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sbw
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.2778 OF 2017
M/s. Bhambhani Shipping Ltd. .. Petitioner
Vs.
The State of Maharashtra & Ors. .. Respondents
Mr. C. B. Thakar a/w R.C. Thakar for the petitioner.
Mr. V. A. Sonpal, Spl. Counsel and Amar Mishra, AGP, for the
respondent nos.1 to 3.
CORAM : A. S. OKA &
A. K. MENON, JJ.
DATED : 28th NOVEMBER, 2017 ORAL JUDGMENT (Per A.S.Oka, J.) 1 Rule. Respondents waive service. Forthwith taken up for hearing. Heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondents. 2 By this writ petition under Article 226 of the Constitution of the India, the petitioner has taken an exception to the order dated 13 th October, 2017 passed by the Maharashtra Sales Tax Tribunal at Mumbai, on an application for stay filed by the petitioner in two VAT second appeals. The impugned demands which are subject matter of the pending appeals before the Sales Tax Tribunal are in the sum of Rs.14,61,31,580/- and Rs.25,01,74,230/- respectively. These ::: Uploaded on - 07/12/2017 ::: Downloaded on - 08/12/2017 00:42:11 ::: 2 903.wp-2778.17 demands include tax, interest and penalty. The Tribunal allowed the stay application by passing the following operative order:- "Stay application is allowed; however subject to deposit of part payment as under:-
Appeal No. Part Payment Installments (in Date of Payment Amount Fixed Rs.) (in Rs.) VAT SA 138/2017 2,50,86,966/- 41,81,161/- On or before 30/10/2017 41,181,161/- On or before 15/11/2017 41,181,161/- On or before 30/11/2017 41,181,161/- On or before 15/12/2017 41,181,161/- On or before 30/12/2017 41,181,161/- On or before 15/01/2018 VAT SA 139/2017 4,78,80,236/- 79,80,039/- On or before 30/10/2017 79,80,039/- On or before 15/11/2017 79,80,039/- On or before 30/11/2017 79,80,039/- On or before 15/12/2017 79,80,039/- On or before 30/12/2017 79,80,039/- On or before 15/01/2018 The appellant is directed to report the compliance of part payment order to the Tribunal. Default of payment of any installment will automatically vacate the stay granted to the execution of the First Appeal order passed by the First Appellate Authority, without further ::: Uploaded on - 07/12/2017 ::: Downloaded on - 08/12/2017 00:42:11 ::: 3 903.wp-2778.17 reference to the Tribunal. On payment by the appellant, as aforesaid;
the stay shall continue till final disposal of appeals." 3 Before we deal with the merits of the controversy, one issue which arises for consideration on the basis of the preliminary objection raised by the respondents reads thus:
"whether against the impugned order, an appeal is maintainable under Section 27 of the Maharashtra Value Added Tax Act, 2002 (for short "the said Act of 2002)?
Sub-section (1) of Section 27 of the said Act of 2002 reads thus:-
"An appeal shall lie to the High Court from every order passed by the Tribunal including a judgment by way of advance ruling, if the High Court is satisfied that the case involves a substantial question of law."
4 In the present case, the order impugned has been passed on the application for stay made by the petitioner in the pending appeals. While deciding such application, no issue could be finally decided or concluded and only a prima facie consideration of the controversy involved in the appeal is required to be made with a view to ascertain whether the appellant has made out a prima facie case. 5 Sub-section (1) of Section 27 of the said Act of 2002, on the face of it gives an impression that an appeal will lie to this Court from every order passed by the Tribunal on a substantial question of ::: Uploaded on - 07/12/2017 ::: Downloaded on - 08/12/2017 00:42:11 ::: 4 903.wp-2778.17 law. However, the similar provision in another statute has been interpreted by this Court in the case of Central Bank of India v/s. Shri Kurian Babu And Ors.1 A Division Bench of this Court considered the provisions of sub-section(1) of Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short "RDB Act"). Sub-section(1) of Section 20 reads thus:-
"20. Appeal to the Appellate Tribunal: (1) Save as provided in Sub-section (2), any person aggrieved by an order made, or deemed to have been made, by a Tribunal under this Act, may prefer an appeal to an Appellate Tribunal having jurisdiction in the matter."
6 The Division Bench considered the view taken by the Apex Court and Delhi High Court in certain other cases and came to the conclusion that against a procedural order or an interlocutory order which does not affect the rights and liabilities of the parties, an appeal will not be maintainable under sub-section(1) of Section 20 as the word "order" will not include an interlocutory or a procedural order which does not decide the rights between the parties. 7 In the case of Zenith Ltd. v/s. Dy. Commissioner of Income Tax, Circle 1(3) and another 2, a Division Bench of this Court 1 2004(4) Mh.L.J. 1006.
2 2004 SCC Online Bom 893
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dealt with sub-section (1) of Section 260A of the Income Tax Act, 1961 which reads thus:-
"260-A(1). An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law."
The issue was whether an appeal under Section 260-A was maintainable against an order declining to permit the appellant to raise additional grounds in the memorandum of appeal before the Tribunal. In paragraphs 4 and 5, the Division Bench held thus:-
"4. The expressions "every order passed in appeal" cannot be construed to take in its fold all interlocutory orders that may be passed by the Income Tax Appellate Tribunal, during the pendency of the appeal, particularly such orders which are procedural in nature. By use of the expression "every order passed in appeal", the legislature never contemplated nor intended that appeal may be preferred by an aggrieved party under Section 260-A to the High Court challenging the interlocutory order particularly those which are procedural in nature not affecting the rights or liabilities of the parties.
5. Though an exhaustive or a comprehensive definition of the expression every order passed in appeal cannot be properly given nor do we venture to do that but suffice to say that in finding our whether the order is covered by the ::: Uploaded on - 07/12/2017 ::: Downloaded on - 08/12/2017 00:42:11 ::: 6 903.wp-2778.17 expression, every order passed in appeal within the meaning of section 260-A of Income Tax Act, 1961, it has to be found out that order affects the merits of the action by determining some right or liability. The order by the Income Tax Appellate Tribunal declining the appellant to add additional grounds is only an order procedural in nature and cannot be said to affect the rights of such party. More so because it is always open to the aggrieved party to challenge such interlocutory order in the appeal that may be preferred against the final order. The correctness of such interlocutory order being open to be challenged in appeal that may be preferred by the aggrieved person against the final order, we have no hesitation in holding that the present appeal is not maintainable."
(emphasis added) 8 In the case of Central Bank of India vs. Gokal Chand 3, the Apex Court interpreted Section 38 of the Delhi Rent Control Act,1958 which reads thus:
"An appeal shall lie from every order of the Controller made under this Act to the Rent Control Tribunal (hereinafter referred to as the Tribunal) consisting of one person only to be appointed by the Central Government by notification in the Official Gazette."
(emphasis added) In paragraph 3 and 4, the Apex Court held thus:
3 AIR 1967 SC 799 ::: Uploaded on - 07/12/2017 ::: Downloaded on - 08/12/2017 00:42:11 ::: 7 903.wp-2778.17 "3. The object of Section 38(1) is to give a right of appeal to a party aggrieved by some order which affects his right or liability. In the context of Section 38(1), the words "every order of the Controller made under this Act", though very wide, do not include interlocutory orders, which are merely procedural and do not affect the rights or liabilities of the parties. In a pending proceeding, the Controller may pass many interlocutory orders under Sections 36 and 37, such as orders regarding the summoning of witnesses, discovery, production and inspection of documents, issue of a commission for examination of witnesses, inspection of premises, fixing a date of hearing and the admissibility of a document or the relevancy of a question. All these interlocutory orders are steps taken towards the final adjudication and for assisting the parties in the prosecution of their case in the pending proceeding; they regulate the procedure only and do not affect any right or liability of the parties. The legislature could not have intended that the parties would be harassed with endless expenses and delay by appeals from such procedural orders.
It is open to any party to set forth the error, defect or irregularity, if any, in such an order as a ground of objection in his appeal from the final order in the main proceeding. Subject to the aforesaid limitation, an appeal lies to the Rent Control Tribunal from every order passed by the Controller under the Act. Even an interlocutory order passed ::: Uploaded on - 07/12/2017 ::: Downloaded on - 08/12/2017 00:42:11 ::: 8 903.wp-2778.17 under Section 37(2) is an order passed under the Act and is subject to appeal under Section 38(1) provided it affects some right or liability of any party. Thus, an order of the Rent Controller refusing to set aside an ex parte order is subject to appeal to the Rent Control Tribunal.
4. Similar considerations have induced the courts to give a limited construction on the apparently wide words of other statutes conferring rights of appeal. Section 202 of the Indian Companies Act, 1913 confers a right of appeal "from any order or decision made or given in the matter of the winding up of a company by the court". In Shankarlal Aggarwal v. Shankarlal Poddar [[1964] 1 SCR 717, 736] this court decided that these words, though wide, would exclude merely procedural orders or those which did not affect the rights or liabilities of parties."
(emphasis added) 9 The decision in the case of Shankarlal Aggarwal is by a Constitution Bench of the Apex Court. In our view, what is held by the Apex Court and this Court will squarely apply to the provisions of sub-section(1) of Section 27 of the said Act of 2002 and an interlocutory or a procedural order passed by the Appellate Tribunal during the pendency of proceedings can be always challenged by the aggrieved party while preferring an appeal against the final order. Unless, the order passed by the Tribunal is of such nature that it ::: Uploaded on - 07/12/2017 ::: Downloaded on - 08/12/2017 00:42:11 ::: 9 903.wp-2778.17 affects the rights and liabilities of the parties, no appeal will lie against an interim or interlocutory or procedural order passed by the Tribunal.
10 Hence, we proceed to consider the petition on merits as a remedy of appeal under sub-section (1) of Section 27 of the said Act of 2002 is not available in the facts of the case of the petitioner. 11 The submission of the learned counsel appearing for the petitioner is that the impugned order is very harsh and it is impossible for the petitioner to comply with the said order. He submitted that various contentions raised by the petitioner have not been addressed by the Tribunal.
12 As noted earlier, for the period from 1 st April, 2009 to 31st March, 2010, against the total demand of Rs.14,61,31,580/- the petitioner has been directed to deposit a sum of Rs.2,50,86,966/- and that also by six fortnightly installments. The amount ordered to be deposited comes to 50% of the principal tax amount payable. Against the total demand of Rs.25,01,74,230/- for the period from 1 st April, 2011 to 31st March, 2012, the petitioner has been directed to deposit only a sum of Rs.4,78,80,236/- which comes to 50% of the basic tax liability. The amount is made payable in six fortnightly installments. ::: Uploaded on - 07/12/2017 ::: Downloaded on - 08/12/2017 00:42:11 :::
10 903.wp-2778.17 Perusal of the impugned interim order and in particular paragraph 6 onwards show that the issue of existence of prima facie case has been addressed by the Tribunal. Though the Tribunal did not accept the contention that a prima facie case has been made out, as stated earlier, substantial relief has been granted by the Tribunal to the petitioner. According to us, there is no perversity in the impugned order which is of discretionary and equitable in nature. 13 The learned counsel appearing for the petitioner submitted that the installments fixed under the impugned order may be converted into monthly installments. We propose to accede to the request made by the petitioner. However, the first installment in both the cases will have to be paid by 25th December, 2017. 14 Accordingly, we dispose of the petition by passing the following order:-
(i) The impugned order is modified to a limited extent;
(ii) In VAT Second Appeal No.138 of 2017, the first installment of Rs.41,81,161/- shall be payable by the petitioner on or before 25 th December, 2017. The remaining five installments of Rs. 41,81,161/- each shall be paid on or before 25 th day of every calendar month starting from January 2018;
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(iii) In VAT Second Appeal No.139 of 2017, the first installment of Rs.79,80,039/- shall be payable by the petitioner on or before 25 th December, 2017. The remaining five installments in the sum of Rs.79,80,039/- each shall be payable by the petitioner on or before 25th day of every calendar month starting from January 2018;
(iv) As directed in the impugned order, in case of any single default, the stay granted by the Tribunal under the impugned order, shall stand automatically vacated without further reference to the Tribunal.
(v) Writ Petition is disposed of on above terms.
(A. K. MENON, J.) (A.S.OKA, J.)
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