Madras High Court
Laxmi Packaging vs Additional Appellate Deputy ... on 12 August, 2022
WP.Nos.33312 of 2019 & etc. batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 12.08.2022
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
W.P.Nos.33312, 33340, 33343, 33348, 33352, 33353, 33319, 33317, 33326,
33327 & 33347 of 2019 &
W.P.Nos.4303, 4318, 4312, 4316, 4323, 4307, 4325, 4297, 4298, 4319 & 4302
of 2020
and
WMP.Nos.33766, 33783, 33789, 33797, 33798, 33767, 33770, 33772, 33779,
33780, 33814, 33810, 33813, 33800, 33801, 33803, 33804, 33806, 33807,
33808, 33784 & 33787 of 2019 &
WMP.Nos.5108, 5090, 5091, 5097, 5117, 5099, 5100, 5120, 5122, 5111 &
5114 of 2020
WP.No.33312 of 2019
Laxmi Packaging
Represented by its Proprietor,
N.Sivanathan
No.787, Edayar Street,
Coimbatore – 641 001. ... Petitioner
Vs
1.Additional Appellate Deputy Commissioner (ST) (FAC),
Dr.Balasundaram Road,
Coimbatore – 641 018.
2.State Tax Officer (ST),
Oppanakkara Assessment Circle,
Dr.Balasundaram Road,
Coimbatore – 641 018. ... Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India, to
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issue aWrit of Certiorarified Mandamus, to call for the impugned order passed
by the first respondent in VAT AP No.1038/2018 (2012-13) dated 31.10.2018
and quash the same and further direct the first respondent rehear the appeal in
accordance with law.
WP.Nos. For Petitioners For Respondents
WP.Nos.33312, 33340, Mr.N.Murali Mr.C.Harsha Raj
33343, 33348, 33352, Additional Government
33353, 33319, 33317, Pleader (for R2)
33326, 33327 & 33347 of
2019 R1 - Tribunal
WP.Nos.4303, 4318, 4312, Mr.N.Murali Mr.C.Harsha Raj
4316, 4323, 4307, 4325, Additional Government
4297, 4298, 4319 & 4302 Pleader (for R2 & R3)
of 2020
R1 - Tribunal
COMMON ORDER
This is a batch of twenty two (22) Writ Petitions filed by two petitioners.
The years in question are 2011-12 to 2016-17 in the case of Jaishni Packs Pvt.
Ltd., and 2012-13 to 2016-17 in the case of Laxmi Packaging.
2.The petitioners have challenged the orders of the first Appellate
Authority dated 31.10.2018 in all cases, as well as an order passed by the Sales
Tax Appellate Tribunal (in short ‘STAT/Tribunal’) declining admission of the
second Appeals on the ground that they were not maintainable, all dated
21.08.2019.
3.The brief facts as relevant to determine the issue in question are that the
petitioners suffered orders of assessment passed under the provisions of the
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Tamil Nadu Value Added Tax Act, 2006 (in short ‘Act’).
4.First appeals were filed by the petitioners before the Appellate Deputy
Commissioner that came to be rejected on 31.10.2018. The petitioners filed
statutory appeals challenging the first appellate orders though without
complying with the statutory pre-condition of remittance of admitted tax.
5.In these circumstances, the STAT/Tribunal has passed orders dated
21.08.2019 rejecting the appeals for want of maintainability. To be noted that
the appeals were returned even immediately upon receipt, but were re-presented
with the endorsement that the petitioners/appellants were not in a position to
comply with the condition of pre-deposit. Inter alia, the petitioners have sought
waiver of the amount that has come to be rejected by the STAT/Tribunal on the
ground that such power of waiver does not fall within the statutory powers
endowed upon the Tribunal.
6.Learned counsel for the petitioners draws attention to the statutory
provisions, particularly Section 58 of the TNVAT Act that provides for an
appeal to the Appellate Tribunal. Undoubtedly, there is a condition therein that
requires an appellant to remit 100% of the tax as ordered by the first Appellate
Authority, in order to maintain its appeal. This is set out under the proviso to
Section 58(1).
7.The argument of the petitioners is that while the second Appellate
Authority that is, the Tribunal, may not have the power under statute to waive
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WP.Nos.33312 of 2019 & etc. batch
the pre-condition for deficit of tax, this Court under Article 226 of the
Constitution of India can certainly consider such a prayer. The petitioners also
disclose that the vires of the provision, specifically the statutory pre-condition
has been upheld by this Court in the case of K.M.Corporation and another Vs.
State of Tamil Nadu and others [11 VST 782].
8.In support of their arguments that this Court under Article 226 has
wide powers to consider the grant of waiver, learned counsel relies upon a
judgment of the Hon'ble Supreme Court in the case of Tecnimont Pvt. Ltd. Vs.
State of Punjab and Others [2019 SCC Online 1228] as well as two earlier
judgments of the Hon’ble Supreme Court in the cases of Government of
Andhra Pradesh and others Vs. P.Lakshmi Devi (Smt.) [2008 4 SCC 720] and
HardeviAsnani Vs. State of Rajasthan and others [2011 14 SCC 160].
9.According to the petitioners, the ratio of the aforesaid cases would
support their request for grant of waiver of pre-deposit. They would specifically
plead that in respect of two assessment years, 2014-15 and 2015-16, the first
Appellate Authority, has taken a view in the Central Sales Tax assessments in
favour of the petitioners to effect that the classification of the goods, being
packing materials, would be liable to be classified in terms of entries 67A and
94/Part B/Schedule-I of the TNVAT Act. In such an event, the VAT
assessments cannot take a contrary stand.
10.Learned Additional Government Pleader appearing for the
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WP.Nos.33312 of 2019 & etc. batch
respondents would emphasize that the condition under Section 58 is non
negotiable. He would also distinguish the judgments of the Hon’ble Supreme
Court relied upon by the petitioner pointing out two out of three judgments
have been rendered in the context of the Indian Stamp Act and not in the
context of Revenue Laws.
11.That apart, he would submit that even those cases had not dealt with
waiver of pre-deposit and had proceeded on an entirely different aspect of the
matter. Thus, according to him, reliance of the petitioners on the aforesaid
judgments is of no support to its case.
12.Having heard learned counsel and carefully studied the case law and
the cases cited, my decision is as under:
13.Section 58 of the Act, to the extent to which it is relevant to decide
the issue in this matter, reads as follows:
‘58.Appeal to Appellate Tribunal.-(1) Any officer
prescribed by the Government or any person objecting to an
order passed by the Appellate [Deputy] Commissioner under
sub-section (3) of Section 51, or by the Appellate [Joint]
Commissioner under sub-section (3) of Section 52, or by the
[Joint] Commissioner under sub-section (1) of Section 53,
may, -
………..’
………..
Provided further that no appeal filed by any person
objecting to an order passed,-
(a) under sub-section (3) of Section 51 or under sub-
section (3) of Section 52 shall be entertained unless it is
accompanied by satisfactory proof of the payment of the tax as
ordered by the Appellate [Deputy] Commissioner or by the
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Appellate [Joint] Commissioner, as the case may be:
(b) under sub-section (1) of Section 53, unless it is
accompanied by satisfactory proof of the payment of the tax
admitted by the appellant to be due or of such instalments
thereof as might have become payable, as the case may be, and
twenty-five per cent of the difference of the tax ordered by the
[Joint] Commissioner under Section 53 and the tax admitted
by the appellant.’
14.We are, in the present case, concerned with an appeal falling under
clause (a) of the proviso extracted above. Unambiguously, the statutory
condition requires deposit of the entirety of the disputed tax as ordered by the
first Appellate Authority. The provision was also challenged, as rightly pointed
out by learned counsel for the petitioners, in the case of K.M.Corporation
(Supra) and has been upheld.
15.In the case of Tecnimont Pvt. Ltd., the Hon'ble Apex Court was
concerned with an appeal filed as against the decision of the Punjab and
Haryana High Court in the context of Section 62(5) of the Punjab Value Added
Tax Act, 2005. That provision stated that no appeal shall be entertained unless
such appeal was accompanied by satisfactory proof of payment of 25% of the
additional demand created, penalty and interest, if any.
16.The questions for resolution as framed by the High Court, are as
follows:
‘4.The questions involved in the matters were framed by
the High Court as under:-
(a) Whether the State is empowered to enact Section 62(5)
of the PVAT Act?
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WP.Nos.33312 of 2019 & etc. batch
(b) Whether the condition of 25% pre-deposit for hearing
first appeal is onerous, harsh, unreasonable and, therefore,
violative of Article 14 of the Constitution of India?
(c) Whether the first appellate authority in its right to
hear appeal has inherent powers to grant interim protection
against imposition of such a condition for hearing of appeals on
merits?’
17.The Hon’ble Supreme Court upheld the decision of the Punjab and
Haryana High Court on questions (a) & (b) to the effect that the condition
imposed by statute was not onerous and the vires was thus upheld.
18.In doing so, the Bench tested the provision in the context of an earlier
judgment in the case of Income Tax Officer Vs. M.K. Mohammed Kunhi [(1969)
2 SCR 65]. In Mohammed Kunhi's case, the Court was concerned with whether
an Appellate Authority had the power to consider and grant stay in cases where
the respective enactment did not specifically endow such power upon the
Tribunal.
19.The Court concluded that even in a case where the Appellate Tribunal
had not been endowed such power, all powers that were incidental or ancillary
to appellate jurisdiction, including the power of grant of stay and interim
protection are to be read into the powers of the Appellate Authority. This case
was relied upon by the High Court in the case of Tecnimont to say that the
STAT/Tribunal had the power of stay even in the teeth of the statutory pre-
condition.
20.This contention was repelled by the Supreme Court which held that
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WP.Nos.33312 of 2019 & etc. batch
the decision in the case of Mohammed Kunhi cannot be held to apply or to
cover a statutory pre-condition. At paragraph No.29, the Bench holds as
follows:
‘29.If the inherent power the existence of which is
specifically acknowledged by provisions such as Section 151 of
the CPC and Section 482 of the Cr.P.C. is to be read with the
limitation that exercise of such power cannot be undertaken for
doing that which is specifically prohibited, same limitation must
be read into the scope and width of implied power of an
appellate authority under a statute. In any case the principle
laid down in MatajogDobey states with clarity that so long as
there is no express inhibition, the implied power can extend to
doing all such acts or employing such means as are reasonably
necessary for such execution. The reliance on the principle laid
down in Kunhi cannot go to the extent, as concluded by the
High Court, of enabling the Appellate Authority to override the
limitation prescribed by the statute and go against the
requirement of pre-deposit. The High Court was clearly in error
in answering question (c).’
21.Thus the conclusion of the Court was to the effect that the principle
laid down in Mohammed Kunhi's case cannot override a statutory limitation and
to this extent the decision of the High Court that had held that the Tribunal had
the incidental power of granting a waiver overriding the statutory condition was
reversed. To this extent, there is no quarrel.
22.The specific reliance of the petitioners before me is on the reference
of the Hon’ble Supreme Court to its decisions in the cases of Smt.P.Lakshmi
Devi and HardeviAsnani (supra). At paragraph Nos.23 and 30 of the SCC
Online report, the Court states that in genuine cases of hardship, recourse
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would still be available to the concerned person, though not at the hands of the
Appellate Authority, but in Writ Petition. This is the sum and substance of the
petitioners case.
23. I would however disagree with the petitioner on two grounds. Firstly,
the aforesaid judgments are distinguishable and inapplicable to the facts and
circumstances of the present case. Both the judgments have been rendered in
the context of Section 47A of the Stamp Act, 1899. The Stamp Act provides for
an enhancement of the value of an asset where the registering Authority
believes that the value was understated in the document. In both the aforesaid
cases, the enhancement of the valuation came to be challenged in Writ Petition.
24.The Hon'ble Apex Court in the cases aforesaid had taken note of a
situation where the enhancement of the valuation was itself patently erroneous
and arbitrary and has stated that in such cases, where a party was in a position
to establish that the enhancement of the valuation by the Sub-Registrar was
patently, arbitrary and erroneous, then such an order of enhancement could be
challenged by way of Writ Petition.
25.This assumes importance in light of the fact that an appeal to be filed
by a person aggrieved by an order of enhancement would have to be
accompanied by payment of 50% of the enhanced amount which would have
placed to a great burden upon the appellants. It is in this context that the
Hon’ble Supreme Court observed that it would be possible in such cases of
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extreme hardship, for the Court to consider the challenge to a patently and
arbitrary order of enhancement.
26.Thus, for an assessee under the VAT Act to obtain the benefit of the
judgments in the cases of Smt.P.Lakshmi Devi and HardeviAsnani (Supra), it
would be necessary to establish that substantial hardship has been caused to the
petitioners and that the order in appeal was patently, arbitrary and erroneous. In
the present case, the argument on merits concerns classification of a product.
27.No materials are placed before the Court to establish hardship and at
best, the petitioners could be stated to have a prima facie case on merits. The
rule that has been set out in the cases of Smt.P.Lakshmi Devi, HardeviAsnani
(Supra) and Tecnimont have to be strictly construed in the teeth of the statutory
prescription under the proviso to Section 51(1).
28.Thus, unless the petitioners are able to establish extreme hardship and
patent error in passing of the order of assessment/appeal, the benefit of the
aforesaid judgments cannot be extended to the petitioners. Accepting the
argument of the petitioners would open the Pandora's box in all cases where
assessees believe that they have a prima facie case on merits, which certainly
cannot be the intention of the Hon'ble Supreme Court in the aforesaid matters,
particularly in the light of the statutory pre-condition.
29.In light of the discussions as above, the challenge in these Writ
Petitions is rejected. Learned counsel for the petitioners would request six
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weeks to make the statutory pre-deposit and such request is acceded to. Liberty
is granted to the petitioners to re-present the papers within a period of six (6)
weeks from today, accompanied by proof of payment of the disputed tax. Upon
compliance, the appeals shall be taken on file without reference to limitation
but ensuring compliance with the condition of pre-deposit and heard on merits
and in accordance with law.
30.These Writ Petitions are dismissed with liberty as aforesaid. No costs.
Consequently, connected Miscellaneous Petitions are closed.
12.08.2022
kbs
Index : Yes
Speaking Order
To
1.Additional Appellate Deputy Commissioner (ST) (FAC),
Dr.Balasundaram Road, Coimbatore – 641 018.
2.State Tax Officer (ST),
Oppanakkara Assessment Circle,
Dr.Balasundaram Road,
Coimbatore – 641 018.
https://www.mhc.tn.gov.in/judis
WP.Nos.33312 of 2019 & etc. batch
DR.ANITA SUMANTH, J.
kbs
W.P.Nos.33312, 33340, 33343, 33348,
33352, 33353, 33319, 33317,
33326, 33327 & 33347 of 2019 &
W.P.Nos.4303, 4318, 4312, 4316,
4323, 4307, 4325, 4297, 4298,
4319 & 4302 of 2020 and
WMP.Nos.33766, 33783, 33789, 33797,
33798, 33767, 33770, 33772, 33779,
33780, 33814, 33810, 33813, 33800,
33801, 33803, 33804, 33806, 33807,
33808, 33784 & 33787 of 2019 &
WMP.Nos.5108, 5090, 5091, 5097,
5117, 5099, 5100, 5120, 5122, 5111 & 5114 of 2020
12.08.2022
https://www.mhc.tn.gov.in/judis
