Delhi High Court
Franke Faber India Ltd. vs Commissioner, Trade & Taxes, ... on 18 February, 2016
Author: S. Muralidhar
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
3.
+ ST.APPL. 74/2014
BHARAT BIJLEE LIMITED ..... Petitioner
Through: Mr Anil K. Kher, Senior Advocate with
Mr Kunal Kher, Advocate.
versus
COMMISSIONER OF TRADE & TAXES ..... Respondent
Through: Mr Naushad Ahemad Khan, ASC (Civil)
GNCTD with Ms Neelam Kholiya, Advocate for
Respondent Nos.1 & 2.
With
4.
+ W.P.(C) 3664/2015 & CM APPL 6523/2015 (stay)
FRANKE FABER INDIA LTD. ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER, TRADE & TAXES, DELHI
& ANR. ..... Respondents
Through: None.
With
5.
+ W.P.(C) 3781/2015 & CM APPL 6757/2015 (stay)
FRANKE FABER INDIA LTD. ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER, TRADE & TAXES, DELHI
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 1 of 27
& ANR. ..... Respondents
Through: None.
With
6.
+ W.P.(C) 3766/2015 & CM APPL 6760/2015 (stay)
M/S BHUPINDER AUTO INTERNATIONAL ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER, TRADE & TAXES, DELHI
& ANR. ..... Respondents
Through: None.
With
52.
+ ST.APPL. 46/2014
DCW LTD. ..... Petitioner
Through: Mr Raj K. Batra and Mr H. L. Taneja,
Advocates.
versus
THE COMMISSIONER OF TRADE AND
TAXES, DELHI ..... Respondent
Through: Mr Satyakam, ASC, GNCTD.
With
53.
+ ST.APPL. 63/2014
H.G. INTERNATIONAL ..... Petitioner
Through: Mr Raj K. Batra and Mr H. L. Taneja,
Advocates.
versus
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 2 of 27
THE COMMISSIONER OF TRADE AND TAXES,
DELHI ..... Respondent
Through: Mr Gautam Narayan, Additional
Standing Counsel.
With
54.
+ ST.APPL. 75/2014 & CM No.18540/2014
ESS ESS METAL ENTERPRISES ..... Petitioner
Through: Mr Raj K. Batra and Mr H. L. Taneja,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES
& ORS. ..... Respondents
Through: Mr Satyakam, ASC, GNCTD.
With
55.
+ ST.APPL. 81/2014 & CM No.18856/2014
ESS ESS METAL ENTERPRISES ..... Petitioner
Through: Mr Raj K. Batra and Mr H. L. Taneja,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES
& ORS. ..... Respondents
Through: Mr Satyakam, ASC, GNCTD.
With
56.
+ ST.APPL. 82/2014 & CM No.18998/2014
ESS ESS METAL ENTERPRISES ..... Petitioner
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 3 of 27
Through: Mr Raj K. Batra and Mr H. L. Taneja,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES
& ORS. ..... Respondents
Through: Mr Satyakam, ASC, GNCTD.
With
57.
+ ST.APPL. 84/2014
TANYA ENTERPRISES ..... Petitioner
Through: Mr A. K. Babbar, Advocate.
versus
COMMISSIONER OF VALUE ADDED TAX ..... Respondent
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
With
58.
+ ST.APPL. 87/2014
ELECTRONIC CORPORATION OF INDIA ..... Petitioner
Through: Mr Raj K. Batra and Mr H. L. Taneja,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES
& ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, Additional Standing
Counsel, GNCTD with Ms Mahua Kalra,
Advocates.
With
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 4 of 27
59.
+ W.P.(C) 4537/2014 & CM APPLS 9045/2014 (for stay)
9644/2014 (leave to amend), 9645/2014 (for stay)
GRAVISS HOSPITALITY LTD. ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER, TRADE & TAXES, DELHI
& ANR. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
With
60.
+ W.P.(C) 6337/2014 & CM APPL 15274/2014 (stay)
COUNTRYWIDE NETWORK PVT. LTD. ..... Petitioner
Through: Mr Rajesh Jain, Mr Virag Tiwari, Mr K.
G. Bhat and Mr S. K. Sarwal, Advocates.
versus
COMMISSIONER, TRADE & TAXES, DELHI
& ANR. ..... Respondents
Through: None.
With
61.
+ W.P.(C) 5875/2014 & CM APPL 14408/2014
DEV EXPORTS ..... Petitioner
Through: Mr Rajesh Jain, Mr Virag Tiwari, Mr K.
G. Bhat and Mr S. K. Sarwal, Advocates.
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 5 of 27
versus
COMMISSIONER OF TRADE & TAXES ..... Respondent
Through: None.
With
62.
+ W.P.(C) 6765/2014 & CM APPL 16005/2014 (stay)
FOOD WORLD ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER, TRADE & TAXES, DELHI
& ANR. ..... Respondents
Through: None.
With
63.
+ W.P.(C) 6768/2014 &CM 16011/2014 (stay)
ALLIED IMPEX PVT. LTD. ..... Petitioner
Through: Through: Mr Rajesh Jain, Mr Virag
Tiwari, Mr K. G. Bhat and Mr S. K. Sarwal,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES ..... Respondent
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
With
64.
+ W.P.(C) 6770/2014 & CM APPL 16019/2014 (stay)
BERCO'S MELODY HOUSE ..... Petitioner
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 6 of 27
Through: Through: Mr Rajesh Jain, Mr Virag
Tiwari, Mr K. G. Bhat and Mr S. K. Sarwal,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES ..... Respondent
Through: None.
With
65.
+ W.P.(C) 7615/2014 & CM APPL 17944/2014 (stay)
ALLIANCE PETROLEUM PVT. LTD. ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
Advocates.
versus
GOVT. OF N.C.T. OF DELHI & ORS. ..... Respondents
Through: None.
With
66.
+ W.P.(C) 7632/2014 & CM APPL 17976/2014 (stay)
VIKAS PLASTICS ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
Advocates.
versus
THE GOVT. OF DELHI & ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 7 of 27
With
67.
+ W.P.(C) 7689/2014 and CM APPL. 18101/2014 (stay)
S. L. ENTERPRISES ..... Petitioner
Through: Through: Mr Rajesh Jain, Mr Virag
Tiwari, Mr K. G. Bhat and Mr S. K. Sarwal,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES ..... Respondent
Through: Mr Satyakam, ASC, GNCTD.
With
68.
+ W.P.(C) 8156/2014 & CM APPL 18996/2014 (stay)
LAKRA OIL TRADING CO. ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER OF TRADE & TAXES,
DELHI & ANR. ..... Respondents
Through: None.
With
69.
+ W.P.(C) 8718/2014 & CM APPL 20047/2014 (stay)
KHERA SALES CORPORATION ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
Advocates.
versus
COMMISSIONER OF VAT & ORS ..... Respondents
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 8 of 27
Through: None.
With
70.
+ W.P.(C) 8719/2014 & CM APPL 20049/2014 (stay)
RICHI RICH RESTAURANT PVT. LTD. ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER OF VAT & ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
With
71.
+ W.P.(C) 387/2015 & CM APPL 638/2015 (stay)
RICHI RICH RESTAURANT PVT. LTD. ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER OF TRADE AND TAXES,
NEW DELHI & ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
With
72.
+ W.P.(C) 403/2015 & CM APPL 678/2015 (stay)
KROSS DIAMONDS PVT. LTD. ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
Advocates.
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 9 of 27
versus
COMMISSIONER, VAT & ORS. ..... Respondents
Through: None.
With
73.
+ W.P.(C) 2535/2015 & CM APPL 4528/2015 (stay)
KAPUR GEMS PVT. LTD. ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES
& ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
With
74.
+ W.P.(C) 2537/2015
KAPUR GEMS PVT. LTD. ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES
& ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 10 of 27
With
75.
+ W.P.(C) 2694/2015 & CM APPL 4815/2015 (stay)
KAPUR GEMS PVT LTD. ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES
& ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
With
76.
+ W.P.(C) 2698/2015 & CM APPL 4820/2015 (stay)
KAPUR GEMS PVT. LTD. ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
Advocates.
versus
COMMISSIONER OF TRADE & TAXES,
& ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
With
77.
+ W.P.(C) 2815/2015 & CM APPL 5049/2015 (stay)
KAPUR GEMS PVT. LTD. ..... Petitioner
Through: Mr. Raj K. Batra with Mr. H.L. Taneja,
ST.Appl. No. 74/2014 & connected matters
W.P.(C) No. 4537/2014 & connected matters Page 11 of 27
Advocates.
versus
COMMISSIONER OF TRADE & TAXES
& ORS. ..... Respondents
Through: Mr Peeyoosh Kalra, ASC (Civil),
GNCTD with Ms Mahua Kalra and Ms Sona
Babbar, Advocates.
And
78.
+ W.P.(C) 3663/2015 & CM APPL 6521/2015 (stay)
FRANKE FABER INDIA LTD. ..... Petitioner
Through: Mr. Ruchir Bhatia, Advocate.
versus
COMMISSIONER,TRADE &TAXES, DELHI
& ANR. ..... Respondents
Through: Mr. Naushad Ahmed Khan, ASC with
Ms. Neelam, Advocate.
CORAM:
JUSTICE S. MURALIDHAR
JUSTICE VIBHU BAKHRU
ORDER
% 18.02.2016
Dr. S. Muralidhar, J.:
1. The common question that arises in these appeals and writ petitions is
whether a single Member of the Appellate Tribunal, Value Added Tax
('AT') can legitimately function as the AT in terms of Section 73(1) of the
Delhi Value Added Tax Act, 2004 ('DVAT Act').
ST.Appl. No. 74/2014 & connected matters
2. Section 73(1) of the DVAT Act reads as under:
"(1) The Government shall, as soon as may be after the
commencement of this Act, constitute an Appellate Tribunal
consisting of one or more members, as it thinks fit, to exercise
the powers and discharge the functions conferred on the
Appellate Tribunal by or under this Act:
Provided that where the Appellate Tribunal consists of one
member, that member shall be a person who has held a civil
judicial post for at least ten years or who has been a member of
the Indian Legal Service (not below Grade III) for at least three
years or who has been in practice as an advocate for at least ten
years, and where the Appellate Tribunal consists of more than
one member, one such member shall be a person qualified as
aforesaid."
3. In terms of Section 73(1) of the DVAT Act, a notification was issued by
the Lieutenant Governor ('LG'), Government of National Capital Territory of
Delhi ('GNCTD') on 27th June 2005 which reads as under:
"In exercise of the powers conferred by sub-section (1) of
Section 73 of the Delhi Value Added Tax Act, 2004 (Delhi Act
3 of 2005), and subject to the stipulations contained in the
proviso to the said sub-section, the Lieutenant Governor of the
National Capital Territory of Delhi hereby constitutes an
Appellate Tribunal consisting of two members to exercise the
powers and discharge the functions conferred on the Appellate
Tribunal by or under the said Act. The Appellate Tribunal shall
also dispose of the appeals already filed or yet to be filed under
Section 43(2) of the Delhi Sales Tax Act, 1975 (since repealed
with effect from the 1st April, 2005)."
4. Initially the AT consisted of Mr. S. K. Kaushik (Chairman), Mr. D.C.
Anand (Judicial Member) and Ms. Nita Bali (Administrative Member). On
18th June 2012, Section 73 of the DVAT Act was amended to insert sub-
ST.Appl. No. 74/2014 & connected matters
section (9), which empowered the GNCTD to constitute benches comprising
of one or more members through a notification. Admittedly, as far as the AT
was concerned, no notification under Section 73(9) of the DVAT Act has
been issued till date.
5. On 31st July 2013, the Lieutenant Governor ('LG'), GNCTD removed Mr.
Kaushik and Ms. Bali from the AT with immediate effect. As a result only
Mr. D.C. Anand remained as the Member (Judicial) of the AT.
6. Thereafter the GNCTD invited applications for appointment of Members
of AT on 7th September 2013. On 11th July 2014, by two separate
notifications issued under Section 73(1) of the DVAT Act, the GNCTD
appointed a Member (Judicial) and a Member (Administrative) respectively.
7. During the period between 1st August 2013 and 28th July 2014 (the date
from which the two new members joined), only Mr. Anand continued as
Member (Judicial). He continued to exercise the powers and functions of the
AT. He inter alia heard the appeals of the Appellants and Petitioners herein.
Preliminary issue
8. In response to a specific query from the Court, whether in any of these
matters the Appellants or Petitioners (hereafter 'Assessees') had raised an
objection before Mr. Anand, who heard their appeals, that he did not have
jurisdiction to do so, the reply was in the negative. It appears that while at
the time of filing of some of the appeals, and even at the time of passing an
order of pre-deposit, the AT may have comprised of two or more members,
ST.Appl. No. 74/2014 & connected matters
by the time the appeal was taken up for final hearing only Mr. Anand
continued as Member (Judicial) of the AT.
9. On the issue whether the failure by the Assessees to raise an objection
before Mr. Anand about his lack of jurisdiction to hear the appeal would
preclude them from later urging such a ground in a higher forum, learned
counsel for the Assessees placed reliance on the decision of the Constitution
Bench of the Supreme Court in The United Commercial Bank Ltd. v.
Workmen AIR 1951 SC 230 and the Full Bench of the Andhra Pradesh
High Court in M/s. Sheik Hussain v. State of Andhra Pradesh AIR 1964
AP 36 (FB).
10. In light of the legal position explained in the aforementioned decisions,
the Court proposes to examine the question that arises in these matters
notwithstanding that none of the Assessees may have raised it in the first
instance before Mr. Anand when he functioned as AT and heard and
disposed of their respective appeals.
Submissions of the Assessees
11. The main plank of the submission on behalf of the Assessees was that
the AT, for the purposes of Section 73(1) of the DVAT Act, is that which is
constituted by the GNCTD. In the absence of any separate notification under
Section 73(9) of the DVAT Act constituting benches of the AT of one or
more of its members, the AT for all practical purposes was that comprised of
two members in terms of the notification dated 27 th June 2005. It was
submitted that in the absence of the vacancy created with effect from 1 st
August 2013 being filled up to complete the quorum of the AT, any order
ST.Appl. No. 74/2014 & connected matters
passed by Mr. Anand sitting singly as Member (Judicial) of the AT would
be null and void. It is pointed out that unlike provisions in the value added
tax legislations of some other states, for e.g., Assam, Manipur, West Bengal
etc. which contain a specific provision to the effect that "no decision or
action of the Tribunal shall be called in question merely on the ground of
any vacancy in the Tribunal", there is no provision in Section 73 or any
other provision of the DVAT Act to that effect. It is accordingly contended
that all decisions taken by Mr. Anand sitting singly as Member (Judicial) of
the AT should be declared to be invalid by this Court.
12. Apart from the reliance being placed by the Assessees on the decision of
the Constitution Bench of the Supreme Court in The United Commercial
Bank Ltd. v. Workmen (supra), reliance was also placed on the decisions in
Subhash G. Narvekar v. State of Goa (2005) 6 Bom CR 341, C.K.
Doraiswamy Naidu v. State of Andhra Pradesh 1966 (12) FLR 248 (Hyd)
and Kama Umi Isa Ammal v. Rama Kudumban AIR 1953 Madras 129.
Submissions of the GNCTD
13. Countering the above submissions, it was contended by Mr. Peeyoosh
Kalra and Mr. Satyakam, Additional Standing Counsel for GNCTD that
under Section 73(1) of the DVAT Act, the GNCTD could constitute an AT
consisting of one or more members. It was pointed out that the proviso to
Section 73(1) of the Act envisages a single member of the AT, qualified to
hold the post of Member (Judicial) functioning as the AT. A reference was
also made to Section 73(4) of the DVAT Act which contemplates a vacancy
being caused in the AT which is required to be filled up by the GNCTD "as
ST.Appl. No. 74/2014 & connected matters
soon as practicable". Attention was also drawn to Regulation 35 of the Delhi
Value Added Tax Appellate Tribunal Regulations, 2005 ('AT Regulations')
which provides that the proceedings of the AT will not be invalid merely
because the Chairman or a Member of the AT withdraws from hearing a
matter. Considerable reliance was placed by the Respondents on the decision
of this Court in Kwality Restaurant & Ice Cream Co. v. Commissioner,
VAT (2012) 54 VST 387 (Del).
14. It was submitted that considering that only one member of the AT was
available in the period between 1st August 2013 and 28th July 2014, such
member could validly function as AT notwithstanding the absence of a
notification under Section 73(9) of the DVAT Act. Alternatively, it was
submitted that the de facto doctrine would apply and even if it were to be
held that Mr. Anand as Member (Judicial) could not have functioned as AT,
his decisions in the appeals of the Assessees herein would not be invalid on
that score.
Analysis and reasons
15. To begin with, the Court notices that Section 73(1) of the DVAT Act
does not contemplate the GNCTD having to issue a notification to constitute
the AT. Even if it appoints one or more members of an AT, such AT could
validly function as such. In other words, the AT does not cease to function
only because there is no notification specifically issued by the GNCTD
constituting such an AT.
16. An AT under Section 73(1) of the DVAT Act can have one or more
ST.Appl. No. 74/2014 & connected matters
members. In the present context, while there was a notification of 27 th June
2005 constituting an AT consisting of two members, no separate notification
as such was issued under Section 73(1) of the DVAT Act when the third
Member (Technical) was appointed. That did not mean that the AT could
not function as a three-member Tribunal. As long as the requirement of
Section 73(1) of the DVAT Act stood satisfied, inasmuch as there was one
or more members of the AT functioning as such, the absence of notification
being issued by the GNCTD under Section 73(1) of the DVAT Act would
not impinge on the valid constitution of such AT.
17. Turning to Section 73 (4) of the DVAT Act, it is seen that the legislative
intent is to ensure continuity of the functioning of the AT even if a vacancy
is caused in the membership of the AT. The wording of Section 73(4) of the
Act makes this position explicit. It states that the Government will
endeavour to fill up the vacancy "as soon as practicable". It does not say that
till such time the vacancy is not filled up, the AT cannot function as such. In
the absence of any prohibition in the AT functioning as such with the
remaining members when a vacancy is caused, it cannot be presumed that an
AT with a lesser number of members than those appointed initially cannot
function as an AT.
18. This position has been explained by the Division Bench of this Court in
Kwality Restaurant & Ice Cream Co. v. Commissioner, VAT (supra). A
perusal of the said decision shows that the Assessee therein had its appeal
heard by a two-member AT at a time when the AT comprised of three
members. The hearing of the appeal was more or less concluded and it was
ST.Appl. No. 74/2014 & connected matters
at the stage of final arguments when the third member of the AT joined the
proceedings. An objection was immediately raised by the Assessee therein
to the expansion of the quorum of the AT to include the Member (Technical)
who had till then been away on account of leave or absence and had not
participated in the hearing. With the AT negativing the objection, the
Assessee filed a writ petition in this Court questioning the correctness of the
said order of the AT.
19. It is significant that the respective stands of the Assessee and the
Department of Trade and Taxes (DTT) in the aforesaid case is converse of
their respective stands in the present case. In Kwality Restaurant & Ice
Cream Co. v. Commissioner, VAT (supra) the contention of the Assessee
was that it would be unfair to the Assessee if a third member of the AT is
permitted to participate in hearing of the appeal at the fag-end of the hearing
when most of the hearing had taken place before the AT comprising only
two members. The stand of the DTT, on the other hand in the said case, was
that the AT could not be said to have been fully constituted till all the
members of the AT participating in the hearing.
20. In Kwality Restaurant & Ice Cream Co. v. Commissioner, VAT (supra),
this Court took note of the fact that under Regulation 35(3) of the AT
Regulations, there can be a situation where the full quorum of the AT is not
available since one or more members could withdraw on the ground of
conflict of interest vis-a-vis the subject matter of the proceedings before the
AT. It was observed by the Court as under:
"8. Facially, the provisions of the Act and Regulations suggest
ST.Appl. No. 74/2014 & connected matters
that the Tribunal, whenever it consists of a plurality of members
has to hold sittings en bloc. However, at the same time, Section
73(4) contemplates a situation where a vacancy might arise in
the membership of the Tribunal. This is not perceived to be an
impediment in its functioning or cause such a hiatus as to
require a separate provision, to enable the existing members to
continue with their functioning. Nor does the statue ordain a
minimum quorum for the hearing of appeals. It, therefore,
appears that the statute is neutral about the consequences which
follow in the event of a member's absence from the Tribunal
for a temporary period, as in this case. This aspect is important,
because the absence of any prohibition either in the negative
form, enjoining members from functioning and hearing appeals
during the absence of one of them, or absence of a provision
mandating a minimum quorum, implies that the Legislature did
not contemplate a logjam, in the Tribunal's functioning. The
argument of the Revenue about a restrictive class of cases
which deals with absence of a member, i.e., in terms of
regulation 35, is insubstantial. For one, that regulation is not
part of the statute; secondly, it states an obvious rule, which all
members of judicial and quasi-judicial bodies have to follow.
Its absence would in no whit undermine the principle it gives
shape to. It would be useful to recollect that every Tribunal is
clothed with incidental and ancillary powers to effectuate its
orders, and carry out its functions effectively (Union of India v.
Paras Laminates (P) Ltd. [1991] 90 STC 263 (SC); [1990] 186
ITR 722 one of the members of the VAT Tribunal can, by no
stretch of the imagination, result in its becoming dysfunctional,
or being unable to function."
21. The Court further proceeded to observe that the conspectus of the DVAT
Act and the AT Regulations reveal that an AT discharges judicial functions.
Even if there were anomalies in the provisions, anything which tends to
undermine the public confidence in the AT has to be "shunned and wherever
necessary, cured". In the facts and circumstances, the Court passed an order
forbearing the third Member (Technical) from participating in the
ST.Appl. No. 74/2014 & connected matters
proceedings in the appeal in question any further and also directed the
appeal to be disposed of by the AT comprising two members who heard it at
the first place. The decision in Kwality Restaurant & Ice Cream Co. v.
Commissioner, VAT (supra) underscores that the legislative intent was that
of continuity of the AT and not its cessation because of a vacancy in its
membership.
22. As far as the present case is concerned, the Court finds that it is only on
account of the vacancies created by the removal of the two of the three
members comprising the AT, that the remaining single Member (Judicial)
had to function as AT with effect from 1 st August 2013. Since he was the
only member, there was no question of constituting benches by issuing a
notification under Section 73 (9) of the DVAT Act. Also in terms of Section
73(1) of the DVAT Act, since one or more members could function as an
AT, there was no illegality attached to the single Member functioning as an
AT. This is also in consonance with the legislative intent behind Section 73
(4) of the DVAT Act which contemplates continuity of the proceedings
before the AT notwithstanding the vacancies created in its membership.
Decision in UCO Bank
23. Since considerable reliance has been placed by learned counsel for the
Petitioner on the decision in The United Commercial Bank Ltd. v.
Workmen (supra) it becomes necessary to discuss the said decision in some
detail. The facts there were that the Central Government constituted an
Industrial Tribunal (IT) by a notification dated 13th June 1949 comprising a
Chairman and two other members under Section 8 of the Industrial Disputes
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Act, 1947 ('ID Act'). The second notification dated 24 th August 1949 was
issued under Section 8(1) of the ID Act appointing Mr. N. Chandrasekhara
Aiyer as a member of the IT in place of one of the members, whose services
ceased to be available. The re-constituted IT commenced its regular sitting
first in Bombay and thereafter at Delhi and Patna. At some of the sittings,
one or other of the three members comprising the IT were absent.
24. Between 23rd November 1949 and 20th February 1950 the services of
Mr. Aiyer were placed at the disposal of the Ministry of External Affairs.
The remaining two members, Mr. Sen and Mr. Mazumdar, together sat at
several places as the IT and made certain Awards. Under Section 15 of the
ID Act the said Awards were accepted by the Government and published in
the gazette. Between 16th January and 20th February 1950 several issues
concerning the jurisdiction of the IT were dealt with. These arose also in the
context of Mr. Aiyer resuming as member of the IT after 20th February 1950
and thereafter sitting with both Mr. Sen and Mr. Mazumdar.
25. It was in this background that the question arose whether in the absence
of Mr. Aiyer, the two other members had no jurisdiction to hear anything at
all without an appropriate notification being issued. Since Mr. Aiyer's
services had ceased to be available on 27th October 1949 he could not
resume sitting as a Member of the IT with the other two members in the
absence of a notification under Section 7 of the ID Act.
26. In The United Commercial Bank Ltd. v. Workmen (supra) the
Constitution Bench of the Supreme Court analysed the relevant provisions
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and noticed a distinction between Section 7 of the ID Act which talked of
appointments of two or more members of the IT and Section 8(1) of the ID
Act which talked of vacancy in the membership of the Board or IT. It was
held that under Section 5(4) of the ID Act when a member of the Board is
absent or there is a vacancy, "the Board is permitted to act, notwithstanding
such absence, provided there is the prescribed quorum. Such quorum is fixed
by the rules of framed" by the appropriate Government. It was observed that
in terms of the proviso to Section 5(4) of the ID Act, where the services of a
Chairman or Member of the Board had ceased to be available, the Board
would not act "until a new Chairman or a member, as the case may be, has
been appointed".
27. The very wording of the relevant provisions of the ID Act is different
when compared to the provisions of the DVAT Act. For instance, Section
7(1) of the ID Act states that the appropriate government may constitute one
or more Tribunals for adjudication of the industrial disputes and Section 7(2)
of the ID Act states that such Tribunal shall consist of such number of
members as the appropriate government may think fit. Where the Tribunal
comprises two or more members, one of them shall be appointed as its
Chairman. In contrast, Section 8(3) of the ID Act specifically states that
where the services of any member of a Board other than the Chairman has
ceased to be available, the appropriate government shall appoint, in the
manner specified in Section 5(3) of the ID Act, another person to take his
place and the proceedings shall be continued before the Board as
reconstituted. The above provisions of the ID Act also, therefore, make it
clear that unless the vacancy is filled up and the IT reconstituted, it cannot
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continue the proceedings pending before the Board.
28. By its very wording, Section 73(4) of the DVAT Act is different. It does
not state that there can be no continuation of the hearing of the appeals by a
single Member (Judicial) of the AT unless the second member is also
appointed. On the contrary, it appears to indicate that whoever is remaining
in the AT shall act as such, till such time the government fills up the
vacancy. Consequently, the Court is of the view that the decision in The
United Commercial Bank Ltd. v. Workmen (supra) is not of any assistance
to the Assessees.
29. The Court is of the view that on a collective reading of Section 73(1), (4)
and (9) of the Act together with the AT Regulations, the position that
emerges is that as long as there is only one remaining member of the AT by
virtue of the others being either removed or the vacancies not being filled
up, such member can, subject to being otherwise qualified, validly function
as an AT.
30. Alternatively, if the situation was that there were two members of the
AT and only one of them sat as an AT to decide an appeal, it could be
argued that the AT was not properly constituted particularly in the absence
of a notification under Section 73(9) of the DVAT Act constituting benches
of the AT. However as far as the present cases are concerned that would be a
hypothetical question because there was no other member of the AT
remaining between 1st August 2013 and 20th July 2014. It was only Mr.
Anand, Member (Judicial) who remained in the AT. There was no question
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of a notification being issued under Section 73(9) of the DVAT Act to
constitute a bench of the AT. There was no bar to Mr. Anand continuing to
function as an AT.
The de facto doctrine
31. Even assuming that Mr. Anand lacked jurisdiction to hear the appeals
and petitions as the AT, by applying the de facto doctrine it could be held
that the decision taken by him as a single Member of the AT would
nevertheless get validated on this score. Here the rational appears to be that
no litigant should suffer on account of the delays and uncertainties only
because a vacancy is created in the AT. The law in this regard has been
succinctly explained in the decision in Gokaraju Rangaraju v. State of AP
(1981) 3 SCC 132 where the Supreme Court observed as under:
"17. A judge, de facto, therefore, is one who is not a mere intruder or
usurper but one who holds office, under colour of lawful authority,
though his appointment is defective and may later be found to be
defective. Whatever be the defect of his title to the office, judgments
pronounced by him and acts done by him when he was clothed with
the powers and functions of the office, albeit unlawfully, have the
same efficacy as judgments pronounced and acts done by a Judge de
jure. Such is the de facto doctrine, born of necessity and public a
policy, to prevent needless confusion and endless mischief. There is
yet another rule also based on public policy. The defective
appointment of a de facto judge may be questioned directly in a
proceeding to which he be a party but it cannot be permitted to be
questioned in a litigation between two private litigants, a litigation
which is of no concern or consequence to the judge except as a judge.
Two litigants litigating their private titles cannot be permitted to bring
in issue and litigate upon the title of a judge to his office. Otherwise
so soon as a judge pronounces a judgment a litigation may be
commenced for a declaration that the judgment is void because the
judge is no judge. A judge's title to his office cannot be brought into
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jeopardy in that fashion. Hence the rule against collateral attack on
validity of judicial appointments. To question a judge's appointment
in an appeal against the judgment is, of course, such a collateral
attack."
32. The result of the above discussion is that the Court negatives the plea of
the Assessees and holds that the single Member (Judicial) could validly
function as the AT between 1st August 2013 and 20th July 2014. Further,
even assuming that during the aforementioned period he lacked jurisdiction,
the de facto doctrine would apply and the decisions taken by him during the
said period shall not be invalidated.
Writ petitions that are dismissed
33. Accordingly, as far as Writ Petition Nos. 3664/2015, 3781/2015,
3766/2015, 4537/2014, 6337/2014, 5875/2014, 6765/2014, 6768/2014,
6770/2014, 7615/2014, 7632/2014, 8156/2014, 8718/2014, 8719/2014,
387/2015, 403/2015, 2535/2015, 2537/2015, 2694/2015, 2698/2015,
2815/2015 and 3663/2015 are concerned, since the only issue is the
challenge to the jurisdiction of a single Member of the AT, these writ
petitions are dismissed. The pending applications in these writ petitions are
also disposed of in the above terms.
34. The challenge raised in these writ petitions to the decision of the AT on
merits cannot be addressed in these writ petitions. Although learned counsel
for the Petitioners urged that the writ petitions may themselves be treated as
appeals, the Court is not inclined to do so. It would be open to the
Petitioners to file the respective statutory appeals, in accordance with law, to
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challenge the orders of the AT on merits accompanied by application for
condonation of delay, wherever applicable. In considering the question of
condonation of delay, the Court concerned will take into account the fact of
pendency of the above writ petitions.
35. As far as the Writ Petition (C) No. 7689 of 2014 is concerned, it raises
an additional issue of the constitutional validity of Section 5 of the DVAT
Act. To consider that issue, Writ Petition (C) No. 7689 of 2014 is set down
for hearing on 16th August 2016.
36. As far as the Sales Tax Appeals being ST. Appl. Nos.74/2014, 46/2014,
63/2014, 75/2014, 81/2014, 82/2014 and 87/2014 are concerned, to the
extent that the question of the validity of the decision of the single Member
AT, that question is answered against the Assessees and in favour of the
Department.
37. To consider the remaining questions raised in the aforementioned
appeals, each of the appeals is directed to be listed on separate dates as will
be indicated in the separate order passed in the concerned Sales Tax
Appeals.
S. MURALIDHAR, J
VIBHU BAKHRU, J
FEBRUARY 18, 2016
dn
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