TMI Blog2004 (3) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... dment) Act, 2003, providing for court fee payable on memorandum of appeal filed before the High Court against orders of the Appellate Tribunal, both under the Income-tax Act and under the Wealth-tax Act calls for determination in all these cases. The question arises this way. All these appeals are filed by the Commissioner of Income-tax, Kochi, against the orders of the Income-tax Appellate Tribunal, Cochin Bench, after the coming into force of section 52A of the Act. Only a court fee of Rs.10 was paid on all these appeals. The office has raised an objection stating that in all appeals filed after the insertion of section 52A of the Act, court fee has to be paid as provided under section 52A read with sub-item (c) of item (iii) of article 3 of Schedule II to the Act. Standing counsel for the Income-tax Department filed objections and maintained that only a court fee of Rs.10 is to be paid on the appeals. The appellants took the stand that they have a vested right of appeal under section 260A of the Income-tax Act from October 1, 1998; once an assessee files an appeal before the first appellate authority on or after October 1, 1998, as against an assessment the law with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings initiated before the amendment, court fee on the basis of unamended provisions alone need be paid in spite of the amendment providing for higher court fee, have been rendered on an interpretation of section 52 of the principal Act but section 52A is notwithstanding anything contained in section 52 of the principal Act and such being the position, court fee at the enhanced rate is payable on all appeals falling under section 52A of the Act filed after October 26, 2002. On behalf of the Commissioner of Income-tax a reply to the said statement is filed stating that the use of the word "notwithstanding" is intended to deny the availability of the benefit of payment of one-third of the court fee before the admission in civil appeal to appeals filed under the Income-tax Act and the Wealth-tax Act before the High Court and that the word "filed" just like the word "altered" used in Namdeo Lokman Lodhi v. Narmadabai, AIR 1953 SC 228 and the words "entertained" or "instituted" in United Bank of India v. Abhijit Tea Co. Pvt. Ltd. [2000] 7 SCC 357; [2000] 102 Comp Cas 53 (SC), does not make the provision retrospective. The non-conferment of appeal originally or conferment of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without reference to any computation of monetary claim was a vested right in the hands of the litigant under the old Act. We have heard Sri P.K.R. Menon, learned senior counsel, Government of India (Taxes) appearing for the Income-tax Department, Sri V.K. Beeran, learned Additional Advocate-General for the State and Sri P. Balachandran, learned counsel acting as amicus curiae. All of them have relied on the decisions of the Supreme Court and the decisions of the High Courts in support of their respective contentions. Before resorting to adjudicate upon the issue involved, it is necessary to bear in mind the facts and circumstances obtained at the time of insertion of section 52A in the Kerala Court Fees and Suits Valuation Act, by Act 2 of 2003, both under the Income-tax Act, 1961, and under the Wealth-tax Act, 1957. The provisions regarding appeals, reference, etc., under both the above enactments are similar and hence, further discussion hereinbelow is with reference to the provisions of the Income-tax Act only. Ever since the commencement of those two enactments the assessees had a right of appeal against the assessment order before the first appellate authority (section 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act with effect from October 1, 1998. Under section 260A(2)(b) a fixed court fee of Rs.10,000 had to be paid on the appeal memorandum if the appeal was filed by the assessee. Similarly court fee of Rs.5,000 was payable for filing appeal in wealth-tax cases filed by the assessees. No court fee was payable by the Revenue in its appeals. However, clause (b) of sub-section (2) of section 260A was omitted by the Finance Act, 1999, with effect from June 1, 1999. In the memo explaining the provisions of the Finance Bill, 1999, in clauses 87 and 96 it is stated that the fee for filing the appeal to the High Court shall be such fee as may be specified in the relevant law relating to court fees for filing appeals to the High Court ([1999] 236 ITR (St.) 184). Thus, though fees for appeal to the High Court against the orders of the Appellate Tribunal was provided from October 1, 1998, under section 260A(2)(b) in the case of appeals filed by the assessees the said provision, since omitted by the Finance Act, 1999, with effect from June 1, 1999, no court fee was payable on appeals filed by the assessee from June 1, 1999. So far as the Revenue's appeal was concerned no fee was payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as may be specified in the relevant law relating to court fees for filing appeals to the High Court. Hence, the Government have decided to introduce court fees for the appeals filed in the High Court against the orders of Income-tax Tribunals and Wealth-tax Tribunals by incorporating a new section, viz., section 52A and by amending article 3 of Schedule II of the Act". The contention of the Revenue as well as the assessee in these cases is that the right of appeal is not merely a matter of procedure and that it is a matter of substantive right, that this right of appeal from the decision of an inferior tribunal to a superior tribunal becomes vested in a party when proceedings are first initiated in and before a decision is given by the inferior court. Such a vested right, according to the parties, cannot be taken away except by express enactment or by necessary intendment. It is also their contention that the intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication. According to the parties the assessment proceedings in all these cases were initiated long befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only question is, was the appeal to His Majesty in Council a right vested in the appellants at the date of the passing of the Act, or was it a mere matter of procedure? It seems to their Lordships that the question does not admit of doubt. To deprive a suitor in a pending action of an appeal to a superior tribunal which belonged to him as of right is a very different thing from regulating procedure. In principle, their Lordships see no difference between abolishing an appeal altogether and transferring the appeal to a new tribunal. In either case, there is an interference with existing rights contrary to the well-known general principle that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested." The Supreme Court in Hoosein Kasam Dada (India) Ltd. v. State of M.P. [1953] 4 STC 144; AIR 1953 SC 221, observed that the principles of the above decision were applied by the Privy Council in a 'subsequent decision in Delhi Cloth and General Mills Co. Ltd. v. Income-tax Commissioner, AIR 1927 PC 242 H also and the same was applied by the Full Bench of the Lahore High Court in Kirpa Singh v. Rasalldar Ajaipal Singh, AIR 1928 Lah 627. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lished the principle that a right of appeal is not merely a matter of procedure; it is a matter of substantive right; this right of appeal from the decision of an inferior tribunal to a superior tribunal becomes vested in a party when proceedings are first initiated in and before a decision is given by, the inferior court; such a vested right cannot be taken away except by express enactment or necessary intendment; an intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication. A Constitution Bench of the Supreme Court in Garikapatti Veeraya v. N. H Subbiah Choudhury, AIR 1957 SC 540 had reiterated the principles laid down by the Supreme Court in Dada India Ltd.'s case, AIR 1953 SC 221. Here, it must be noted that the decisions in both these cases were rendered by the same learned judge S.R.Das C.J. (in the earlier case as a puisne judge). The Constitution Bench has extracted the principles laid down by the Privy Council in Colonial Sugar Refining Co.'s case [1905] AC 369 which we have already extracted in this judgment and observed that (page 545 of AIR 1957 SC): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the law is only prospective. But, if the law states that after its commencement no suit shall be "disposed of" or "no decree shall be passed" or "no court shall exercise powers or jurisdiction", then the Act applies even to pending proceedings and has to be taken judicial notice of by the civil courts Now it is settled by the decisions of the Supreme Court mentioned above that the right of appeal is not a matter of procedure and that it is a substantive right. Thus the right of appeal is a vested right which is vested in the litigants at the commencement of the lis and these rights cannot be taken away or cannot be impaired or imperiled or made more stringent or onerous by any subsequent legislation unless the subsequent legislation said so either expressly or by necessary intendment. An intention to interfere with or impair or imperil a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication. Two Division Benches of this court (Usha v. Food Corporation of India [1997] 1 KLT 264 and Abdulla v. State of Kerala [2003] 1 KLT 961) in the context of payment of enhanced court fee under the Kerala Court Fees and Suits Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court. Clause (b) of sub-section (2) provided that such appeal shall be accompanied by a fee of Rs. 10,000 where such appeal is filed by an assessee. Here, it must be noted that no court fee was payable in an appeal filed by the Chief Commissioner or the Commissioner against the order of the Income-tax Appellate Tribunal. Even this requirement of paying the fee in an appeal filed by the assessee was only for the period from October 1, 1998, to May 31, 1999. Section 260A(2)(b) prescribing the fee was omitted with effect from June 1, 1999, by the Finance Act, 1999. Consequent on the omission with effect from the said date a new sub-section (7) in section 260A was inserted applying the procedure of the Code of Civil Procedure, 1908, relating to appeals to the High Court to appeals under section 260A also. By virtue of the insertion of sub-section (7), the court fee as applicable for filing second appeal under section 100 of the Code of Civil Procedure, 1908 has to be paid for filing an appeal under section 260A. It is in this background, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d right acquired by a party will not be affected? Here, it must be noted that when section 260A of the Income-tax Act b providing for an appeal against the order of the Income-tax Appellate Tribunal was inserted, sub-section (2)(b) thereof provided for a fee of Rs. 10,000 in such appeals. Similarly in the Wealth-tax Act also in an appeal filed by an assessee under section 27A of the said Act sub-section (2) thereof provided for a fee of Rs.5,000. True, no court fee was payable by the Chief Commissioner/ Commissioner in his appeal. So it is not as if a fee for appeal before the High Court against the order of the Income-tax Appellate Tribunal was provided for the first time. The provision for fees in section 260A(2)(b) was omitted so as to enable the State Government to decide the court fee payable on appeals filed before the High Court against the order of the Income-tax Appellate Tribunal. Needless to say, it is for the Legislature to decide as to whether the court fee has to be paid on appeals filed by the State or the Central Government. In the instant case, the State Legislature has not made any distinction between an appeal filed by the Central Government or by an assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Schedule II, article 3, item (iii)(C), thereto as at present. The fact that the right of appeal is a vested right which accrues to a party from the date of initiation of the assessment proceedings which is the date of commencement of the lis can no longer be disputed. The fact that such vested right can be interfered with or imperilled by the Legislature is also not in dispute. However, such vested right can be imperilled or taken away only by express words or by necessary implication and such intention must be clearly manifested. As already noted, whether the expressions "memorandum of appeal filed" occurring in section 52A can be understood as expressly taking away the vested right or at any rate as clearly manifesting an intention to take away such right by necessary implication is the question to be considered. The contention of senior counsel for the Revenue is that if the legislative intent was to give retrospective operation to the provisions of section 52A provisions similar to sections 249(1) and 253(6) of the Income-tax Act should have been enacted. Section 249(1) which prescribes the form of appeal and limitation states every appeal under this Chapter shall be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(1) and in section 253(6) is manifested from the expressions "appeal filed" occurring in section 52A. Sri Balachandran took us to the decision of the Supreme Court in Hoosein Kasatn Dada India Ltd.'s case [1953] 4 STC 114, where the Supreme Court was considering the expression "entertained" occurring in section 22(1), proviso, of the Central Provinces and Berar Sales Tax Act and the expression" admitted" occurring in the proviso to section 22(1) after amendment. It was held in the said decision that the amendment has placed a substantial restriction on the assessee's right of appeal, for the amended section requires payment of the entire assessed amount as a condition precedent to the admission of its appeal. In that context, the Supreme Court considered the contention of counsel for the appellant that the expression "admitted" by necessary implication applies to an appeal from an assessment order made before the date of amendment as well as an appeal from an order made after that date. The Supreme Court in that context referred to a Calcutta Special Bench decision in Sadar Ali v. Doliluddin Ostagar, AIR 1928 Cal 640, 643 [FB], where Rankin C.J. observed that: "unless the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as come into force. From the above it is clear that the intention of the Legislature is clearly manifested by necessary implication that the Legislature wanted to imperil the vested right acquired by a party by making the party liable to pay court fee as provided under section 52A read with Schedule II, article 3, item (iii)(C) of the Court Fees Act. In that view of the matter the contention of counsel for the Income-tax Department that they are liable to pay the court fee at Rs.10 only in respect of the appeals arising from assessment proceedings initiated prior to the insertion of section 52A cannot be sustained. Though it is not necessary to deal with the matter any further since the parties have relied on the non obstante clause in section 52A of the Court Fees Act some clarification is required. Section 51 of the Court Fees Act deals with "fee" on memorandum of appeal against the order relating to compensation under any Act for the time being in force for the acquisition of property for public purposes and provides that the fee shall be computed on the difference between the amount awarded and the amount claimed by the appellant. Section 52 says that the fee payable in an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee as computed by the Assessing Officer, in the case to which the appeal relates is one lakh rupees or less court fee payable is rupees five hundred only, under sub-clause (b) where such income exceeds one lakh rupees but does not exceed two lakh rupees, court fee payable is rupees one thousand and five hundred, under sub-clause (c) where such income exceeds two lakh rupees, court fee payable is one per cent, of the assessed income subject to a maximum of ten thousand rupees and under sub-clause (d) where the subject-matter of an appeal relates to any matter, other than those specified in sub-clauses (a) to (c) above, court fee payable is five hundred rupees. Here it must be noted that the provisions of section 52A read with sub-item (C), item (iii), article 3 of Schedule II did not in any way increase the liability of an assessee from what was provided in section 260A(2)(b) of the Income-tax Act. It only gives some relief to the assessee while avoiding the debatable issue as to whether the fee on appeal is a tax on litigation or a court fee. To put it differently, this is not a case where the vested right has been imperilled or in any way adversely affected from the point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the State Legislature in the circumstances of the case. As we have already held, the State Legislature had clearly manifested its intention by the use of the expressions "fee payable on a memorandum of appeal filed" in section 52A. The vested right of appeal subsequently conferred under section 260A of the Income-tax Act in so far as payment of court fee is concerned is taken away by necessary implication. In other words, the provisions of section 52A of the Court Fees and Suits Valuation Act inserted by the Amendment Act of 2003 in that sense has retrospective operation thereby affecting the earlier assessments also. We accordingly hold that in all appeals filed by the Commissioner of Income-tax or in any appeal to be filed either by the Revenue or by the assessee under the Income-tax Act and under the Wealth-tax Act against the orders of the Income-tax Appellate Tribunal from October 26, 2002, court fee is payable and has to be paid under section 52A read with Schedule II, article 3, item (iii), sub-item (C), of the Kerala Court Fees and Suits Valuation Act, inserted by the Kerala Court Fees and Suits Valuation (Amendment) Act, 2003. The view expressed in the offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the relief claimed in the appeal. What is the reason for this change in section 52A? Was it the intention of the Legislature that in respect of appeal against penalty orders where huge stakes are involved, sub-clauses (c), (b) and (a) of sub-item (C) of item (iii) of article 3 of Schedule II is to be made applicable or irrespective of the reliefs sought, a fixed court fee of Rs. 500 under sub-clause (d) of sub-item (C) of item (iii) of article 3 of Schedule II alone need be paid? These are all matters which require urgent attention of the State Government and if it is considered necessary appropriate amendment has to be made urgently to make the provision beyond any doubt. Now that the State Legislature by inserting section 73A by the amendment Act, 2003, exempted the State and its officers from the payment of court fees in official matters whether such a treatment can be extended to the Central Government and its officials in official matters consistent with the Scheme of the Income-tax Act and the Wealth-tax Act is also a matter for consideration by the State Government. A copy of this order will be sent to the Chief Secretary to the State for perusal and follow up acti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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