TMI Blog1998 (12) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... al except to understand the cause of action for these cases. We will therefore set down the facts of two cases to appreciate the grievance of the assessees and the need and provocation for filing these petitions under article 226 of the Constitution of India. 3.. In O.P. No. 103 of 1998 it is stated that the petitioners are manufacturers of cement and they have a factory of Chilamkur, Andhra Pradesh. They have a place of business in Chennai City and are assessees on the file of the first respondent under the Tamil Nadu General Sales Tax Act, 1959 hereinafter called the TNGST Act . They effected inter-State sales from their factory at Andhra Pradesh which are governed by the Central Sales Tax Act, 1956, hereinafter called the CST Act . It is stated that the first respondent had treated certain sales which are governed by the Central Sales Tax Act as sales under the TNGST Act and added the amount along with other sales made locally under the TNGST Act in respect of assessment years 1987-1988, 1988-1989 and 1989-1990. These assessments have been independently challenged by the petitioners. We are here concerned only with the assessment year 1987-88 which was reopened under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to force on May 8, 1997 only. Therefore, assessment orders and disputes which arose long prior to the said date May 8, 1997 are not affected by the Tamil Nadu Act No. 11 of 1997 and in those cases the power of stay was still available as per the unamended provision. In some cases, the petitioners have challenged the validity of the Tamil Nadu Act No. 11 of 1997 as being in violation of articles 14 and 19(1)(g) of the Constitution of India. In O.P. No. 103 of 1998 it is also worthwhile to see the prayer in the petition. It is for a writ of mandamus to forbear the respondent from recovering the tax and the penalty under the TNGST Act, 1959 pursuant to the revised order of assessment dated March 31, 1995 for the year 1987-88 till the disposal of the appeal by the second respondent (Sales Tax Appellate Tribunal). 6. In O.P. No. 3325 of 1997 it is stated that the petitioners were finally assessed for the year 1989-90 on March 29, 1995. The first appeal before the Appellate Assistant Commissioner ended in slight modification, by an order dated May 19, 1995. Against the order of the Appellate Assistant Commissioner dated May 19, 1995 a second appeal was filed to the Sales Tax Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the unamended proviso to section 36(5) a duty was cast on the Appellate Tribunal to exercise the power and the assessee had the right to demand an order on a stay application, under the incidental and ancillary power the scope of grant stay is of a lesser decree, in the sense there was more discretion available to the Sales Tax Appellate Tribunal to exercise the power or not. This according to the learned counsel is the only difference which has been brought about by Tamil Nadu Act No. 11 of 1997. The learned counsel has also taken us through all the relevant provisions starting from section 30 to 39-A. In section 36 itself it is pointed out that there is a power to review its own order under sub-section (6). In section 38 which provides for a revision to the Special Tribunal, there is also an amendment which deletes sub-section (6) enabling the Special Tribunal to give directions relating to stay of collection of tax disputed before the Special Tribunal. But, at the same time sub-section (8) provides for a review. Section 39-A which provides for amendment of orders of assessment by implementing and incorporating the orders passed in an appeal, revision or review, sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o fundamental right on behalf of the assessee to claim not only a right of appeal, but more so a right to apply for stay pending disposal of the appeal. He has also referred to certain decisions relating to the retrospective operation of Tamil Nadu Act No. 11 of 1997. 11.. On a consideration of the arguments on both sides we are of the opinion that if the following issues are settled, an answer can be given to the attack on Tamil Nadu Act No. 11 of 1997 and its manner of interpretation: (1) Is section 3 of Tamil Nadu Act No. 11 of 1997, in so far as it restricts the scope of the appeal power under section 36 of the TNGST Act, invalid and unconstitutional, as violating articles 14 and 19(1)(g) of the Constitution of India? (2) Is there an incidental or ancillary power in the Appellate Tribunal under section 36 of the TNGST Act, notwithstanding the amendment to the proviso to section 36(5) of the TNGST Act? (3) Does the section 36(3)(iii) or sub-section (3) of section 39-A indicate the wide powers of the Sales Tax Appellate Tribunal under section 36 to entertain and grant interim directions regarding the collection of tax disputed before the Tribunal at any stage of the appeal? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way the same, if necessary. The following judgments will support the above view: [1955] 6 STC 222 (Nagpur) (Nemkumar Kesrimal v. Commissioner of Sales Tax, Madhya Pradesh), [1979] 44 STC 331 (P H) (Subhash Chander Co. v. State of Punjab), [1971] 28 STC 487 (All.) (Sri Gulshan Trading Company v. State of Uttar Pradesh). The above proposition of law has been reiterated in a number of judgments of the Supreme Court like [1969] 71 ITR 815 (Income-tax Officer, Cannanore v. M.K. Mohammed Kunhi) and AIR 1965 SC 703 (Kasibai v. Mahadu). There are however a few decisions which seem to suggest that if the power to grant stay is taken away it detracts from the full appellate power which any appellate authority gets as a matter of right. But there are no binding decisions contrary to the view expressed by the apex Court to the effect that a right of appeal or a restriction placed on the right of appeal still affects the constitutional validity of a provision of law. In AIR 1990 MP 160 (Smt. Basant Kumari v. State of Madhya Pradesh) it was held that if an appellate or revisional authority is prohibited from passing an order of stay in cases where a strong prima facie case is made out, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. For understanding the scope of the arguments we will begin with the judgment of the Supreme Court in [1969] 71 ITR 815 (Income-tax Officer v. M.K. Mohammed Kunhi). In that case the assessee suffered certain penalties for concealment of income. The assessee filed appeals to the Income-tax Appellate Tribunal and sought for stay of the collection of the penalties. The Tribunal declined to grant stay holding that it had no power to grant such a prayer. The High Court, being moved under article 226 of the Constitution of India held that the power was incidental and ancillary to the appellate jurisdiction of the Income-tax Appellate Tribunal. The Supreme Court upheld the view of the High Court. The apex Court notices that the provisions of the Income-tax Act and Income-Tax Appellate Tribunal Rules, 1963 did not contain any express power forbearing the Tribunal to entertain a stay application relating to the recovery of penalty or tax from an assessee. There was however power under section 220(6) to treat the assessee as not being in default during the pendency of an appeal. That power was conferred on the Income-tax Officer only in an appeal to the Appellate Assistant Commissioner, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income-tax v. Bansi Dhar Sons). We will deal with this judgment a little elaborately because in our opinion this case clinches the entire issue. The question before the Supreme Court was no doubt the correctness of the decision of the High Court to grant stay or pass interim orders, in a reference pending under section 66 of the Income-tax Act. For the assessment year 1960-61 the I.T.O. treated as income from the insurance amount as that of the hindu undivided family. On an appeal by the hindu undivided family, the Appellate Assistant Commissioner set aside the order holding that the income was personal income of an individual. The Revenue thereupon preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal held that the income in question was that of the hindu undivided family and was liable to be assessed as such. However, the Tribunal referred a question of law under section 256(1) of the Income-tax Act, 1961. Pending the reference before the High Court certain orders of stay was sought for from the High Court. The High Court on a consideration of the merits granted stay of the realisation of the taxes. The argument before the Supreme Court was that the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pending the reference the excise authorities were seeking to recover dues from the party. There was also a provision, namely, section 35N of the Central Excises and Salt Act, 1944 which states that notwithstanding a reference being made to the High Court, sums due to the Government as a result of an order of the Appellate Tribunal shall be payable. Quoting Bansi Dhar s case [1986] 157 ITR 665 (SC), the Calcutta High Court observed as follows: In the case of Commissioner of Income-tax, New Delhi v. Bansi Dhar Sons reported in (1986) 24 ELT 193 (SC); [1986] 157 ITR 665, the Supreme Court held that an appeal is kept pending before the Appellate Tribunal until the High Court answers the questions referred to it. The appellate jurisdiction is retained by the Tribunal to dispose of the appeal in accordance with the opinion expressed or answer given by the High Court. While the appeals are thus pending before the Tribunal, nothing should be implied as detracting from the jurisdiction of the Tribunal. The power to grant stay is incidental and ancillary to the appellate jurisdiction, and is retained by the Tribunal pending the reference before the High Court. 18.. We will now take up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments for the years 1984-85 to 1989-90 revoking certain exemptions granted earlier in respect of stock transfers. Appeals were preferred before the Deputy Commissioner, Commercial Taxes, who set aside the assessment orders and remitted the matters back to the assessing authority. The assessees filed second appeals before the Sales Tax Appellate Tribunal. Pending disposal of the appeals they filed petitions for stay of all further proceedings by invoking section 36(5) of the TNGST Act. However, since section 36(5) did not specifically provide for giving directions or staying further proceedings, the assessee relied upon the decisions of the Supreme Court and invoked the incidental and ancillary power of the Tribunal. The Tribunal held that the language of section 36(5), did not enable him to give any direction as sought for. After referring to the decisions of the Supreme Court, to which we have already made a reference the learned Judge quoted with approval the observations of the Orissa High Court in [1971] 28 STC 652 (State of Orissa v. Member, Sales Tax Tribunal). They are as follows: (i) Where an Act confers a jurisdiction, it impliedly also grants the power of doing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Government Advocate, there is no quarrel against the propositions adumbrated by the Supreme Court, but he argues that where there is express bar or prohibition for the grant of stay it will not be proper to imply any incidental or ancillary power. According to him the non obstante clause in section 36(5) as well as the amending of the proviso deleting the power of the Tribunal to grant direction regarding payment of tax during the pendency of an appeal except in the case of an order of the Deputy Commissioner under section 32(1) of the TNGST Act are clear indications of the intention of the Legislature to prohibit the grant of stay pending disposal of the appeal. 24.. In AIR 1992 SC 2279 (Shyam Kishore v. Municipal Corporation of Delhi), certain provisions of the Delhi Municipal Corporation Act, 1957 were examined. Against an order of assessment, an appeal was provided to a district Judge. Section 170 of the Act laid down certain conditions with regard to the filing of an appeal. It said that no appeal shall be heard or determined under section 169 unless the amount if any in dispute in the appeal had been deposited by the appellant in the municipal corporation. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before him. No doubt this judgment is strong authority for the proposition that when the Legislature is clear in prohibiting the grant of stay there cannot be an implied incidental or ancillary power. To the same effect is the judgment of the Andhra Pradesh High Court in [1988] 68 STC 220 (State of Andhra Pradesh v. Hindustan Shipyard Limited.) and [1993] 89 STC 37 (Bom.) (Champaklal Nanabhai v. Commissioner of Sales Tax, Maharashtra State). In fact even in the cases cited on the side of the assessees the Supreme Court always takes care to observe that the incidental or ancillary power is available unless specifically excluded by the statute. We can take for an illustration the case of the Karnataka Sales Tax Act. There also the Act was amended taking away the power of the second Appellate Court to grant stay. But it is interesting to notice the language implied. The amended section 22(3A) is as follows: Notwithstanding that an appeal has been preferred under sub-section (1), the payment of tax or penalty or any other amount, payable in accordance with any order passed by the Assistant Commissioner or the Deputy Commissioner under section 20 shall not, pending disposal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt and the fact they did not employ a language as found in the Karnataka, Andhra Pradesh or Bombay Acts. It only shows that the Tamil Nadu Legislature did want to preserve the incidental and ancillary power in the Appellate Tribunal. Apparently, the Legislature should have been confident that the Appellate Tribunal will not exercise the incidental and ancillary power in a manner which will give room for taking a stringent action by further amending the Act and making an express bar on the power of the Appellate Tribunal. The learned counsel for the petitioners have placed before us a number of authorities and text books on the manner of interpreting section 3 of Tamil Nadu Act No. 11 of 1997. We are of the opinion that it is really not necessary to strain the language in any manner to come to the above conclusion that the Tamil Nadu Legislature has preserved the incidental and ancillary power, even while enacting Act No. 11 of 1997. We therefore, answer issue number 2 in favour of the petitioners to the extent that stay applications are maintainable only under the incidental and ancillary power of the Appellate Tribunal. In view of this finding the judgment of Sales Tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(5) as available prior to Tamil Nadu Act No. 11 of 1997. We have already explained that prior to Tamil Nadu Act No. 11 of 1997 the Sales Tax Appellate Tribunal was duty bound to exercise the power in the manner prescribed by the statute. It was undoubtedly a better right inhering in the assessees. Under the incidental and ancillary power the Sales Tax Appellate Tribunal can only receive the stay applications in fit and proper cases but it is not bound to grant stay except in cases where injustice is likely to be caused. This aspect of the case will be explained a little later. Under issue number 4 we are only examining the case whether the decision of the Sales Tax Appellate Tribunal dated July 28, 1997 reported in (1997-98) 3 TNCTJ 145 (Gani and Sons Agency v. State of Tamil Nadu) that irrespective of the assessment year or the date of assessment year stay applications are not maintainable. In [1953] 4 STC 114 (SC) [Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh], it was held that the right of appeal is not merely a matter of procedure but a matter of substantive right. The right of appeal from the decision of an inferior Tribunal to a superior Tribunal becomes a ves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n application to excuse the delay in filing an appeal is a vested right, but the law relating to condonation of delay in filing the application is not a vested right. Therefore, it was held that the law obtaining on the date a revision petition is filed has to be applied for the purposes of condonation of delay and not the law obtaining on the date of commencement of the proceeding out of which the revision petition arose. In [1990] 76 STC 393 (Swathi Traders v. Commercial Tax Officer) a single Judge of the Karnataka High Court, while dealing with an identical provision of the Karnataka Sales Tax Act, held that in cases where the proceedings of assessments were commenced before the amended provision came into force on April 1, 1988 the old law would apply and not the amended provision. Therefore, the Tribunal had to entertain the application for stay in such cases and consider them on merits and make the appropriate orders under the old provisions which existed prior to April 1, 1988. No doubt the second finding of the learned single Judge on the validity of the amendment was set aside by the Division Bench in [1992] 84 STC 113 (Kar) (Commercial Tax Officer v. Swathi Traders). Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the assessment order or the date when the lis commenced. The word lis means a suit or action, where there is an issue between the parties in dispute. Therefore, it can be said that when return is filed and the same is not accepted and the officer proposes to assess the dealer in a different way by issuing a pre-assessment notice the lis no doubt commences. But only when this difference of opinion takes the form of an assessment order, it can be said that the lis has actually taken a proper and legal form. Instead of leaving the matter in doubt or to the whims and fancies of the parties or the assessing authorities, it is proper to hold that the dispute between the parties commences only when an order of assessment is made. Therefore, in all cases where orders of assessment have been made the right of the assessee to file a first appeal before the A.A.C. and a second appeal before the Sales Tax Appellate Tribunal is recognised. Equally the right of the assessee to file an application for stay before See State of Andhra Pradesh v. Hindustan Shipyard Limited [1988] 62 STC 220 (AP). the Sales Tax Appellate Tribunal is also recognised. This is so notwithstanding the fact that on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay and even then it could be only on certain conditions and not an absolute stay. The points are: (1) The fact that section 36(5) imposes a duty on the assessee to pay the tax in accordance with the order of assessment, notwithstanding the filing of an appeal. (2) The purpose of Tamil Nadu Act No. 11 of 1997 in modifying the proviso to sub-section (5) of section 36, restricting the power to issue directions only in the case of an order passed by the Deputy Commissioner under subsection (1) of section 32. (3) A strong prima facie case is available on merits in the particular case before the Tribunal. (4) The assessee will be financially ruined if stay is not granted and that the ultimate success, if any in the appeal will not restore him to the original position prior to the filing of an appeal. (5) The revenue will not be prejudiced by the grant of stay. 33.. We also add that both the assessee and Sales Tax Appellate Tribunal should show restraint in invoking the said incidental and ancillary power. The power should be very sparingly used only in hard cases to prevent injustice being perpetrated. They should remember that if indiscriminate orders are passed the democl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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