Calcutta High Court (Appellete Side)
A S L Enterprises Ltd vs The Senior Joint Commissioner on 25 March, 2022
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
RESERVED ON: 16.02.2022
DELIVERED ON: 25.03.2022
CORAM:
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA
MAT 783 OF 2017
A S L ENTERPRISES LTD.
VERSUS
THE SENIOR JOINT COMMISSIONER, SALES TAX, CENTRAL AUDIT
UNIT & ORS.
WITH
MAT 784 OF 2017
A S L ENTERPRISES LTD.
VERSUS
THE SENIOR JOINT COMMISSIONER, SALES TAX, CENTRAL AUDIT
UNIT & ORS.
WITH
MAT 786 OF 2017
MASCOM PETROCHEM PRIVATE LIMITED
VERSUS
The JOINT COMMISSIONER, COMMERCIAL TAXES, BURRABAZAR
CIRCLE & ORS.
WITH
M.A.T. 792 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 5148 OF 2017)
Page 1 of 72
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 5151 OF 2017)
M/S. VATECH WABAG LIMITED
VERSUS
DEPUTY COMMISSIONER COMMERCIAL TAXES, MIDNAPORE CHARGE
& ORS.
WITH
M.A.T. 982 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 5956 OF 2017)
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 5961 OF 2017)
ARCL ORGANICS LIMITED
VERSUS
SALES TAX OFFICER, PARK STREET CHARGE & ORS.
WITH
M.A.T. 985 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 5958 OF 2017)
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 5963 OF 2017)
MUKUL AGARWAL
VERSUS
JOINT COMMISSIONER, SALES TAX, BEADON STREET CHARGE & ORS.
WITH
M.A.T. 986 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 5959 OF 2017)
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 5964 OF 2017)
UDIT COMMERCIAL PRIVATE LIMITED
VERSUS
JOINT COMMISSIONER, SALES TAX, CORPORATE DIVISION & ORS.
WITH
M.A.T. 1370 OF 2017
SHAKTI INDUSTRIES & ANR.
VERSUS
THE JOINT COMMISSIONER, COMMERCIAL TAXES, CHOWRINGHEE
CIRCLE & ORS.
WITH
Page 2 of 72
M.A.T. 1619 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 9655 OF 2017)
STYLISH PRECASET PRIVATE LIMITED
VERSUS
SENIOR JOINT COMMISSIONER OF SALES TAXES, BURRABAZAR
CIRCLE & ORS.
WITH
M.A.T. 1664 OF 2017
I.A. CAN 1 OF 2018 (OLD NO. C.A.N. 720 OF 2018)
RAJAGARIA TIMBER PRIVATE LIMITED
VERSUS
JOINT COMMISSIONER, COMMERCIAL TAXES, JORABAGAN CHARGE &
ORS.
WITH
M.A.T. 1751 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 9909 OF 2017)
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 9913 OF 2017)
ALLIANCE MILLS (LESSEES) LIMITED
VERSUS
SALES TAX OFFICER CENTRAL AUDIT UNIT-I & ORS.
WITH
M.A.T. 1752 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 9912 OF 2017)
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 9914 OF 2017)
ALLIANCE MILLS (LESSEES) LIMITED
VERSUS
SALES TAX OFFICER CENTRAL AUDIT UNIT-I & ORS.
WITH
M.A.T 1782 OF 2017
WITH
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 10240 OF 2017)
DADHEECH INFRASTRUCTURE PRIVATE LIMITED
Page 3 of 72
VERSUS
JOINT COMMISSIONER, COMMERCIAL TAXES, CHOWRINGHEE CIRCLE
& ORS.
WITH
M.A.T. 1786 OF 2017
TAPAN MAZUMDER
VERSUS
SALES TAX OFFICER, SILIGURI CHARGE & ORS.
WITH
M.A.T. 1787 OF 2017
I.A. CAN 1 OF 2019 (OLD NO. C.A.N. 6389 OF 2019)
I.A. CAN 2 OF 2019 (OLD NO. C.A.N. 6390 OF 2019)
SHAKAMBAREE TRADERS PRIVATE LIMITED
VERSUS
SALES TAX OFFICER, BURTOLA CHARGE & ORS.
WITH
M.A.T. 1801 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 10106 OF 2017)
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 10107 OF 2017)
M/S. EMC LIMITED
VERSUS
SENIOR JOINT COMMISSIONER OF SALES TAX & ORS.
WITH
M.A.T. 1896 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 12153 OF 2017)
GEO PILING SOLUTIONS & ANR.
VERSUS
THE DEPUTY COMMISSIONER, SALES TAX, BHABANIPUR CHARGE &
ORS.
WITH
M.A.T. 1897 OF 2017
Page 4 of 72
ANANYA WOOD PRIVATE LIMITED
VERSUS
THE SALES TAX OFFICER, JORABAGAN CHARGE & ORS.
WITH
M.A.T. 1898 OF 2017
ANANYA WOOD PRIVATE LIMITED
VERSUS
THE SALES TAX OFFICER, JORABAGAN CHARGE & ORS.
WITH
M.A.T. 1899 OF 2017
ESSAR PROJECTS (INDIA) LIMITED.
VERSUS
DEPUTY COMMISSIONER OF COMMERCIAL TAXES & ORS.
WITH
M.A.T. 1936 OF 2017
OSCORP INDUSTRIES (PRIVATE) LIMITED
VERSUS
STATE OF WEST BENGAL & ORS.
WITH
M.A.T. 1937 OF 2017
OSCORP INDUSTRIES (PRIVATE) LIMITED & ANR.
VERSUS
STATE OF WEST BENGAL & ORS
.
WITH
M.A.T. 1958 OF 2017
MA AMBA SPONGE IRON (PRIVATE) LIMITED
VERSUS
DEPUTY COMMISSIONER OF COMMERCIAL TAXES & ORS.
WITH
M.A.T. 1991 OF 2017
I.A. CAN 1 OF 2018 (OLD NO. C.A.N. 222 OF 2018)
Page 5 of 72
I.A. CAN 2 OF 2018 (OLD NO. C.A.N. 223 OF 2018)
M/S. D.R. ELECTRICALS.
VERSUS
DEPUTY COMMISSIONER OF COMMERCIAL TAXES, CHANDNEY
CHAWK CHARGE & ORS.
WITH
M.A.T. 2055 OF 2017
I.A. CAN 1 OF 2018 (OLD NO. C.A.N. 1405 OF 2018)
UNIVERSAL CONSTRUCTION COMPANY.
VERSUS
SALES TAX OFFICER, DURGAPUR CHARGE & ORS.
WITH
M.A.T. 2072 OF 2017
I.A. CAN 1 OF 2018 (OLD NO. C.A.N. 1185 OF 2018) (NOT IN FILE)
I.A. CAN 2 OF 2018 (OLD NO. C.A.N. 1188 OF 2018) (NOT IN FILE)
BHARAT PHARMACEUTICALS & ANR.
VERSUS
THE SENIOR JOINT COMMISSIONER, COMMERCIAL TAXES & ORS.
WITH
M.A.T. 2073 OF 2017
SANJAY RAMPURIA
VERSUS
THE JOINT COMMISSIONER, COMMERCIAL TAXES, DHARMATALA
CIRCLE & ORS.
WITH
M.A.T. 2152 OF 2017
APE POWER (PRIVATE) LIMITED
VERSUS
THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, PARK STREET
CHARGE & ORS.
WITH
M.A.T. 652 OF 2018
Page 6 of 72
MURIDHAR RATANLAL EXPORTS LIMITED.
VERSUS
THE SENIOR JOINT COMMISSIONER, SALES TAX, LARGE TAX PAYERS'
UNIT & ORS.
WITH
M.A.T. 676 OF 2018
SHREE VAISHANAVI ISPAT LIMITED
VERSUS
THE DEPUTY COMMISSIONER, SALES TAXES, LYONS RANGE CHARGE
& ORS.
WITH
M.A.T. 684 OF 2018
MR. NAVIN SARAF
VERSUS
STATE OF WEST BENGAL & ORS.
WITH
M.A.T. 694 OF 2018
NORTH BROOK JUTE COMPANY LIMITED
VERSUS
SALES TAX OFFICER, CENTRAL AUDIT UNIT - I & ORS.
WITH
M.A.T. 669 OF 2017
SUPREME INDUSTRIES LIMITED
VERSUS
SENIOR JOINT COMMISSIONER, COMMERCIAL TAXES, CENTRAL
AUDIT UNIT I & ORS.
WITH
M.A.T. 724 OF 2017
SUPREME INDUSTRIES LIMITED
VERSUS
SENIOR JOINT COMMISSIONER, COMMERCIAL TAXES, CENTRAL
AUDIT UNIT I & ORS.
WITH
Page 7 of 72
M.A.T. 791 OF 2017
M/S. VATECH WABAG LIMITED
VERSUS
DEPUTY COMMISSIONER, COMMERCIAL TAXES, MIDNAPORE
CHARGES & ORS.
WITH
M.A.T. 1031 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 11996 OF 2017)
DVC EMTA COAL MINES LIMITED
VERSUS
JOINT COMMISSIONER, COMMERCIAL TAXES, ASANSOL CHARGE &
ORS.
WITH
M.A.T. 1034 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 8991 OF 2017)
ANINDYA GHOSH
VERSUS
DEPUTY COMMISSIONER OF COMMERCIAL TAXES, HOWRAH CHARGE
& ORS.
WITH
M.A.T. 1321 OF 2017
I.A. CAN 1 OF 2017 (OLD NO. C.A.N. 8989 OF 2017)
PRECISION ENGINEERS & FABRICATORS PRIVATE LIMITED
VERSUS
JOINT COMMISSIONER, COMMERCIAL TAXES, BEHALA CHARGE &
ORS.
WITH
M.A.T. 2070 OF 2017
I.A. CAN 3 OF 2018 (OLD NO. C.A.N. 2796 OF 2018)
SHAMBHU PRASAD AGARWAL
VERSUS
Page 8 of 72
SENIOR JOINT COMMISSIONER, COMMERCIAL TAXES, LARGE TAX
PAYER UNIT & ORS.
WITH
M.A.T. 373 OF 2018
I.A. CAN 3 OF 2019 (OLD NO. C.A.N. 4723 OF 2019)
PAULSONS DERMA PRIVATE LIMITED
VERSUS
SENIOR JOINT COMMISSIONER OF SALES TAXES, KOLKATA SOUTH
CIRCLE & ORS.
WITH
M.A.T. 374 OF 2018
I.A. CAN 3 OF 2019 (OLD NO. C.A.N. 4722 OF 2019)
(CAN NOT FOUND)
PAULSONS DERMA PRIVATE LIMITED
VERSUS
SENIOR JOINT COMMISSIONER OF SALES TAXES, KOLKATA SOUTH
CIRCLE & ORS.
WITH
FMA 733 OF 2018
M/S. VATECH WABAG LIMITED
VERSUS
DEPUTY COMMISSIONER, COMMERCIAL TAXES, MIDNAPORE CHARGE
& ORS.
WITH
FMA 912 OF 2019
POWER MECH. PROJECTS LIMITED
VERSUS
SENIOR JOINT COMMISSIONER, COMMERCIAL TAXES, DURGAPUR
CIRCLE CHARGES & ORS.
WITH
FMA 914 OF 2019
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 8992 OF 2017)
Page 9 of 72
HARSH POLYFABRIC PRIVATE LIMITED
VERSUS
SALES TAX OFFICER, N.D. SARANI CHARGE & ORS.
WITH
FMA 915 OF 2019
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 6086 OF 2017)
DIPANJAN MITRA & ANR.
VERSUS
DEPUTY COMMISSIONER OF COMMERCIAL TAXES, BHAWANIPORE
CHARGE & ORS.
WITH
FMA 916 OF 2019
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 6090 OF 2017)
DIPANJAN MITRA & ANR.
VERSUS
DEPUTY COMMISSIONER OF COMMERCIAL TAXES, BHAWANIPORE
CHARGE & ORS.
WITH
FMA 918 OF 2019
I.A. CAN 2 OF 2017 (OLD NO. C.A.N. 8993 OF 2017)
ISLAND TRADING COMPANY PRIVATE LIMITED
VERSUS
COMMERCIAL TAX OFFICER, PARK STREET CHARGE & ORS.
Appearance:-
Mr. Boudhayan Bhattacharyya,
Mr. Anil Kumar Dubey,
Mr. Rajarshi Chatterjee,
Ms. Sretapa Sinha
........For the Appellants
(in MAT 792/2017; MAT 982/2017; MAT 985/2017; MAT 986/2017; MAT
1619/2017; MAT 1751/2017; MAT 1752/2017; MAT 791/2017; MAT
373/2018;
MAT 374/2018; & FMA 733 OF 2018)
Page 10 of 72
Mr. Anil Dugar
Mr. Rajarshi Chatterjee ........For the Appellants
(in MAT 783/2017 to MAT 786/2017; MAT 1370/2017; MAT 1664/2017;
MAT 896/2017 to MAT 1898/2017; MAT 2072/2017; MAT 652/2018 &
MAT 676 OF 2018)
Mr. Sandip Choria,
Mr. Himangshu Kr. Ray
......For the appellants
(in MAT 1786 of 2017; MAT 1899 of 2017, MAT 1958 of 2017 and MAT 1991
of 2017)
Mr. J. Ahmed Khan,
Mr. T.A. Khan
......For the appellant
(in MAT 1787 of 2017)
Mr. Vivekananda Bose
Mr. Avisek Guha
.....For the appellant
(in FMA 915/2019 & FMA 916/2019)
Mr. Piyal Gupta
.....For the appellant
(in MAT 694/2018, MAT 669/2017, MAT 724/2017, MAT 1031/2017, FMA
912/2019 & FMA 918/2019)
Mr. Anirban Ray, Ld. Government Pleader,
Mr. Talay Masood Siddiqui,
Mr. S. Mukherjee,
Mr. Debasish Ghosh,
Mr. N. Chatterjee,
Mr. V. Kothari
......For the State
JUDGMENT
(Judgment of the Court was delivered by T.S.SIVAGNANAM, J.)
1. These intra court appeals filed by the dealers who were registered under
the provisions of the West Bengal Value Added Tax, Act 2003 (the Act) are
directed against the judgment and order dated March 30, 2017 in M/s.
Vatech Wabag Limited Versus Deputy Commissioner, Commercial Taxes,
Midnapore Charge and Others 69 Sales Tax Advisors 120. The appellants had
filed the writ petitions seeking varied prayers and essentially in all the cases,
the writ petitioners had challenged the vires of the second proviso to Section
84 (1) of the Act. The Learned Single Bench by judgment dated March 30,
2017, dismissed all the writ petitions and upheld the vires of the second
proviso to section 84 (1) of the Act.
2. Mr. Bhattacharya, Learned Advocate appearing for the appellant Vatech
Wabag Limited, the lead case broadly raised five contentions:-
2.1. The first being that payment of 15 % of the disputed tax under Section 84
is a compulsory extraction and partakes the colour of a separate levy/tax
hence unauthorized by law. Secondly, it was contended that under certain
circumstances the Act gives an opportunity to file appeal without prepayment
which the revenue does not accept. Thirdly, the right to appeal is a
substantive right which cannot be taken away, once the lis has started.
Fourthly, the impugned provision is hit by the general principles of
arbitrariness and unreasonableness, and, lastly the impugned provision
infringes the fundamental rights guaranteed under Article 19(1)(g) as the
restriction contained in the impugned provision is far from being reasonable
and realistic.
2.2. Elaborating his submission, on the first contention, it is submitted that the
word used in Section 84 is "payment" and not "deposit". The impugned
proviso to Section 84 (1) nowhere specifically mentions that the amount has
to be returned to the dealer and even Section 62 of the Act which deals with
refunds does not specifically mention that the prepayment made in terms of
the impugned provision has to be returned. Reference was made to the P.
Ramanatha, Advance Law Lexicon to state that the payment is defined to be
act of paying or that which is paid; discharge of a debt, obligations or duty;
satisfaction of claim; recompense; the fulfillment of a promise or the
performance of an agreement; the discharge in money of a sum due. Further
it is submitted that the payment has no narrow technical legal meaning
restricted to payment of money, as it signifies satisfaction of a claim. With
regard to the meaning of the word "deposit", it is submitted that the Advance
Law Lexicon explains deposit to mean that there must be a liability to return
it to the party by whom it is made, it is not a sum lent but a sum deposited.
Relying upon the decision of the Hon'ble Supreme Court in Commissioner of
Income Tax. U.P - II Versus Bazpur Co-operative Sugar Factory Limited,
1 it is submitted that it has been clearly held that essence of deposit is a
liability to return. Referring to the decision of the Hon'ble Full Bench of this
Court in Secretary, West Bengal Council of H.S. Education Versus
Soumyadeep Banerjee, 2 it is submitted that the "deposit" cannot be
synonymous with "payment". It is submitted that insisting upon payment of
15 % of the disputed tax in terms of the impugned proviso is in the nature of
a compulsory extraction and therefore it has to be in the nature of a tax
however, the WBVAT has no provision to tax the right to appeal of an
aggrieved dealer.
2.3. With regard to the second contention, it is submitted that Section 2(45) of
the Act defines the term "tax", Section 2(46) defines "tax due" and Section
(1988) 172 ITR 321
AIR 2010 CAL 161 (FB)
2(49) defines "tax payable". It is submitted that the "tax payable" is defined as
tax payable under the Act on the sales or purchases but does not include tax
due. "Tax due" is defined as the amount which becomes due as per any notice
of demand, but after the date mentioned therein. It is submitted "tax due" is
the quantum against which an appeal under Section 84 is filed and hence
"tax due" is the "tax" as referred to in the impugned proviso. It is further
submitted that by juxta posing clause (b) of the second proviso to Section
84(1) shows that if an appeal is filed after issuance of notice of demand but
before the date mentioned in the said notice, then such appeals can be filed
without making prepayment of 15 %, as the date has not yet passed.
2.4. The third contention is that appeal being a substantive right, cannot be
taken away and/or modified retrospectively, unless expressly enacted to the
said effect. To support such argument, reliance has been placed on the
decision of the Hon'ble Supreme Court in H.K. Dada (India) Limited Versus
State of M.P. 3 It is submitted that the impugned provision expressly states
01st day of April, 2015 to be the date for making prepayments for all appeals
filed on or after such date, but such appeals which are filed on or after 01st
April, 2015, all originated from various original proceedings much before
such date, for which there is no specific enactment or intendment, on the
part of the state legislature to make it retrospective. It is submitted that in all
cases where the appeals were filed on or after 01st day of April, 2015, the
original lis arose much before the said date, hence the substantive and vested
right to appeal cannot be taken away and/or prejudicially modified under the
facts and circumstances.
AIR 1953 SC 221
2.5. The fourth contention is that the provision is ultravires being hit by the
general principles of arbitrariness and unreasonableness as contained under
Article 14 of the Constitution of India, as the impugned provision fails to
distinguish between the quantum of demands and all dealers are compelled
to pay 15 % prepayment in order to file an appeal. Further the impugned
proviso does not take into account the different kinds of assessments such an
exparte assessment, best judgment assessment and assessments where
dealer had reasonable opportunity of being heard and therefore the provision
is arbitrary and unreasonable. To support such contention, reliance was
placed on the decision of the Hon'ble Supreme Court in Shayara Bano
Versus Union of India & Ors., 4. It is further submitted that the Learned
Writ Court while dismissing the writ petition placed heavy reliance on the
decision of the Hon'ble Supreme Court in State of Madhya Pradesh Versus
Rakesh Kohli and Another, 5 and this judgment has been overruled on the
same point in "Shayara Bano". "RiG-Veda" was referred to explain the
doctrine of equality. Reliance was placed on the decision of the Hon'ble
Supreme Court in Uttar Pradesh Power Corporation Limited Versus
Ayodhya Prasad Mishra & Another 6, for the proposition that equals
cannot be treated unequally. For the same proposition, reliance was placed
on the decision of High Court of Rajasthan, in State of Rajasthan Versus
Khem Chand Sharma & Another 7. To further support such contention of
in-equal treatment, reliance was placed on the decision of the Hon'ble
(2017) 9 SCC 1
(2012) 6 SCC 312
(2008) 10 SCC 139
[1992] (2) WLC 618
Supreme Court in Benette Coleman & Company Versus Union of India 8
and it is submitted that to treat all dealers equally with others who are
unequal violates Article 14 of the Constitution. To buttress this submission
further, reliance was placed on the decision of the Hon'ble Supreme Court in
Indra Sawhney Versus Union of India. 9
2.6. The final contention is that Article 19(6) lays down the restrictions
hedging Article 19(1)(g) of the Constitution, should be reasonable however, in
the case on hand the total restriction for not entertaining an appeal without
15 % prepayment is completely unreasonable, unjustified, especially in cases
where draft order has not been served, the order is passed exparte or where
there are complete or selective rejections of Books of Accounts and input tax
credit (ITC). The Learned Advocate has drawn our attention to the legislation
passed by several states in the country classifying them into three categories.
Firstly in respect of state legislations which has granted power to relax/waive
the prepayment, legislations where there is no power of waiver or relaxation
and legislations where power has been granted to the Appellate Authority to
exempt the dealer from the provisions or prepayment of the admitted as well
as the disputed tax for good and sufficient reasons. Therefore, it is submitted
that a holistic view is required to be adopted and if done so, it has to be held
that the impugned provision requires to be declared as ultravires.
3. Mr. Dugar, Learned Advocate appearing for the other dealers submitted
that the right of appeal is a vested and substantive right and that cannot be
taken away by virtue of the impugned proviso. In support of such contention,
(1972) 2 SCC 788
(1992) Suppl. 3 SCC 217
reliance was placed on the decision of the Hon'ble Supreme Court in M.P.
Steel Corporation Versus Commissioner of Central Excise. 10 It is further
submitted that right of appeal accrues on the date of commencement of the
lis which commences from the date when return is filed or the date by which
return is required to be filed. In support of such contention, reliance was
placed on the decision in Khazan Chand Nathi Ram Versus State of
Haryana & Others 11 and Deputy Commercial Tax Officer, Tribunal
Central 1 Assessment Circle, Tirupur and Others Versus Cameo Exports
and Others 12. Further it is submitted that the impugned proviso is
detriment to the interest of the dealer who prefers an appeal against the order
of assessment and in such circumstances giving retrospective operation to
the impugned proviso will affect, alter and destroy the existing right of the
dealer as it creates a new liability or obligation on the dealer to prefer the
appeal and in such circumstances the impugned proviso has to be held to be
prospective. In support of such contention, reliance was placed on the
decision of the Hon'ble Supreme Court in Jayam and Company Versus
Assistant Commissioner & Others 13. Relying upon the decision of the
Hon'ble Supreme Court in Technimont Private Limited Versus State of
Punjab 14 it is submitted that in case of genuine and extreme hardship, writ
petition could be an appropriate remedy.
4. Mr. Khan, Learned Advocate appearing for the other dealers while
adopting the arguments of the Learned Advocates, whose submissions we
MANU/SC/0484/2015
(2004) 136 STC 261 (P & H)
(2006) 147 STC 218 (Mad)
(2016) 15 SCC 125
(2019) SCC Online SC 1228
have noted above, contended that the provisions of Section 84 of the Act
which has been challenged by the appellants would fall under the category of
cases, where the proviso does not provide for any power to relax the rigour of
requirement of prepayment of 15 % of the disputed tax and therefore, the
only remedy available to the dealer is to invoke jurisdiction of this Court
under Article 226 of the Constitution. The Learned Advocate placed reliance
on the decision of the High Court of Gauhati in Monoranjan Chakraborty
Versus State of Tripura & Another, 15 wherein it was held, the provision
under the Tripura Sales Tax Act, 1976 directing the dealer to deposit 50 % of
the tax or penalty as a precondition for entertainment of appeal or revision
was harsh, oppressive and unjust, violating Article 14 of the Constitution. It
is not disputed by the Learned Advocate that the said decision was overruled
by the Hon'ble Supreme Court in State of Tripura Versus Monoranjan
Chakraborty. 16 By placing reliance on the decision in the case of Gujarat
Agro Industries Company Limited Versus Municipal Corporation of the
City of Ahmedabad & Others, 17 and the decision in Shyam Kishore &
Others Versus Municipal Corporation of Delhi & Anothers, 18 it is
submitted that the Hon'ble Supreme Court in Shyam Kishore observed that
the relevant Act be amended to make the position clear. Further it is
submitted that distinguishing feature of the provisions which were under
consideration of the Hon'ble Supreme Court was that, unlike Sales Tax Laws,
including the VAT Act, there was no provision for payment of tax on self-
assessment by filing returns. Reliance was also placed on the decision in the
(1991) 81 STC Page 291 (Guj)
(2001) 10 SCC 740
(1999) 4SCC 468
(1993) 1 SCC 22
case of Royal Insulation Private Limited Versus Commercial Tax Officer,
Manali Assessment Circle, Chennai 19 wherein the Division Bench of the
High Court of Madras dealing with provisions insisting for prepayment for
entertainment of appeal but not empowering the Appellate Authority to give
any relief was deprecated and the State Government was advised to forthwith
amend the provision to permit waiver or stay by the Appellate Authority of the
pre-deposit amount. Therefore, it is submitted that taking clue from the
decision in Shyam Kishore and Royal Insulation, the impugned proviso
requires to be amended. The Learned Advocate placed reliance on the
decision of this Court in Shyam Sel and Power Limited Versus Union of
India, 20 which is a case which deals with Section 35 F of the Central Excise
Act 1944, a provision enabling the appellate authority to dispense with the
deposit. It is submitted that in the said decision the Hon'ble Supreme Court
has enlisted the circumstances where under it would be necessary to
dispense with such requirements. It is further submitted that in the case of
Manu Jayanti International, 21 wherein appeal was filed by the dealer
seeking enhancement of the amount refundable, the Appellate Authority
mechanically insisted on prepayment of 15 % and fortunately the state agreed
that in such a case insisting upon prepayment of 15 % does not arise. Similar
was the case in BJP Steel Star Engineering Private Limited, 22 wherein
the tribunal granted relief to the dealer. The Learned Advocate while adopting
the argument of the other Learned Advocates that unequals are being treated
equally, supplemented by contending that there may be several categories of
(2006) 147 STC 246 (Mad)
MANU/WB/1394/2014 (Cal)
RN-1137 of 2016
69 STA 100
dealers namely registered, un-registered or even a transporter who would be
a dealer in terms of Section 80 (15) of the Act as well as casual traders, the
dealer may be a defaulter or one who has complied with the statutory
requirements, an assessment may be made exparte or after hearing the
dealer, the assessment orders may be reasoned or without reasons and
assessment may arise from search and seizure or may be in the regular
course. There may be cases where huge demands are raised by the assessing
officer in an arbitrary manner and treating all such dealers equally is
unreasonable, arbitrary and discriminatory.
5. The Learned Government Pleader after referring to the impugned
provision submitted that the dealer is required to produce documents relating
to proof of payment and not payment alone. The impugned proviso does not
insist upon the payment of the entire demand, but only 15 % of the disputed
tax. The provisions of the Act were amended by the West Bengal Finance Act,
2015 published in the Government Gazette dated 24.03.2015 by which
significant changes were made to the various provisions of the Act and the
rules framed thereunder and the impugned proviso was by way of
substitution as could be seen from Section 16 of the West Bengal Finance Act
2015 by which the second proviso stood substituted. The impugned proviso
states that provided further that no appeal for any period submitted on or
after 01st day of April, 2015, shall be entertained by the said Authority unless
it is satisfied that the applicant has produced the documents relating to proof
of payment of full amount of tax, interest, penalty or late fee as the case may,
as the applicant may admit to be due from him and 15 % of the amount of
tax in dispute in such appeal. It is submitted that the substituted proviso be
deemed to be a provision under the Act for all purposes ever since the West
Bengal Value Added Tax Act, 2003 came into effect. The substituted proviso
also fixes a date from which the appeals will be entertained subject to
fulfillment of conditions in clause (a) and (b) contained therein. Emphasis is
laid on the word "entertained" and what would mean by entertainment of an
appeal, Rule 141 of the WBVAT Rules 2005 has to be referred to. Further
more in terms of Rule 141, prayer for stay can also be made. References were
also made to be Rules 80 and 83 of the 2005 Rules. Reliance was placed on
decision of the Hon'ble Supreme Court in State of Madhya Pradesh Versus
Rakesh Kohli & Anothers, 23 for the proposition as to what are the
principles the Court will have to take into consideration while dealing with
constitutional validity of a taxation law. For the same proposition, reliance
was placed on the decision of the Hon'ble Supreme Court in Government of
Andhra Pradesh and Others Versus P Laxmi Devi. 24 To explain the effect
of an amendment to a statute by substitution, reliance was placed on the
decision of the Hon'ble Supreme Court in Garikapati Veeraya Versus N
Subbiah Choudhury & Others. 25 Therefore it is submitted that if an
amendment is made by substitution, it shall relate back and to be
understood to have been in the same form ever since the inception of the
statute. It is further submitted that the amended proviso which was
substituted, fixes a cut-off date 01st of April, 2015, which would clearly show
that pending appeals would not be affected by virtue of the substituted
proviso. It is submitted that the object of this substituted proviso needs to be
(2012) 6 SCC 312
(2008) 4 SCC 720
AIR (1957) SC 540
taken into consideration. The impugned proviso which came to be substituted
by the West Bengal Finance Act 2015, is one among the several provisions
which were amended/substituted in the parent Act thereby bringing about a
significant change in the scheme of the Act. To support such contention,
reliance was placed on the decision of the Hon'ble Supreme Court in Union of
India & Others Versus NITDIP Textiles Processors Private Limited &
Anothers. 26
6. The Learned Government Pleader placed reliance on the decision of the
High Court of Patna in D.V.C. Bukaru Co-operative Stores Limited Versus
State of Bihar, 27 where identical provision was upheld. It is submitted that
in the said decision several decisions of the Hon'ble Supreme Court and other
High Courts have been referred to and an identical provision was upheld. The
decision of the High Court of Karnataka in Prakrith Builders Private
Limited Versus State of Karnataka & Ors., 28 was also pressed into
service wherein identical provision under the Karnataka Sales Tax Act, 1957
was upheld. It is thus submitted that the second proviso having been
substituted, in law, it would mean that it is repeal of the earlier provision and
re-enactment and merely because it is retrospective, it cannot be held to be
ultra vires or bad in law. Further it is submitted that the right to file an
appeal by the aggrieved dealer remains intact and such statutory/vested right
remains unaffected. With regard to the plea of hardships as raised by the
appellants, it is not a matter which has to be considered while testing the
vires of a statutory provision. The Learned Government Pleader placed
(2012) 1 SCC 226
MANU/BH/0103/1998
MANU/KA/0624/2008
reliance on the decision of the Hon'ble Supreme Court in Newtech Promoters
and Developers Private Limited Versus State of UP and others, 29
wherein the Hon'ble Supreme Court took into consideration similar provision
insisting upon a pre-deposit and held the same to be valid as it will avoid
unscrupulous and uncalled for litigation at the appellate stage. It is
submitted that when a statute confers a right of appeal, while granting a
right, the legislature can impose conditions for exercise of such a right, so
long as the conditions are not onerous or unreasonable rendering the right
almost illusory. It is submitted that the amended proviso, provides for
producing proof of payment of 15 % of the disputed amount which cannot be
said to be unreasonable or onerous. In any, event hardships cannot be a
ground to test the constitutional validity of a statutory provision. Further it is
submitted that several provisions of the Act and the rules were amended by
the Finance Act 2015 and taking into consideration that the amended proviso
should not impact the pending appeals, the legislature in its wisdom had
fixed the date as 01st day of April, 2015 and the wisdom of the legislature will
not be questioned by this court. Reliance was placed on the decision in
Harinagar Sugar Mills Limited Versus State of Bihar & Others, 30 and it
is submitted that mere filing of the appeal does not absolve the appellant nor
suspend their liability to pay the tax assessed during pendency of the appeal
and it continues unless paid or set aside and any payment made during that
period when liability subsists shall be in discharge of that liability as
determined. Reliance was placed on the decision in Har Devi Asnani Versus
(2021) SCC Online SC 1044
(2003) 11 SCC 40
State of Rajasthan & Others 31 wherein the pre-condition of payment of 50
% of the recoverable amount before entertaining a revision under Section 65
(1) of the Rajasthan Stamp Act 1998 was held to be constitutionally valid. By
placing reliance on the decisions of the Hon'ble Supreme Court in Arun
Kumar & Others Versus Union of India & Others, 32 it was submitted
that the said decision has explained doctrine of "reading down" and held that
it is presumed that the statute is constitutionally valid and the burden is
upon the person who attacks it to show that there has been transgression of
constitutional principles. Further by referring to the said decision, it is
submitted that, if the statute is clear, unambiguous and explicit it may not be
permissible for the Court to read down something not intended by the
statute. With the above submission, the Learned Government Pleader referred
to the findings recorded by the Learned Single Bench and submitted that the
order impugned in these appeals has correctly taken note of the legal
principles and prayed for affirming the said order.
7. The Government Pleader by way of reply to the contentions of the
appellants reiterated his submissions with regard to the meaning of the word
"payment" as spelt out in the Advance Law Lexicon and referred to the
decision in the case of H.K Dada and submitted that there is a date fixed in
the impugned second proviso which shows the intention of the legislature
very clearly. By referring to the decision in Uttar Pradesh Power
Corporation (supra) it is submitted that Article 14 is designed to prevent
(2011) 14 SCC 160
(2006) Income Tax Reports page 89 (SC)
discrimination and it seeks to prohibit a person or class of persons from
being singled out from others similarly situated.
8. By way of reply, Mr. Bhattacharyya referred to Rule 80 of the Rules and
submitted that the said rule does not speak about refund of any pre-deposit.
Equally Rule 141 deals with stay of disputed amount of net tax and other
circumstances and these rules cannot save the impugned proviso. It is
submitted that decision in Har Devi Asnani referred to by the Learned
Government Pleader is a case where "payment" or "deposit" was not the issue.
Further in the decision in Newtech Promoters relied on by the Learned
Government Pleader, it was admitted case of pre-deposit and therefore
distinguishable. It is further submitted that the decision in NITDIP Textile
Processors cannot be applied to the case on hand as the appellant's case is
that there is no qualification at all. On the same ground, the decision in Arun
Kumar is also stated to be distinguishable. The Learned Advocate seeks to
distinguish the decision in the case of D.V.C. Bukaru Cooperative Stores and
Prakrith Builders by contending that those were cases in which the issue was
not whether the amount to be paid is a "pre-deposit" or a "payment". Further
the Learned Advocate has drawn our attention to the enactments in other
states where the powers to relax and waive have been provided.
9. Mr. Khan, Learned Advocate appearing for the appellants, in reply would
reiterate his submissions by contending that sufficient safeguard has to be
read into Section 14 of the Act. The Learned Advocate also reiterated his
submissions by referring to paragraph 44 to 46 of the decision of the
Supreme Court in Shyam Kishore. Further it is submitted that the argument
of the State that expression "proof of payment" used in Section 84 of the Act
is nothing but word play and in essence it is payment, as without payment no
proof is generated. Further Rule 141 cannot come to the aid of the State in
any manner and such rule has come into effect from 01.04.2013, two years
before the impugned proviso and such rule for all practical purposes becomes
"otiose" with effect from 01.04.2015. Further it is submitted that use of the
word "substitute" in the Finance Act cannot help the State as such word and
other words like "omit" and "insert" are legislative commands having no
reference to effective date of the amendment introduced by such command.
The effective date is either provided for in the amending Act itself or
notification separately issued. Further it is submitted that obtaining refund of
any amount once paid is a herculean task and the reluctance of the
authorities to effect refund of excess amount knows no bound. Further it is
submitted that the Section 84 of the Act unambiguously states 15 % of the
amount of tax in dispute and therefore the amount is paid only towards tax.
Further on an after 01.04.2015, the dealer who prefers an appeal has to pay
not only the admitted tax in full but 15 % of the tax in dispute and unless
both conditions are fulfilled, the appeal will not be entertained. Therefore, it is
submitted that the impugned proviso is liable to be struck down.
10. We have elaborately heard the Learned Advocates for the parties and
carefully perused the materials placed on record.
11. The writ petitioners, who were unsuccessful in their challenge to the
vires of the Second Proviso to Section 84(1) of the West Bengal Value Added
Tax Act, 2003 (hereinafter referred to as "the Act" for brevity), are the
appellants before us.
12. Section 84 of the Act deals with 'appeal against provisional or other
assessment'. The said provision reads as follows:-
"84. Appeal against provisional or other
assessment.-(1) Any casual dealer or dealer may, in the
prescribed manner, appeal to the Commissioner, the Special
Commissioner, the Additional Commissioner or any person
appointed under sub-section (1) of Section 6 to assist the
commissioner as may be prescribed to exercise the power
under the section against a provisional assessment or any
other assessment, within forty-five days or such further
period as may be allowed by the said authority for cause
shown to his satisfaction from the receipt of a notice of
demand in respect thereof:
Provided that where the total amount of tax,
interest, late fee or penalty in dispute in an appeal is in
excess of rupees twenty lakh such appeal may lie before an
appellate forum as may be constituted by the
Commissioner, consisting of one or more special
Commissioner or Additional Commissioner or any person
appointed under sub-section (1) of Section 6 to assist the
Commissioner, and the appellate forum shall act as the
appellate authority in disposing of such appeal under this
section:
Provided further that no appeal for any period
submitted on or after the 1st day of April, 2015, shall be
entertained by the said authority unless it is satisfied that
the applicant has produced the documents relating to proof
of payment of-
(a) full amount of tax, interest, penalty or late
fee, as the case may be, as the applicant
may admit to be due from him, and
(b) fifteen per centum of the amount of tax in
dispute in such appeal:
Provided further that where the payment of tax due
from registered dealer stands deferred under Section 116, an
appeal shall, notwithstanding that the tax admitted to be
due from him has not been paid, be entertained."
13. In terms of sub-section (1) of Section 84 any causal dealer or dealer
may, in the prescribed manner, appeal to the Commissioner, the Special
Commissioner, the Additional Commissioner or any person appointed under
sub-section (1) of Section 6 to assist the Commissioner, as may be
prescribed, to exercise the power under the section against a provisional
assessment or any other assessment within forty-five days or such further
period as may be allowed by the authority for cause shown to the
satisfaction from the receipt of the notice of demand in respect thereof.
14. The first proviso states that where the total amount of tax, interest,
late fee or penalty in dispute in an appeal is in excess of rupees twenty lakh,
such appeal may lie before an appellate forum as may be constituted by the
Commissioner, consisting of one or more Special Commissioner or
Additional Commissioner or any person appointed under sub-section (1) of
section 6 to assist the Commissioner, and the appellate forum shall act as
the appellate authority in disposing of such appeal.
15. The second proviso states that no appeal for any period submitted on
or after the 1st day of April, 2015 shall be entertained by the said authority
unless he is satisfied that the applicant has produced the documents
relating to proof of payment of (a) full amount of tax, interest, penalty or late
fee as the case may be, as the applicant may admit to be due from him and
(b) 15% of the amount of tax in dispute in such appeal.
16. The third proviso states that where the payment of tax due from a
registered dealer has been deferred under Section 116, an appeal shall,
notwithstanding that the tax admitted to be due from him has not been
paid, be entertained.
17. Several provisions of the Act were amended by the West Bengal
Finance Act, 2015. The amendments were made in Sections 10, 14, 16, 19,
22, 24A, 30E, 33, 34, 34A, 36, 40, 47AA, 61, 84, 87, 87A, 93 and Schedule
C to the Act.
18. Section 9 of the Finance Act, 2015 states that notwithstanding
anything contained in any judgment, decree or order of any court, tribunal
or other authority, the amendment made in the Principal Act by Clause (a) of
sub-section (2) of Section 2 shall be deemed to have been made with effect
from 2nd day of March, 2015 and accordingly, anything done or any action
taken or purported to have been taken or done under the Principal Act on or
after the said date shall, notwithstanding anything contrary contained in the
judgment, decree or order of any court, Tribunal or other authority be
deemed to be and to have always been for all purposes, as validly and
effectively taken or done as if the said amendment had been in force at all
material time.
19. Rule 80 of the West Bengal Value Added Tax Rules, 2005 (hereinafter
referred to as "the Rules" for brevity) deals with manner of refund in
consequence of order of appeal, revision, etc. It states that where any
amount payable by a dealer in respect of any period on account of tax
assessed, penalty imposed or late fee and interest determined is reduced in
consequence of any order passed on reassessment, redetermination, appeal,
revision or review, as the case may be, and if it is found that the amount
payable is less than the amount paid for such period, including the amount
recovered under Section 55, if any, the appropriate assessing authority or
the appellate authority or revisional authority shall serve upon such dealer a
revised notice in Form 27 or Form 27A or Form 28, as the case may be,
specifying therein the amount paid in excess and the excess amount shall
be refunded to the dealer by the appropriate assessing authority in
accordance with sub-rule (4), sub-rule (5) and sub-rule (6) of Rule 59.
20. The proviso to Rule 80 states that where any amount of tax assessed,
penalty imposed, late fee determined or interest determined in respect of a
dealer for any period remains unpaid till the date of the order in
consequence of which such refund arises, the appropriate assessing
authority or the appellate authority or the revisional authority shall adjust
the amount of excess payment towards the arrear tax, penalty, late fee or
interest thereupon and if any amount still remains refundable, he shall
satisfy the adjustment in the revised notice
21. Second proviso to Rule 80 confers power for recovery of the amount of
tax, penalty, late fee or interest as an arrear of land revenue.
22. Rule 81 deals with manner of refund or adjustment of tax deducted at
source in respect of works contract to a dealer having no liability to pay tax.
23. Rule 82 deals with refund arising out of rectification of the order
determining interest.
24. Rule 141 deals with stay of disputed amount, net tax, etc. It states
that where a dealer intends to have stay of realisation of the amount of net
tax, interest, late fee or penalty disputed in an appeal filed before the
appellate authority exercising jurisdiction over such a dealer shall pray for
such stay in Form 68 and thereupon the realisation of the disputed amount
of net tax, interest, late fee or penalty, shall upon entertainment of such
appeal, be stayed till the disposal thereof.
25. Proviso to Section 141 states that where the appellate authority is
satisfied that the registered dealer has not disclosed the actual amount of
admitted net tax, interest or late fee in full in the appeal petition, he may
direct for payment of the balance amount of admitted net tax, interest or
late fee and thereafter, the stay for the balance portion of the disputed
amount of net tax, interest, late fee or penalty shall be subject to such
payment.
26. As mentioned above, the appellants have questioned the vires of the
second proviso to Section 84(1) of the Act and were unsuccessful in their
attempt leading to filing of these appeals.
27. In the preceding paragraph, we have noted the submission made by
the learned Advocates for the appellants as well as the learned Government
Pleader.
28. The following issues arise for consideration in these appeals:-
(i) Whether insistence of protection of payment of 15% of the disputed
tax as stipulated in the second proviso to Section 84(1) of the Act
infringes/abrogates the vested right of appeal under Section 84(1), when such
right accrues to a dealer on the date of filing the return; whether it would
amount to compulsory extraction of "tax" before the same becomes due and
payable?
(ii) Whether the second proviso to Section 84(1) infringes Article 14 of the
Constitution of India, as it ignores the different categories and assessments
and assessees?
(iii) Whether the right of appeal conferred under Section 84(1) can be
construed as an absolute right prohibiting the said legislature from imposing
conditions for entertaining such an appeal?
(iv) What is the effect of substitution of second proviso to Section 84(1)
of the West Bengal Finance Act, 2015?
(v) Whether the principles of "reading down" be applied while
interpreting the second proviso to Section 84(1) and
(vi) Whether alleged hardship of a dealer would be a relevant
consideration while considering the vires of a statutory provision?
29. The sheet anchor of the argument of the learned Advocate for the
appellant is that compelling the dealer to make payment of 15% of the
disputed tax is a compulsory extraction and part takes the colour of a
separate levy/tax, which is not authorised by law. The second proviso to
Section 84(1) states that no appeal for any period submitted on or after the
1st day of April, 2015 shall be entertained unless the applicant has
produced document relating to proof of payment of the full amount of tax as
admitted to be due by him and 15% of the amount of tax in dispute in such
appeal.
30. The crucial word in the second proviso is "entertained". The State
while seeking to sustain the validity of the above provision, would contend
that the right to prefer an appeal has not been affected by virtue of the
second proviso and the condition, which is required to be complied with by
the dealer for an appeal to be entertained has been stipulated in the second
proviso and such condition can be imposed by the State legislature as it is
within its legislative competence and the amount of 15% of the disputed tax
cannot be stated to be either unreasonable or harsh on the dealers.
31. The case of the appellants is that the second proviso fixes the date
as 1st April, 2015 and no appeal preferred after the said date will be
entertained, unless the conditions stipulated in clause (a) and clause (b) of
the second proviso are complied with.
32. By placing reliance on the decision in Hoosein Kasam Dada
(supra), it is submitted that the pre-existing right to file an appeal under the
earlier provision has not been destroyed by the amendment, as the right of
the appeal from the decision of the lower authority become vested in a party
when proceedings are first initiated and before a decision is given by the
lower authority. In the said decision, it was held that right of appeal is not
merely a matter of procedure, it is a substantive right, a right vested in a
party when the proceedings are first initiated and such vested right cannot
be taken away, except by express enactment or necessary intendment.
Further, it is contended that the pre-existing right of appeal should continue
to exist and the proviso as it stood prior to its amendment of the Finance
Act, 2015 would cover the exercise and enforcement of that right of appeal
and amended proviso cannot prevent exercising such a right.
33. The Hon'ble Supreme Court in the said decision was testing the
correctness to the amended proviso to sub-section (1) of Section 22 of the
Central Provinces and Berar Sales Tax Act, 1947 and it was held that the
amended proviso was prospective and the old law which continued to exist
would apply and that the appeal should not have been rejected on the
ground that it was not accompanied by satisfactory proof of payment of the
assessed tax as in the said case, the appellant did not admit that any
amount was due by it and therefore, it was held that under the section as it
stood previously (before amendment) the appellant therein was entitled to
file its appeal without depositing any sum of money. To the same effect,
reliance was placed on the decision of the Division Bench of the High Court
of Madras in Deputy Commercial Tax Officer, Tirupur Versus Cameo
Exports 33.
34. By referring to the above decisions, it is contended by the learned
Advocates for the appellants an amendment to a provision dealing with a
right of appeal can only be prospective, it cannot affect the right which is
vested/crystallised in the dealers as such right accrued to them when the lis
commenced, that is, the date of which the return was filed under the Act.
(2006) 147 STC 218 (Mad)
35. The answer to the argument advanced on behalf of the appellants
lies in the very decisions themselves. It has been held that the amendment
cannot be said to affect a pre-existing right of appeal without making the
same retrospective by express words or necessary intendment. Thus, an
amendment to such a provision could be made by the legislature, if the
amendment is to be given retrospective effect, by expressly and clearly
stipulating such intendment.
36. To be noted that Section 22(1) of the 1947 Act, which was subject
matter of challenge in Hoosein Kasam Dada (supra) has not been given
retrospective effect by an express provision or by necessary implication. The
amendment to Section 84 of the Act by Finance Act, 2015 was by way of
substitution, as Section 16 of the Finance Act, 2015 states, in Section 84(a)
in sub-section (1), for the second proviso, the following proviso shall be
substituted:-
(a) full amount of tax, interest, penalty or late fee, as the
case may be, as the applicant may admit to be due
from him, and
(b) fifteen per centum of the amount of tax in dispute in
such appeal.
37. Decisions have been cited by the learned Government Pleader to
show that when a provision is substituted in an enactment, it is deemed to
be in force ever since the enactment was notified or in other words, it
amounts to repeal of the existing provision or re-enactment of a new
provision to take effect from the date on which the Act came into force.
38. The argument on behalf of the appellants is that merely because the
Finance Act, 2015 uses the expression 'substitution', the impugned
amendment cannot abrogate the substantive and vested right of the
appellants, which had accrued in their favour on the date of filing the return
under the provisions of the Act.
39. The argument of the learned Government Pleader is that sub-section
(1) of Section 84 is the substantive law providing for a right of appeal to an
aggrieved dealer and the provisos under the said provision are procedural
and the State legislature is competent to impose conditions for entertaining
an appeal and therefore, the impugned proviso does not in any manner
abrogate the right of appeal provided under Section 84(1). Thus, we are to
consider as to the distinction between a substantive law and the procedural
law.
40. In Hitendra Vishnu Thakur Versus State of Maharashtra,34 the
Hon'ble Supreme Court, while considering what are substantive and
procedural laws, had laid down the scope of amending Act which was given
retrospective effect. It was held that a statute which affects substantive
rights is presumed to be prospective in operation unless made retrospective
either expressly or by necessary intendment. A statute which merely affects
procedure, unless such a construction is textually impossible, is presumed
to be retrospective in its application, should not be given an extended
meaning and should be strictly confined to its clearly defined limits. It was
further held that law relating to forum and limitation is procedural in nature
whereas law relating to right of action and right of appeal even though
(1994) 4 SCC 602
remedial, is substantive in nature. Every litigant has a vested right in
substantive law, but no such right exists in procedural law. It was further
held that a procedural statute should not generally speaking be applied
retrospectively where the result would be to create new disabilities or
obligations or to impose new duties in respect of transactions already
accomplished. Further a statute which not only changes the procedure but
also creates new right or liability shall be construed to be prospective in
operation, unless otherwise provided, either expressly or by necessary
implication.
41. In Shyam Sunder Versus. Ram Kumar, 35 it was held that repeal
of an enactment is followed by a legislation such legislation does not affect
the substantive rights of the parties on the date of suit or adjudication of
suit unless such a legislation is retrospective and a court of appeal cannot
take into consideration a new law brought into existence after the judgment
appealed from has been rendered because the rights of the parties in an
appeal are determined under the law in force on the date of suit. It was
further held that the said position in law would be different in the matters
which relate to procedural law, but so far as substantive rights of parties are
concerned they remain unaffected by the amendment in the enactment.
Thus, the legal principles, which can be culled out from the above decision
is that after a substantive law is amended, it would be prospective unless
made retrospective either expressly or by necessary intendment. An
amendment to a procedural law is always retrospective in operation unless
it is enacted to be made only prospective. Therefore, we need to bear in
(2001) 8 SCC 24
mind the important distinction between substantive right to file an appeal
and the procedure which has to be followed while exercising such right of
appeal.
42. Section 84(1) of the Act provides for an appellate remedy to an
aggrieved dealer. The said provision is a substantive law, which confers a
right on an aggrieved dealer. The provisos contained in sub-section (1) of
Section 84 regulate the procedure for exercising such right of appeal. The
first proviso to Section 84(1) deals with procedural aspects in respect of an
appeal in which the dispute is in excess of rupees twenty lakh and the
authority, which will be disposing of such appeal as may be constituted by
the Commissioner. The second proviso deals with the procedure to be
adopted by the aggrieved dealer in cases where appeals are preferred on or
after the 1st day of April, 2015. The second proviso is qualified by two
conditions. The first of which being producing proof of payment of the full
amount of tax, interest, penalty or late fee as the aggrieved dealer may admit
to be due from him. Clause (b) requires the aggrieved dealer to produce
proof of payment of 15% of the amount of tax in dispute in such appeal.
The third proviso provides for the contingency when an appeal can be
entertained, when the tax admitted to be due from a dealer has not been
paid and the same stands deferred under Section 116 of the Act. Therefore,
if the provisos to Section 84(1) are read together, will clearly demonstrate
that the provisos enumerate the procedure to be followed by an aggrieved
dealer while exercising his substantive right of appeal under Section 84(1) of
the Act. In other words, if the right of appeal as provided under Section
84(1) could be entertained upon compliance of certain conditions by the
aggrieved dealer at the time of preferring an appeal, which would be a
provision in the realm of procedural law. It can be further clarified by
observing that Section 84(1) of the Act provides for the authority before
whom the appeal can be preferred and the circumstances under which the
dealer could exercise such right and the conditions to be followed by the
dealer for availing such right are stipulated in the proviso, which are
procedural in nature. Thus, the appellants cannot be heard to say that they
have a vested right in a procedural law.
43. It was argued that the date fixed in the second proviso to Section
48(1) cannot have retrospective effect and would not apply to all cases where
the lis (filing of return) commenced prior to the amendment. The second
limb of the argument is that fixing the date as 1st day of April , 2015 is
irrational and arbitrary.
44. With regard the contention regarding retrospectivity/ prospectivity,
we have dealt with the same and held that the second proviso to Section
84(1) being a procedural provision would be retrospective as the statute
clearly says so and there is a clear intendment to the said effect. Aggrieved
dealers are not entitled to question the date fixed in the second proviso as
being arbitrary and irrational. We find the date so fixed has utmost
relevance and significance. The West Bengal Finance Act, 2015 had virtually
overhauled the WBVAT Act, 2003. We had earlier noted the amendment
brought about to various provisions. The amendments were by substitutions
and insertions, the substitutions are more in number than the insertions.
More importantly the second proviso to Section 84(1) was substituted.
Principles of statutory interpretations are to be reckoned while considering
an amendment by substitution to be retrospective or prospective. In Sham
Rao V. Perulekar Versus. The District Magistrate Thane, Bombay &
two others, 36 it was observed:
"The rule is that when a subsequent Act amends an earlier
one in such a way as to incorporate itself, or a part of itself,
into the earlier, than the earlier Act must thereafter be read
and construed (except where that would lead to a repugnancy,
inconsistency or absurdity0 as if the altered words had been
written into the earlier Act with pen and ink and the old words
scored out so that thereafter there is no need to refer to the
amending Act at all."
45. Bearing in mind the above legal principles in mind we test the
correctness of the contentions of the appellants that the impugned proviso
cannot affect the vested right of the appellant which accrued in their favour
prior to the amendment. Similar arguments were placed in Hindustan
Petroleum corporation Ltd. (Supra), which were rejected holding thus:
"But prior to that, it would be necessary to understand the scope
of a proviso vis--vis the main provision in a section in the context
of the decisions of the Hon'ble Supreme Court and in light of the
principles of interpretation of proviso.
a) The normal function of a proviso is to except
something out the enactment or to qualify something
enacted therein which, but for the proviso, would be
within the purview of the enactment. As a general
rule, a proviso is added to an enactment to qualify or
create an exception to what is in the enactment and
ordinarily, a proviso is not interpreted as stating a
general rule. In other words, a proviso qualifies the
AIR 1952 SC 324
generality of the main enactment by providing an
exception and taking out as it were, from the main
enactment, a portion which, but for the proviso would
fall within the main enactment. Further, a proviso
cannot be construed as nullifying the enactment or as
taking away completely a right conferred by the
enactment.
b) In this regard, learned Author, Justice G.P. Singh
has, in "Principles of statutory Interpretation",
enunciated certain rules collated from judicial
precedents. Firstly, a proviso is not to be construed as
excluding or adding something by implication i.e.,
when on a fair construction, the principal provision is
clear, a proviso cannot expand or limit it. Secondly, a
proviso has to be construed in relation to which it is
appended i.e., normally, a proviso does not travel
beyond the provision to which it is a proviso. A
proviso carves out an exception to the main provision
to which it has been enacted as a proviso and to no
other. However, if a proviso is a statute does not form
part of a section but is itself enacted as a separate
section, then it becomes necessary to determine as to
which section the proviso is enacted as an exception
or qualification. Sometimes, a proviso is used as a
guide to construction of the main section. Thirdly,
when there are two possible construction of words to
be found in the section, the proviso could be looked
into to internet the main section. However, when the
main provision is clear, it cannot be watered down by
the proviso. Thus, where the main section is not clear,
the proviso can be look into to ascertain the meaning
and scope of the main provision.
c) The proviso should not be so construed as to make it
redundant. In certain cases, "the legislative device of
the exclusion is adopted only to exclude a part from
the whole, which, but for the exclusion, continues to
be a part of it", and words of exclusion are presumed
to have some meaning and are not readily recognized
as mere surplusage. As a corollary, it is stated that a
proviso must be so construed that the main enactment
and the proviso should not become redundant or
otiose. This is particularly so, where the object of a
proviso sometimes is only by way of abundant
caution, particularly when the operative words of the
enactment are abundantly clear. In other words, the
purpose of a proviso in such a case is to remove any
doubt. There are also instances where a proviso is in
the nature of an independent enactment and not
merely, an exception or qualifying what has been
stated before. In other words, if the substantive
enactment is worded in the form of a proviso, it would
be an independent legislative provision concerning
different set of circumstances than what is worded
before or what is stated before. Sometimes, a proviso
is to make a distinction of special cases from the
general enactment and to provide it specially.
d) At this stage, this construction or interpretation of a
proviso could be considered:-
a) In Ishverlal Thakorelal Almaula v.
Motibhai Nagjibhai [MANU/SC/0328/1965
: AIR 1966 SC 459], while dealing with the
Bombay Tenancy and Agricultural Lands
Act, 1948, the Hon'ble Supreme Court held,
that a proper function of a proviso is to
except or qualify something enacted in the
substantive clause, which but for the
proviso, would be within that clause.
b) In Kaviraj Pandit Durga Dutt Sharma
v. Navaratna Pharmaceutical Laboratories
[MANU/SC/0194/1964 : AIR 1965 SC 980],
while considering proviso to Section 6 of
Trade Marks Act, 1940, it was observed
that it would not be a reasonable
construction for any statute, if a proviso
which in terms purports to create an
exception and seeks to confer certain
special rights on a particular class of cases
included in it should be held to be otiose
and to have achieved nothing.
c) In Kedarnath Jute Manufacturing Co.
Ltd., v. the Commercial Tax Officer and
Others [MANU/SC/0290/1965 : AIR 1966
SC 12], it was observed that "the effect of
an excepting or qualifying proviso,
according to the ordinary rules of
construction, is to except out of the
preceding portion of the enactment or to
qualify something enacted therein, which,
but for the proviso, would be within it". [See
"Craies" on Statute Law - 6th Edition - P.
217]. In this case, this Court was
considering Section 5(2)(a)(ii) of Bengal
Finance Sales Tax Act, 1941 and Rule 27-A
of Bengal Sales Tax Rules.
d) In Dattatraya Govind Mahajan and
Others v. The State of Maharashtra and
another [MANU/SC/0381/1977 : AIR 1977
SC 915], a Constitution Bench of the Apex
Court, while considering the amendment
made to Maharashtra Agriculture Lands
(Ceiling on Holdings) Act, 1961, in the
context of Article 31B of the Constitution
and the second proviso thereto, reiterated
what was stated in Ishverlal's case, supra.
e) In S. Sundaram Pilai, etc, v. V.R.
Pattabiraman [MANU/SC/0387/1985 : AIR
1985 SC 582], while dealing with the scope
of a proviso and explanation to sub-section
(2) of Section 10 of Tamil Nadu Buildings
(Lease and Rent Control) Act, 1960, the
Hon'ble Supreme Court held that a proviso
may have three separate functions.
Normally, a proviso is meant to be an
exception to something within the main
enactment or qualifying some thing enacted
therein which, but for the proviso, would be
within the purview of the enactment. In other
words, a proviso cannot be torn apart from
the main enactment, nor can it be used to
nullify or set at naught the real object of the
main enactment. Sometimes, a proviso may
exceptionally have the effect of a substantive
enactment.
After referring to several legal treatises and judgments, the Apex Court held
in the above judgment as under:-
"43. We need not multiply authorities after authorities on
this point because the legal position seems to be clearly and
manifestly well established. To sum up, a proviso may serve
four different purposes:
(1) qualifying or excepting certain provisions from
the main enactment;
(2) it may entirely change the very concept of the
intendment of the enactment by insisting on
certain mandatory conditions to be fulfilled in
order to make the enactment workable;
(3) it may be so embedded in the Act itself as to
become an integral part of the enactment and
thus acquire the tenor and colour of the
substantive enactment itself; and
(4) it may be used merely to act as an optional
addenda to the enactment with the sole object
of explaining the real intendment of the
statutory provision.
f) The approach to the construction and
interpretation of a proviso are enunciated in the
following cases:-
a) In M. Pentiah & others v. Muddala
Veeramallapa & others
(MANU/SC/0263/1960 : AIR 1961 SC
1107), it was observed that while
interpreting a section or a proviso, as in
the instant case, if the choice is between
two interpretations, the narrower of
which would fail to achieve the manifest
purpose of the legislation, we should
avoid a construction which would
reduce the legislation to futility and
should rather accept the bolder
construction based on the view that
Parliament would legislate only for the
purpose of bringing about an effective
result.
b) In Superintendent & Remembrancer of
Legal Affairs to Govt. of West Bengal v.
Abani Maity (MANU/SC/0525/1979 :
AIR 1979 SC 1029), the Apex Court
observed that the statute is not to be
interpreted merely from the
lexicographer's angle. The Court must
give effect to the will and inbuilt policy
of the Legislature as discernible from
the object and scheme of the enactment
and the language employed therein. The
words in a statue often take their
meaning in the context of a statute as a
whole. They are, therefore, not to be
construed in isolation.
46. As already noted the second proviso to Section 84(1) is a procedural
law, in which the appellants can claim no vested right. The Legislature in its
wisdom, imposed a condition for entertaining an appeal with a view to
safeguard the interest of revenue. We cannot be called upon to interpret the
impugned proviso so as to make it redundant or useless. As already noted
the judgment of the Hon'ble Supreme Court in Hoosein Kasam Dada can
have no application to the cases on hand, so also the decision in DCTO
Versus. Cameo Exports,37 which was rendered following the reasoning in
Hoosein Kasam Dada. Hence, we hold that the impugned Proviso has
retrospective operation and all appeals filed on or after 1st day of April, 2015
will be entertained only if the conditions are complied with.
(2006) 147 STC 218 (Mad)
47. In Anant Mills Co. Ltd. Versus. State of Gujarat 38 the vires of
Section 402(2)(e) of the Bombay Provincial Municipal Corporations Act as
amended by Gujarat Act No.5 of 1970 was challenged. The said provision
pertains to entertainment of an appeal by a person who had not deposited
the tax due from him and who had not been able to show to the appellate
forum that the deposit of the amount would cause him undue hardship,
arising out of his own omission or default. The Hon'ble Supreme Court held
that requirement about the deposit of the amount claimed as a condition
precedent to the entertainment of the appeal did not have the effect of
nullifying the right of appeal, especially when keeping in view the fact that
discretion vested with the appellate court to dispense with the compliance of
the requirement. It was further held that the said statutory provision
sought to regulate the exercise of the right of appeal and therefore, the said
provision was held to be not violative of Article 14 of the Constitution. It
was further held that the right of appeal being a creature of a statute,
without a statutory provision creating such a right, an aggrieved person is
not entitled to file an appeal. Further, it was held that the legislature while
granting the right of appeal can impose conditions for the exercise of such
right. It was permissible to enact a law that no appeal shall lie against an
order relating to an assessment of tax unless the tax had been paid and
such condition merely regulating the exercise of right of an appeal was that
the same is not to be abused by a recalcitrant party and there is no difficulty
in the enforcement of the order appealed against in case the appeal is
ultimately dismissed. It was further held that it was open to the legislature
(1975) 2 SCC 175
to impose an accompanying liability upon a party upon whom a legal right is
conferred or to prescribe conditions for the exercise of the right. Any
requirement for the discharge of that liability or the fulfilment of that
condition in case the party concerned seeks to avail of the said right is a
valid piece of legislation.
48. In Seth Nand Law Versus State of Haryana, 39 the Constitution
Bench of the Hon'ble Supreme Court held that right of an appeal is a
creature of a statute and there is no reason why the legislature while
granting the right cannot impose conditions for the exercise of such right so
long as the conditions are not so onerous as to amount to unreasonable
restrictions rendering the right almost illusory. In the said decision, the
Hon'ble Supreme Court held that the condition regarding predeposit was not
onerous.
49. In Chatter Singh Baid Versus Corporation of Calcutta 40 the
validity of a provision prohibiting entertainment of appeal altogether where
tax was not paid has been upheld. In the said decision, Section 183(A) of
the Calcutta Municipal Act, 1951 was considered and it was held that
merely because the section impairs the right of appeal by imposing an
onerous condition of deposit of consolidated rate payable up to the date of
presentation of appeal on the valuation determined, it cannot be said the
section was unfair, fanciful, oppressive and arbitrary. Further, it was held
that the condition of deposit at the time of filing the appeal did not make the
(1980) Supplementary SCC 574
AIR 1984 Cal 283
right of the appeal under Section 183(1) of the said Act is nugatory or
illusory.
50. In Narayan Chandra Ghosh Versus UCO Bank 41 the condition
imposed in Section 18(1) of the SARFAESI Act, 2002 requiring a deposit in
terms of the proviso to the said section before entertaining an appeal against
the order of the Debts Recovery Tribunal was held to be a valid peace of
legislation, on the ground that the legislature can impose conditions for
exercise of such right of appeal so long as the conditions are not onerous, as
to amount to unreasonable restrictions, rendering the right almost illusory
and considering the conditions hedged in the said proviso to Section 18(1) of
the SURFAESI Act, it was held to be not onerous.
51. In Hindustan Petroleum Corporation Ltd. Versus Union of India
42, after referring to the above decisions, it was held that the condition
imposed under Section 35F of the Central Excise Act, 1944 stipulating a
requirement for deposit of the amount as condition precedent to the
entertainment of appeal, was held to be valid and requirement of deposit of
7.5% of the duty in dispute was held to be not an onerous condition.
52. Learned Advocate appearing for the appellant had referred to the
meaning of the word "payment" and "deposit" by referring to the Advance
Law Lexicon. In our considered view, the proviso to Section 84(1) of the Act
cannot be sought to be interpreted by referring to the meaning of the words
"payment" and "deposit" as defined in the Advance Law Lexicon but are
required to be considered by reading the entire provision as a whole along
(2011) 4 SCC 548
(2016) 89 GST 285
with the scheme of the Act and not to read the two words viz., "payment"
and "deposit" in isolation. Therefore, the reference to the meaning of these
words as spelt out in the Law Lexicon cannot in any manner advance the
case of the appellants.
53. The decision in the case of Bazpur Sugar Factory was pressed into
service to explain as to what would be meant by deposit, which has essence
of a deposit is that there must be a liability to return it to the party by whom
or on whose behalf it is made on the fulfilment of certain conditions. Firstly,
the decision in the said case arose out of a proceedings under the Indian
Cooperative Societies Act, 1921 and the question framed for determination
was whether on the facts and circumstances, the Income Tax Appellate
Tribunal was right in holding that the amount of Rs.5,15,863/- was not a
revenue receipt liable to tax. Thus, considering the facts of the case of the
assessee therein, with regard to the monies described as security deposit
which was returned by the assessee as and when the empty bottles were
returned, the Court went into the aspect as to whether the said amount as
claimed by the dealer should be treated as a deposit for ascertaining as to
whether they are liable to pay income tax or not. In our considered view, the
said decision cannot in any manner assist the case of the appellant, as is
distinguishable on facts.
54. Reliance was placed on the decision in the case of Soumyadeep
Banerjee. The issue in the said case was whether a deposit, which was
directed to be made by the examinees as precondition for production of
answer scripts would create any right in favour of the WB Council and the
claim to retain it altogether and if not, whether the Court has power to pass
at the time of final hearing the order of appropriation of costs from and out
of the amount deposited. It was held that the pre-trial deposit made in a
case is not the subject matter of the writ petition, as the challenge made by
the writ petitioner was with regard to the validity and legality of evaluation
of the answer script, not with regard to the incurring of the expenses.
Further, it was held that under any stretch of imagination, the issue of
deposit, can never be raised and if the Court asks for deposit in a lis as
condition precedent, it is a matter of procedure as opposed to substantive
law. We find that the decision in Saumyadeep Banerjee would support the
case of the respondent and not that of the appellants.
55. In Kisan Sahkari Chinni Mills Ltd., the question was whether
administrative charges collected by the State Government under the
enactment in question were to be included in the assessable value of
molasses cleared by the sugar factories, who were respondents therein. It
was held that under Section 4(4)(d)(ii) of the Central Excise Act, what is to
be excluded from the assessable value is the amount of duty of excise, sales
tax and other taxes and administrative charges which would be covered
under the said provision as other taxes because it is a compulsory
extraction made under an enactment and therefore, a duty or impost and
impost must be held to be in the nature of a tax covered by the said
provision. The said decision in no manner can assist the case of the
appellants, as the second proviso to Section 84(1) being a procedural law for
regulating the procedure to be followed by an aggrieved dealer for preferring
an appeal under Section 84(1) cannot be construed to be a compulsory
extraction in the nature of a tax, but it is a condition imposed by the
legislature, a condition precedent for exercising the statutory right of appeal.
56. Thus, as pointed out earlier in Hoosein Kasam Dada the validity of
Section 22(1) of the Central Provinces and Berar Sales Tax Act, 1947 was
challenged in which there was no date mentioned, as to which of those
appeals will be entertained unless the amount of tax and penalty admitted
by the assessee has been paid, whereas in the second proviso to Section
84(1), the date has been clearly mentioned as appeals to be submitted on or
after the 1st day of April, 2015 such procedure is required to be adopted,
making it clear that the second proviso will not affect pending appeals.
57. In fact in Hoosein Kasam Dada, the Hon'ble Supreme Court held
that though the right of appeal is a substantive right/vested right, such
right cannot be taken away, except by express enactment or necessary
intendment. Even assuming for arguments sake, the second proviso to
Section 84(1) is to be treated as a substantive provision, such right is not an
absolute right and could be taken away or subject to conditions, if there is
an express enactment or necessary intendment. The second proviso clearly
shows the necessary intendment and therefore, even assuming it is treated
to be a vested right, the same can be modified and made exercisable subject
to conditions.
58. In D.V.C. Bakura Cooperative Stores Ltd.,, the validity of Section
45(3) of the Bihar Finance Act, 1981 was challenged, which stated that no
appeal shall be admitted unless the dealer objecting to an order of
assessment has paid 20% of the tax assessed or full amount of tax admitted,
whichever is greater. The said provision was upheld after referring to
various decisions holding that the right of appeal is a statutory right and it
is open to the legislature to provide for remedy of appeal and also impose
conditions in the matter of exercise of that right. In the said case, the
argument as advanced before us was made contending that in other States,
the enactments provide for a power to relax or waive such conditions and
the impugned provision does not provide for such a contingency and
therefore, the provision has to be read down to confer power on the
authority power to relax or waive the condition. This argument was rejected
by holding that merely because in some other States, the appellate authority
has been given power to relax or waive the required deposit of the part of the
tax assessed, it cannot be held that absence of such a provision in the Act in
the State in question will not render it ultra vires.
59. In Khazan Chand and Others Versus State of Jammu and
Kashmir 43 it was held that sales tax is the biggest source of revenue for a
State and it is for the State to decide as to how and in what manner, it
would raise its revenue and determine which particular transactions of sale
or purchase of goods taking place within the State should be taxed and at
what rates etc. It was further held that nature of things differ from State to
State and it is for each State to determine the methods it will adopt to collect
its revenue and if the provisions of the legislation of every State on a
particular topic are to be identical in respect, there is no purpose in
including that topic in the State List and it may as well be included in the
Union List.
(1984) 56 SCC 214
60. Therefore, the argument of the learned Advocate for the appellants
to draw inspiration from the enactment of the other State or read down the
2nd proviso to Section 84(1) of the Act does not arise. The principle of
reading down can be applied if a provision is not clear or does not provide
for certain contingencies and if a statute is clear more particularly a fiscal
statute, the concept of reading down would be alien especially in the facts
and circumstances of the cases before us. We also note that similar
provision under the Karnataka Sales Tax Act, 1957 was upheld in Prakrith
Builders Pvt. Ltd. Versus State of Karnataka 44. Similar provision in
Section 77(4) of the Orissa Value Added Tax Tax, 2004 was upheld in
Jindal Stainless Steel Versus State of Orissa 45.
61. In the light of the above discussions, we hold that the second
proviso to Section 84(1) of the Act is the procedure prescribed for preferring
an appeal under Section 84(1) of the Act by an aggrieved dealer and
condition imposed therein is not a compulsory extraction of tax and the
State legislature was well within its jurisdiction to impose conditions for
preferring appeals and on account of such condition being imposed, it
neither infringes nor abrogates the statutory right of appeal granted to an
aggrieved dealer under Section 84(1) of the Act and insistence upon
producing of proof of payment of 15% of the tax in dispute cannot be
regarded as compulsory extraction of tax, as the assessment has been
completed and as long as the assessment is not set aside or modified, the
(2009) 19 VST 589
(2012) 54 VST 1
tax due as computed would become due and payable. Accordingly, Issue
Nos.1 and 3 are decided against the appellants.
62. For entertaining an appeal under Section 84(1), the dealer is
required to produce proof of payment of 15% of the disputed tax in terms of
the procedure prescribed in Clause (b) of second proviso to Section 84(1). It
cannot be disputed by the appellants that on and after the order of
assessment is passed and the tax is quantified the liability accrues. Mere
filing of an appeal does not suspend the liability so determined. The liability
would subsist until it is set aside or modified. Therefore, to state that the
15% is a compulsory extraction, is incorrect, as it is only a measure or
quantification for the appeal being entertained. The dealer who complies
with the condition and appeal being entertained is not absolved of his
liability to pay the net tax, interest, late fee or penalty, and if the dealer
desires protection in this regard, he has to resort to the remedy under rule
141 of the Rules which deals with power of the appellate authority to grant
stay of realization of the amount of net tax, interest etc. upon an application
in Form 68 being filed by the dealer. This power can be exercised by the
appellate authority once upon entertainment of the appeal. In other words,
unless the appeal is entertained upon compliance of the procedural
requirement in the second proviso to Section 84(1), prayer for stay would not
be maintainable. In this regard it is beneficial to refer to the decision of the
Hon'ble Supreme Court in Harinagar Sugar Mills Ltd. [(2003) 11 SCC 40],
wherein the Hon'ble Supreme Court held that mere filing of the appeal does
not absolve the appellant nor suspends the liability assessed during the
pendency of the appeal it continues unless paid or set aside.
63. It was argued by the learned Advocate appearing for the appellants
that different categories of assessments and different categories of assessees
have all been bunched together and inequals have been treated as equals.
To explain the concept of equality, reference was made to Rig Veda.
Reliance was also placed on the decisions in Benette and Colomen &
Khem Chand. While testing the constitutional validity of a statute on the
anvil of Article 14, it has to be seen as to whether there is discrimination,
whether a person or class of persons have been singled out from others
similarly situated. It is equally important to note that Article 14 does not
prohibit classification as long as classification is based on legal and relevant
circumstances.
64. Firstly, we need to consider as to whether the argument of the
learned Advocates for the appellants stating that different types of
assessments and different types of dealers have been treated alike. The
argument deserves to be outrightly rejected for the simple reason that
whatever may be the type of assessment, such as a best judgment
assessment, an assessment after opportunity to the dealer etc., is an
assessment under the provisions of the Act. Similarly, an assessee can be of
different categories and a casual dealer can also be brought within the
provisions of the Act. Therefore, the appellants' attempt to show
discrimination is an attempt, which has to necessarily fail.
65. Section 84(1) of the Act is a provision, which provides for right of
appeal to an aggrieved dealer. The substantive provision does not categories
the types of assessment or types of assessees and it provides for a right of
appeal to any casual dealer or dealer. Therefore, to draw a distinction which
in our view is an artificial distinction. What the appellants seek to do is to
read something which is not contemplated under the statute. Therefore,
such argument has to necessarily fail.
66. The decision in the case of Khem Chand cannot be applied to the
case of the assessees as the matter pertains to whether the doctrine of equal
pay for equal work was to be applied in the facts and circumstances of the
said case.
67. The decision in Benner Coleman & Co., is also distinguishable. In
the said case, it was contended that in the case of newspapers operating on
10 or less than 10 page level, additional quota of paper has been given to
increase their pages to 10, but the imposition of 10 page ceiling on
newspapers operating on a page level above 10 was said to violate Article
19(1)(a) and Article 14 of the Constitution of India. While considering the
said contention, it was held that the news print policy abridges the
fundamental rights of the petitioners therein in regard to freedom of speech
and expression and on facts, it was held that under the garb of distribution
of newsprint, the Government has tended to control the growth and
circulation of newsprint. As already held, the right of appeal conferred
under Section 84(1) does not discriminate between different types of
assessments and different types of assessees and confers such right on
casual dealers and all other dealers and therefore, the question of
considering as to whether at all there is any discrimination does not arise in
the facts and circumstances of the case.
68. Reliance was placed on the decisions in Ayodhya Prasad Mishra,
Khem Chand Sharma and Benette Coleman. These decisions have been
pressed into service to support the argument that equals cannot be treated
unequally and equally well settled that unequals cannot be treated equally
and if it is done, it would offend the doctrine of equality enshrined in Articles
14 and 16 of the Constitution of India. The argument of inequal treatment is
predicated on the categories of assessees and the types of assessments. In
terms of provisions of the WBBAT, an assessee has been defined to also
include a transporter or a casual trader. While testing the vires of the
proviso to Section 84(1), we are required to examine as to whether the
substantive law, namely, Section 84(1) seeks to draw any distinction as
regards the varied categories of dealers/ assessees or assessments. On a
plain reading of Section 84(1), it shows that there is no distinction among
the categories of dealers or the types of assessments. The provision deals
with appeal against provisional or other assessments. Other assessments
would include all categories of assessments as were enumerated by the
learned Advocates for the appellant. Thus, in the absence of any
classification or sub-classification of the category of dealers or types of
assessments, the provision cannot be stated to be discriminatory.
Furthermore, the provision states that any casual dealer or dealer may in
the prescribed manner appeal to the authority specified therein. The term
"dealer" has been defined under Act and undoubtedly, all the appellants
before us will fall within the said definition. Assuming one of them is a
casual dealer, he also stands covered by Section 84(1). The provision further
takes note of the fact that a dealer may be aggrieved by an order of
provisional assessment and, therefore, the legislature in its wisdom has
granted appellate remedy even against provisional assessments. More
importantly, Section 84 uses the words "or other assessments". The said
words would bring within its umbrella all categories of assessments other
than provisional assessments. Thus, the attempt of the appellants to bring
in a theory of inequality is not tenable. Therefore, the decisions relied on
would not assist the case of the appellant.
69. In the light of the above, we hold that the second proviso to Section
84(1) is neither discriminatory nor violative of Article 14 of the Constitution
of India and accordingly.
70. It is contended by the learned Advocate for the appellant that the
second proviso to Section 84 of the Act would fall under a category where no
power is given to any authority to relax the rigour of such requirement as
mentioned in the second proviso and therefore, the only remedy available to
the dealer is to approach this Court under Article 226 of the Constitution.
Reliance was placed on the decision in the case of Shyam Kishore wherein
it was held that the appellate authority must be permitted to grant time to
the assessee to effect payment when the appeal is to be heard and if
necessary, the appeal can be adjourned to enable the assessee to comply
with the conditions. It is submitted that after interpreting the statutory
provision which was subject matter of challenge in the said case, the
Hon'ble Supreme Court suggested for amendment of the relevant statute.
The decision in Shyam Kishore pertained to interpretation of the provisions
of Section 170 of the Delhi Municipal Corporation Act, 1957 which mentions
the conditions of right to appeal. One of the conditions being that the
appellant was to deposit the amount in dispute in the office of the
Corporation. The Court interpreted the provision and noted that Section 170
deals with conditions of right to appeal and states that no appeal was to be
heard or determined under Section 169 of the said Act, unless the
conditions in Clause (a) and (b) of Section 170 of the said Act are complied
with. Thus, it is clear that Section 170 of the said Act deals with the
procedural law when the appeal is to be heard or determined. Thus, the
question before the Court was as to when an appeal will be heard or
determined. These words were interpreted by the Court by holding that in
this statutory context of the said provision it is plausible to say that an
appeal (Section 169 of the said Act) can be admitted or entertained, but only
cannot be heard or disposed of without pre-deposit of the disputed tax.
71. In our considered view, the decision in Shyam Kishore cannot be
applied to the facts and circumstances of the cases on hand. As noted
earlier, Section 84(1) of the Act is the substantive right of the assessee to file
an appeal. The manner, in which the appeal will be entertained, is
stipulated in the proviso under Section 84(1) of the Act. There is marked
difference between the words and phrases used in the Delhi Municipal
Corporation Act and that of the WBVAT. Hence, the decision cannot be
applied to the facts of this case. Equally this Court cannot enact a law and
the duty of the Court is to interpret the law and as we find there is nothing
arbitrary or unreasonable about the provisos to Section 84(1) the question of
making a recommendation to the legislature for amending the Act does not
arise. Equally the decision in the case of Royal Insulation wherein there
was direction to the State Government to issue an ordinance amending
Section 31 of the Tamil Nadu General Sales Tax Act, 1959 cannot be applied
to the facts and circumstances of the case on hand. Reliance was placed on
the decision of this Court in Shyam Sel and Power Limited wherein the
Court has referred to various decisions of the Hon'ble Supreme Court and
enlisted the circumstances whereunder it would be necessary to dispense
with the requirement of pre-deposit. The said decision arose out of a writ
petition filed by an assessee challenging the order passed by the Customs,
Excise and Service Tax Appellate Tribunal by directing the appellant therein
to pre-deposit an amount of Rs. 60 lakhs as condition precedent for stay of
the amount of duty and penalty which was payable by the assessee therein.
Considering the facts of the case, the Court took into consideration various
decisions where the Court had intervened in the matter of conditions
imposed to pre-deposit certain sums of money. The observation and the
findings of the Court are relatable to the facts of the said case where the
assessee approached the Court complaining that the condition to pay Rs. 60
lakhs was onerous. We need to remind ourselves that the challenge before
use is to the constitutional validity of the proviso to Section 84(1) of the Act
and while deciding the same we are not expected to be guided by decisions
which were rendered examining the correctness of the discretion exercised
by the Tribunals and the Lower Authorities. Therefore, the decision cannot
be made applicable to the facts and circumstances of the cases before us.
72. Reference was made to the decision in Monoranjan Chakraborty.
However, as admitted by the learned Advocate for the appellant that the said
decision has been reversed by the Hon'ble Supreme Court, we cannot draw
any reference from the decision of The Gauhati High Court which has been
reversed.
73. The learned Advocates for the appellant pointed out that there are
different categories of dealers and all dealers are being treated equally when
they are unequal which is violative of Article 14 of the Constitution. Certain
instances were pointed out wherein Appellate Authority under the Act has
mechanically insisted upon the dealers to effect pre-deposit though it was
an appeal filed by the dealer seeking enhancement of the claim for refund. It
may be true that there might have been some stray instances where the
Appellate Authority or the office of the Appellate Authority might have
mechanically refused to entertain an appeal regardless of the fact that the
appeal does not dispute any quantum of tax but disputes the computation
done by the revenue with regard to entitlement for refund. However, we find
such orders were reversed by the Tribunal, and rightly so. In any event,
these stray instances cannot be taken as an anvil to test the vires of a
statute.
74. Reliance was placed on the decision in M.P. Steel Corporation to
buttress the submission that the substantive right of filing an appeal cannot
be taken away by virtue of the second proviso. This argument was further
expanded by placing reliance on the decision of Khazan Chand Nathi Ram
and the decision in Cameo Exports. In the earlier part of this judgment, we
have conclusively held that the second proviso to Section 84(1) being a
procedural law does not in any manner impinge on the substantive right of
appeal conferred by the aggrieved dealer under Section 84(1) of the Act.
Therefore, the decision does not render support to the case of the appellant
assessees. It was contended that the condition imposed in the second
proviso is altogether a new provision, and it cannot have retrospective effect.
To support such contention, reliance was placed on the decision in Jayam
and Company. In the said decision the Hon'ble Supreme Court held that in
a fiscal legislation, the legislature has power to make provision
retrospectively. The broad legal principles as laid down in R.C. Tobacco
Private Limited Versus Union of India 46, was relied on to enumerate the
principles while testing a retrospective statute. It was held that,
(i) A law cannot be held to be unreasonable merely because it
operates retrospectively;
(ii) The unreasonability must lie in some other additional
factors;
(iii) The retrospective operation of a fiscal statute would have
tobe found to be unduly oppressive and confiscatory
before it can be held to be unreasonable as to violate
constitutional norms;
(iv) Where taxing statute is plainly discriminatory or provides
no procedural machinery for assessment and levy of tax or
that is confiscatory, courts will be justified in striking
down the impugned statute as unconstitutional;
(v) The other factors being period of retrospectivity and
degree of unforeseen or unforeseeable financial burden
imposed for the past period;
(vi) Length of time is not by itself decisive to affect
retrospectively.
(2005) 7 SCC 725
75. After referring to several other decisions, the Hon'ble Supreme
Court held that Section 19(20) of the Tamil Nadu Value Added Tax, 2006 is
altogether a new provision introduced for determining the input tax in a
specified situation i.e. goods are sold at a lesser price than the purchase
price of goods and the provision being introduced for the first time to the
detriment of the dealers cannot have retrospective effect. The decision in
Jayam and Company is clearly distinguishable on the facts. Firstly, the
Hon'ble Supreme Court held that it was altogether a new provision and the
new provision would cause detriment to the dealers was held to be
prospective. In the cases before us, we have been called upon to test the
vires of a procedural statute which has been introduced by way of
substitution, by the West Bengal Finance Act. It is settled legal principle
that a procedural law is always retrospective unless a contrary intention is
manifest in the provision itself. Therefore, the decision in Jayam and
Company cannot be made applicable to the facts and circumstances of the
cases on hand. The decision in Technimont Private Limited was referred
to to support the contention that in case of genuine and extreme hardship
writ petition could be an appropriate remedy. This issue does not arise for
consideration in the cases on hand as we are to decide the validity of the
impugned provision. In any event, if a dealer is of the view that he is entitled
to move the extraordinary jurisdiction of this Court under Article 226 of the
Constitution of India without filing an appeal before the Appellate Authority,
it is for such dealer to convince the Court as to why he is justified in not
availing the alternate remedy and as to why he has approached the High
Court under Article 226 of the Constitution. It is for the Court to then take a
decision as to whether the writ petition would be an appropriate remedy
though there exists a statutory appellate remedy.
76. It was contended that the learned Writ Court while dismissing the
writ petitions had placed heavy reliance on the decision in Rakesh Kohli,
which decision has been overruled in Shayara Bano. It was held that in the
decisions in Rakesh Kohli and other decisions, were read as being an
absolute bar to use of "arbitrariness" as a tool to strike down legislation
under Article 14 and the decisions were arrived at following the decision in
The State of A.P Versus McDowell and Co. 47, which was held to be per
incuriam, and therefore, the judgments, following McDowell (including
Rakesh Kohli), are no longer good law.
77. In our considered view, the tests which are to be applied to test the
constitutional validity of a substantive law is not required to be applied to
the cases on hand as we have conclusively held that the provisos to Section
84(1) are procedural. Therefore, the decision in Shayara Bano could be of
no assistance to the submissions made on behalf of the appellants.
78. In Newtech Promoters and Developers [(2021) SCC online SC
1044], five questions were framed for consideration of which the following
two questions would be of relevance to the present appeals:
1) Whether the Real Estate (Regulation and Development) Act, 2016, is
retrospective or retroactive in its operation and what will be its legal
consequences if tested on the anvil of the Constitution of India?
(1996) 3 SCC 709
2) Whether the conclusion of pre-deposit under proviso to Section 43
(5) of the 2016 Act for entertaining substantive right of appeal is
sustainable in law.
79. The Hon'ble Supreme Court held the provisions of the 2016 Act to be
retroactive in its operation. It was observed:
Merely because enactment as prayed is made retroactive in
its operation, it cannot be said to be either violative of Articles
14 of 19 (1) (g) of the Constitution of India. To the contrary, the
Parliament indeed has the power to legislate even
retrospectively to take into its fold the pre-existing contract
and rights executed between the parties in the larger public
interest.
80. Before the Hon'ble Supreme Court it was argued that the
substantive right of appeal cannot remain dependent on fulfillment of pre-
deposit which is otherwise onerous on the builders alone and discriminatory
amongst the stake holders as defined under the provisions of the 2016 Act.
Both the contentions were discarded in the following terms:
The submission in the first blush appears to be attractive but
is not sustainable in law for the reason that a perusal of
scheme of the Act makes it clear that the limited rights and
duties are provided on the shoulders of the allottees under
Section 19 of the Act at a given time, several onerous duties
and obligations have been imposed on the promoters i.e.
registration, duties of promoters, obligations of promoters,
adherence to sanctioned plans, insurance of real estate,
payment of penalty, interest and compensation, etc. under
Chapters III and VII of the Act 2016. This classification
between the rights, duties and obligations cast upon the
allotees/home buyers and the promoters and is in furtherance
of the object and purpose of the Act to protect the interest of
the consumers vis-a-viz, the promoters in the real estate
sector. The promoters and allotees are distinctly identifiable,
separate class of persons having been differently and
separately dealt with under the various provisions of the Act.
Therefore, the question of discrimination in the first place does
not arise which has been alleged as they fall under distinct
and different categories/ classes.
The legislature in its wisdom has intended to ensure that the
money which has been computed by the authority at least
must be safeguarded if the promoter intends to prefer an
appeal before the tribunal and in case, the appeal fails at a
late stage, it becomes difficult for the consumer/ allottee to get
the amount recovered which has been determined by the
authority and to avoid the consumer/ allottee to go from pillar
to post for recovery of the amount that has been determined
by the authority in fact, belongs to the allottee at a later stage
could be saved from all the miseries which come forward
against him.
At the same time, it will avoid unscrupulous and uncalled for
litigation at the appellate stage and restrict the promoter if
feels that there is some manifest material irregularity being
committed or his defence has not been properly appreciated at
the first stage, would prefer an appeal for re-appraisal of the
evidence on record provided substantive compliance of the
condition of pre-deposit is made over, the rights of the parties
inter se could easily be saved for adjudication at the appellate
stage.
81. It was submitted by the learned Advocate for the appellant that the
decision in Newtech Promoters is not applicable as it was admittedly a case
of pre-deposit and not payment. This contention does not merit
consideration as in the said decision the Hon'ble Supreme Court has
referred to and relied on the decision in Technimont Pvt. Ltd 48 wherein
the validity of Section 62(5) of the Punjab Value Added Tax Act, 2005 was
upheld. The said provision is similarly worded as the impugned proviso to
state that no appeal shall be entertained unless such appeal is accompanied
by satisfactory proof of the prior minimum payment of twenty five per cent
off the total amount of tax, penalty and interest, if any. Therefore, the
decision in Newtech Promoters would apply with full force to the appeals
on hand.
82. The Hon'ble Supreme Court further observed thus:-
AIR (2019) SC 4489
It is indeed the right of appeal which is a creature of the
statute, without a statutory provision, creating such a right
the person aggrieved is not entitled to file the appeal. It is
neither an absolute right nor an ingredient of natural justice,
the principles of which must be followed in all judicial and
quasi-judicial litigations and it is always be circumscribed
with the conditions of grant. At the given time, it is open for
the legislature in its wisdom to enact a law that no appeal
shall lie or it may lie on fulfillment of precondition, if any,
against the order passed by the Authority in question.
In our considered view, the obligation cast upon the promoter
of pre-deposit under Section 43(5) of the Act, being a class in
itself, and the promoters who are in receipt of money which is
being claimed by the home buyers/ allottees for refund and
determined in the first place by the competent authority, if
legislature in its wisdom intended to ensure that money once
determined by the authority be saved if appeal is to be
preferred at the instance of the promoter after due compliance
of pre-deposit as envisaged under Section 43(5) of the Act, in
no circumstance can be said to be onerous as prayed for or in
violation of Articles 14 or 19(1)(g) of the Constitution of India.
83. The upshot of the discussion is that:-
1. Insisting the dealer to produce the proof of payment of 15% of
the disputed tax in terms of the second proviso to Section
84(1) does not infringe/ abrogate the vested right of appeal
under Section 84(1) of the Act and such proviso does not
amount to compulsory extraction of tax as it is a procedural
law, prescribing a procedure for the purpose of entertaining
an appeal.
2. The second proviso to Section 84(1) of the Act does not
infringe Article 14 of the Constitution as the substantive law
namely, Section 84(1) of the Act does not provide for any
categories of dealers or categories of assessments except two
categories namely, provisional assessments and other
assessments and the two categories in the dealers as casual
dealer or any other dealer. Therefore, all categories of dealers
have been brought under a single umbrella and they have
been given right to file appeal against either a provisional
assessment or other assessment. Thus, the attempt of the
appellant to draw an artificial classification among the
dealers is impermissible.
3. The right of appeal conferred under Section 84(1) of the Act
has not been affected on account of the condition imposed
under the second proviso to Section 84(1) which provides for
the procedure to be adhered for entertainment of an appeal
by an aggrieved dealer. The procedural law does not in any
manner, impinge upon the vested right of the dealer conferred
under Section 84(1) of the Act.
4. By virtue of the amendment brought about by West Bengal
Finance Act, 2015, the second proviso to Section 84(1) of the
Act stood substituted by the new proviso thereby, making the
intention of the legislature clear that it never intended to keep
alive the old proviso.
5. The principle of "reading down" cannot be applied when there
is no ambiguity in the second proviso to Section 84(1) of the
Act that apart the proviso being a procedural law, it is validly
made applicable retrospectively, the dealers cannot claim any
vested right in a procedural law and for several reasons the
State legislature has sufficient freedom to impose conditions
while prescribing the procedure for entertaining an appeal
and insisting upon producing proof of payment of 15% of the
tax in dispute is neither onerous or unreasonable.
6. The alleged hardship of a dealer cannot be of any relevance
while considering vires of a statutory provision which has
been held to be a reasonable condition and nothing onerous.
84. In the result, the appeals are dismissed and the constitutional validity
of the second proviso to Section 84(1) is upheld. In cases where the
appellants have prayed for consequential relief in the writ petitions by
challenging show-cause notices or assessment orders, liberty is granted to
such of those appellants to file the reply to the show-cause notices within 30
days from the date of receipt of the server copy of this judgment and order
after which the concerned assessing authority shall proceed with the matter
in accordance with law. In cases where the appellants have challenged the
orders of assessments, they are granted liberty to file appeal before the
concerned appellate authority within 30 days from the date of receipt of the
server copy of this order and if such appeal is filed and the conditions in
Section 84(1) are complied with, the appellate authority shall entertain the
appellants appeals without rejecting the same on the ground of limitation.
No Costs.
(T.S. SIVAGNANAM, J)
I agree.
(HIRANMAY BHATTACHARYYA, J)
(P.A- SACHIN/PRAMITA)
