Gauhati High Court
Monoranjan Chakraborty vs State Of Tripura And Anr. on 5 December, 1989
Equivalent citations: [1991]81STC291(GAUHATI)
JUDGMENT B.P. Saraf, J.
1. The petitioners in this batch of writ petitions have challenged the vires of the "first two provisos" to Section 20 and the "proviso" to Section 21 of the Tripura Sales Tax Act, 1976 (hereinafter referred to as "the Act"), as amended by the Tripura Sales Tax (Third Amendment) Act, 1984 (hereinafter the "1984 Amendment Act"). Though the facts in different writ petitions are slightly different, as the question of law that arises for consideration is the same, all these writ petitions were heard together and are being decided by this common judgment.
2. The relevant facts common to all these petitions, briefly stated, are as follows : The petitioners are registered dealers under the Act. They have been assessed by the Superintendent of Taxes, who is the assessing authority under the Act, in respect of their turnover for different return periods and taxes payable determined on the basis thereof. While making the assessments, the Superintendent of Taxes did not accept the turnover disclosed by them in their returns or account books and estimated the same at much higher figures. As a result, in each assessment, tax much in excess of what was payable according to the dealer, was determined as payable and demand was raised in respect thereof. In some cases, penalty had also been levied in addition to tax.
3. Some of the petitioners filed appeals against such orders of assessment to the Assistant Commissioner of Taxes under Section 20 of the Act. Along with the appeals, they filed petitions for admission of the appeal without payment of the disputed amount of tax and/or penalty. In most of the cases the Assistant Commissioner directed the petitioners to deposit 50 per cent of the amount of tax or penalty for admission of the appeal in view of the "first and second proviso" to Section 20 of the Act as inserted by the 1984 Amendment Act, hereinafter the "appeal provisos" which now prescribes a statutory minimum deposit of 50 per cent of the tax or penalty for entertainment of the appeal and restricts the discretion of the appellate authority in the matter of stay to the balance 50 per cent only. The petitioners, in some of the cases, preferred further appeals to the Tribunal against such orders but the Tribunal also expressed its inability to do anything in the matter in view of the specific provision contained in the appeal proviso prescribing statutory minimum deposit. Left with no remedy, the petitioners filed the present writ petitions challenging the validity of orders of assessment and penalty and the appeal provisos on the ground of violation of the rights guaranteed under Articles 14 and 19 of the Constitution. The petitioners in some of the cases directly filed writ petitions before this Court challenging the levy of tax and penalty and the vires of the said provisos without going through the formality of filing appeal which could not be entertained without payment of tax or penalty in view of the said provisos. The petitioners in some of the civil rules sought to file revision petitions under Sub-section (2) of Section 21 of the Act against the orders of assessment and penalty but the newly inserted proviso to the said section being similar to the second proviso to Section 20 of the Act stood in their way. These petitioners have challenged the vires of the proviso to Sub-section (2) of Section 21 of the Act, hereinafter the "revision proviso". The petitioners in some of the cases sought to file appeal and the same having not been entertained in view of the appeal proviso filed revision petitions before the Commissioner which also could not be admitted by the Commissioner because of the revision proviso. Having no alternative the petitioners challenged both the appeal provisos and the revision proviso by filing the present writ petitions.
4. Before dealing with the various contentions of the parties, we may refer to the relevant provisions of the Act. Section 20 of the Act provides for an appeal against an order of assessment or penalty passed under the Act. This section was amended by the 1984 Amendment Act with effect from July 1, 1984. Originally, the relevant portion of Section 20(1) stood in the following terms :
"20. Appeal.--(1) Any dealer objecting to an order of assessment or penalty passed under this Act, may, within thirty days from the date of the service of such order, appeal to the prescribed authority against such assessment or penalty :
Provided that no appeal shall be entertained by the said authority unless he is satisfied that the amount of tax assessed or the penalty levied, if not otherwise directed by him, has been paid."
5. By the 1984 Amendment Act in the first proviso the words "if not otherwise directed by him" were deleted and a new proviso was inserted after the first proviso. The relevant portion as amended, reads as follows :
"20. Appeal.--(1) Any dealer objecting to an order of assessment or penalty passed under this Act, may, within thirty days from the date of the service of such order, appeal to the prescribed authority against such assessment or penalty :
Provided that no appeal shall be entertained, by the said authority unless he is satisfied that the amount of tax assessed or the penalty levied has been paid:"
Provided further that the authority before whom an appeal has been filed may, for reasons to be recorded in writing, direct the appellant to pay any lesser amount which shall not be less than fifty per cent of the tax assessed or fifty per cent of the penalty levied and, on payment of the amount so directed, entertain the appeal."
6. Similarly Sub-section (2) of Section 21 of the Act provides for revision by the Commissioner of any order passed by any authorities subordinate to him. Any dealer aggrieved by the order may move the Commissioner for revision under the said provision by filing a petition within 90 days from the date of the communication of the order in question. It reads :
"21. (2) In the case of any order other than an order to which Subsection (1) applies, passed by any person appointed under Sub-section (1) of Section 4 to assist him, the Commissioner may, either of his own motion or on a petition by a dealer for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such enquiry or cause such enquiry to be made, and subject to the provisions of this Act, may pass such orders thereon, not being an order prejudicial to the dealer, as he thinks fit."
7. By the 1984 Amendment Act the following proviso was inserted after Sub-section (2) :
"Provided that no petition for revision by a dealer shall be admitted by the Commissioner unless at least fifty per cent of the amount of tax assessed, or as the case may be, fifty per cent of the amount of penalty levied has been paid by the dealer where the order against which revision is filed relates to assessment of tax or imposition of penalty."
From a reading of the aforesaid provisions relating to appeal and revision contained in Sections 20 and 21 of the Act, the following position emerges :
(1) Prior to the 1984 Amendment Act, any dealer aggrieved by an order of assessment or penalty could file an appeal before the appellate authority. Though before filing the appeal he was required to deposit the amount of tax or penalty for entertainment of the appeal, full discretion was vested in the appellate authority to admit an appeal without any such deposit or to ask the dealer to deposit such portion of it as it thought fit depending on the facts and circumstances of each case.
(2) The 1984 Amendment Act took away the discretion of the appellate authority so far as 50 per cent of the tax or penalty is concerned by providing that he shall not have the power to issue any direction to a dealer for payment of any amount lesser than 50 per cent. In other words, for availing the right of appeal, minimum deposit of 50 per cent of the tax or penalty was made a statutory requirement and the discretion vested in the appellate authority to relax the requirement of deposit of tax or penalty as a condition precedent was restricted to the balance 50 per cent only.
(3) So far as the remedy by way of revision is concerned, prior to 1984 Amendment Act the remedy was available to an aggrieved dealer without any precondition of payment of tax or penalty. However, by the 1984 Amendment Act, a new condition of payment of fifty per cent of the amount of tax or penalty was introduced for admission of the revision petition by the Commissioner also.
(4) No authority under the Act, including the State Government itself, has been vested with any discretion to relax the aforesaid mandatory requirements.
8. The result of the aforesaid amendment, in substance, is that no right is available to a dealer aggrieved by an order of assessment or penalty to approach any higher authority under the Act by way of appeal or revision unless he is in a position to deposit at least 50 per cent of the amount of tax or penalty, because the provisions incorporated in Sections 20 and 21 by the 1984 Amendment Act specifically provide so. The only relaxation he can get is in payment of the balance 50 per cent because in respect thereof the appellate and the revisional authority still have a discretion to pass suitable orders. The petitioners have challenged the aforesaid provisions, which, according to them, have rendered the right of appeal or revision virtually nugatory. It is contended that such a law is violative of the fundamental rights guaranteed under Articles 14 and 19(1)(g) and 21 of the Constitution of India.
9. We have heard Mr. B. Das, Mr. S. Deb, Mr. A.M. Lodh and Mr. A.K. Bhowmik, learned counsel for the petitioners. Their submissions can be summarised as follows : The impugned provisions making the right of appeal and revision conditional on making statutory minimum deposit of 50 per cent of the tax or penalty, amounts to virtual negation of the right of appeal or revision which was available to a dealer aggrieved by orders passed by the Superintendent of Taxes. The impugned provisions are excessively onerous and harsh and cannot be termed as good law within the meaning of Article 265 of the Constitution. In many cases, the business of the dealer may be ruined by the Superintendent of Taxes by passing an order raising excessively high demand on account of tax or penalty quite beyond the means of the dealer concerned if such dealer is not allowed to challenge the same in any event without making the statutory minimum deposit. It was submitted that levy of arbitrary, illegal and excessively high tax or penalty by the assessing officers is not unknown or uncommon. The orders impugned in the writ petition would even testify this statement. Even in such cases, the appellate or revisional authority, even though prima facie satisfied that the demand is not tenable, cannot give any redress to the aggrieved dealer unless he has the capacity to deposit at least 50 per cent of the demand. Such provision of law not only violates Articles 14 and 19 but having a serious effect on the livelihood of the tax-payers, is also violative of the provisions of Article 21 of the Constitution of India.
10. Mr. S. Barman Roy, learned Advocate-General for the State of Tripura, refuted the submissions of the petitioners. His contention was that the right of appeal is not an inherent right. It is only a creation of statute. It is for the Legislature to decide whether it wants to give a right of appeal or not, or to give it subject to conditions and restrictions. A tax law cannot be held to be violative of Article 14, 19(1)(g) or 21 of the Constitution of India on the ground that it does not provide for appeal against orders passed under it or imposes stringent conditions for availing the same. The contention of the learned Advocate-General, in brief, is that it being the prerogative of the Legislature to grant right of appeal or not to grant it, the law cannot be challenged as ultra vires Articles 14 and 19(1)(g) on the ground that it did not provide for any appeal or the appeal provided was illusory.
11. We have considered the submissions of the learned counsel for the petitioners as well as the learned Advocate-General for the State of Tripura. The nature of the right of appeal is no more res integra. It is well-settled by a catena of decisions that it is not an inherent right. It is a creature of statute and is, therefore, subject to conditions and restrictions imposed by it. It is open to the Legislature to give or not to give a right of appeal against decisions made by the authorities under the Act and the enactment on that account, in the absence of anything more, cannot be condemned as unconstitutional. The real controversy, in the present case, is regarding the validity of the Tripura Sales Tax Act itself (as amended by the 1984 Amendment Act) which confers powers on the Superintendent of Taxes to assess the turnover of a dealer, levy tax or impose penalty on a dealer without any effective remedy to approach the higher authorities against such levy of tax or imposition of penalty. The question for determination, therefore, is that in such a case if no right of appeal is given against such levy of tax or penalty or it is made subject to such stringent, unreasonable and impracticable restrictions and conditions so as to render it nugatory or illusory, whether the law can be held to be arbitrary and violative of the fundamental rights guaranteed under Articles 14 and 19(1)(g) of the Constitution. The determination of the question will depend upon the scope and ambit of Articles 14 and 19 of the Constitution.
12. It is well-settled by now that taxing statutes are not beyond the pale of limitations imposed by Articles 14 and 19 of the Constitution, If a taxing law infringes the provisions of Article 14 or 19, it must be struck down as unconstitutional. Article 14 guarantees right to equality. It provides :
"The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India."
13. Taxation law is no exception to the doctrine of equal protection. Besides, the guarantee of equal protection applies against substantive as well as procedural laws.
14. The content and reach of Article 14 today is no more confined to "classification". As observed by the Supreme Court in E.P. Royappa v. State of Tamil Nadu (1974) 4 SCC 3 :
"Equality is a dynamic concept with many aspects and dimensions and it cannot be 'cribbed, cabined and confined' within traditional and doctrinaire limits. From a positivistic point of view, equality is antithetic to arbitrariness. In fact equality and arbitrariness are sworn enemies ; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an Act is arbitrary, it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Article 14."
15. Article 14 thus strikes at arbitrariness and ensures fairness and equality of treatment. As observed by Bhagwati, J. (as his Lordship then was) in Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489 :
"...............arbitrariness is antithetic of Article 14."
A legislation which does not contain any provision which is directly discriminatory may yet offend against the guarantee of equal protection if it confers upon the executive or administrative authority an unguided or uncontrolled discretionary power in the matter of application of the law.
16. The above interpretation of Article 14 was followed in the cases of Maneka Gandhi v. Union of India (1978) 1 SCC 248, Ramana Dayaram Shetty v. International Airport Authority of India [1979] 3 SCC 489, Ajay Hasia v. Khalid Mujib Sehravardi (1981) 1 SCC 722. In Maneka Gandhi's case (1978) 1 SCC 248, it was observed :
"Now, the question immediately arises as to what is the requirement of Article 14 : What is the content and reach of the great equalising principle enunciated in this article ? There can be no doubt that it is a founding faith of the Constitution. It is indeed the pillar on which rests securely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or lexicographic approach. No attempt should be made to truncate its all-embracing scope and meaning, for to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrinaire limits........... Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Article 14 like a brooding omnipresence."
17. In Ajay Hasia's case (1981) 1 SCC 722, it was observed :
"It must, therefore, now be taken to be well-settled that what Article 14 strikes at is arbitrariness because an action that is arbitrary, must necessarily involve negation of equality. The doctrine of classification which is evolved by the courts is not paraphrase of Article 14 nor is it the objective and end of that article. It is merely a judicial formula for determining whether the legislative or executive action in question is arbitrary and, therefore, constituting denial of equality. If the classification is not reasonable and does not satisfy the two conditions referred to above, the impugned legislative or executive action would plainly be arbitrary and the guarantee of equality under Article 14 would be breached. Wherever therefore there is arbitrariness in State action whether it be of the Legislature or of the executive or of an 'authority' under Article 12, Article 14 immediately springs into action and strikes down such State action. In fact, the concept of reasonableness and non-arbitrariness pervades the entire constitutional scheme and is a golden thread which runs through the whole of the fabric of the Constitution."
18. Maneka Gandhi's case (1978) 1 SCC 248, is also an authority for the proposition that the guarantee against arbitrariness and discrimination contained in Article 14 is not restricted to executive action unsupported by law but it is also available against the arbitrary laws. In other words, the law-making shall also be subject to the restrictions imposed by Article 14. A law which is not reasonable, fair and just may also be held to be violative of Article 14.
19. The law laid down by the aforesaid decisions still holds the field. As was observed by Sen, J., in Express Newspapers case (1986) 1 SCC 133 :
"It is rather late in the day to question the correctness of the landmark decision in Maneka Gandhi's case (1978) 1 SCC 248 and the innovative construction placed by Bhagwati, J., on Article 14 in the three cases of Royappa (1974) 4 SCC 3, Maneka Gandhi (1978) 1 SCC 248 and International Airport Authority (1979) 3 SCC 489, which have evolved new dimensions in judicial process."
20. Having considered the content and reach of Article 14 and having grasped the concept that arbitrariness is antithetic of Article 14 we have to proceed to see whether the Tripura Sales Tax Act can be held to be unconstitutional being violative of Article 14 as it does not provide any effective right of appeal, revision or any other remedy to a dealer aggrieved by arbitrary or illegal order levying tax or penalty passed under the Act. For this purpose we shall have to find out the possible consequences and effect of the absence of such remedy. Whether absence of effective remedy in the instant case will have the effect of rendering the whole procedure of levy of tax and imposition of penalty under the Act oppressive and uncontrolled, If we come to such a conclusion, the statute may have to be declared unconstitutional.
21. It may be appropriate to observe at this stage that there is no dispute about the proposition that absence of corrective machinery by way of appeal or revision, per se will not make a provision unreasonable. It will depend upon the scheme of the Act, the nature of powers vested in the authorities, the effect and consequences of the orders passed under the Act on the person concerned. All these are the relevant factors which shall have to be taken into consideration in arriving at the aforesaid conclusion. If it is found that very serious consequences might flow in the absence of adequate and effective corrective machinery by way of appeal or revision, the law can be held to be harsh, oppressive and unjust and violative of Article 14. In fact, it is not the phraseology of (he statute that governs the situation but it is the effect of the law that is decisive. If the effect is to render it arbitrary and oppressive, Article 14 will be attracted.
22. In this connection, we may refer to a decision of the Supreme Court in K.T. Moopil Nair v. State of Kerala AIR 1961 SC 552, wherein the provisions of the Travancore-Cochin Land Tax Act (15 of 1955) were struck down on the ground that it was " confiscatory in character and effect". The aforesaid Act, inter alia, empowered the Government to make a provisional assessment on the basis of tax payable by a holder of unsecured land. No right of appeal was provided to the assessee as might be aggrieved by the order of assessment. Dealing with the consequences, it was observed :
"That the provisions aforesaid of the impugned Act are in their effect confiscatory is clear on their face. Taking the extreme case............ The petitioner is making an income of Rs. 3,100 per year out of the forests..........his liability for taxation in respect of his forest land amounts to Rs. 54,000 whereas his annual income for the time being is only Rs. 3,100............it may be assumed that he will not be in a position to pay the deficit of about Rs. 51,000 every year in respect of the forests in his possession. The legal consequences of his making a default in the payment of the aforesaid sum of money will be that the money will be realised by the coercive processes of law. One can easily imagine that the property may be sold at auction and may not fetch even the amount for the realisation of which it may be proposed to be sold at public auction. In the absence of a bidder forthcoming to bid for the offset amount, the State ordinarily becomes the auction purchaser for the realisation of the outstanding taxes. It is clear, therefore, that apart from being discriminatory..........the Act is clearly confiscatory in character and effect. It is not even necessary to tear the veil, as was suggested in the course of the argument, to arrive at the conclusion that the Act has that unconstitutional effect....."
23. In Babubhai & Co. v. State of Gujarat [1985] 2 SCC 732, at 736, the Supreme Court observed :
"It is not possible to formulate an effective test to determine in which cases absence of corrective machinery by way of appeal or revision to a superior authority to rectify an adverse order passed by an authority or body on whom the power is conferred may indicate that the power so conferred is unreasonable or arbitrary...................."
24. It is thus not possible to formulate an effective test to determine in which cases absence of corrective machinery by way of appeal or revision would make the power conferred on the authorities unreasonable or arbitrary and render the provision invalid. It will depend on the cumulative effect of a number of factors. One of the relevant factors to be considered as indicated above is whether the absence of an appeal is likely to make the whole procedure oppressive and arbitrary or render the statutory provisions confiscatory in character and effect.
25. Let us, therefore, turn to the scheme of the Act and the relevant provisions thereof. The Act was enacted with a view to levying tax on the sales of certain goods in Tripura. Section 3, which is the charging section, makes every dealer in taxable goods liable to pay tax on its turnover at the rates specified in the Schedule to the Act. Taxable goods have been specified in the Schedule. Section 4 deals with "taxing authorities". It provides for appointment of a Commissioner of Taxes and such other persons as the State Government might think fit. It also provides for constitution of a Tribunal called the Tripura Sales Tax Tribunal. All the powers under the Act are vested in the Commissioner except the power of hearing second appeal and appeal against order passed by the Commissioner which has been vested in the Tribunal. The Commissioner has been empowered to delegate his powers to any of the persons appointed under the Act to assist him subject, however, to such restrictions and conditions as may be prescribed. The various authorities to assist the Commissioner have been prescribed by the Rules. Rule 4 provides that there shall be the following authorities to assist the Commissioner :
(i) Assistant Commissioner of Taxes.
(ii) Superintendent of Taxes.
(iii) Inspector of Taxes.
(iv) Any other person appointed as such by the State Government.
26. Rule 49 of the Rules prescribes that the powers to call for returns, to make assessment, to cancel or rectify them, to impose penalty and to order maintenance of accounts shall not be delegated by the Commissioner to any officer below the rank of Superintendent. Thus the Superintendent is the lowest in the hierarchy of officers to whom the power to make assessment and impose penalty can be delegated. By a notification made in this behalf, the Commissioner of Taxes has delegated all his powers in regard to matters referred to in Rule 49 above, including the power to make assessment and impose the penalty, to the Superintendent of Taxes. The Superintendent of Taxes, therefore, is the sole authority to make assessment and impose penalty. Section 9 of the Act deals with assessment. Under this section, the assessing officer, namely, Superintendent of Taxes, may make the assessment on the basis of the return, or on the basis of the evidence adduced or in the event of failure of a dealer to comply with the terms of the notice calling for return or production of accounts, etc., to the best of his judgment, and to determine the tax payable on the basis of such assessment. Under Section 11 of the Act he has been given further power to make reassessment of the turnover in cases of evasion, etc. Under Section 13, he is also empowered to levy penalty for failure to submit return in time, for failure to comply with the notice for production of books of account, etc., or for concealment of the particulars of turnover or for evasion of any liability to pay tax. Such penalty may be imposed on a dealer in addition to tax payable by him. The maximum amount of penalty that can be imposed is one and a half times of the amount of tax. Section 24 of the Act provides, inter alia, for payment of tax falling due on assessment. It requires that such tax should be paid by the date specified in the notice of demand or where no such date is specified within 30 days from the date of service thereof. There are provisions for charging of interest from a dealer on account of delayed payment of tax. In the event of default of payment of any dues, the Superintendent of Taxes may also levy penalty to the extent of 100 per cent of the amount due. The amount remaining outstanding from a dealer beyond the due date might be realised under Section 26 as arrears of land revenue by taking recourse to coercive measures. By insertion of a new section, namely, Section 26A by the Tripura Sales Tax (Second Amendment) Act, 1981, a special mode of recovery has been provided in addition to the one provided by Section 26. By this section the authorities have been vested with the discretion to direct a third person to pay the amount due from any dealer towards the latter's tax liability directly to the authorities under the Act and not to the dealer. This is the power of initiating what is commonly known as "garnishee proceeding". Section 29 of the Act empowers the authority to prosecute a dealer for various acts of omission or commission which include "failure to pay within time allowed any tax assessed or any penalty levied on him".
27. Appeal lies to the Assistant Commissioner of Taxes against an order of assessment or penalty passed by the Superintendent of Taxes ; second appeal lies to the Tribunal. Besides, a dealer aggrieved by an order might also approach the Commissioner of Taxes in his revisional jurisdiction. However, as elaborately discussed above, the power of appeal and revision has now been made subject to statutory minimum deposit of 50 per cent of the tax or penalty. Unless such a deposit can be made, the admitted position is that a dealer aggrieved by an order of assessment or penalty cannot approach any authority under the Act and cannot get any redress irrespective of the merits of his case and the nature of the order passed against him.
28. From a perusal of the scheme of the Act and its various provisions, it is clear that very wide powers have been conferred on the Superintendent of Taxes in the matter of levy of tax and imposition of penalty on a dealer. The discretion vested in him is enormous. The consequences and effect of an order of assessment or penalty passed by him are very serious. If a Superintendent of Taxes makes an assessment which is arbitrary and illegal and exceptionally or exorbitantly high demand is raised on the basis of such assessment, the immediate consequences and effect will be that the dealer shall have to pay within the time specified in the notice of demand or within 30 days from the service thereof at least 50 per cent of the demand so made. Without making such a deposit, he cannot even approach any authority under the Act, low or high, to seek any relief against such arbitrary or illegal order. Cases where huge demand had been raised on account of tax or penalty by erroneous interpretation of law or by arbitrary exercise of powers, are not few or far between. Day in and day out one comes across such cases. In any event, the number of cases where such things happen is not material for the present purpose. That may be a matter for the higher authorities under the Act to look into or Commissions and Committees set up for the purpose to investigate and report. For our purpose, it is sufficient to note that such things do happen. In the last one week in the course of hearing of writ petitions directed against sales tax assessments, we ourselves have come across a number of cases where huge demands had been raised on account of tax and penalty which could not be sustained. Sales tax was levied on betel nuts holding it to be taxable, which has been held by this Court to be non-taxable. Similarly tax was levied on cardamom, coal-tar pea gravels and certain other goods which all were later held to be non-taxable. We also came across cases where assessments were made without any basis or material and huge demands raised on the basis thereof. We have noticed cases where sales tax was levied on transactions which did not involve "sale". Sales tax was levied on newly set up industries whereas the sales made by them had been exempted from tax for a specified period. We had to set aside all those assessments. When such is the undisputed and apparent state of affairs and so vast are the powers conferred on the Superintendent of Taxes in the matter of levy of tax and imposition of penalty, one can easily visualise the serious consequences that might flow in the absence of adequate and effective corrective machinery. Take for instance, a petty dealer, the total worth of whose assets does not exceed even Rs. 25,000. He might be assessed under the Act. While making assessments, certain non-taxable goods might be treated as taxable. Arbitrary or exorbitant estimation may be made of his turnover. Huge demand on account of tax and penalty, say amounting to Rs. 1 lakh is raised against him on the basis of such assessment Let us visualise what will be the consequences and effect. What will happen to such a dealer ? The dealer concerned cannot challenge the order passed by the Superintendent of Taxes, even if on the face of it, it is illegal or arbitrary, unless he can arrange to deposit at least Rs. 50,000 because till he can do so he can neither approach the Assistant Commissioner of Taxes in appeal nor the Commissioner of Taxes in revision. No other corrective machinery has been provided. What will be the fate of such a dealer ? He might be ruined. The order passed by the Superintendent of Taxes, irrespective of its merits, would become final. Coercive measures would be taken against him for recovery of the amount of Rs. 1 lakh ; his properties would be attached and put to auction ; his business would be closed ; his family will be left to starve without any means of livelihood ; and he himself might even be put in civil prison for recovery of the balance demand that would remain outstanding even after auction of all his properties. All that will happen only as the dealer concerned could not avail of the right of appeal or revision because of the unreasonable and unpracticable stringent requirement of statutory minimum deposit of 50 per cent of tax or penalty, which has been made a condition precedent for availing that right. Had he been allowed to approach the appellate or revisional authorities, he would have filed an appeal, satisfied the appellate authority about the prima facie merits of his case, got the appeal admitted without payment of tax, and ultimately got the demand set aside as being arbitrary and illegal. Very many other illustrations can be given where similar serious consequences will follow. But there is no use of multiplying them. Suffice it to say that no authority howsoever high cannot be left with such a vast discretionary power without any remedy against its abuse or misuse. The Legislature cannot be oblivious of the possible abuse or misuse or improper exercise of such power and refuse to provide necessary safeguards against it.
29. It was submitted before us on behalf of the State that the power vested in the Superintendent of Taxes to levy tax or impose penalty being quasi-judicial power there is no reason for apprehension that the same would be abused or misused or exercised arbitrarily. In other words, the argument was that the court should not take into account the hypothetical cases of abuse or misuse of powers by the authority which is required to act quasi-judicially and should presume that they would act strictly in accordance with law. The argument is attractive. We wish we could have accepted the same. But knowing the things as they are, it is not only difficult but just impossible to accept it As indicated above, we are not to go far in search of cases of arbitrary or illegal assessments. All the assessments which are subject-matter in the present batch of writ petitions have been challenged to be so. We had ourselves heard a number of other writ petitions during the last one week where we found the assessments to be arbitrary, erroneous or illegal and set aside the same. Besides, we fail to appreciate the aforesaid submissions for another reason also. If the Legislature wanted to repose absolute trust and confidence in the Superintendent of Taxes in the matter of levy of tax and imposition of penalty it would not have provided any appeal or revision at all against the same. Evidently, the Legislature was conscious of the inherent dangers of vesting such absolute power in any authority and with a view to provide a check on the exercise of discretionary powers by such authorities, corrective remedy by way of appeal and revision was provided. If that be so, why this remedy is restricted only to those well-to-do or financially sound dealers who can make statutory minimum deposit of 50 per cent of the tax or penalty ? Why classify the dealers, who are equally aggrieved by the levy and imposition of tax or penalty by the very same authority into two categories--one who are financially capable of depositing 50 per cent thereof in the interim and the other who are not so capable ? What is the basis of such a classification ? What is the rationale behind it ? Is it not on the face of it discriminatory ? We, however, do not propose to go into all as we are satisfied in the light of the aforesaid discussion that the power to levy tax or impose penalty conferred on the Superintendent of Taxes without any corrective machinery is most unreasonable. Very wide powers have been granted without any check or control on the exercise thereof. There is a great chance of its being abused. If abused, it can cause havoc to the dealer concerned. Apparently the whole procedure of levy of tax and imposition of penalty without an effective right of appeal, in the instant case, is most oppressive and uncontrolled. The consequences are devastating on the dealers. It is clearly confiscatory in character and effect.
30. Absence of appeal, in the instant case, in our opinion, has made the whole procedure of levy of tax and imposition of penalty highly oppressive and arbitrary. Such law, therefore, has to be held to be harsh, unjust and violative of Article 14. We, therefore, hold that the first and the second provisos to Sub-section (1) of Section 20 and the proviso to Sub-section (2) of Section 21 of the Tripura Sales Tax Act, 1976, are ultra vires Article 14 of the Constitution and strike down the same.
31. In view of this conclusion of ours, we are of the opinion that in the instant case, it is not necessary to go into the scope and ambit of Article 19(1)(g) of the Constitution and to decide whether the impugned provisos violate the aforesaid provision of the Constitution also. So far as the question of violation of Article 21 is concerned, we may like to observe that in a recent decision in Sodon Singh v. Delhi Municipal Corporation AIR 1989 SC 1988, it has been clearly held by the Supreme Court that Article 21 is not attracted in a case of trade or business, either big or small. The right to carry on any trade or business and the concept of life and personal liberty within Article 21 are too remote to be connected together. In view of the aforesaid decision we are of the opinion that violation of Article 19(1)(g) of the Constitution does not, in the absence of anything more, amount to violation of Article 21 also. The contentions based on violation of Article 21 are, therefore, rejected.
32. In view of our decision indicated above, all the writ petitions are allowed. In cases, where the petitioners had filed appeals and revisions, which were not admitted or dismissed, we direct that all these shall be restored to file, admitted and heard on merits. In cases where no appeal or revision was filed in view of the impugned provisos, the petitioners shall be allowed to prefer appeal or revision within the prescribed time which shall be computed from the date of this decision in the present writ petitions.
33. Before parting with case, we like to put on record the alternative submission of the counsel for the petitioners that if the impugned provisos are not held to be ultra vires, each of the impugned assessments, which have also been challenged in this batch of writ petitions, should be examined with a view to decide whether the same are arbitrary, illegal or violative of principles of natural justice and liable to be set aside and quashed. We find force in the submission of the counsel. However, in view of the fact that we have held the impugned appeal provisos and revision proviso as ultra vires Article 14 and directed restoration of appeals/ revisions earlier filed for hearing on merits and allowed filing of appeal, etc., where it had not been done earlier, it is not necessary to do so.
34. In the result, the writ petitions arc allowed. We make no order as to costs.
J.M. Srivastava, J.
35. I agree.