M/S. Dcm Limited vs Sales Tax Officer, Ward No. 7 New ...
2001 Latest Caselaw 736 Del

ORDER

Arijit Pasayat, C.J.

1.

Petitioner, in this petition under Articles 226 & 227 of the Constitution of India, 1950 questions the legality of the orders passed by the Appellate Tribunal, Sales Tax, Delhi (in short 'the Tribunal') while dealing with the appeals filed by the petitioner against the direction fro pre-deposits for entertaining the appeals filed before appellate authority. By order dated 31st January, 2001 petitioner was directed by the Tribunal to deposit Rs. 2 crores against the demands raised under the Delhi Sales Tax Act, 1975 (in short 'the Act') and Rs. 75 lakhs against demands raised under the Central Sales Tax Act, 1956 (in short 'the Act'). First Appellate Authority i.e. Additional Commissioner Sales Tax-I had directed pre-deposit of Rs. 3 crores and Rs. 75 lakhs respectively for entertaining the first appeals filed relating to assessments for assessment year 1989-90. The total demand raised under the Act was in the neighborhood of Rs. 25.18 crores, while it was Rs. 1.27 crores under Central Act. Petitioner filed and application for review of the order. Tribunal held that there was no scope for reviewing the order. So far as the tax raised under the Act is concerned, a major portion of it related to levy of tax on deemed transfer of assets. Tribunal took note of that aspect while directing payment of Rs. 2 crores under the Act. It also took note of the financial position of the petitioner as highlighted before it.

2. According to learned counsel for the petitioner, requirement of per-deposit is unreasonable restriction on the right to file an appeal against an adverse adjudication. In any event, according to him, imposition of stringent conditions makes the right illusory. In the case at hand, it is submitted that the authorities lost sight of the real factual position and acted on surmises and conjectures to levy huge extra demands. Several documents have been pressed into service to show that the assessments were unsustainable. Additionally, it is urged that precarious financial position of the petitioner makes it impossible to comply with the conditions. It is further submitted that on a careful consideration of the relevant materials, the assessments will not stand the test of appeal and, on the contrary, liquidation of the amounts directed to be deposited would cause undue hardship to it. In essence, it is submitted that the discretion dispensing with pre-deposit has not been judiciously exercised.

3. Learned counsel for the Revenue, on the other hand, submitted that the documents and materials placed on record were duly analysed by the assessing officer and the conclusions are in order. Petitioner has not made out a case for being granted stay of realisation of the extra demands. Nowhere before the authorities below any financial stringency was established and for the first time, without any material to support the stand, a contention cannot be raised before this Court. It is pointed out that against the demand of more than Rs. 26 crores only Rs. 2.75 crores have been directed to be paid.

4. Section 43(5) appearing in Chapter 8 of the Act deals with filing of an appeal, where it has clearly stipulated that no appeal against the assessment with or without penalty or order imposing penalty shall be entertained unless such an appeal is accompanied by satisfactory proof of payment of the tax with or without penalty in respect of which appeal has been preferred. However, a discretion has been conferred on the authority to entertain an appeal for reasons to be recorded in writing that insistence on full amount being paid need not be there furnishing any prescribed amount of security for the amount as may be directed or deposit of smaller sum that raised as extra demand.

5. Requirement of deposit of the amount in dispute is a condition precedent for entertaining the appeal and not for filing the appeal. The provisions are mandatory in nature and failure to deposit the amount in question would render the appeal incompetent. While considering an application for grant of stay, the concerned authority has to, inter alia, consider the following aspects:

(a) Whether there is prima facie case in favor of the assessed.

(b) The balance of convenience qua deposit or otherwise.

(c) Irreparable loss, if any, to be caused in case stay is not granted.

(d) Safeguarding of public interest.

6. In Assistant Collector of Central Excise, West Bengal v. Dunlop India Ltd the Apex Court held that normally four factors for grant of stay order should be kept in view, i.e. prima facie case, which by itself is not enough, balance of convenience, possibility of irreparable injury and safeguarding the public interest.

7. Right of appeal is a creation of statute. But in exercise of such right, there is no inherent of constitutional right to file an appeal. While granting such right, Legislature can impose any condition. It was observed in Anant Mills Co. Ltd v. State of Gujarat and State of Bombay v. Supreme General Films Exchange Ltd. , that Legislature can while granting right of appeal, lay down a condition for deposit of tax as it is creation of stature. Legislature can also put restriction it so as to curtail it. There is nothing wrong if under same statute, a right of appeal is given and them some restrictions are put over it. Right to appeal is substantive fight and not a mere matter of procedure. But such right is neither an absolute right nor an ingredient of natural justice. It must be conferred by statue and can be exercised only as permitted by statute. There is no fetter in imposing conditions about deposit of fees etc. There are many fiscal statutes like Central Excise and Salt Act, Customs Act, Sales Tax Acts of various States and many other similar statutes, which mandate deposit of disputed amount as a condition precedent for entertaining appeal. Condition of deposit of court fee in many cases merely regulates exercise of right of appeal. It is open to Legislature to impose an accompanying liability upon a party upon whom legal right is conferred or to prescribe conditions for exercise of right. Any requirement for discharge of that liability of fulfillment of that condition in case the party concerned seeks to avail said right is valid piece of legislation and Article 14 has no application. Observations in the case of Hannah Cohen v. Beneficial Industrial (1949) 337 US 541 lend some support to the view we have taken. Headnote 10 which is based upon the observations in the body of the judgment reads as follows:

"10. A State statute which requires that in a stock-holder's derivative action a plaintiff who owns less than five percent of the defendant corporation's outstanding shares, or shares having market value not exceeding $ 50000, give security for the reasonable expenses, including counsel fee., incurred by the corporation and by other parties defendant, and which makes the plaintiff liable for such expenses if he does not make good his claims, and subjects the amount of security to increase if the progress of the litigation reveals that it is inadequate or to decrease if it is proved to be excessive, does not violate the contract clause or the due process cause, or the equal protection clause of the Federal Constitution."

8. It has to be noted that under proviso to section 30(1) of the Workmens Compensation Act, 1923, no appeal by an employer shall lie in respect of demand under clause (a) of the said sub-section, unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against. In T. Narayanan Nair v. Union of India (1990) 77 FJR (Ker.) it was held that provision which requires deposit of fee before resorting to appeal cannot be said to be illegal and the inconvenience caused to the appellant to make payment is no reason to strike down said statutory provisions. It was observed by Punjab and Haryana High Court in Piara Singh v. Commissioner, Workmen Compensation, Patiala (1987) Lab IC 818 that simple fact that compensation awarded has to be deposited before an appeal can be entertained would not furnish ground to entertain writ petition by passing statutory remedy for appeal. In Nathamuni Gounder v. State of Tamil Nadu (1986) 2 LLJ 423, it was observed that if the Legislature provides for no appeal in a particular case, or provides for an appeal subject to certain conditions it is a piece of proper legislation. Even if a statute denied right of appeal, statute cannot be said to be bad legislation. Reference to the other statutes where conditions are imposed for entertaining an appeal has been made for purpose of showing that even where apparently more onerous requirements and/or conditions have been imposed that per se has been held to be no ground for declaration of a provision ultra vires.

9. It is to be noted that Tribunal, in the original order which was sought to be reviewed, inter alia observed as follows:

"It appears that barring the tax on sale of assets on re-organisation of the company other additions and disallowances are basically matters of fact and evidence. The Ld. First Appellate Authority, who has avoided to comment on the merits of the appeals, appears to have taken into consideration of the prima facie case. On the financial capacity of the company it appears to be a classic example of asset stripping. The cash generating assets have been transferred to group companies and now the appellant cries for shortage of funds guarantors for its liabilities. If a company holding current assets worth several hundred crores cannot pay the likely tax demands running into single crore, who in the country will like to pay his likely tax dues. The argument that the payment to the department would be against the interest of depositors does not cut ice in view of the facts and further that the department has a priority over the appears to be more anxious to delay the discharge of its liabilities than getting the appeals decided as is evident from its progress of the writ petition without final order and the present appeals".

10. It is accepted that declaration forms for transactions have not been produced. A sum of Rs. 1 crore has been levied on enhancements made in turnover for alleged suppression of sale of floppies. It is petitioner's stand that the suppression has not been established. Some of the other items for which extra demands have been levied under the Act are as follows:

Sl. No.  Items                            Tax Levied
--------------------------------------------------------

1.       Purchase Tax on packing         3,078,983.00
         material used for goods
         transferred to other states

2.       Purchase Tax (Differential)       890,561.00
         @ 2% on packing material used
         for Local Sales

3.       Gain in weight due to             613,458.00
         hydrogenation

4.       Sales of Floppies                 117,958.00

5.       Commission Sale for dealer      1,415,766.00
         in USA

6.       On write off value of goods       100,000.00
  

 

11. The amounts indicated above are exclusive of interest. Whether the enhancement was proper or the levy on other scores can be maintained is a question which has to be gone into in detail by the appellate authority. It would not be proper and/or desirable for us to express any final opinion in the matter. So far as the demands under the Central Act are concerned, major part of it relates to non-production of declaration forms (either "C" forms or "E" forms). We find that Tribunal had taken note of the relevant aspects while directing payment of Rs. 2 crores and Rs. 75 lakhs respectively. Scope for interference in a matter of this nature, particularly when the appeal is yet to he heard and merits of the appeal is to be considered elaborately, is rather limited. Since the Tribunal has kept in view the relevant aspects we don not consider this to be a fit case for our interference. It is stated that the petitioner has deposited Rs. 26. lakhs so far as the demands rebateable to the Aft are concerned and Rs. 4 lakhs so far as the demands relatable to the Central Act are concerned. We direct that in case of deposit of balance amounts as directed (i.e. Rs. 1.74 crores & Rs. 71 lakhs) by the end of July, 2001, realisation of residual extra demand shall remain stayed till disposal of the appeals and the appeals shall be heard on merits by the first appellate authority, if they are otherwise free from defects.

12. The petition stands disposed of.