TMI Blog1989 (12) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover disclosed by them in their returns or account books and estimated the same at much higher figures. As a result, in each assessment, tax much in excess of what was payable according to the dealer, was determined as payable and demand was raised in respect thereof. In some cases, penalty had also been levied in addition to tax. Some of the petitioners filed appeals against such orders of assessment to the Assistant Commissioner of Taxes under section 20 of the Act. Along with the appeals, they filed petitions for admission of the appeal without payment of the disputed amount of tax and/or penalty. In most of the cases the Assistant Commissioner directed the petitioners to deposit 50 per cent of the amount of tax or penalty for admission of the appeal in view of the "first and second proviso" to section 20 of the Act as inserted by the 1984 Amendment Act, hereinafter the "appeal provisos" which now prescribes a statutory minimum deposit of 50 per cent of the tax or penalty for entertainment of the appeal and restricts the discretion of the appellate authority in the matter of stay to the balance 50 per cent only. The petitioners, in some of the cases, preferred further appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not otherwise directed by him, has been paid." By the 1984 Amendment Act in the first proviso the words "if not otherwise directed by him" were deleted and a new proviso was inserted after the first proviso. The relevant portion as amended, reads as follows: "20. Appeal.-(1) Any dealer objecting to an order of assessment or penalty passed under this Act, may, within thirty days from the date of the service of such order, appeal to the prescribed authority against such assessment or penalty: Provided that no appeal shall be entertained by the said authority unless he is satisfied that the amount of tax assessed or the penalty levied has been paid: " Provided further that the authority before whom an appeal has been filed may, for reasons to be recorded in writing, direct the appellant to pay any lesser amount which shall not be less than fifty per cent of the tax assessed or fifty per cent of the penalty levied and, on payment of the amount so directed, entertain the appeal." Similarly sub-section (2) of section 21 of the Act provides for revision by the Commissioner of any order passed by any authorities subordinate to him. Any dealer aggrieved by the order may move th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remedy by way of revision is concerned, prior to 1984 Amendment Act the remedy was available to an aggrieved dealer without any precondition of payment of tax or penalty. However, by the 1984 Amendment Act, a new condition of payment of fifty per cent of the amount of tax or penalty was introduced for admission of the revision petition by the Commissioner also. (4) No authority under the Act, including the State Government itself, has been vested with any discretion to relax the aforesaid mandatory requirements. The result of the aforesaid amendment, in substance, is that no right is available to a dealer aggrieved by an order of assessment or penalty to approach any higher authority under the Act by way of appeal or revision unless he is in a position to deposit at least 50 per cent of the amount of tax or penalty, because the provisions incorporated in sections 20 and 21 by the 1984 Amendment Act specifically provide so. The only relaxation he can get is in payment of the balance 50 per cent because in respect thereof the appellate and the revisional authority still have a discretion to pass suitable orders. The petitioners have challenged the aforesaid provisions, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt conditions for availing the same. The contention of the learned Advocate-General, in brief, is that it being the prerogative of the Legislature to grant right of appeal or not to grant it, the law cannot be challenged as ultra vires articles 14 and 19(1)(g) on the ground that it did not provide for any appeal or the appeal provided was illusory. We have considered the submissions of the learned counsel for the petitioners as well as the learned Advocate-General for the State of Tripura. The nature of the right of appeal is no more res integra. It is well-settled by a catena of decisions that it is not an inherent right. It is a creature of statute and is, therefore, subject to conditions and restrictions imposed by it. It is open to the Legislature to give or not to give a right of appeal against decisions made by the authorities under the Act and the enactment on that account, in the absence of anything more, cannot be condemned as unconstitutional. The real controversy, in the present case, is regarding the validity of the Tripura Sales Tax Act itself (as amended by the 1984 Amendment Act) which confers powers on the Superintendent of Taxes to assess the turnover of a dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly discriminatory may yet offend against the guarantee of equal protection if it confers upon the executive or administrative authority an unguided or uncontrolled discretionary power in the matter of application of the law. The above interpretation of article 14 was followed in the cases of Maneka Gandhi v. Union of India [1978] 1 SCC 248, Ramana Dayaram Ajay Hasia v. Khalid Mujib Sehravardi [1981] 1 SCC 722. In Maneka Gandhi's case [1978] 1 SCC 248, it was observed: "Now, the question immediately arises as to what is the requirement of article 14: What is the content and reach of the great equalising principle enunciated in this article? There can be no doubt that it is a founding faith of the Constitution. It is indeed the pillar on which rests securely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or lexicographic approach. No attempt should be made to truncate its all-embracing scope and meaning, for to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrinaire limits ........... Article 14 strikes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 SCC 489, which have evolved new dimensions in judicial process." Having considered the content and reach of article 14 and having grasped the concept that arbitrariness is antithetic of article 14 we have to proceed to see whether the Tripura Sales Tax Act can be held to be unconstitutional being violative of article 14 as it does not provide any effective right of appeal, revision or any other remedy to a dealer aggrieved by arbitrary or illegal order levying tax or penalty passed under the Act. For this purpose we shall have to find out the possible consequences and effect of the absence of such remedy. Whether absence of effective remedy in the instant case will have the effect of rendering the whole procedure of levy of tax and imposition of penalty under the Act oppressive and uncontrolled. If we come to such a conclusion, the statute may have to be declared unconstitutional. It may be appropriate to observe at this stage that there is no dispute about the proposition that absence of corrective machinery by way of appeal or revision, per se will not make a provision unreasonable. It will depend upon the scheme of the Act, the nature of powers vested in the authorities, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not even necessary to tear the veil, as was suggested in the course of the argument, to arrive at the conclusion that the Act has that unconstitutional effect............." In Babubhai Co. v. State of Gujarat [1985] 2 SCC 732, at 736, the Supreme Court observed: "It is not possible to formulate an effective test to determine in which cases absence of corrective machinery by way of appeal or revision to a superior authority to rectify an adverse order passed by an authority or body on whom the power is conferred may indicate that the power so conferred is unreasonable or arbitrary................" It is thus not possible to formulate an effective test to determine in which cases absence of corrective machinery by way of appeal or revision would make the power conferred on the authorities unreasonable or arbitrary and render the provision invalid. It will depend on the cumulative effect of a number of factors. One of the relevant factors to be considered as indicated above is whether the absence of an appeal is likely to make the whole procedure oppressive and arbitrary or render the statutory provisions confiscatory in character and effect. Let us, therefore, turn t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r production of accounts, etc., to the best of his judgment, and to determine the tax payable on the basis of such assessment. Under section 11 of the Act he has been given further power to make reassessment of the turnover in cases of evasion, etc. Under section 13, he is also empowered to levy penalty for failure to submit return in time, for failure to comply with the notice for production of books of account, etc., or for concealment of the particulars of turnover or for evasion of any liability to pay tax. Such penalty may be imposed on a dealer in addition to tax payable by him. The maximum amount of penalty that can be imposed is one and a half times of the amount of tax. Section 24 of the Act provides, inter alia, for payment of tax falling due on assessment. It requires that such tax should be paid by the date specified in the notice of demand or where no such date is specified within 30 days from the date of service thereof. There are provisions for charging of interest from a dealer on account of delayed payment of tax. In the event of default of payment of any dues, the Superintendent of Taxes may also levy penalty to the extent of 100 per cent of the amount due. The am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cannot even approach any authority under the Act, low or high, to seek any relief against such arbitrary or illegal order. Cases where huge demand had been raised on account of tax or penalty by erroneous interpretation of law or by arbitrary exercise of powers, are not few or far between. Day in and day out one comes across such cases. In any event, the number of cases where such things happen is not material for the present purpose. That may be a matter for the higher authorities under the Act to look into or Commissions and Committees set up for the purpose to investigate and report. For our purpose, it is sufficient to note that such things do happen. In the last one week in the course of hearing of writ petitions directed against sales tax assessments, we ourselves have come across a number of cases where huge demands had been raised on account of tax and penalty which could not be sustained. Sales tax was levied on betel nuts holding it to be taxable, which has been held by this Court to be non-taxable. Similarly tax was levied on cardamom, coal-tar pea gravels and certain other goods which all were later held to be nontaxable. We also came across cases where assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Had he been allowed to approach the appellate or revisional authorities, he would have filed an appeal, satisfied the appellate authority about the prima facie merits of his case, got the appeal admitted without payment of tax, and ultimately got the demand set aside as being arbitrary and illegal. Very many other illustrations can be given where similar serious consequences will follow. But there is no use of multiplying them. Suffice it to say that no authority howsoever high can be left with such a vast discretionary power without any remedy against its abuse or misuse. The Legislature cannot be oblivious of the possible abuse or misuse or improper exercise of such power and refuse to provide necessary safeguards against it. It was submitted before us on behalf of the State that the power vested in the Superintendent of Taxes to levy tax or impose penalty being quasijudicial power there is no reason for apprehension that the same would be abused or misused or exercised arbitrarily. In other words, the argument was that the court should not take into account the hypothetical cases of abuse or misuse of powers by the authority which is required to act quasijudicially and shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. It is clearly confiscatory in character and effect. Absence of appeal, in the instant case, in our opinion, has made the whole procedure of levy of tax and imposition of penalty highly oppressive and arbitrary. Such law, therefore, has to be held to be harsh, unjust and violative of article 14. We, therefore, hold that the first and the second provisos to sub-section (1) of section 20 and the proviso to sub-section (2) of section 21 of the Tripura Sales Tax Act, 1976, are ultra vires article 14 of the Constitution and strike down the same. In view of this conclusion of ours, we are of the opinion that in the instant case, it is not necessary to go into the scope and ambit of article 19(1)(g) of the Constitution and to decide whether the impugned provisos violate the aforesaid provision of the Constitution also. So far as the question of violation of article 21 is concerned, we may like to observe that in a recent decision in Sodon Singh v. Delhi Municipal Corporation AIR 1989 SC 1988, it has been clearly held by the Supreme Court that article 21 is not attracted in a case of trade or business, either big or small. The right to carry on any trade or business and the concept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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