TMI Blog2001 (11) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... o is entitled to appear before any authority may be represented, inter alia, by a Sales Tax Practitioner who is duly authorised in writing in this behalf. Under the provisions of rule 63 of the APGST Rules, 1957, the procedure for registration of a Sales Tax Practitioner is specified. In order to be a qualified Sales Tax Practitioner, a person should possess a degree in commerce or law of any recognised university. Alternatively an accountant who has passed the accountancy examination conducted by the Central Board of Revenue constituted under the Central Board of Revenue Act, 1924 is also entitled to be registered as Sales Tax Practitioner. Rule 63(3) contemplates an application being made before the Commissioner of Commercial Taxes, Andhra Pradesh and payment of fee of Rs. 50. Thereupon the Commissioner, if he is satisfied that the applicant possesses the requisite qualification, registers the applicant as Sales Tax Practitioner. Against the order of Commissioner of Commercial Taxes refusing to register a particular person, an appeal is provided to the Government Under rule 63-A of the Rules the person authorised under section 35 of the Act is to file an authorisation in form X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XXXVI and XXXVII and statements in Forms AR I to AR. IV duly attested by a Chartered Accountant and, therefore, it affects their profession. 4.. The grievance of the petitioners in W.P. No. 20152 of 2001 is that the impugned amendment is not bona fide and it came to be issued only at the behest of the Chairman, SIRC of ICAI in order to help the Chartered Accountants. The petitioners have also contended that the impugned sub-rule (5-A) is ultra vires of section 39 of the Act. 5.. Sri S. Ravi, learned counsel appearing for the petitioners, in W.P. No. 20211 of 2001 and Mr. M.S. Prasad, learned counsel appearing for the petitioners in W.P. No. 20152 of 2001 would contend that (i) insertion of sub-rule (5-A) in rule 17 of the APGST Rules by the impugned amendment is not bona fide, for the said amendment was effected at the behest of the Chairman, South Indian Regional Committee of Institute of Chartered Accountants of India (for short, "SIRC of ICAI") in order to oblige and help the professional body of Chartered Accountants; (ii) there are large number of competent, qualified and experienced Sales Tax Practitioners throughout the State of Andhra Pradesh and they have been assisti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Act or CST Act and, therefore, the State Government, by framing a rule, is not justified in imposing an additional obligation on the dealer which is not at all contemplated either under the APGST Act or CST Act nor is it necessary, and in that view of the matter the impugned sub-rule (5-A) of rule 17 is ex facie illegal, arbitrary and unreasonable; (vii) lastly, the learned counsel would contend that even assuming that the impugned subrule (5A) of rule 17 is valid, that rule can be applied prospectively only and not retrospectively and the action of the Government and its authorities in applying the said rule even for the assessment year 2000-2001 is one without jurisdiction. In other words the learned counsel would maintain that even in the event of upholding the validity of sub-rule (5-A), that sub-rule would be applied only for the assessment year 2001-2002 and onwards. 6.. On the other hand, Mr. Bhaskar Reddy, learned Special Government Pleader for Taxes, while disputing the tenability of the contentions raised by the learned counsel for the petitioners would contend that (i) the State Government has undoubtedly necessary delegation of power to enact the impugned sub-rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the learned counsel for the petitioners that the inserted sub-rule (5-A) even if it is valid can be applied only for the assessment year 2001-2002. 7.. The impugned sub-rule (5-A) of rule 17 reads"(5-A). Every dealer whose total turnover in a year is not less than forty lakh rupees, shall get the accounts maintained by him for any year, audited by a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 (Act 38 of 1949) and shall furnish to the assessing authority, a certificate of such audit in form XXXVI and a statement in form XXXVII along with the statements in forms A.R. I, A.R. II, A.R. III and A.R. IV, duly attested by such Chartered Accountant on or before the 30th day of November in the case of a dealer, other than body corporate and the 31st December of the year subsequent to the assessment year, in the case of body corporate. All the statutory forms required to be filed in support of any claim of exemption or concessional rate shall also be furnished in original along with such certificate: Provided that a dealer, whose total turnover in a year is between rupees twenty lakhs and rupees forty lakhs may, at his option furnish to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case. Let us first dispose of the contention of the learned counsel for the petitioners based on mala fides and malice. The term "mala fide" has two meanings. In the popular sense, it means, dishonesty, fraud or ill-will. But in the legal sense, it has a very broad connotation. When an action is taken out of personal animosity, ill-will or vengeance entertained by a holder of public office, such action will be struck down on the ground of "malice in fact" and such action occurs only very rarely. Normally, the authorities are found to have erred by ignorance or misunderstanding of the Constitution or the statute, yet the courts constantly accused them of the charge of legal mala fide or "malice in law", simply because they have acted contrary to the Constitution or statute or on improper grounds or arbitrarily and in violation of article 14 postulates. Bad faith, many a time, be treated as interchangeable with unreasonableness and extraneous considerations. Bad faith or malice, therefore, scarcely has an independent existence as distinct ground of invalidity. Mala fide exercise of power only means that the statutory power is exercised for the purposes foreign to those, for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce there is total lack of pleading as well as proof as regards mala fide, the contention of the learned counsel for the petitioners relating to the plea of mala fide should fail. 11.. Similarly, the attack of the impugned sub-rule (5-A) on the ground that it is totally unreasonable and arbitrary should fail. We say this because, as held by the apex Court in State of Andhra Pradesh v. McDowell and Co. AIR 1996 SC 1627 while the court can strike down an enactment or statutory rule for disproportionate, excessive and unreasonable restriction on fundamental right or for violating other constitutional limitations, it cannot strike down an enactment merely on the ground that the impugned enactment or the rule is unreasonable or unnecessary or unwarranted. In Paritosh's case AIR 1984 SC 1543, the apex Court has opined that the statutory rule or regulation, unlike a bye-law, cannot be held invalid on the ground of unreasonableness as distinguished from arbitrariness. Whether the impugned amendment was necessary or warranted is in the exclusive domain of the rule-making authority, in the instant case, the State Government, and it is not for the court to question the wisdom of the rule- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the Judges participating in the decision should play an important part, and the limit to their interference with legislative judgment in such cases can only be dictated by their sense of responsibility and self-restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives of the people have, in authorising the imposition of the restrictions, considered them to be reasonable." 12.. In the instant case, it is not difficult to find the rationale of the impugned sub-rule (5-A). With the insertion of sub-rule (5-A) in rule 17, an assessee whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2) of section 39 of the APGST Act. Clause (a) of sub-section (2) of section 39 reads: "(a) all matters expressly required or allowed by this Act to be prescribed." Clause (n) of sub-section (2) of section 39 reads: "(n) Generally regulating the procedure to be followed and the forms to be adopted in proceedings under this Act." 14.. It cannot be gainsaid that the obligation cast on the dealer under the impugned sub-rule (5-A) is in respect of a proceeding under the APGST Act. The process of procedure of assessment is also a proceeding under the APGST Act. Clause (n) of sub-section (2) of section 39 in clear and unambiguous terms empowers the State Government to regulate the procedure to be followed and the forms to be adopted in proceedings under the APGST Act. Therefore, what is provided under the impugned sub-rule (5-A) is nothing but a "procedure to be followed" as well as "forms to be adopted " within the meaning of those terms occurring in clause (n) of sub-section (2) of section 39. It is also pertinent to note the significance of the word "generally" occurring in clause (n) of sub-section (2) of section 39. The word "generally" occurring in clause (n) in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e this Court as unconstitutional and for consequential direction that the petitioners therein are also eligible to audit the accounts for the purpose of section 44AB of the Income-tax Act, 1961. Section 44AB of the Income-tax Act introduced with effect from April 1, 1985 read as follows: "44AB. Every person,- (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year or years relevant to the assessment year commencing on the 1st day of April, 1985, or any subsequent assessment year; or (b) carrying on profession shall, if his gross receipts in profession exceed ten lakh rupees in any previous year or years relevant to the assessment year commencing on the 1st day of April, 1985, or any subsequent assessment year, get his accounts of such previous year or years audited by an accountant before the specified date and obtain before that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed: Provided that in a case where such person is required by or under any other law to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entiation. Section 288 enumerates the diverse categories of persons entitled to attend on behalf of the assessees before the hierarchy of authorities under the Act and apart from other persons income-tax practitioners, advocates and chartered accountants are mentioned. A glance at the list of persons set out in sub-section (2) of section 288 reveals that the persons who are expected to make an effective and genuine representation and having an over-view knowledge of the affairs of the assessee are authorised to represent without reference to any specialised proficiency in taxation or otherwise. It is patent that all those categories are lined up on an equal footing under section 288 for the purpose of representation of the case of the assessee and this equal eye should be confined to the purpose of representation only and it cannot be expected of advocates and income-tax practitioners with their background of education and academic attainment to give a good account of themselves in audit. Equally, chartered accountants cannot be credited with legal education. Chartered accountants constitute a distinct group and income-tax practitioners and advocates cannot be equated with them in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ... (2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any interest or penalty, payable by a dealer under this Act as if the tax or interest or penalty by such a dealer under this Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. This takes us to the last contention of the learned counsel for the petitioners. The contention of the learned counsel for the petitioners that even assuming that sub-rule (5-A) is valid, that rule should be applied only prospectively and not retrospectively and the action of the State Government and its authorities in applying the said sub-rule even for the assessment year 2000-2001 is without jurisdiction, in our considered opinion, is misconceived and untenable. It is relevant to note that the provision contained in sub-rule (5-A) prescribing compulsory audit by a chartered accountant is a piece of procedural law and it does not create any substantive vested right in the dealers. As regards procedural laws, the laws on the date of assessment or determination are applicable without reference to and regardless of the year of assessment if no one suffers by such application. It is pertinent to note that the provision which enabled the dealers to file their returns through the Sales Tax Practitioners and their certifications before insertion of sub-rule (5-A) of rule 17 was a mere opportunity to take advantage of the then existing provision and was not a "right accrued" so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ramamma AIR 1965 SC 1970. However, the above rule applicable to substantive rights is not applicable to matters of procedure. The opinions in Gardner v. Lucas (1878) 3 AC 582, and Delhi Cloth General Mills Co. Ltd. case AIR 1927 PC 242, Jose Da Costa's case AIR 1975 SC 1843 and Gurbachan Singh v. Satpal Singh AIR 1990 SC 209 are the authorities to state that the statutes dealing with merely matters of procedure are presumed to be retrospective unless such a construction is textually inadmissible. In Blyth v. Blyth (1966) 1 All ER 524. Lord Denning held that the rule that an Act of Parliament is to be given retrospective effect applies only to statutes, which affect vested rights. It does not apply to statutes which only alter the form of procedure or the admissibility of evidence, or the effect which the courts to give evidence. Further, in Attorney-General v. Vernazza (1960) 3 All ER 97 and K. Eapen Chako v. Provident Investment Company (P) Ltd. AIR 1976 SC 2610, it is opined that if the Act affects matters of procedure only, then, prima facie, it applies to all actions pending as well as future. In Anant Gopal Sheorey v. State of Bombay AIR 1958 SC 915 in stating the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posing liability generally governed by the normal presumption that it is not retrospective and it is a cardinal principle of tax law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication, as held by the apex Court in Reliance Jute and Industries Ltd. v. Commissioner of Income-tax, West Bengal [1979] 120 ITR 921 (SC); AIR 1980 SC 251. However, the above rule applies only to the charging section and other substantive provisions and it does not apply to machinery or procedural provisions of taxing Act, which are generally retrospective and apply even to pending proceedings. In Commissioner of Wealth Tax, Meerut v. Sharwan Kumar Swarup [1994] 210 ITR 886 (SC); (1994) 6 JT SC 4460 it was held that rule 1BB of Wealth Tax Rules inserted from April 1, 1979 laying down method of valuation of a house used for residential purpose was applicable to pending assessments of the years 1977-78 and 1978-79 also. However, in Incometax Officer v. S.K. Habibullah [1962] 44 ITR 809 (SC); AIR 1962 SC 918 and Delhi Cloth General Mills Co. Ltd. case AIR 1927 PC 242, the Supreme Court held that a procedural provision, as far as p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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