TMI Blog1971 (2) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner of Commercial Taxes, Kurnool (R-2). A further appeal was thereafter preferred by the petitioner to the Sales Tax Appellate Tribunal (R-3). The petitioner applied to the Deputy Commissioner of Commercial Taxes for stay of collection of tax pending disposal of that appeal in vain and the Tribunal refused to entertain the appeal on the ground that it was not accompanied by satisfactory proof of payment of tax, as required by section 21(6) of the Act. Hence this petition to call for the records relating to Appeal No. 5/69-70 and to quash the order dated 30th April, 1969, of the second respondent by issuing a writ of certiorari or any other appropriate writ, order or direction; and in the alternative to direct the Sales Tax Appellate Tribunal (R-3) to entertain the appeal without insisting on proof of payment of tax as, according to the petitioner, section 21(6) of the Act is ultra vires the powers of the State Legislature besides being violative of the fundamental rights guaranteed by articles 14 and 19(1)(f) and (g) of the Constitution of India. In the counter-affidavit filed on behalf of respondents 1 and 2, it is averred, among other things, that section 21(6) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in either ordinary parlance or legal sense, the Income-tax Appellate Tribunal cannot be held to be a civil, criminal or a revenue court." On the same parity of reasoning that is contained in the decisions cited, it must be said that the Sales Tax Appellate Tribunal is also not a court. Entries 3 and 65 of the State List no doubt deal only with constitution and organisation of all courts except the Supreme Court and the High Courts; administration of justice; and jurisdiction and powers of all such courts except the Supreme Court and High Courts; but this by itself is not sufficient to warrant the inference that the State Legislature has no power to enact the impugned provision contained in section 21(6) of the Act. Sri Dasaratharama Reddy discreetly refrained from questioning the power of the State Legislature to constitute the Sales Tax Appellate Tribunal. In fact, he expressed more than once before us that he should not be taken as questioning the power of the State Legislature to constitute the Tribunal. It is, therefore, difficult to understand how he could be heard to say that the authority that could validly constitute the Tribunal is not competent to control and regulate its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creation of the Tribunal as well as the provisions contained in section 21 of the Act to regulate its jurisdiction and powers are well within the legislative competence of the State as it was already seen that entry 54 of List II is of sufficient amplitude as to empower that Legislature to make laws for all ancillary and incidental matters as well. Check Post Officer v. K.P. Abdulla and Bros.[1971] 27 S.T.C. 1 (S.C.). may, with advantage, be referred to in this connection. While dealing with a case arising under section 42(3) of the Madras General Sales Tax Act, 1959, Shah, J., as he then was, speaking for the court in that case, pointed out at page 3: "Entry 54 of List II of the Seventh Schedule to the Constitution authorises the State Legislature to legislate in respect of taxes on the sale or purchase of goods. A legislative entry does not merely enunciate powers; it specifies a field of legislation and the widest import and significance should be attached to it. Power to legislate on a specified topic includes power to legislate in respect of matters which may fairly and reasonably be said to be comprehended therein ..... A taxing entry therefore confers power upon the Legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this sub-section, the assessing authority may also direct the dealer to pay a penalty as specified in sub-section (8) ..... (4-C) The powers conferred by sub-section (4) on the assessing authority may, subject to the same conditions as are applicable in the case of that authority, be exercised also by any of the authorities higher than the assessing authority including the Deputy Commissioner concerned. 19.. Appeals.-(1) Any dealer objecting to any order passed or proceeding recorded by any authority under the provisions of this Act other than an order passed or proceeding recorded by a Deputy Commissioner under sub-section (4-C) of section 14, may, within thirty days from the date on which the order or proceeding was served on him, appeal to such authority as may be prescribed ..... (2-A) Where an appeal is admitted under sub-section (1), the appellate authority may, on an application filed by the appellant and subject to such terms and conditions as he may think fit, order stay of collection of the tax under dispute pending disposal of the appeal. (2-B) Against an order passed by the appellate authority refusing to order stay under sub-section (2-A), the appellant m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment passed by the Board of Revenue suo motu under sub-section (1) of section 20, may appeal to the High Court within sixty days from the date on which the order was communicated to him ....." It would be seen from what has been extracted above that the Act provides for an appeal (1) from an order passed or proceeding recorded by the assessing authority other than those made by a Deputy Commissioner under section 14(4-C) to the prescribed authority, (2) from an order passed or proceeding recorded by the prescribed authority on appeal under section 19 or by a Deputy Commissioner suo motu under sub-section (4-C) of section 14 or under sub-section (2) of section 20 to the Appellate Tribunal, and (3) from an order relating to assessment passed by the Board of Revenue suo motu under sub-section (1) of section 20 to the High Court; and also for revision by the Deputy Commissioner against an order passed by the appellate authority refusing to grant stay under sub-section (2-A) of section 19 and to the High Court against an order passed by the Tribunal on the grounds mentioned in section 22(1). In none of the aforesaid cases, except appeals envisaged by sub-section (1)(a) and (b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sake of convenience and appeals from orders made or proceedings recorded by appellate authorities or second appeals; and proof of payment of tax is made a precondition for entertaining appeals coming under the latter category alone. He adds that this classification between appeals from original orders and appeals from appellate orders, besides being quite intelligible, is conceived in the interests of public revenue and to discourage frivolous and vexatious appeals and the restraint imposed by sub-section (6) of section 21 is, therefore, neither unreasonable nor arbitrary. It is also urged by him that the petitioner is not entitled to question the validity of section 21(6) for the reason that the right of appeal is only a creature of the statute and not a fundamental right and the Legislature can therefore impose restrictions on the exercise of such right. There is no gainsaying that right of appeal, not being an inherent right that could be implied, has to be conferred by an express enactment as has been pointed out in Harihar Gir v. Commissioner of Income-tax, Bihar and Orissa[1941] 9 I.T.R. 246. and it is also true that it is open to the Legislature to impose limitations on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch an order to the Tribunal under section 21 is, in substance, a first appeal. But even such appeals cannot be entertained by the Tribunal unless they are accompanied by satisfactory proof of payment of tax. Similarly, till the decision in Suryalakshmi Cotton Mills Ltd. v. Deputy Commissioner[1969] 23 S.T.C. 178. was rendered, appeals under section 21(1)(b) from orders passed or proceedings recorded by a Deputy Commissioner under section 20(2) could not also be entertained without proof of payment of tax though they too were in the nature of first appeals. It is not in dispute that appeals from orders passed or proceedings recorded by an appellate authority under section 19 in relation to imposition of penalty or confiscation of goods can be entertained by the Appellate Tribunal under section 21(1)(a) without insisting on proof of payment of taxes even though they come within the second category of appeals. It is, therefore, not correct to say that appeals are broadly divided into two classes in the Act for the purpose of section 21(6). It is true that what is prohibited by article 14 of the Constitution is class legislation and not reasonable classification; but the instances cite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the case of appeals from orders passed or proceedings recorded by the appellate authority under section 19 if stay of collection of tax, granted by the Deputy Commissioner under sub-section (2-C) of section 19, is in operation, whereas compliance with the requirements of section 21(6) is insisted upon in cases where there is no such "stay". It is difficult to understand the rationale behind this further classification of appeals belonging to the same category, viz., those by dealers objecting to an order passed or proceeding recorded by the prescribed authority on appeal under section 19. There are no guidelines in the Act for regulating the exercise of the discretion vested in the Deputy Commissioner under section 19(2-B) or 19(2-C) and so, if he should arbitrarily refuse to grant stay or to direct that the stay already granted shall be operative till the disposal of the appeal by the Tribunal, a dealer, who is unable to find the wherewithal for paying the tax as determined in an appeal under section 19, would be left without a remedy even if he has a strong case for appeal before the Tribunal. The right of appeal to the Tribunal is altogether denied, if not destroyed, in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prima facie strong case although such power is conferred by the Act on the Deputy Commissioner from whose orders, appeals are provided to the Tribunal. We have already adverted to the fact that appeals to the Tribunal from orders of the appellate authority in the matter of penalty and confiscation of goods are also not subject to the restraint imposed by section 21(6). It is also worthy of note that this restraint is not made applicable to revisions and appeals to the High Court under sections 22 and 23 of the Act though they too stand on a par with second appeals for all practical purposes. It is, therefore, clear that appeals from orders passed or proceedings recorded by the prescribed authority on appeal under section 19 alone are now singled out for the purpose of insisting on satisfactory proof of payment of tax as a condition precedent for those appeals being entertained by the Tribunal. Thus, there is neither consistency nor any logical basis for the discrimination made by the Act between appeals arising or preferred under similar circumstances by dealers who are similarly situated. Further, the fetter imposed by section 21(6) has undoubtedly the effect of rendering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantive right of appeal is provided by section 21(1), it is for that Tribunal to decide whether the appeal deserves to be entertained or not and not for the Deputy Commissioner. There is no wonder if the Tribunal is precluded from entertaining appeals from several dealers even in really deserving cases on account of the power to grant or refuse to grant stay of collection of tax being vested with the Deputy Commissioner who would naturally be inclined to assist the department, to which he belongs, in the collection of taxes in every possible way even if it should involve an element of coercion. Section 21(6) is, therefore, more likely to deprive dealers of their right of appeal to the Tribunal even when they have a strong and tenable case rather than to discourage frivolous appeals. We have, therefore, no hesitation in concluding that the impugned classification, besides being unreasonable and discriminatory, has absolutely no connection with the object sought to be achieved by the Act. Section 21(6) is accordingly struck down being violative of the provisions of article 14 of the Constitution. In the view we have taken, it is not necessary to examine if and how far the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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