Karnataka High Court
Commercial Tax Officer, Xii Circle, ... vs Swathi Traders on 21 January, 1991
Equivalent citations: ILR1991KAR582
Author: Shivaraj Patil
Bench: S. Mohan, Shivaraj V. Patil
JUDGMENT Shivaraj Patil, J.
1. All these appeals are directed against the orders passed by the learned single Judge in the respective writ petitions striking down sub-section (3A) and sub-section (5) of section 22 of the Karnataka Sales Tax Act, 1957, as unconstitutional and ultra vires. The respondents in the writ petitions are the appellants in these appeals. Since common questions of law arise for determination in these appeals, they are disposed of by this common judgment.
2. The writ petitioners sought for a writ of certiorari praying to quash the amended provisions of sub-section (3A) and sub-section (5) of section 22 of the Karnataka Sales Tax Act, 1957 (hereinafter called "the Act") as amended by Karnataka Act No. 15 of 1988. By the said Amendment Act 15 of 1988, the power of the Karnataka Appellate Tribunal granting stay orders in appeals filed before the Tribunal arising out of the appeals disposed of by the appellate authority, i.e., Deputy Commissioner, Commercial Taxes (Appeals), is taken away.
3. The petitioners in the writ petitions principally contended that having provided for the appeal to the Appellate Tribunal, the Legislature could not have taken away the power to grant an interim order. The learned single Judge accepting this contention allowed the writ petitions and has struck down the amended provisions of sub-section (3A) and sub-section (5) of section 22 of the Act. Hence these appeals are filed by the respondents in the writ petitions challenging the orders of the learned single Judge.
4. The learned Government Advocate appearing for the appellants urged :
(i) an appeal is a mere creature of the statute and the Legislature which confers such a right can equally take it away or prescribe conditions for the exercise of the right which may be onerous or otherwise;
(ii) the right of appeal may exist even without the power of granting stay because by taking away the power of granting stay the right of appeal is not taken away and the right of appeal is neither a fundamental nor a constitutional right;
(iii) the learned single Judge has mainly relied on the decision of the Supreme Court in Mohammed Kunhi's case [1969] 71 ITR 815, but has failed to see that the facts of that case were different;
(iv) the amended provisions in question were not at all opposed to article 14 of the Constitution of India. Power of granting stay order is taken away only in the case of second appeals arising out of the orders passed under section 20 of the Act and not in the case of appeals filed against the orders passed under section 21 of the Act.
5. In opposition the learned counsel appearing for the writ petitioners, the respondents herein, argued in support and justification of the orders passed by the learned single Judge. They reiterated the contentions urged before the learned single Judge. Learned counsel for the writ petitioners relied on the following decisions in support of their contentions :
(i) Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh [1953] 4 STC 114 (SC).
(ii) Garikapati Veeraya v. Subbiah Choudhry .
(iii) Collector of Customs and Excise v. Bava .
(iv) Income-tax Officer v. Mohammed Kunhi [1969] 71 ITR 815 (SC).
(v) Basant Kumari v. State of Madhya Pradesh .
In the case of Hoosein Kasam Dada [1953] 4 STC 114 (SC), proviso to section 22(1) of the C.P. and Berar Sales Tax Act, 1947, as it stood prior to its amendment in 1949 came to be considered. An aggrieved assessee was entitled to file an appeal provided he paid such amount of tax as he might admit to be due from him. Under the proviso to section 22(1) after amendment, the appeal had to be accompanied by satisfactory proof of payment of tax in respect of which the appeal had been preferred. The assessee contended that since the amendment had not been made retrospective, his right of appeal under the original section 22(1) remained unaffected and as he did not admit anything due, he was not liable to deposit any sum before preferring the appeal to the Sales Tax Commissioner. Under the circumstances, on the facts of that case the Supreme Court held that the condition or the restriction imposed by the amendment could not affect the assesse's right of appeal without depositing tax in respect of which the appeal had been preferred.
6. In the case of Garikapati Veeraya , what was considered was whether the right of appeal which accrued to the litigant on the date of institution of the suit, is preserved to the parties till the rest of the career of the suit ? The Supreme Court again on the facts of that case held that the right of the plaintiff was governed by the law prevailing on the date of institution of the suit in the year 1949 which provided for final appeal to the Federal Court. In the case of Collector of Customs and Excise v. Bava , the Supreme Court laid down that the requirement of making deposit of the disputed duty along with the appeal filed under the Customs Act cannot be applied to the appeals filed under section 35 of the Central Excise Act, under which there was no such requirement of making such a deposit.
7. Thus as can be seen from these three decisions the Supreme Court considered the law governing the right of appeal of the parties as on the date the proceedings were initiated and in none of these decisions the questions involved in cases on hand, came up for consideration, as to whether power of granting stay could be taken away by the Legislature by subsequent amendment having created right of appeal. Hence, in our considered opinion these three decisions do not help the case of the writ petitioners.
8. The Supreme Court in the case of Income-tax Officer v. Mohammed Kunhi [1969] 71 ITR 815, has considered the powers of the Appellate Tribunal under section 254 of the Income-tax Act, 1961, in dealing with the appeals before it. In that decision it is held thus :
"Section 254 of the Income-tax Act, 1961, which confers on the Appellate Tribunal powers of the widest amplitude in dealing with appeals before it, grants by implication the power of doing all such acts, or employing such means, as are essentially necessary to its execution. The statutory power under section 254 carries with it the duty in proper cases to make such orders for staying recovery proceedings pending an appeal before the Tribunal, as will prevent the appeal, if successful, from being rendered nugatory."
9. Section 254 of the Income-tax Act, 1961, gives the procedure of the Appellate Tribunal. It is useful to extract sub-sections (5) and (6) of the said section :
"(5) Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.
(6) The Appellate Tribunal shall, for the purpose of discharging its functions, have all the powers which are vested in the income-tax authorities referred to in section 131, and any proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purpose of section 196 of the Indian Penal Code (XLV of 1860) and the Appellate Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (V of 1898)."
The Supreme Court at page 819 of the said judgment has referred to Maxwell on Interpretation of Statutes, eleventh edition, at page 350 which reads thus :
"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."
In the said decision it is observed by the Supreme Court that the Income-tax Appellate Tribunal is not a court but it exercises judicial powers. The Tribunal's powers in dealing with appeals are of the widest amplitude and have in some cases been held similar to and identical with the powers of an appellate court under the Code of Civil Procedure. In the said decision the argument advanced was that in the absence of any express provisions in sections 254 and 255 of the Act relating to grant of stay of recovery during the pendency of an appeal, no such powers could be exercised by the Tribunal. But looking to the very wide powers conferred on the Appellate Tribunal under section 254 of the Income-tax Act and the procedure to be followed by the Tribunal under section 255, the Supreme Court has held that the Appellate Tribunal with widest possible amplitude must carry with it by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective. Under section 254 or 255 of the Income-tax Act, no provision was made taking away the power of Appellate Tribunal granting stay. In the absence of any specific prohibition it was held as discussed already above, the Appellate Tribunal by necessary implication had all the powers and duties incidental and necessary to make the exercise of those powers fully effective. When there was no express provision enabling the Tribunal to grant stay the Supreme Court took the view that the power to grant stay was incidental or ancillary to its appellate jurisdiction.
10. When specific provision is made under section 22(3A) and 22(5) of the Act as amended by Act 15 of 1988 taking away the power of the Appellate Tribunal granting stay of payment of tax or penalty or any other amount payable during the pendency of the appeals specified under the provisions, in our considered view the case of Income-tax Officer v. Mohammed Kunhi [1969] 71 ITR 815 (SC), has no application and hence is of no assistance to the writ petitioners.
11. In the case of Basant Kumari v. State of Madhya Pradesh , section 42-A of the Madhya Pradesh Ceiling on Agricultural Holdings Act (20 of 1960) came up for consideration. It is held thus in para 10 :
"10. The next question for consideration is about the validity of section 42-A of the Act. That provision lays down that in appeals or revisions directed against the order passed by a competent authority, no stay shall be granted by the appellate or revisional authority. Now, it cannot be disputed that the right of appeal or revision is creature of statute. The Legislature may not confer that right and may also lay down conditions for the exercise of that right. The question for consideration, however, is whether once an appeal or a revision has been properly filed and entertained, can the power of the appellate or revisional authority to pass orders incidental or supplemental to the exercise of its powers for the purpose of doing justice between the parties, be taken away ? An appeal or a revision is a remedy provided by law for getting an order passed by any authority cancelled or modified by approaching the higher authority in that behalf. If an appellate or revisional authority is prohibited from passing an order of stay in cases where a strong prima facie case is made out, then even if ultimately the impugned order passed by the competent authority declaring any land as surplus is set aside, restitution would be practically impossible if the land in question has already been distributed to other persons, as provided by the Act. For the effective exercise of appellate jurisdiction, an appellate authority grants stay."
In that case the court considered that the restitution would be practically impossible if the land in question has already been distributed to other persons as provided under the Act. In these cases even if the writ petitioners were to pay or deposit tax or penalty or any other amount payable during the pendency of the appeals in the absence of any stay orders, it cannot be said that the restitution is not possible particularly so when the appellants are State Government and its officers. Thus even this decision of Basant Kumari , does not advance the case of the writ petitioners in any way.
12. It is the firmly established judicial view that the right of appeal is not an inherent right so also it is not a fundamental right. The right of appeal is a mere creature of the statute and it is open to the Legislature which creates such a right equally to take away the same if necessary. The learned Government Advocate has cited the following decisions in support of his arguments :
(i) [1955] 6 STC 222 (Nag.) (Nemkumar Kesrimal v. Commissioner of Sales Tax).
(ii) [1979] 44 STC 331 (P & H) (Subhash Chander & Co. v. State of Punjab).
(iii) [1971] 28 STC 487 (All.) (Sri Gulshan Trading Company v. State of Uttar Pradesh).
In all these decisions the provisions of the Sales Tax Act came up for consideration and the consistent view taken in all these cases is to the effect that the right of appeal is a mere creature of the statute and the Legislature which confers such a right can equally take it away or prescribe conditions for the exercise of the right.
13. In the case of Sri Gulshan Trading Company v. State of Uttar Pradesh [1971] 28 STC 487 (All.). [The citation appears to have been referred in the order of the learned single Judge as [1971] 28 STC 481 (All.) Commissioner of Sales Tax v. Chandra Oil Mills]. The Division Bench of the Allahabad High Court has observed thus at page 491 :
"We are of opinion that the right to stay of the amount of tax, fee or penalty assessed under the Act is not an integral part of the right of appeal. Neither precedent nor principle is shown in support of the argument. Counsel for the petitioners has referred us to two decisions of the Supreme Court [Income-tax Officer v. M. K. Mohammed Kunhi [1969] 71 ITR 815 (SC) and Kasibai v. Mahadu ]. The first decision was under the Income-tax Act. The question was whether the Income-tax Appellate Tribunal, which is empowered to entertain an appeal from an order of assessment, has got the power to grant stay of recovery of tax during the pendency of the appeal before it. The argument on behalf of the income-tax department was that as the Act does not confer any express power to grant stay, the Tribunal has got no such power. The Supreme Court did not accept the argument. It was held that the Tribunal has got ample power to stay recovery of tax during the pendency of the appeal before it. It was said that the power to grant stay is incidental or ancillary to the appellate power. But nowhere in this decision it has been held that a right to stay is an integral part of an assessee's right of appeal."
This case is directly on the point and applies to the facts of the cases on hand in all fours inasmuch as the validity of similar subsequent amendment taking away the power of stay was considered in the case under the Uttar Pradesh Sales Tax Act (15 of 1948). The learned single Judge did not agree with this decision. We are unable to see any good reason to disagree with the said decision. On the other hand we are in respectful agreement with the ratio of the said case.
14. Section 22(3A) and 22(5) of the Act, as amended by Amendment Act 15 of 1988 has neither taken away nor curtailed nor crippled the right of appeal. What is taken away is only the power of the Appellate Tribunal to grant stay that too in second appeals. The learned Government Advocate effectively met the arguments of the writ petitioners that the amended provisions of the Act are opposed to article 14 of the Constitution of India by submitting that by amended provisions the power to grant stay is conferred on the Tribunal in case of appeals filed against the orders made under section 21, i.e., in case of first appeals and taken away the powers to grant stay in case of second appeals arising from the orders made under section 20 of the Act, and as such there is nothing to say that the amended provisions in question were violative of article 14 of the Constitution of India. In our view, this submission of the learned Government Advocate merits acceptance.
15. Thus having considered carefully all aspects of the matter, we are unable to subscribe to the view taken by the learned single Judge. Consequently these appeals are entitled to succeed. Therefore, in the result, for the reasons stated and discussion made above, these appeals are allowed, the impugned orders passed by the learned single Judge in all these appeals are set aside and the writ petitions stand dismissed. No costs.
16. Writ appeals allowed.