9911796707
TMI Blog1976 (2) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... y issued hawala bills without there being any transactions. On the basis of this affidavit, the Enforcement Branch of the ST Department started proceedings against the applicant and such transactions of sales made to the said Doshi were held as liable to tax. These orders of the concerned STO, confirmed by the AAC, were challenged before the Maharashtra Sales Tax Tribunal. The Tribunal set aside the orders of the lower authorities. The Tribunal held that the affidavit of the said Doshi was not at all reliable. After the Tribunal set aside the orders of the lower authorities holding the sale transactions liable to tax, the CST has filed reference application before the High court against the said orders of the Tribunal passed in second appeal. 2. There after, a criminal complaint has been filed by an Officer of the Enforcement Branch of the ST Department against the present applicant, in the Court of the Metropolitan Magistrate, Mazagaon. Briefly stated, the averments in the complaint are as follows. The three partners of the applicant firm are jointly arraigned as accused Nos. 1, 2 3. The said Doshi is arraigned as accused No. 4. It is averred that in the books of account, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department should be directed to put on record, the record of the case pertaining to the present applicant and the said Doshi, in order to enable the present applicant to file an affidavit in support of the present application for contempt. The prayer in cl. (b) is that the Tribunal should examine the records and on being satisfied that there is prima facie contempt of the Tribunal, the Tribunal should make a reference to the High Court under the Contempt of Courts Act and forward the papers for action. By cl. (c), the applicants pray for an order restraining the Department from proceeding with the criminal complaint above said. The prayer in cl. (d) is that the applicant may be permitted, after inspection of the case record to file necessary affidavits. Prayer in cl. (e) is for an interim stay in terms of prayer in cl. (c) till the disposal of the proceedings for Contempt of Court. 5. At the present request of the applicant, notice was issued to the CST to show cause why prayers in cls. (a), (b), (d) and (e) should not be granted. Both sides have been heard; and elaborate, exhaustive and well studied arguments have been made by, Shri B.C. Joshi, Advocate, on behalf of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est level for the collection of the tax. Its functions are in aid of the functions of the State of lawful collection of tax. The jurisdiction of the Tribunal is a correctional jurisdiction is respect of assessment and collection of tax. Various rulings make this position clear. There are clear and unequivocal pronouncements to the effect that such a Tribunal is not a Court. 8. The above stated propositions are only a bare outline indicating the lines on which the respective Advocates had developed their various arguments. The same would of course, have to be taken note of and duly considered at the proper stage. What is requisite is to analyse the various legal positions, to duly study the numerous rulings which have a vital bearing on the question in issue, and to set out logically the chain of reasoning which must ultimately go to decide the problem posed. 9. It is obvious that for a long period after Courts as understood in the judicial system came into existence, no statute attempted to define the legal concept of a Court. It is only in comparatively recent times that a definition of the said terms was attempted by a particular statute viz. Evidence Act for purposes of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat an administrative Tribunal may act judicially, but still remain an administrative Tribunal as distinguished from a Court, strictly so-called. Mere externals do not make a direction to an administrative officer by an ad hoc Tribunal, an exercise by a Court, of judicial power. 11. It is next requisite to take due note of a series of decisions of the Supreme Court which lay down the law on the question. In Bharat Bank Ltd. vs. Employee of Bharat Ltd. reported in 1950 SCR. 459, the Supreme Court considered whether an Industrial Tribunal constituted under the Industrial Disputes Act, 1957, was a Court for purposes of Arts. 136 of the Constitution. The Supreme Court after referring to Halsbury's definition, an the definition of the term in the Indian Evidence Act, which is by no means exhaustive, observed that the person or persons constituting a Court must be entrusted with judicial functions, that is, of deciding litigated questions according to law. But, in addition they must be persons deriving their powers from the State and must be exercising the judicial powers of the State. "Judicial power" as under in s. 71 of the Constitution meant the power which every sovereign authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to constitute a Tribunal a Court. The Tribunal or an authority would be a Court, if it is given power to give a definitive judgment or decision which has finality and authoritativeness that would bind the parties appearing before it so far as the rights litigated before it are concerned. Secondly, the appointment of the Tribunal or authority as well as the source of its power must be the judicial power of the State coming to it by the status itself. The High Court held that the possession of the powers of review or inherent powers like those possessed by the Civil Court under the CPC could not be regarded as sine qua non in the matter. 15. This dictum of the Bombay High Court laying down the criteria to be satisfied for constituting a Tribunal or an authority a Court, is of course binding on this Tribunal. There can be no question about its being not binding. The fact that the said ruling is being does not by itself solve the particular problem facing us in the present case. When a ruling obviously has binding force, the judge has the duty and the responsibility of carefully considering and deciding whether the principles laid down in the said ruling apply to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is one such further sub-species. The Sales Tax Tribunal is another such further sub-species. 17. If there are judicial precedents deciding the question as to whether Tribunals dealing with tax matters are Courts or are not Courts, if such precedents are binding on this Tribunal and further if such precedents are applicable to a case like this then the Tribunal obviously cannot escape the duty and the responsibility of considering whether such precedents would have to be followed by this Tribunal in this matter as being decisive. This would be so for various reasons. Firstly, the Contempt of the Courts Act does not contain any definition of the term 'Courts'. Thus, the statute does not provide guidance on this problem. One has, therefore, to turn to the law of precedents in order to seek guidance in the matter. In this context there is the ruling of the Bombay High Court considered above, setting out in general the attributes which would be possessed by a Tribunal or authority in order to constitute a Court within the meaning of the Contempt of Courts Act. The other set of rulings heavily relied on by Shri. Andhyarujina and which will be presently considered, lay down the positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the State. They are not a part of the legislature nor are they a part of the judiciary. Their functions are the assessment and collection of taxes and in the process of assessing taxes, they have to follow a pattern of section which is judicial. They are not thereby converted into Courts of Civil Judicature. They still remain the instrumentalities of the State. "The enunciation is clear. The taxing authorities are held to be not Courts, but the instrumentalities of the State. 19. In 11 STC 716 The State of Orissa Anr. vs. Chakobhai Ghelabhai Co. 5 Judges of the Supreme Court held as correct the view that the assessing authorities were not courts in the strict sense of the term. The Supreme Court again in Jagannath Prasad vs. State of Uttar Pradesh 14 STC 536 considered the specific question where a STO was a Court within the meaning of s. 195, CPC. After exhaustively citing from previous judgments, including the judgments of the Privy Council and of the Supreme Court, it was observed that STOs are not Courts as understood in the Cr.PC, s. 195.. They are not Revenue Courts. Finally, it is pronounced that a STO is only an assessing authority and the STO is not a Court. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxing authorities. The argument developed by him is an follows. Bombay ST Act, 1959, contains chapter III with its caption 'Sales Tax Authorities' and Tribunal. Sec. 20 relates to ST authorities from the Commissioner downwards. By a different section namely, s. 21, the statute provides for a Tribunal. Thus the statue itself contemplates that a Tribunal is not a tax authority. Sec. 53 expressly confers certain powers of Civil Court on the Tribunal such as requiring proof of acts by affidavits, examination of witnesses and compelling production of documents. Sec. 55 gives wide powers of appeal to the Tribunal. Under sub-s. 6(a), (b), (c) the powers to be exercised in appeal are wide including an enhancement of the assessment. Sec. 35 also authorises re-assessment. The powers conferred on the Tribunal are, therefore, very wide including that of appeal, revision and even enhancement. It would, therefore, be wrong to say that the Tribunal's jurisdiction is limited to the collection and assessment of tax. Shri Joshi cited observations of the Supreme Court in ITO, Kannanore vs. M.K. Mohammed Kunhi. AIR 1969 SC 430. There are that the powers which are conferred on the Tribunal under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e there is a provision for two parties before the Tribunal is merely a difference relating to procedure. The regulations under the Bombay ST Act have been made by the Tribunal under s. 21 cl. (7) merely for the purpose of regulating the procedure of the Tribunal. Such provisions cannot charge the legal position. The various other powers referred to by Shri Joshi are powers conferred equally on the other taxing authorities as on the Tribunal. Under s. 55, Bombay ST Act, sub-s. (2) an appeal against an order of an Asstt. Commissioner is provided at the option of the appellant either to the Commissioner or to the Tribunal. It is argued that there is no basis for the contention that after the stage of the Commissioner, there is a metamorphosis, by which the Tribunal gets converted into a Court, while the taxing authorities including the Commissioner remain merely taxing authorities and not Courts. It is contended that the provisions concerning procedure mentioning two parties before the Tribunal, do not have the effect of extending the jurisdiction of the Tribunal beyond the correctional jurisdiction as regards collection and assessment of taxes. 25. Shri Andhyarujina then referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand outside the machinery of assessment and is a part of the same. The observations, therefore, strongly support the contention of Shri Andhyarujina that the jurisdiction of the Sales Tax Tribunal which is analogous to that of an Tribunal for the assessment of taxes and does not extend beyond the same, so that it could be equated with jurisdiction of a Court. It is requisite in this context to note the observations of the Supreme Court in a recent case, CST, U.P. vs. Parson Tools Plants, above cited. The Supreme Court was considering the question whether the appellate authority under the U.P. Sales Tax Law is a Court for purposes of s. 14, Limitation Act. The Supreme Court after considering previous rulings observed that this contention was correct. 28. The position as regards precedents, therefore, is that the Bombay High Court is S.A. Shah's case above cited, considered the position of an Tribunal in a taxing statute and has held that it is only a part of the machinery of assessment, and cannot stand outside such machinery. A distinction was drawn on the basis that the Tribunal was part of the assessment machinery, while the High Court which is a Court, was not part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Municipal Committee, Amritsar vs. Hazarat Singh in Criminal Appeal No. 228 of 1972 decided on 12th March, 1975. The Supreme Court has observed that statement of matters other than law has no binding force in the said case before the Supreme Court, the observation of the Supreme Court to which the Sessions Judge had made reference, were merely passing observations. Shri Joshi has also cited observations from Ashoka Marketing Ltd. vs. State of Bihar, 26 STC 254 at page 258. There the Supreme Court observed that a principle laid down in a previous case by the Supreme Court had no bearing in any case where the statute and the facts were different. He also referred to the Bombay High Court judgment in J.N. Bagga Ors. vs. All India Reporter Ltd. AIR 1969 Bombay 302. This judgment lays down that the judgments of the Supreme Court and the High Court cannot be read out of context, even though propositions of law appear to be laid down in general terms. The general propositions of law have to be considered with regard to the facts and circumstances of the particular case. 31. There can be no quarrel with the above said principles which of course have to be followed. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxes and in the process of assessing taxes, they have to follow a pattern of action, which is judicial. They are not thereby converted into Courts of civil judicature. They still remain the instrumentalities of the State". 33. The question before the Supreme Court was the tenability of a petition under Art. 32 of the Constitution, arising out of an assessment or under a taxing statute. The Court therefore, had necessarily to consider, in order to decide on the tenability, whether the word "State" in Art. 12 included taxing Departments. It may be noted that the Court expressly declined to decide whether ordinary Courts of civil judicature were included in the words "State". The Court however had necessarily to decide whether the taxing Department were so included. For this purpose, the above said observations, making clear the distinction between an instrumentality of the State of Court of Civil Judicature, had to be made. It will thus be seen that the observations in questions are not obiter. They arose from the facts of the case before the Supreme Court. They are certainly not passing observations. The observations embody the statement of the legal position. The above discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. A careful study of the judgment of the Supreme Court reveals the following position. The consideration of this question appears at page 514 of the report. After stating the problem the Supreme Court proceeded in the light of previous rulings of the Supreme Court and observations of the Privy Council, to hold that taxing authorities are instrumentalities of the State, but are not Courts of Civil Judicature. It was further observed that this is so, inspite of the fact that the taxing authorities have certain powers similar to powers exercised by Courts. This point to be noted, is that the Supreme Court first enunciated that taxing authorities are not Courts of Civil Judicature. Therefore, the Court enunciated that a STO is not a Revenue Court. Finally it observed that the taxing authority is only an assessing authority. Various provisions of the Sales Tax Statute were examined and finally the Supreme Court observed Page (543) "in our opinion therefore the STO is not a Court". After laying down this proposition, the Supreme Court cited the previous pronouncements holding the same view. 36. These observations therefore clearly relate to one aspect of the legal position in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax proceeding is in the nature of a judicial proceeding between contesting parties, is a matter which is not capable of even a plausible argument. The IT authorities who have power to assess and recover tax, are not acting as judges deciding a litigation between the citizen and the State they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. Tax legislation necessitates the setting up of machinery to ascertain the taxable income and to assess tax on the income, but that does not impress the proceeding with the character of an action between the citizen and the State." 38. It has also to be noted that there would be no basis to contend that the observations above said should be regarded as confined to the position of a Court vis-a-vis the Limitation Act. What the Supreme Court has done, is to first decide and proceeding in a Civil Court. On this basis the Supreme Court proceeded to draw the further inference that since an assessment proceeding was not a suit or a proceeding in a Civil Court, the Limitation Act which applied to proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. From this it is clear that this finding of the Supreme Court is not a passing observation. It is not obiter. Its application to the present case will not mean taking the observations out of the context. Secondly, it would be wrong to contend that the observation is made only as regards the position of a Tribunal only vis-a-vis the provisions of the Limitation Act. On the other hand, what the Supreme Court has done, is first to expressly pronounce that the Appellate Authority and the Tribunal under the ST Act are not Courts. Thereafter, the Supreme Court proceeded to observe, on the basis of this principal, that the Limitation Act also did not apply to proceedings before such Tribunals. 42. In this connection one observation may be made. In the present context, there is no difference in the position of the ITAT and the Sales Tax Tribunal, which would have the effect of making the observations of the Supreme Court and the High Court inapplicable to the Sales Tax Tribunal. On the other hand, in one respect the difference between the two Tribunals is worth noting. Sec. 253 sub-s. (2), Income-tax Act, 1922 provides that the CIT may direct the ITO to file an appeal before the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and against the other, unless indeed the entire public are regarded as the other party (from the judgment in Boultar vs. Kent Justices 1897 AC 556). In S.S. Gadgil's case, the clear observations are that an Income Tax proceeding cannot be in the nature of a judicial proceeding between contesting parties. The tax authorities are not acting as Judges deciding a litigation between the citizen and the State. The proceedings of assessment are not proceedings having character of an action between the citizen and the State. In Hardut Roy's case about cited the observations of the Court of Appeal The King vs. Income-tax Special Commissioner have been cited and relied upon. These are that in making assessments and dealing with appeals, the CIT are not in the position of Judges deciding an issue between two parties. They are not deciding a case inter parties; they are assessing or estimating at amount on which in the interests of the country at large, the taxpayer ought to be taxed. 45. Thus, the position as to whether the Tribunal can be said to have power to give a definitive judgment that would bind the parties so far as the rights litigated before it are concerned, is concluded by au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arallel in the powers conferred on the Civil Court. The Jurisdiction of review under Order 47, CPC is not analogous to this jurisdiction. Powers of review can be exercised only on discovery of new and important matter of evidence. The other circumstances justifying review, is a mistake or error apparent on the face of record or any other sufficient reason, an expression which has to be construed ejusdem generis with the earlier clause of mistake or error. Thus, the power of review conferred on a Civil Court is quite distinct from the powers of re-assessment under s. 35. No powers similar to those of re-assessment can be exercised by a Civil Court. Once a decision is made and judgement is delivered, apart from correction of slips or review for reasons above stated, the matter cannot be re-opened by the Court. The contention that this illustrates the position of the jurisdiction of a Tribunal being essentially correctional, has substance. 48. Thus, the legal position on the problem posed before us has been considered above exhaustively, after a critical analysis and examination of the position from all possible angles. From the same, it is amply clear that we have no option left, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
