TMI Blog2005 (9) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... ch occasion, was restricted to a maximum period of 180 days, as upon the expiry of that period, the stay order shall stand automatically vacated. According to the learned counsel, prior to insertion of the aforementioned provisos, the Tribunal enjoyed unbridled power to grant absolute stay. Clarifying the statement, the learned counsel submitted that section 253(6) was amended by the Finance Act, 1998 with effect from 1-10-1998, to enhance the appeal fee payable to the Tribunal at the time of filing of appeal, by an assessee, and the Legislature used the following express language- "253. (1) to (5)" (6) an appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, in the case of an appeal made, on or after 1-10-1998, irrespective of the date of initiation of the assessment proceedings relating thereto, be accompanied by a fee of,- (a) to (d) Proviso** ** **" The Legislature has expressly stated that the amendment should be applied to an appeal made on or after 1-10-1998, 'irrespective of the date of initiation of the assessment proceedings'. In the absence of such express retrospective operation and express r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l contentions heard. On a careful consideration of the facts and circumstances of the case, we are of the considered opinion that once the Hon'ble High Court has modified the order of the Tribunal, directing the assessee to continue to pay instalment of Rs. 5 lakhs per month, it is no more open for this Bench to take contrary view and grant further relief to the assessee as the facts and circumstances of the case has not undergone a change. While the order of this Bench dated 20-12-2004 in S.P. No. 181/Hyd./2004 as modified by the Hon'ble A.P. High Court in 24335/2004 is in operation, we deem it fit not to interfere in the same, as it is not demonstrated before us that there is a change in the facts and circumstances between the date of the order of the Hon'ble A.P. High Court and today. 8. On this factual position of the matter and especially in view of the judgment of the Hon'ble High Court of A.P. in W.P. No. 24335/2004, we dismiss this stay petition filed by the assessee. We reiterate that the earlier order of the Tribunal as modified by the Hon'ble High Court would continue to remain in operation. Order accordingly." At this juncture, the assessee filed a Miscellaneous Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent made w.e.f. 1-6-2001, a stay order 'shall stand vacated' after 180 days of the granting of the stay. This amendment is injurious to the assessee. This injurious amendment cannot be forced on an assessee who acquired a vested right to follow the unamended appeal procedure. The right to make use of an existing appeal procedure which is favourable to an assessee is a substantive right (but not a procedural right). Such substantive right gets vested in a person as soon as 'lis' proceedings or litigation) starts in an inferior Court. In the income-tax context, the 'lis' starts as soon as an Assessing Officer issues the first hearing notice under section 143(2). If that date of issue of the hearing notice issued by the Assessing Officer is before 1-6-2001 then the pre-amended provisions of section 254 will continue to apply to such an assessee. Even if an assessee files an appeal (before the Tribunal) after 1-6-2001 or even if he files a stay petition after 1-6-2001, the two provisos to section 254(2A) cannot be applied to such an assessee and the Tribunal will have no jurisdiction to invoke those two provisos. This legal provision is contained in the following judgment of the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedures. See pages 120, 122, 123 and 124 of 1953 4 STC. The Supreme Court stated at page 123 of the journal: 'The pre-existing right of appeal is not destroyed by the amendment if the amendment is not retrospective by express words are necessary intendment. The fact that the pre-existing right of appeal continues to exist, in its turn necessarily implies that the old law which created the right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the pre-existing right of appeal, that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of that right.' In this case, the Supreme Court held that the assessee need not pay the full tax for pursuing his appeal and it is enough if he pays only his admitted tax. Effect of any Supreme Court judgment: A judgment of Supreme Court is the law of the land under article 141 of Constitution of India and every authority, Tribunal, and Court should necessarily follow the ratio of the judgment of the Supreme Court. No express provision in the amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain any appeal filed by an assessee unless he has paid the full tax as determined after the first appeal was disposed of. In this case the following was the chronology of the events: Hearing notice issued by the Assessing Officer (i e., the Commercial Tax Officer) 14-3-1957 Assessment order dated 25-3-1957 Date of amendment 15-6-1957 First appellate order dated 9-4-1962 Sales Tax Appellate Tribunal's (STAT's) notice to assessee asking the assessee to pay full tax as determined by the first appellate authority 24-10-1962 The Andhra Pradesh High Court held that the new law, which came into force on 15-6-1957, is not applicable to the assessee as the Assessing Officer issued his first hearing notice on 14-3-1957, three months before the date of the amendment. The High Court directed the STAT to entertain the appeal filed by the assessee without insisting on payment of full tax. The High Court held that the STAT has no jurisdiction to give a notice to the assessee asking the assessee to pay the full tax. State of AP v. Hindustan Shipyard [1987] 5 APSTJ 1(AP): Again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amendment the first appellate authority caninot entertain an appeal unless the assessee has paid the full undisputed tax. The following are the relevant dates: The Assessing Officer issued a hearing notice under section 143(2) before 31-7-1975 The assessment under section 143(3) was passed on 31-7-1975 Date of amendment of section 249 1-10-1975 The assessee filed an appeal before the Appellate Assistant Commissioner (AAC) on 9-10-1975 The ITAT, Calcutta and the Calcutta High Court held that though the amendment came into force prior to the date of filing of the appeal, the law relating to appeals is the law prevailing on the date of issue of the hearing notice under section 143(2) and hence the assessee need not pay even its undisputed tax before filing the appeal before the first appellate authority. Any number of interlocutory orders can be passed in the same appeal as there is no res judicata or estoppel in interlocutory matters. An assessee can file any number of miscellaneous petitions and stay petitions before the Tribunal so long as the main appeal is pending before that Tribunal, vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force. The Apex Court observed in para 25 of its order: 'Further, the contention of the High Court that the orders of dismissal passed by the High Court merged in the orders passed by the Governor cannot be accepted. If the order of the initial authority is void, an order of the appellate authority cannot make it valid'. Similarly in the present case of ATE the stay order No. SP-181 of 2004 dated 20-12-2004 passed by the Tribunal (without jurisdiction) cannot be validated by the High Court which passed the order No. WP 24335 dated 28-12-2004. Hyderabad Allwyn Metal Works Limited v. Collector of Central Excise 1978-AWR (The Andhra Weekly Reporter) - 528 (AP). The same principle was reiterated by Andhra Pradesh High Court in the above case. In this case the Assessing Officer levied a penalty under the Central Excise and Salt Act of 1944 beyond the period of limitation of six months. That penalty order was confirmed in an appeal. The assessee filed a writ petition before the Andhra Pradesh High Court. The High Court held that when the original penalty order was void, any subsequent appellate order confirming such an order is equally void. At page 533 of AWR the High Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 589 dated 16-1-1991 the CBDT clarified that when an assessee is not financially sound he should not be forced to pay the disputed demand. The assessee (ATE) closed down its business on 30-6-2003. It incurred a net loss of Rs. 50,589 for the assessment year 2004-05 (its last assessment year). The bank balance of the firm is nil as on 31-3-2005. The balance is Rs. 301 for partner Sri Ch. Tirupati Rao as on 4-5-2005. It is Rs. 6,897 for the other partner Sri Ch. Srinivasa Rao as on 3-12-2004. The loss sustained in the fire accident on 9-2-2001 was about Rs. 2 crores. B. Subhadra v. ITO [2005] 272 ITR (AT) 100 (Hyd.): This Hon'ble Hyderabad Tribunal itself held in this case that the introduction of the second proviso in section 254(2A) did not take away the powers of the Tribunal to grant stay any number of times under sub-section (1) of section 254. The present assessee submits that this is the correct legal position; however, in the case of Subhadra, neither the assessee nor the department raised the fundamental legal issue whether the second proviso comes into picture at all in a case where assessment proceedings were initiated before 1-6-2001 (the date of amendment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Tribunal in its subsequent order dated 16-5-2005 in S.P. No. 74/Hyd./2005. Though p we have extracted relevant portions of the said order herein-above, it is worthwhile to reproduce the same hereunder once again for ready reference- "6. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, we are of the considered opinion that once the Hon'ble High Court has modified the order of the Tribunal, directing the assessee to continue to pay instalment of Rs. 5 lakhs per month, it is no more open for this Bench to take contrary view and grant further relief to the assessee as the facts and circumstances of the case has not undergone a change. While the order of this Bench dated 20-12-2004 in S.P. No. 181/Hyd./2004 as modified by the Hon'ble Andhra Pradesh High Court in 24335/2004 is in operation, we deem it fit not to interfere in the same, as it is not demonstrated before us that there is a change in the facts and circumstances between the date of the order of the Hon'ble A.P. High Court and today. 8. On this factual position of the matter and especially in view of the judgment of the Hon'ble High Court of Andhra Pradesh in W.P. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of procedure, but a substantive right; a right vested in a party cannot be taken away by an amendment with retrospective effect, unless it is shown to be retrospective by express words or necessary intendment. 9. As observed by the Apex Court, a right of appeal is a substantive right and any amendment touching upon the right of appeal should not be treated as a matter of procedure. However, in the case before us the power to grant stay does not directly or indirectly affect the right of appeal, conferred upon the assessee by the statute. Under the Income-tax Act, the disputed tax need not be paid by an assessee in order to exercise his right of appeal. Even if the petition filed by the assessee seeking stay of collection of the outstanding demand is rejected, by an appellate authority, the right of appeal is not affected and, on the contrary, it is the duty of the Appellate Tribunal to dispose of the appeal on merits in accordance with law, as held by the Hon'ble Supreme Court in the case of CIT v. S. Chennappa Mudaliar [1969] 74 ITR 41. Though section 254 of the Income-tax Act has not specifically conferred a power upon the Appellate Tribunal to grant stay in an appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of appeal, and thus, the Court held that the condition of compulsory payment of tax is not a matter of procedure. Thus, this decision of the Hon'ble Andhra Pradesh High Court is distinguishable on facts. The issues before the Patna High Court in Raja Bahadur Kamakhya Narayan Singh v. State of Bihar [1962] 46 ITR 516 and before the Calcutta High Court in CIT v. Bengal Card Board Industries Printers (P.) Ltd. [1989] 176 ITR 193 also touch upon the right of appeal of an assessee, and as such, those decisions are also distinguishable on facts. 11. In the case of State of A.P. v. Hindustan Shipyard [1987] 5 APSTJ 1 (AP), the jurisdictional High Court observed that incidental/ancillary powers of the Tribunal to grant stay flows from the substantive power to entertain and hear the appeal conferred upon the Tribunal, and thus, it is not possible to separate these incidental powers from the substantive power. This decision hinges upon the logic that a quasi-judicial authority cannot be completely ousted of the power to grant stay, which is a power incidental/ancillary to the main power of deciding the appeal. However, in the case before us, the right to grant stay was not taken away b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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