TMI Blog2016 (7) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... ituted Section 35 F of the Act, 1944 is not applicable to the stay applications and appeals already preferred or pending before any appellate authority, prior to commencement of the Finance (No.2) Act, 2014, which shows the clear intention on the part of Legislature, meaning thereby Finance (No.2) Act, 2014 shall be applicable to all the stay applications and appeals which are being preferred on or after 6th August, 2014. Thus, effect of Section 6 of the General Clauses Act, 1897 is being taken away by 2 nd proviso to Section 35F of the Act, 1944, which is the “different intention” of the Legislature. The legislature, in its wisdom, has thought it fit to extend the benefit of the Scheme to such of those assessees whose tax arrears are outstanding as on 31-3-1998, or who are issued with the demand or show-cause notice on or before the 31st day of March, 1998, though the time to file declaration for claiming the benefit is extended till 31-1-1999. In extreme cases always the assessees can take recourse to the writ jurisdiction under Article 226 of the Constitution of India. Few extreme cases will not make the substituted Section 35F of the Act, 1944 unconstitutional. All care c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise and Service Tax Appellate Tribunal, Eastern Zonal Bench Kolkata, Commissioner of Central Excise and Service Tax, Jharkhand, Registrar, Customs, Excise Service Tax Appellate Tribunal, West New Delhi, Deputy Registrar, Customs, Excise Service Tax Appellate Tribunal,Kolkata, Central Board of Excise and Customs, Government of India, New Delhi Commissioner of Central Excise and Service Tax, Registrar, Customs, Excise Service Tax Appellate Tribunal, West New Delhi, Deputy Registrar, Customs, Excise Service Tax Appellate Kolkata, The Union of India, through the Joint Secretary (Revenue), The Secretary/ Registrar, Customs Excise and Service Tax, Commissioner of Central Excise, Ranchi, Jharkhand , The Director (Judicial Cell) Govt. of India, Ministry of Finance, New Delhi HON'BLE MR. JUSTICE D.N.PATEL AND HON'BLE MR. JUSTICE AMITAV K. GUPTA For the Petitioner : M/s. Kartik Kurmy, S.B. Sharma, Nitin Pasari, Ranjana Mukherjee Rajesh Sharma, Advocates. For the Respondent : M/s A.R. Choudhary, Advocate, M/s Deepak Roshan, Ratnesh Kumar, Amit Kumar, Advocates (Oral Judgement) Per D.N. Patel, J.: 1. These writ petitions have been preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) amount payable under rule 6 of Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004; (v) interest payable under the provisions of this Act or the rules made thereunder. (Emphasis supplied) ● It appears that under the aforesaid provision, as a rule, an appellant had to deposit with the appellate authority or the Tribunal, the duty demanded or the penalty levied. Nonetheless, the application for waiving the deposit was also permitted to be preferred. Evaluating the undue hardship on the part of the assessee-appellant and safeguard of the interests of the revenue from the other side the amount of deposit may be waived by the Tribunal or the appellate authority by using the judicial discretion. ● By virtue of Section 105 of the Finance (No.2) Act, 2014, Section 35F has been substituted and the said substituted Section 35F which has been brought into force with effect from 6 th August, 2014 reads as under:- 35F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.- The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal.- (i) under sub-section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the respondent-authority dated 16th September, 2014 and 14th October, 2014 have created two classes of the assessees viz. those who have preferred appeals prior to 6th August, 2014 and those who have preferred appeals after 6th August, 2014. This classification is not a valid classification and two tests of the valid classification have been violated. Irrelevant criteria have been taken into consideration for creating these two classes. The differentia must be intelligible and it must have a reasonable nexus with the object, sought to be achieved by the amendment. ● It is further submitted by the learned counsel for the petitioners that classification made by substituted Section 35F of the Act, 1944 is absolutely arbitrary in nature. The whole classification is based upon the date of filing of the appeal, either before the Commissioner (Appeals) or before the Custom, Excise, and Service Tax Appellate Tribunal. This cannot be a criteria for classification. ● It is also submitted that right to prefer appeal has already accrued prior to 6th August, 2014 under Section 35F of the earlier un-amended provision. ● It is further submitted that the new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44) ELT 255 Delhi, 2014 (5) SCC 219, 1996 (3) SCC 142, 2015 (321) ELT 195 Andhra Pradesh, 2015 (320) ELT 51 Kerala, 2015 TIOL 1592, HC Madras ST, 2015 (323) ELT 119 Punjab Haryana, 1992 (3) SCC 666, 1978 (2) ELT J 333 SC, 1989 (39) ELT 178 SC, 1994 (4) SCC 602, 2001 (4) SCC397, AIR 1954 SC 545, 2010 (3) SCC 786, AIR 1955 SC 191 (1), AIR 1965 SC 1017, 1974 (1) SCC 19, 2015 (322) ELT 353 SC, 1983 (1) SCC 305, AIR 1952 SC 75 (1), AIR 1955 SC 13, 198 (104) ELT 595 Delhi, 1989 (39) ELT 171 SC, 1973 (1) SCC 500, 2013 (8) SCC 519, AIR 1960 SC 633. 5. Arguments canvassed by the counsels on behalf of Union of India : ● Counsels appearing for the respondents mainly submitted that as per the earlier provision of section 35F, as a matter of rule, the assessee-appellants have to deposit 100% of the duty demanded or the penalty levied, and as an exception, the Commissioner (Appeals) or Tribunal may dispense with such deposit by maintaining the equilibrium between undue hardship on the part of the appellants and safeguards of the interests of the revenue on the part of the Union of India, whereas newly substituted section 35F has diluted the rigor of the law and instead of 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the lowest available authority under the Central Excise Act, 1944. ● It is further submitted by the counsel for the respondents that there is no substantive right vested in the appellants to prefer an appeal, but, it is merely procedural in nature. ● Under Section 6 of the General Clauses Act, if there is different intention of the new Act while the earlier one is repealed, in that eventuality, earlier right, privilege, obligation or liability under the repealed Act or provision will not continue once the new Act or new provision is brought into effect. Looking to the second proviso of section 35F the intention of the legislature appears to be absolutely clear, unambiguous and unequivocal. As per second proviso to the new Section 35F, if any assessee wants to prefer an appeal after 6th August, 2014, he will have to deposit 7.5% or 10% as the case may be, of the duty demanded or penalty levied. This different intention , creates an exception to Section 6 of the General Clauses Act . ● It is further submitted by the counsel for the respondents that a statute relating to taxation cannot be quashed or struck down merely for being harsh, otherwise e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion only by the discretion of the Tribunal or Commissioner (Appeals), the amount to be deposited by the appellant was being dispensed with, whereas, now by newly substituted section 35F the statute itself waives, in all cases, without any order of the Commissioner (Appeals) or of the Tribunal, 92.50% or 90% of the duty demanded or the penalty levied. Thus, instead of 100% ,as per earlier section 35F, now the appellants have to deposit only 7.5 % or the 10% as the case may be, of the duty demanded or the penalty levied, and that too with a maximum cap of ₹ 10 crores as per first proviso to section 35F and hence, these writ petitions may not be entertained by this Court. 7. Sri Deepak Roshan, learned counsel appearing for the Central Excise Department has thrown light upon section 35FF that in case the appellants succeed in their appeals, the amount shall be refunded with interest varrying from 5% to 36% as the case may be, as per section 106 of the Finance (No.2 ) Act, 2014. This position was not there earlier. This is also in favour of the appellants-assessees and makes section 35F more balanced. 8. R E A S O N S: Having heard the counsels for both the sides and look ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement with this contention. It ought to be kept in mind that whenever any cut off date is prescribed, there are bound to be few persons who will fall on wrong side of the cut off date, but, it does not mean that the cut off date chosen by the legislature is arbitrary. In a statute relating to taxation, more liberty should be given to the legislature. The legislature enjoys a greater latitude for classification in the field of taxation. It has been held by Hon'ble Supreme Court in the case of State of W.B. vs. E.I.T.A. India Ltd., reported in (2003) 5 SCC 239, at para 4 as under:- 4. In examining the constitutional validity of the impugned provisions of a statute, it will be useful to bear in mind the following well-settled propositions. If a legislation is found to lack in legislative competence or is found to be in contravention of any provision of Part III or any other provision of the Constitution, the impugned legislation cannot escape the vice of unconstitutionality (see: Kesavananda Bharati v. State of Kerala and also State of A.P. v. McDowell Co.). A challenge to any statutory provision on the ground of the classification being discriminatory and violative of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The 2 nd proviso to Section 35F of the Act, 1944 is a clear intention of the legislature. The second proviso is absolutely unambiguous and unequivocal. 2nd proviso to substituted Section 35F of the Act, 1944 reads as under:- 35F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.- The Tribunal or the Commissioner(Appeals), as the case may be, shall not entertain any appeal.- (i) ........................ (ii) ........................ (iii) ....................... xxx xxx xxx Provided further that the provisions of this section shal l not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance(No.2) Act, 2014. xxx xxx xxx (Emphasis supplied) Thus, the substituted Section 35 F of the Act, 1944 is not applicable to the stay applications and appeals already preferred or pending before any appellate authority, prior to commencement of the Finance (No.2) Act, 2014, which shows the clear intention on the part of Legislature, meaning thereby Finance (No.2) Act, 2014 shall be applicable to all the stay applications and appeals which are being preferred on or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, especially when we keep in view the fact that discretion is vested in the appellate Judge to dispense with the compliance of the above requirement. All that the statutory provision seeks to do is to regulate the exercise of the right of appeal. The object of the above provision is to keep in balance the right of appeal, which is conferred upon a person who is aggrieved with the demand of tax made from him, and the right of the Corporation to speedy recovery of the tax. The impugned provision accordingly confers a right of appeal and at the same time prevents the delay in the payment of the tax. We find ourselves unable to accede to the argument that the impugned provision has the effect of creating a discrimination as is offensive to the principle of equality enshrined in Article 14 of the Constitution. It is significant that the right of appeal is conferred upon all persons who are aggrieved against the determination of tax or rateable value. The bar created by Section 406(2)(e) to the entertainment of the appeal by a person who has not deposited the amount of tax due from him and who is not able to show to the appellate Judge that the deposit of the amount would cause him un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or disadvantage operates upon all persons who make the default or omission. (Emphasis supplied) Thus, it has been by Hon'ble the Supreme Court that right of appeal is the creature of statute. Without statutory provision and without creating such a right, the person aggrieved is not entitled to file an appeal. It has been held by the Hon'ble Supreme Court that the legislature while granting the right of appeal, can always impose conditions for exercise of such right. It has been further held that in absence of any special reason, there appears to be no legal or constitutional impediment to the imposition of such conditions. Thus, it is always permissible for the legislature to make the right to prefer an appeal as a conditional one. In the facts of the present case, by virtue of substituted Section 35F of the Act, 1944 only 7.5% or 10% of the duty demanded or penalty levied is to be deposited and howsoever the worst case of the petitioner17 assessees may be, even though they have no prima-facie case, ex facie 92.5% or 90% , as the case may be, of the duty demanded or the penalty levied, is already waived by the Statute itself. Now, there is no need of any order to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other rubber products. By a notification dated April 6, 1984 issued by the Government of India, Ministry of Finance (Department of Revenue) in exercise of the powers conferred by Rule 8(1) of the Central Excise Rules, 1944, tyres, falling under Item 16 of the First Schedule to the Central Excise and Salt Act, 1944, were exempt from a certain percentage of excise duty to the extent that the manufacturers had not availed themselves of the exemption granted under certain other earlier notifications. The Department was of the view that the Company was not entitled to the exemption as it had cleared the goods earlier without paying central excise duty, but on furnishing bank guarantees under various interim orders of courts. The Company claimed the benefit of the exemption to the tune of ₹ 6.05 crores and filed a writ petition in the Calcutta High Court and sought an interim order restraining the central Excise Authorities from the levy and collection of excise duty. The learned Single Judge took the view that a prima facie case had been made out in favour of the Company and by an interim order allowed the benefit of the exemption to the tune of Rs two crores ninety-three lakhs an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mere asking. The appeal is allowed with costs. (Emphasis supplied) Several decisions have been rendered by Hon'ble the Supreme Court in regard to the provision of unamended Section 35F of the Act,1944 that Courts or the Tribunals have to strike a balance between undue hardship of the assessee and Safeguard the interest of Revenue . Time and again challenges have been made to this endeavour for maintenance of equilibrium between the aforesaid two aspects of the matter in the form of litigations and are reaching out to Hon'ble the Supreme Court from the appellate authority or from the Tribunal via High Court with uncertainty, which has now been brought to an end by reducing the discretion of the Commissioner (Appeals) or the Tribunal, by virtue of substituted Section 35F of the Act, 1944. (viii) Counsels appearing for the petitioners have argued that the classification created by Section 35F of the Act, 1944 has no reasonable nexus with the object, sought to be achieved. It ought to be kept in mind that the reasons and objects are to be gathered from the amended Act. It has been held by Hon'ble the Supreme Court in the case of Union of India Vs. Nitdip Texti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 1998. 50. The legislature, in its wisdom, has thought it fit to extend the benefit of the Scheme to such of those assessees whose tax arrears are outstanding as on 31-3-1998, or who are issued with the demand or show-cause notice on or before the 31st day of March, 1998, though the time to file declaration for claiming the benefit is extended till 31-1-1999. The classification made by the legislature appears to be reasonable for the reason that the legislature has grouped two categories of the assessees, namely, the assessees whose dues are quantified but not paid and the assessees who are issued with the demand and show-cause notice on or before a particular date, month and year. The legislature has not extended this benefit to those persons who do not fall under this category or group. This position is made clear by Section 88 of the Scheme which provides for settlement of tax payable under the Scheme by filing declaration after the 1st day of September, 1998 but on or before the 31st day of December, 1998 in accordance with Section 89 of the Scheme, which date was extended up to 31-1-1999. The distinction so made cannot be said to be arbitrary or illogical which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, for the reasons of functional expediency and even otherwise, can pick and choose to tax some. A power to classify being extremely broad and based on diverse considerations of executive pragmatism, the judicature cannot rush in where even the legislature warily treads. All these operational restraints on judicial power must weigh more emphatically where the subject is taxation. Discrimination resulting from fortuitous circumstances arising out of particular situations, in which some of the tax-payers find themselves, is not hit by Article 14 if the legislation, as such, is of general application and does not single them out for harsh treatment. Advantages or disadvantages to individual assessees are accidental and inevitable and are inherent in every taxing statute as it has to draw a line somewhere and some cases necessarily fall on the other side of the line. (Emphasis supplied) Thus, the classification is valid if the differentia is intelligible and if it has reasonable nexus with the object sought to be achieved. There must be a reason for classification. The reason need not be a good one. The test is not wisdom, but good faith in classification. In the matters relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit jurisdiction under Article 226 of the Constitution of India. Few extreme cases will not make the substituted Section 35F of the Act, 1944 unconstitutional. All care can be taken with respect to such types of cases under Article 226 of the Constitution of India. Ubi jus, ibi remidum - where there is wrong, there is remedy. Exceptional assessee can always takes shelter of writ jurisdiction, otherwise, section itself has waived 92.5% or 90% of the deposit of the tax and has compelled only for 7.5% or 10% of the duty demanded or penalty imposed to be deposited. The newly substituted Section 35F of the Central Excise Act, 1944 is more than reasonable in comparison to earlier provision of Section 35F. It appears that now a days it has become a fashion to challenge even those provisions, which are more than reasonable, in the court of law and these petitions are not exception to this trend. It has been held by Hob'ble Supreme court in the case of Government of Andhra Pradesh Vs. P. Laxmi Devi, reported in (2008) 4 SCC 720, in paragraph nos. 70, 72, 73, 77 to 80 as under:- 70. As stated above, it is only when there is no manner of doubt that the statute is unconstitutional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen to be the path to judicial wisdom and institutional prestige and stability. The court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry ; that exact wisdom and nice adaptation of remedy are not always possible and that judgment is largely a prophecy based on meagre and uninterpreted experience . Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in Secy. of Agriculture v. Central Roig Refining Co., be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty before law, liberty, freedom of religion, etc., the Court will not grant such latitude to the legislature as in the case of economic measures, but will carefully scrutinise whether the legislation on these subjects is violative of the rights and liberties of the citizens, and its approach must be to uphold those rights and liberties, for which it may sometimes even have to declare a statute to be unconstitutional. 79. Some scholars regarded it a paradox in the judgments of Holmes, J. (who, as we have already stated above, was a disciple of Thayer) that while he urged tolerance and deference to legislative judgment in broad areas of lawmaking challenged as unconstitutional, he seemed willing to reverse the presumption of constitutionality when laws inhibiting civil liberties were before the court. 80. However, we find no paradox at all. As regards economic and other regulatory legislation judicial restraint must be observed by the court and greater latitude must be given to the legislature while adjudging the constitutionality of the statute because the court does not consist of economic or administrative experts. It has no expertise in these matters, and in this age of spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) whether amendment made to section 35F of the Act has a retrospective operation? (3) what order? 25. At this stage, it would be useful to distinguish between substantive law from the law of procedure as it has been persistently contended by the learned counsel for petitioners that the right to file an appeal is a substantive right and that right cannot be altered with retrospective effect when it has already vested with the parties on the date the lis commenced. Also when conditions with regard to fileing an appeal are altered, it would affect the right to file an appeal, which is a substantive right. The aforesaid distinction has been enunciated by the Hon'ble Supreme Court in its later judgments and have a bearing on point no.1 (a) The meanings of substantive law and procedural law as stated in Black's Law Dictionary, 9th Edition, are as under: Substantive law (Seb-sten-tiv) (18c). The part of the law that creates, defines and regulates the rights, duties and powers of parties. 'so far as the administration of justice is concerned with the application of remedies to violated rights, we may say that the substantive law defines the remedy and rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Hoosein Kasam Dada (1953) 4 STC 114 (SC); AIR 1953 SC 221, cannot be of any assistance to the petitioners. The same cannot be applied to the facts of the present case, having regard to the second proviso of amended section 35F of the Act. In Hoosein Kasam Dada (1953) 4 STC 114 (SC); AIR 1953 SC 221, a proviso such as the second proviso under consideration was conspicuous by its absence. The second proviso of section 35F in the instant case clearly distinguishes the provision amended in that case. (b) In Hoosein Kasam Dada (1953) 4 STC 114 (SC); AIR 1953 SC 221, the Hon'ble Supreme Court placed reliance on a decision of the privy council in Colonial Sugar Refining CoHoosein Kasam Dada (1953) 4 STC 114 (SC); AIR 1953 SC 221,mpany (1905) AC 369 (PC). It was held therein that the right to file an aHoosein Kasam Dada (1953) 4 STC 114 (SC); AIR 1953 SC 221,ppeal was a substantive right and not a mere matter of procedure. It is a vested right which inheres in a party from the commencement of the actioHoosein Kasam Dada (1953) 4 STC 114 (SC); AIR 1953 SC 221,n in the court of first instance and such a right cannot be taken away except by an express provision or by a necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand, the decisions of the Hon'ble Supreme Court with regard to pre-deposit of disputed amounts to be made by a aggrieved party before the appellate authority are squarely applicable to these cases. (d) Thus, the judgment of Hon'ble Supreme Court in Hoosein Kasam Dada (1953) 4 STC 114 (SC); AIR 1953 SC 221, does not apply to the present case having regard to the provisions considered in both these cases being distinct, different and not being in pari matria. As already noted, the insertion of the second proviso, being of significance in the provision under consideration, the ratio in Hoosein Kasam Dada (1953) 4 STC 114 (SC); AIR 1953 SC 221, is distinguished and therefore, cannot be relied upon in these matters by the petitioners. Similarly, the observations made by the Hon'ble Supreme Court in Garikapati Veerayya, AIR 1957 SC 540 are not applicable to the present case. Those observations are in the context of an amendment made to a substantive legislation and not to an amendment made to a procedural law, which is under consideration in the instant case. In fact, in State of Bombay Vs. Supreme General Films Exchange Ltd., AIR 1960 SC 980 and in Ramesh Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rim order), respectively. Accordingly, point no.2 is answered by holding that amended section 35F of the Act has a retrospective operation. 38. Summary of conclusion: Thus, from the aforesaid discussions the findings and the conclusion arrived at could be summarised as under: (1) It is held that in the instant case, the right to file an appeal, which is a substantive right grated under Section 35F and 35B of the Act has not been amended and remains intact. That Section 35F of the Act as amended, consists of a mandatory requirement of pre-deposit for entertaining an appeal before the appellate authority, i.e. before the Commissioner(Appeals) or the Appellate Tribunal as the case may be, is a piece of proceedural legislation and does not fall within the realm of substantive law. Thus,Section 35 and 35B do not confer an absolute right to file an appeal but are subscribed or controlled by Section 35 F of the Act. Hence, in the instant case the right to file an appeal under Section 35 or 35B as the case may be is not an absolute right but a conditional one. (2) In view of a plethora of decisions of the Hon'ble Supreme court, it is held that in the instant case, the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Substituted Section 35F is procedural in nature. (xiii) It has been held by Hon'ble the Supreme Court in the case of H.P. State Electricity Regulatory Commission Vs. H.P. SEB, reported in (2014) 5 SCC 219, at para 21, as under:- 21. Thereafter, the larger Bench referred to a number of authorities and proceeded to cull out the principles as follows: (Garikapati Veeraya case, AIR p. 559, para 23) 23. From the decisions cited above, the following principles clearly emerge: (i) That the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. (ii) The right of appeal is not a mere matter of procedure but is a substantive right. (iii) The institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit. (iv) The right of appeal is a vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when the adverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assification is having a rational nexus of achieving the object of preventing the creation of further multiple Hindu undivided families for reduction of tax liabilities. Further, for the validity of the section, it is not necessary for the legislature to withdraw the benefit which is already conferred. 13. Secondly, the cut-off date of 31-12-1978 cannot be said to be arbitrary. The amending Bill was introduced in June 1980 and is given effect to from Assessment Year 1980-81. It is settled law that the choice of a date as a basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical in the circumstances; while fixing a line, a point is necessary and there is no mathematical or logical way of fixing it; precisely, the decision of the legislature or its delegate must be accepted unless it is very wide off the reasonable mark. (University Grants Commission v. Sadhana Chaudhary.) The learned counsel for the respondent was not in a position to point out any ground for holding that the said date is capricious or whimsical in the circumstances of the case. In this view of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses are not to be mentioned in black and white . They can be inferred also. One sided version has been given by the learned counsel for the petitioners. Let us look at the other side of the argument. If the Company and some of its Directors had already preferred appeals prior to 6th August, 2014 and if their applications for waiver of the deposit was dismissed by the Appellate forum and that order was confirmed up to Hon'ble the Supreme Court, they would have to pay 100% of the duty demanded or penalty imposed, whereas, if the remaining Director prefers appeal on or after 6th August, 2014, he is sure to get the benefit of substituted Section 35F. Thus, Director, who preferred appeal on or after 6th August, 2014 will get the benefit of depositing only 7.5% or 10% (New Section 35F) of the duty demanded or penalty imposed, whereas, the other Directors who preferred appeals before 6th August, 2014 have to deposit 100% of the duty demanded or penalty imposed( Old Section 35F). Only negative side of the ammendment is being narrated by the counsel for the present petitioners, but, there is also a positive side of it. In fact, Section 35F-amended provision, is much more in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held constitutional in the case of Anant Mills Company Ltd. Vs State of Gujarat reported in (1975) 2 SCC 175 a t paras 39, 40 and 54, which are quoted hereunder:- 39. Mr Bhandare on behalf of the State of Gujarat has assailed the finding of the High Court that Section 406(2)(e) and Section 411(bb) are violative of Article 14 and that Rule 42 of the Taxation Rules is void insofar as it has provided that if an appeal is preferred or entertained against the tax, warrant shall not be issued for the recovery of the amount of tax. The High Court in striking down Section 406(2)(e) and Section 411(bb) relied upon its earlier judgment dated October 27, 1969 which had been given before the addition of the proviso to Section 406(2)(e) by Act 5 of 1970. According to the earlier judgment, clause (e) of sub-section (2) of Section 406 classified the appellants filing appeals against tax and rateable value into two classes: (1) those who deposited the amount of tax assessed by the Commissioner; and (2) those who did not. It was held that the above classification had no rational nexus with the object of the provision for appeal and that there was no reasonable justification for giving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount claimed as a condition precedent to the entertainment of an appeal which seeks to challenge the imposition or the quantum of that tax, in our opinion, has not the effect of nullifying the right of appeal, especially when we keep in view the fact that discretion is vested in the appellate Judge to dispense with the compliance of the above requirement. All that the statutory provision seeks to do is to regulate the exercise of the right of appeal. The object of the above provision is to keep in balance the right of appeal, which is conferred upon a person who is aggrieved with the demand of tax made from him, and the right of the Corporation to speedy recovery of the tax. The impugned provision accordingly confers a right of appeal and at the same time prevents the delay in the payment of the tax. We find ourselves unable to accede to the argument that the impugned provision has the effect of creating a discrimination as is offensive to the principle of equality enshrined in Article 14 of the Constitution. It is significant that the right of appeal is conferred upon all persons who are aggrieved against the determination of tax or rateable value. The bar created by Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability or disadvantage arising out of a party s own default or omission cannot be taken to be tantamount to the creation of two classes offensive to Article 14 of the Constitution, especially when that disability or disadvantage operates upon all persons who make the default or omission. XXX XXX XXX 54. As a result of the above, we dismiss Writ Petitions Nos. 51, 60 to 74, 87 to 91, 157, 492 to 503, 533, 534 and 583 of 1972 as also Writ Petitions Nos. 1866 to 1877 and 2046 of 1973 with costs. One hearing fee. We also dismiss Civil Appeals Nos. 489 to 513 and 752 to 755 of 1973. We accept Civil Appeals Nos. 643 to 684 of 1973 and Civil Appeals Nos. 389 to 430 of 1974 and set aside the judgment of the High Court insofar as it has struck down Section 2(1- A)(i), Section 406(2)(e), Section 411(bb) and Rule 42 of the Taxation Rules in Schedule A to the Corporations Act. We also set aside the judgment of the High Court to the extent it has struck down resolutions passed by the Corporation for official years 1967-68, 1968-69, 1969-70 and 1970-71 fixing the rate of conservancy tax at 9 per cent in respect of textile mills and factories. The writ petitions which were filed in the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted Section 35F, is not at all confiscatory in nature. On the contrary it is more than reasonable and leaning more towards the assessee rather than the revenue. (xvii) Counsel appearing for the petitioners has heavily placed reliance upon the decision rendered by Hon'ble the Supreme Court in the case of Hoosein Kasam Dada(India) Ltd. vs. State of M.P., but, as stated hereinabove, looking to the 2 nd Proviso to Sect ion 35F, which is a different intention of the legislation, it takes away the effect of Section 6 of the General Clauses Act, 1897. Moreover, 2nd proviso to Section 35F of the Act, 1944 makes the present case different, factually, from Hoosein Kasam Dada's case. We are in full agreement with the ratio desidendi propounded by the Hon'ble Karnataka High Court, as stated hereinabove, in the case reported in (2016) 89 VST 235 (Karnataka) in paras 2, 23 25, which are the distinguishing features of substituted provision of Section 35F. Hence, the ratio propounded in the case of Hoosein Kasam Dada's case is not applicable in the facts of the present case. In the Hoosein Kasam Dada's case the entire amount was to be deposited and, therefore, Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e writ jurisdiction under Article 226 should be exercised, having due regard to the discipline which has been laid down under Section 35F of the Act, is a separate matter altogether but it is important to note that the power under Section 226 has not been, as it cannot be, abridged. XXX XXX XXX 19. Parliament while substituting the provisions of Section 35F of the Central Excise Act, 1944 by Finance Act (No. 2) of 2014, has laid down that the Tribunal or the Commissioner (Appeals) shall not entertain any appeal unless the appellant has deposited the duty or, as the case may be, a penalty to the stipulated extent.These words in Section 35F of the Act would indicate that on and after the enforcement of the provision of Section 35F of the Act, as amended, an appellant has to deposit the duty and penalty as stipulated and unless the appellant were to do so, the Tribunal shall not entertain any appeal. This provision would, therefore, indicate that it would apply to all appeals which would be filed on and from the date of the enforcement of Section 35F of the Act. 20. The intendment of Section 35F of the Act is further clarified by the second proviso which stipulates that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, endless litigations, arising out of waiver applications, have been brought to an end and looking to the very meager percentage of the amount to be deposited, Section 35F- as amened cannot be said to be violative of Article 14 of the Constitution of India much less of Article 19(1)(g) of the Constitution of India. (xix) Thus, even if the show-cause notice has been issued prior to 6 th August, 2014 or even if the Order-in-Original is passed prior to 6 th August, 2014 or even if, the company and few of its Directors have preferred appeals prior to 6th August, 2014, but, if the left out Director prefers appeal on or after 6th August, 2014, looking to the second proviso to substituted Section 35F, the newly substituted Section 35F shall be applicable, to his appeal and such an appellant, shall have to deposit 7.5% or 10% of the duty demanded or penalty levied, as the case may be. The fact as to whether it will be beneficial to the assessee or not, does not merit any consideration as individual benefit is not to be appreciated at all. Even if anybody has preferred appeal prior to 6th August, 2014 and his waiver application has been dismissed by the appellate authority which is co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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