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Bharat Bijlee Limited. Versus Commissioner of Trade & Taxes, Govt. of N.C.T. of Delhi & Others

2016 (2) TMI 655 - DELHI HIGH COURT

Whether a single Member of the Appellate Tribunal, Value Added Tax (AT) can legitimately function as the AT in terms of Section 73(1) of the Delhi Value Added Tax Act, 2004 - Held that:- the single Member (Judicial) could validly function as the AT between 1st August 2013 and 20th July 2014. Further, even assuming that during the aforementioned period he lacked jurisdiction, the de facto doctrine would apply and the decisions taken by him during the said period shall not be invalidated. - ST. AP .....

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M No.18856/2014, ST.APPL. 82/2014 & CM No.18998/2014, ST.APPL. 84/2014, ST.APPL. 87/2014, W.P.(C) 4537/2014 & CM APPLS 9045/2014 (for stay) 9644/2014 (leave to amend), 9645/2014 (for stay), W.P.(C) 6337/2014 & CM APPL 15274/2014 (stay), W.P.(C) 5875/2014 & CM APPL 14408/2014, W.P.(C) 6765/2014 & CM APPL 16005/2014 (stay), W.P.(C) 6768/2014 &CM 16011/2014 (stay), W.P.(C) 6770/2014 & CM APPL 16019/2014 (stay), W.P.(C) 7615/2014 & CM APPL 17944/2014 (stay), W.P.(C) 2 .....

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403/2015 & CM APPL 678/2015 (stay), W.P.(C) 2535/2015 & CM APPL 4528/2015 (stay), W.P.(C) 2537/2015 FRANKE FABER INDIA LTD., M/S BHUPINDER AUTO INTERNATIONAL, DCW LTD. , H.G. INTERNATIONAL , ESS ESS METAL ENTERPRISES , TANYA ENTERPRISES , ELECTRONIC CORPORATION OF INDIA , GRAVISS HOSPITALITY LTD. , COUNTRYWIDE NETWORK PVT. LTD. , DEV EXPORTS, FOOD WORLD , ALLIED IMPEX PVT. LTD. BERCO'S MELODY HOUSE , ALLIANCE PETROLEUM PVT. LTD. VIKAS PLASTICS, S. L. ENTERPRISES, LAKRA OIL TRADING C .....

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the commencement of this Act, constitute an Appellate Tribunal consisting of one or more members, as it thinks fit, to exercise the powers and discharge the functions conferred on the Appellate Tribunal by or under this Act: Provided that where the Appellate Tribunal consists of one member, that member shall be a person who has held a civil judicial post for at least ten years or who has been a member of the Indian Legal Service (not below Grade III) for at least three years or who has been in .....

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hi Act 3 of 2005), and subject to the stipulations contained in the proviso to the said sub-section, the Lieutenant Governor of the National Capital Territory of Delhi hereby constitutes an Appellate Tribunal consisting of two members to exercise the powers and discharge the functions conferred on the Appellate Tribunal by or under the said Act. The Appellate Tribunal shall also dispose of the appeals already filed or yet to be filed under Section 43(2) of the Delhi Sales Tax Act, 1975 (since re .....

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. On 31st July 2013, the Lieutenant Governor ( LG ), GNCTD removed Mr. Kaushik and Ms. Bali from the AT with immediate effect. As a result only Mr. D.C. Anand remained as the Member (Judicial) of the AT. 6. Thereafter the GNCTD invited applications for appointment of Members of AT on 7th September 2013. On 11th July 2014, by two separate notifications issued under Section 73(1) of the DVAT Act, the GNCTD appointed a Member (Judicial) and a Member (Administrative) respectively. 7. During the peri .....

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ppeals, that he did not have jurisdiction to do so, the reply was in the negative. It appears that while at the time of filing of some of the appeals, and even at the time of passing an order of pre-deposit, the AT may have comprised of two or more members, by the time the appeal was taken up for final hearing only Mr. Anand continued as Member (Judicial) of the AT. 9. On the issue whether the failure by the Assessees to raise an objection before Mr. Anand about his lack of jurisdiction to hear .....

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that arises in these matters notwithstanding that none of the Assessees may have raised it in the first instance before Mr. Anand when he functioned as AT and heard and disposed of their respective appeals. Submissions of the Assessees 11. The main plank of the submission on behalf of the Assessees was that the AT, for the purposes of Section 73(1) of the DVAT Act, is that which is constituted by the GNCTD. In the absence of any separate notification under Section 73(9) of the DVAT Act constitut .....

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other states, for e.g., Assam, Manipur, West Bengal etc. which contain a specific provision to the effect that no decision or action of the Tribunal shall be called in question merely on the ground of any vacancy in the Tribunal , there is no provision in Section 73 or any other provision of the DVAT Act to that effect. It is accordingly contended that all decisions taken by Mr. Anand sitting singly as Member (Judicial) of the AT should be declared to be invalid by this Court. 12. Apart from the .....

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Mr. Satyakam, Additional Standing Counsel for GNCTD that under Section 73(1) of the DVAT Act, the GNCTD could constitute an AT consisting of one or more members. It was pointed out that the proviso to Section 73(1) of the Act envisages a single member of the AT, qualified to hold the post of Member (Judicial) functioning as the AT. A reference was also made to Section 73(4) of the DVAT Act which contemplates a vacancy being caused in the AT which is required to be filled up by the GNCTD "as .....

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considering that only one member of the AT was available in the period between 1st August 2013 and 28th July 2014, such member could validly function as AT notwithstanding the absence of a notification under Section 73(9) of the DVAT Act. Alternatively, it was submitted that the de facto doctrine would apply and even if it were to be held that Mr. Anand as Member (Judicial) could not have functioned as AT, his decisions in the appeals of the Assessees herein would not be invalid on that score. A .....

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nt context, while there was a notification of 27th June 2005 constituting an AT consisting of two members, no separate notification as such was issued under Section 73(1) of the DVAT Act when the third Member (Technical) was appointed. That did not mean that the AT could not function as a three-member Tribunal. As long as the requirement of Section 73(1) of the DVAT Act stood satisfied, inasmuch as there was one or more members of the AT functioning as such, the absence of notification being iss .....

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ime the vacancy is not filled up, the AT cannot function as such. In the absence of any prohibition in the AT functioning as such with the remaining members when a vacancy is caused, it cannot be presumed that an AT with a lesser number of members than those appointed initially cannot function as an AT. 18. This position has been explained by the Division Bench of this Court in Kwality Restaurant & Ice Cream Co. v. Commissioner, VAT (supra). A perusal of the said decision shows that the Asse .....

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T negativing the objection, the Assessee filed a writ petition in this Court questioning the correctness of the said order of the AT. 19. It is significant that the respective stands of the Assessee and the Department of Trade and Taxes (DTT) in the aforesaid case is converse of their respective stands in the present case. In Kwality Restaurant & Ice Cream Co. v. Commissioner, VAT (supra) the contention of the Assessee was that it would be unfair to the Assessee if a third member of the AT i .....

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ulations, there can be a situation where the full quorum of the AT is not available since one or more members could withdraw on the ground of conflict of interest vis-a-vis the subject matter of the proceedings before the AT. It was observed by the Court as under: 8. Facially, the provisions of the Act and Regulations suggest that the Tribunal, whenever it consists of a plurality of members has to hold sittings en bloc. However, at the same time, Section 73(4) contemplates a situation where a va .....

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pect is important, because the absence of any prohibition either in the negative form, enjoining members from functioning and hearing appeals during the absence of one of them, or absence of a provision mandating a minimum quorum, implies that the Legislature did not contemplate a logjam, in the Tribunal s functioning. The argument of the Revenue about a restrictive class of cases which deals with absence of a member, i.e., in terms of regulation 35, is insubstantial. For one, that regulation is .....

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an, by no stretch of the imagination, result in its becoming dysfunctional, or being unable to function. 21. The Court further proceeded to observe that the conspectus of the DVAT Act and the AT Regulations reveal that an AT discharges judicial functions. Even if there were anomalies in the provisions, anything which tends to undermine the public confidence in the AT has to be shunned and wherever necessary, cured . In the facts and circumstances, the Court passed an order forbearing the third M .....

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ly on account of the vacancies created by the removal of the two of the three members comprising the AT, that the remaining single Member (Judicial) had to function as AT with effect from 1st August 2013. Since he was the only member, there was no question of constituting benches by issuing a notification under Section 73 (9) of the DVAT Act. Also in terms of Section 73(1) of the DVAT Act, since one or more members could function as an AT, there was no illegality attached to the single Member fu .....

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t the Central Government constituted an Industrial Tribunal (IT) by a notification dated 13th June 1949 comprising a Chairman and two other members under Section 8 of the Industrial Disputes Act, 1947 ( ID Act ). The second notification dated 24th August 1949 was issued under Section 8(1) of the ID Act appointing Mr. N. Chandrasekhara Aiyer as a member of the IT in place of one of the members, whose services ceased to be available. The re-constituted IT commenced its regular sitting first in Bom .....

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. Between 16th January and 20th February 1950 several issues concerning the jurisdiction of the IT were dealt with. These arose also in the context of Mr. Aiyer resuming as member of the IT after 20th February 1950 and thereafter sitting with both Mr. Sen and Mr. Mazumdar. 25. It was in this background that the question arose whether in the absence of Mr. Aiyer, the two other members had no jurisdiction to hear anything at all without an appropriate notification being issued. Since Mr. Aiyer s s .....

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acancy in the membership of the Board or IT. It was held that under Section 5(4) of the ID Act when a member of the Board is absent or there is a vacancy, the Board is permitted to act, notwithstanding such absence, provided there is the prescribed quorum. Such quorum is fixed by the rules of framed by the appropriate Government. It was observed that in terms of the proviso to Section 5(4) of the ID Act, where the services of a Chairman or Member of the Board had ceased to be available, the Boar .....

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nt may think fit. Where the Tribunal comprises two or more members, one of them shall be appointed as its Chairman. In contrast, Section 8(3) of the ID Act specifically states that where the services of any member of a Board other than the Chairman has ceased to be available, the appropriate government shall appoint, in the manner specified in Section 5(3) of the ID Act, another person to take his place and the proceedings shall be continued before the Board as reconstituted. The above provision .....

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till such time the government fills up the vacancy. Consequently, the Court is of the view that the decision in The United Commercial Bank Ltd. v. Workmen (supra) is not of any assistance to the Assessees. 29. The Court is of the view that on a collective reading of Section 73(1), (4) and (9) of the Act together with the AT Regulations, the position that emerges is that as long as there is only one remaining member of the AT by virtue of the others being either removed or the vacancies not bein .....

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ere was no other member of the AT remaining between 1st August 2013 and 20th July 2014. It was only Mr. Anand, Member (Judicial) who remained in the AT. There was no question of a notification being issued under Section 73(9) of the DVAT Act to constitute a bench of the AT. There was no bar to Mr. Anand continuing to function as an AT. The de facto doctrine 31. Even assuming that Mr. Anand lacked jurisdiction to hear the appeals and petitions as the AT, by applying the de facto doctrine it could .....

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r or usurper but one who holds office, under colour of lawful authority, though his appointment is defective and may later be found to be defective. Whatever be the defect of his title to the office, judgments pronounced by him and acts done by him when he was clothed with the powers and functions of the office, albeit unlawfully, have the same efficacy as judgments pronounced and acts done by a Judge de jure. Such is the de facto doctrine, born of necessity and public a policy, to prevent needl .....

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to his office. Otherwise so soon as a judge pronounces a judgment a litigation may be commenced for a declaration that the judgment is void because the judge is no judge. A judge's title to his office cannot be brought into jeopardy in that fashion. Hence the rule against collateral attack on validity of judicial appointments. To question a judge's appointment in an appeal against the judgment is, of course, such a collateral attack. 32. The result of the above discussion is that the Cou .....

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