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of <h1>Court strikes down unconstitutional provision, restores original powers to Appellate Tribunal under Sales Tax Act</h1> The court allowed the writ petitions and struck down sub-section (3A) of Section 22, as inserted by the amending Act, as unconstitutional and ultra vires. ... - Issues Involved:1. Constitutionality of the amendment to Section 22 of the Karnataka Sales Tax Act.2. Discriminatory nature of the amendment.3. Violation of Article 19(1)(g) of the Constitution.4. Powers of the Appellate Tribunal to grant stay orders.5. Financial hardship and procedural fairness.Issue-wise Detailed Analysis:1. Constitutionality of the Amendment to Section 22 of the Karnataka Sales Tax Act:The petitioners, who are dealers registered under the Karnataka Sales Tax Act, 1957, and the Central Sales Tax Act, 1956, challenged the amendment to Section 22 by Karnataka Act No. 15 of 1988. The amendment removed the power of the Appellate Tribunal to grant stay of payment of tax or penalty during the pendency of appeals against orders passed by the Assistant Commissioner or Deputy Commissioner under Section 20. The petitioners argued that this amendment is unconstitutional, arbitrary, and unreasonable, thus liable to be struck down. The court held that the right of appeal is a substantive right and a vested right governed by the existing law before the amendment. It was concluded that the impugned amendment taking away the power to grant stay in fit cases is opposed to the very concept of vesting appellate powers in an authority.2. Discriminatory Nature of the Amendment:The petitioners contended that there is no rationale in taking away the power to grant stay in appeals filed against orders made under Section 20, while retaining such power in appeals against orders under Section 21. This was argued to be discriminatory. The court found that the distinction made under sub-section (3A) of Section 22 by the Amendment Act created discrimination between two sets of appeals filed by the assessees under the Act. The court held that the amendment was arbitrary, irrational, and unconstitutional, as it failed to appreciate the implications of such an amendment.3. Violation of Article 19(1)(g) of the Constitution:The petitioners argued that the amendment is violative of Article 19(1)(g) of the Constitution, which guarantees the right to practice any profession or to carry on any occupation, trade, or business. The court, considering the principles laid down by the Supreme Court, held that the amendment, by taking away the power to grant stay, imposed unreasonable restrictions on the right of appeal, thereby violating Article 19(1)(g).4. Powers of the Appellate Tribunal to Grant Stay Orders:The petitioners argued that the Appellate Tribunal had the power to grant stay orders even before the amendment, and this power should not be taken away. The court referred to several Supreme Court decisions, including Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh, Garikapati Veeraya v. N. Subbiah Choudhry, and Collector of Customs and Excise v. A.S. Bava, which emphasized that the right of appeal includes the right to obtain an order of stay. The court concluded that the Appellate Tribunal's power to grant stay orders is inherent and necessary to make the exercise of its appellate jurisdiction fully effective.5. Financial Hardship and Procedural Fairness:The petitioners highlighted the financial hardship they would face due to the amendment, as they would have to deposit the disputed tax during the pendency of the appeals. The court noted that the amendment exposed the assessees to risks of recovery such as prosecution, recovery from creditors and bankers, and sale of movables and immovables. The court observed that the amendment disregarded the consequences and prejudice it would cause to the valuable rights of the dealers under the Act and interfered with the discretionary powers vested in the Appellate Tribunal.Conclusion:The court allowed the writ petitions and struck down sub-section (3A) of Section 22, as inserted by Section 11 of the amending Act 15 of 1988, as unconstitutional and ultra vires. Consequently, the amendment to sub-section (5) of Section 22 by Section 11(3) of the amending Act was also struck down. The Appellate Tribunal was directed to entertain stay applications filed by the assessees-appellants against orders passed under Section 20 of the Karnataka Sales Tax Act and to continue exercising its powers under Section 22(5) as it existed before the amendment.
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