal before the Tribunal. The controversy centred in that case mainly on the scope of the discretionary power conferred by section 45 of the Indian Income-tax Act, 1922, on the Income-tax Officer. It was held that a writ petition to compel the Income-tax Officer to exercise his discretion under section 45 or to exercise it honestly and, objectively was not barred. But on the merits the Court declined issue a writ. Viswanatha Sastri J., in his separate judgment made the following observations at page 271: "Lastly it has to 'be observed that section 45 of the Income-tax Act is somewhat cryptic in its terms and merely gives the Income-tax Officer power to declare a person to be not in default pending the appeal. There is no provision for stay similar to Order XLI, Rules 5 & 6, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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." 27. In Bharat Heavy Electricals Limited vs. The State of Karnataka, (2006) 147 STC 638, a Full bench of the Karnataka High Court extensively considered the scope of "inherent powers" of a Court. It would be advantageous to notice the relevant observations which read as under:- "8. This takes us to the question as to what is 'inherent power'. Words and Phrases. (Permanent Edition, volume 21 A, pages 16 and 17) defines inherent power as follows: "Jurisdiction" is conferred on Court by constitutions and statutes, whereas "inheren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered with reference to Section 254 of Income Tax Act, 1961 which at the relevant point of time read thus: "The Appellate Tribunal may, after giving both the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit." The Supreme Court quoted with approval the following passage from Maxwell on Interpretation of Statutes [XI Edition, page 350]: "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." The Supreme Court answered the question raised before it in the affirmative in MOHAMMED KUNHI (supra) on the following reasoning: "The argument advanced on behalf of the appellant before us that, in the absence of any express provisions in Sections 254 and 255 of the Act relating to stay of recovery during the pendency of an appeal, it must be held that no such power can he exercised by the Tribunal, suffers from a fundamental infirmity..... The right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the Appellate Tribunal. Indeed, the Tribunal has been given very wide po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tay is incidental and ancillary to the appellate jurisdiction. What was true of the appellate jurisdiction could not be predicated of the referential jurisdiction. 13. to 18. xxxxxxxxx 19. The State expressed an apprehension that granting of stay will impede collection of tax. The answer is found in the case of MOHAMMED KUNHI where the Supreme Court observed; "A Certain apprehension may legitimately arise in the minds of the authorities administering the Act that, if the Appellate Tribunal proceeded 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 the disposal of appeals by the Appellate Tribunal. 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 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 enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory. 44. Their Lordships of the Apex Court in this respect held thus : "Section 255(5) of the Act does empower the Appellate Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision. In our opinion the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when Section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It could well be said that when Section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory. A certain a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court under article 226 of the Constitution of India. I cannot accede to the contention of learned counsel for the petitioner that the petitioner has no other efficacious remedy except invoking the jurisdiction of this court in the light of the judgments of the Allahabad High Court and the Kerala High Court referred to above, which, in turn, are based upon the Supreme Court judgment in M.K. Mohammed Kunhis case (Supra) 5. The appellate authority before whom the appeal is pending has the power to grant stay of the demand impugned in the appeal pending before him. It is appropriate that the petitioner-assessee should be relegated to availing of the said remedy before invoking the jurisdiction of this court under article 226 of the Constitution of India. I cannot accede to the contention of learned counsel for the petitioner that the petitioner has no other efficacious remedy except invoking the jurisdiction of this court in the light of the judgments of the Allahabad High Court and the Kerala High Court referred to above, which, in turn, are based upon the Supreme Court judgment in M.K. Mohammed Kunhis case (Supra)." 30. Adverting to the second facet of the argument as to whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the parts of a statute or sections must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction put to be on a particular provision makes consistent enactment of the whole statute. This would be more so if a literal construction of a particular clause leads to manifestly absurd and anomalous results which could not have been intended by the Legislature. (4) The principle that a fiscal statute should be construed strictly is applicable only to taxing provisions such as a charging provision or a provision imposing penalty and not to those parts of the statute which contain machinery provisions--CIT v. National Taj Traders [1980] 121 ITR 535 (SC) (headnote)." 31. In P.T.Rajan vs. TPM Sahir and others, (2003) 8 SCC 498, it was recorded as under:- "45. A statute as is well known must be read in the text and context thereof. Whether a statute is directory or mandatory would not be dependent on the user of the words "shall" and "may". Such a question must be posed and answered having regard to the purpose and object it seeks to achieve." Reference may be made to quoting from Domat' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power has been conferred on the first appellate authority to pass an order of interim injunction/protection, in our opinion, by necessary implication and intendment in view of various pronouncements and legal proposition expounded above and in the interest of justice, it would essentially be held that the power to grant interim injunction/protection is embedded in Section 62(5) of the PVAT Act. Instead of rushing to the High Court under Article 226 of the Constitution of India, the grievance can be remedied 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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