Madras High Court
Lipton India Ltd. vs Assistant Commissioner (Ct) And Ors. on 7 January, 1994
Equivalent citations: [1994]95STC216(MAD)
JUDGMENT Janarthanam, J.
1. Lipton India Ltd. (petitioner), it is said, is registered under the Companies Act, 1956, having its registered office at No. 1, Transport Depot Road, Calcutta-700 088. It is having branches all over India, one of which is located at No. 150, Luz Church Road, Madras-600 004. It is, inter alia, engaged in the manufacture of animal feed at its factory in Singanallur, Coimbatore.
2. Assessments for the years 1984-85 to 1986-87 under the Central Sales Tax Act, 1956 (Act 74 of 1956) (for short "the CST Act"), it is said, had been completed by the Assistant Commissioner (CT), Central Assessment Circle I, Madras-600 006 (first respondent) allowing exemption on the alleged claim of stock transfers from Coimbatore branch to its clearing and forwarding agent at Palghat in Kerala. However, it appears, for the assessment years 1987-88 to 1989-90, similar exemption had been claimed by the petitioner.
3. The petitioner's place of business at Coimbatore was stated to have been inspected by the officers of the Assessment Wing on April 8, 1989. On verification of the records, it was found that movements from Coimbatore to Palghat were as a result of specific orders from the buyers ; that the goods were, though purported to have been consigned to the Palghat branch, actually delivered to the ultimate buyers by the same lorry, which proceeded from Coimbatore : that the "pro forma invoice" prepared by the Coimbatore office for the stock transfers exactly tallied with the sales invoices raised by the Palghat branch on the ultimate buyers and therefore the "stock transfer" was not real and that the direct inter-State sales 'from the Coimbatore branch to the ultimate buyers in Kerala were sought to be projected as stock transfers to Palghat branch.
4. Consequently, the first respondent-assessing officer reopened the assessments for the years 1984-85 to 1986-87 revoking the exemption already granted on such stock transfers and for the years 1987-88 to 1989-90 disallowed the exemption claimed therefor.
5. Aggrieved by the denial of such exemptions, the petitioner, it is said, filed six appeals, namely, A.P. Nos. 6 to 8, 45 and 52 of 1991 and 5 of 1992 before the Deputy Commissioner (CT), Madras (North), Madras-600 006 (second respondent), 'who, however, on consideration of the materials available on record, by his composite order dated March 31, 1993, thought fit to set aside the assessment orders and remitted the matters back to the first respondent-assessing officer for consideration afresh, of course, with certain directions and observations.
6. The aggrieved petitioner filed appeals in T.A. Nos. 907 to 912 of 1993 before the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Madras-600 104 (third respondent), Along with the said appeals, applications in T.P. Nos. 196 to 201 of 1993 for stay of all further proceedings had been filed under Section 36(5) of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) (for short "the TNGST Act").
7. However, on the question of maintainability, the petitioner appeared to have invoked the inherent power of the Tribunal for grant of stay of giving effect to the composite order of remand, by virtue of the decisions in Burhanpur Tapti Mill Ltd. v. Board of Revenue [1955] 6 STC 670 (Nag), State of Orissa v. Member, Sales Tax Tribunal [1971] 28 STC 652 (Orissa), Income-tax Officer v. M.K. Mohammad Kunhi [1969] 71 ITR 815 (SC), Puran Mal Kauntia v. Income-tax Officer [1975] 98 ITR 39 (Pat), Income-tax Officer v. Khalid Mehdi Khan and Commissioner of Income-tax v. Bansi Dhar & Sons .
8. The third respondent-Tribunal, in the process of consideration of the stay applications, focussed the point for determination in paragraph 6 of the composite order dated October 28, 1993, thus :
"The only point to be determined is whether the petitioners/appellants are entitled to, for the order of stay of all further proceedings by the Assistant Commissioner (CT), Central Assessment Circle-I, under Section 36(5) of the Tamil Nadu General Sales Tax Act, 1959."
9. To the question so posed, the answer is found, after discussion, in paragraph 10, reflected as below :
"10.............the language of Section 36(5) of the Tamil Nadu General Sales Tax Act, 1959 (Act) is very clear to the effect that the Tribunal in its discretion can give direction with regard to the payment of tax before the disposal of the appeal. Under the abovesaid provision, the Tribunal is not empowered to stay the proceedings of the Assistant Commissioner (CT), Central Assessment Circle-I, Madras."
10. The Tribunal, after taking into consideration various precedents, on which implicit reliance had been placed, ultimately recorded a finding that those precedents are not at all applicable and consequently they are not helpful, as not being applicable, to the facts of the case.
11. On the merits of the case, the Tribunal recorded a finding in paragraph 16 thus :
"16. Further by the order of remand by the Deputy Commissioner (CT), Madras (North), no payment of tax by the appellant arises and no prejudice is caused to the petitioner, if stay is not granted regarding further proceedings of the Assistant Commissioner (CT), Central Assessment Circle I. Therefore no question of any balance of convenience or prejudice arises in this case."
Ultimately, the Tribunal dismissed all the stay applications, giving rise to the present actions praying for issue of writs of certiorarified mandamus to quash the same and direct the Tribunal to dispose of the same afresh in accordance with law."
12. Petitioners also filed W.M.P. Nos. 33018 to 33023 of 1993 praying for stay of all further proceedings, pending disposal of the writ petitions.
13. When these writ petitions, along with W.M.Ps., came up for admission, this Court directed Mr. T. Ayyasamy, learned Government Advocate (Taxes) to take notice for and on behalf of the respondents and he accordingly did so.
14. Mr. C. Natarajan, learned counsel appearing for the petitioner (in all these WPs), would strenuously contend that the petitioner had, of course, initially filed the stay applications under Section 36(5) of the TNGST Act, as if stay that had been prayed for was stay of recovery of tax or penalty, pending appellate proceedings, without realising that the stay that had been prayed for was stay of giving effect to the remand order ; that the mistake so committed had been later realised at the instance of the office pointing out the same ; that thereafter, a communication had been sent to the office for the invocation of inherent power, placing reliance on certain precedents quoted therein, with a request to place the stay applications before the Tribunal for disposal on merits ; that in the process of the disposal of the stay applications, the Tribunal misdirected itself in the application of law to the facts and circumstances of the case, resulting in the dismissal of the stay applications on the ground that it had no power to grant the 'relief of stay to give effect to the remand order and even otherwise, there is no warrant to grant such a relief on merits, inasmuch as no question of payment of tax by the petitioner arises ; that such a conclusion is ex facie erroneous, inasmuch as the relief so prayed for is capable of being granted, even in the absence of any express provisions therefor in the TNGST Act, by invocation of the ancillary and incidental powers, which are necessary to make the exercise of the substantive power inherent in the appellate jurisdiction fully effective, thereby causing incalculable prejudice to the petitioner and that therefore it is eminently a fit case for quashing the composite order impugned and directing the Tribunal to dispose of the stay applications on merits, in the light of the exercise of such appellate jurisdiction.
15. Mr. T. Ayyasamy, learned Government Advocate (Taxes), would, however, repelling such submissions, state that the Tribunal does not have any inherent power, as envisaged either under Section 151 of the Code of Civil Procedure, 1908 or under Section 482 of the Code of Criminal Procedure, 1974, to give the relief as sought for by the petitioner.
16. As rightly contended by learned Government Advocate (Taxes), no provision is available in the TNGST Act vesting "inherent power" in any of the authorities thereunder. However, appellate jurisdiction had been conferred upon certain authorities thereunder by way of first and second appeals. While conferring such appellate jurisdiction on such authorities, relevant provisions had been made to issue directions as regards payment of tax and penalties to have the effect of stay, pending disposal of the appeals. The stay that had been prayed for before the Tribunal was not in respect of recovery of tax and penalty, pending disposal of the appeals but was in respect of giving effect to the remand order passed by the first respondent, Assistant Commissioner. While making such a prayer, as already indicated, the initial mistake that had been committed by the petitioner by filing an application under Section 36(5) of the TNGST Act, had been subsequently rectified at the instance of the office, by a communication emanating from the petitioner, in the sense of invocation of "inherent power" for stay of giving effect to the remand order of the Assistant Commissioner. While doing so, relevant precedents, on which reliance had been placed, had also been quoted, thus making it clear that what was intended was the invocation of "ancillary or incidental power", implicit in the exercise of the appellate jurisdiction and not the "inherent power", as explicitly expressed therein. The moot question, in such a situation, that arises for consideration is as to whether the Tribunal has got such ancillary or incidental power, in exercise of its appellate jurisdiction to grant or otherwise of the stay of giving effect to the remand order in question.
17. It is not as if such a question never arose for consideration on prior occasions before superior courts of jurisdiction and the plain fact is such a question did come to be canvassed, on occasions more than one, and some of the precedents in that behalf may now be examined to solve the tangle posed in the issue in question.
18. The case in Burhanpur Tapti Mill Ltd. v. Board of Revenue, Madhya Pradesh [1955] 6 STC 670 (Nag) may be referred to first. In that case, the petitioners were assessees under the C.P. and Berar Sales Tax Act, 1947 (for short "the Act"). They were assessed to sales tax which was duly paid by them. The Commissioner of Sales Tax, however, reopened the assessment under Section 22B of the Act and remitted the case to the Regional Assistant Commissioner of Sales Tax, Amravati, for making a fresh assessment. Against the order of the Commissioner of Sales Tax, the petitioners appealed to the Board of Revenue, which is the Appellate Tribunal under Sub-section (3) of Section 22B. The petitioners made an application to the Board of Revenue to stay the proceedings before the Regional Assistant Commissioner of Sales Tax, but the application was rejected on the ground that there was no provision in the Act in regard to stay of proceedings. The aggrieved petitioners challenged the said order of the Board of Revenue before the High Court of Judicature at Nagpur in writ proceedings. Learned single Judge of that court while deciding that matter expressed thus (at pages 671-672) :
"3............'.Since an appeal is expressly provided in Sub-section (3) of Section 22B of the Sales Tax Act, it is implicit that the Board of Revenue can exercise all the powers which are necessary for the proper disposal of the appeal. The law on the subject is laid down in Maxwell on the Interpretation of Statutes, 10th Edition, on page 361 in the following terms :--
'Where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui jurisdictio explicari non potuit.'
4. The order impugned reopens the assessment on certain grounds. The Board of Revenue is empowered to decide whether the principles of assessment set down by the Commissioner of Sales Tax are proper. If there was no scope for reopening the assessment, the resultant proceedings before the Regional Assistant Commissioner of Sales Tax would be an abuse of the process of the Court. It seems axiomatic that where the Legislature invests an Appellate Tribunal with powers to prevent an injustice, it impliedly empowers it to stay the proceedings which may result in causing further mischief. In such cases the refusal to stay the proceedings may make the appeal itself nugatory, if a reassessment is made in the meantime requiring the assessee to file another and costly appeal. A view of law which leads to such onerous results is prima facie untenable.
5. It is no doubt true that in the Code of Civil Procedure, there is a specific provision, namely, Section 151, relating to the inherent powers of courts. But that section does not create any new right and only enunciates the powers which are exercisable by courts for the ends of justice or to prevent the abuse of any legal process : Hukum Chand Boid v. Kamalnand Singh ILR 33 Cal 927, followed in Nand Kishore Singh v. Ram Golam Sahu ILR 40 Cal 955. In Janki Das v. Sheo Prasad ILR 54 All. 344 and Asadali Chowdhury v. Mahamed Hossain Chowdhury ILR 43 Cal 986, it was held that the appellate court can exercise powers of stay even if order 41, Rule 5, Civil Procedure Code, is not in terms applicable. The principle underlying these decisions is that courts of law have got the power, apart from any express provision, to further the ends of justice and prevent harassment to the parties. What applies to the courts of law also applies to quasi-judicial Tribunals. Therefore, since the Board of Revenue has the power to adjudge the correctness of the impugned order, it has also the power to stay the proceedings in pursuance of that order."
19. Secondly, the case of State of Orissa v. Member, Sales Tax Tribunal [1971] 28 STC 652 (Orissa) may be adverted to. In that case, as against the orders of assessments, appeals had been preferred before the Commissioner of Sales Tax. The appeals were dismissed. Second appeals were preferred before the Sales Tax Tribunal. During the pendency of the second appeals, the Tribunal granted interim stay. Writ petition had been filed challenging the jurisdiction of the Tribunal to grant stay during the pendency of second appeals. The Orissa Sales Tax Act, 1947 (Act 14 of 1947) underwent amendments on occasions more than one, initially in the year 1955, then in the year 1957 and finally in the year 1968. Initially there was no provision conferring power on the Tribunal to grant stay. However, the provision to grant power, which had been introduced by the 1955 Act, was, however, not brought into force ; and later such a provision was, in fact, omitted by the 1957 Act. After the passing of the 1968 Act, the Commissioner alone was competent to grant stay, during the pendency of the second appeal and the Tribunal, has no such power. In such a situation, the point that arose for consideration was whether the Tribunal has the power to grant the stay.
(a) In a bid to find out an answer to such a question, their Lordships of the Division Bench of the Orissa High Court referred to the case of the Income-tax Officer, Cannanore v. M.K. Mahammed Kunhi [1969] 71 ITR 815 (SC), as that case threw light directly on the question in issue--though it arose out of the Income-tax Act, 1961.
(i) Section 254(1) of that Act deals with orders of the Appellate Tribunal. Sub-section (1.) thereof lays down that the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. Indisputably powers have not been expressly conferred upon the Appellate Tribunal to stay proceedings relating to the recovery of penalty or tax due from an assessee. Under Section 220(6), power of stay by treating the assessee, as not being in default during the pendency of an appeal has been given to the Income-tax Officer only when an appeal has been presented under Section 246 to the Appellate Assistant Commissioner. Thus, there is express provision in the Income-tax Act for stay of proceedings by the Income-tax Officer relating to recovery of penalty and tax when first appeal is pending, but there is no corresponding express provision to grant stay when the second appeal is pending before the Appellate Tribunal.
(ii) Despite the absence of such express provision for grant of stay, their Lordships held that the Tribunal had implied powers to grant stay. The logic through which such a conclusion was reached is based on the basic principle to be found in Maxwell on Interpretation of Statutes, Eleventh Edition, at page 350. The statement is that "where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means ; as are essentially necessary to its execution".
(iii) Their Lordships applied the above principle to the wide, powers exercised by the Tribunal under Section 254(1), They concluded thus :
"If the Income-tax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Appellate Tribunal is entirely helpless in the matter of stay of recovery, the entire purpose of the appeal can be defeated if ultimately the orders of the departmental authorities are set aside. It is difficult to conceive that the Legislature should have left the entire matter to the administrative authorities to make such orders as they choose to pass in exercise of unfettered discretion. The assessee, as has been pointed out before, has no right to even move an application when an appeal is pending before the Appellate Tribunal under Section 220(6) and it is only at the earlier stage of appeal before the Appellate Assistant Commissioner that the statute provides for such a matter being dealt with by the Income-tax Officer."
(iv) Their Lordships' ultimate conclusion was summed up in paragraph 8 as follows :
"In our opinion the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when Section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner, but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It could well be said that when Section 254 confers appellate jurisdiction, it impliedly grants the power, of doing all such acts, or employing such mean's, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory."
(b) After penning down the ultimate conclusion of their Lordships of the Supreme Court, the Division Bench of the Orissa High Court deduced the following two propositions :
(i) Where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts or employing such means as are essentially necessary to its execution. This implied power is incidental and ancillary to the exercise of the appellate jurisdiction.
(ii) If, however, the statute confers express power on any authority to deal with a particular contingency, then by necessary implication that particular power is to be taken as excluded from the ambit of implied power. In other words, the theory of implied powers cannot be invoked when express jurisdiction has been conferred on any authority to exercise a particular power.
20. Coming to the facts of the case on hand, as already adverted to, stay of giving effect to the remand order had alone been prayed for on all those stay applications and nothing more. Such a relief is capable of being granted only by the invocation of the implied or incidental or ancillary power, implicit in the exercise of the appellate jurisdiction conferred on the Tribunal, if the facts and circumstances of the case so warrant, and to say that the Tribunal has no such power, as had been done here, cannot at all be reflecting the reality of the situation, in the light of the law, as laid down by the superior courts cited supra. The resultant position would be that the composite order impugned has to be necessarily quashed and the same is accordingly quashed.
21. If done so, it would result in remitting the matter back to the Tribunal for consideration and disposal afresh. Such a ritualistic exercise, if undertaken, is likely to result in causing prejudice, not only to the petitioner, but also to the Revenue, in the sense of brooking further delay. The best course to be adopted, in such a situation, is to issue a direction not to stall or prevent further proceedings of the assessments in question by the assessing officer (second respondent), pursuant to the orders of remand ; instead, he may be allowed to proceed with the assessments, till up to the stage of passing of final orders thereon ; and await the outcome of the Tribunal in the second appeals, that are stated to be pending. If the outcome of the said appeals pending before the Tribunal ends in favour of the department, then there may not be any impediment to passing final orders on the assessments and issuance of demand notices therefor for payment of tax due, if any. If, on the other hand, the said appeals end in favour of the assessee, it goes without saying that there may not be any necessity to pass any orders, afresh on those assessments, pursuant to the direction of the remand order.
22. With the directions and observations as above, all these writ petitions are disposed of. Consequently, all W.M.Ps. are dismissed. There shall, however, be no order as to costs, in the circumstances.