2005 (7) TMI 626 - HC - VAT and Sales Tax

Court Upholds Validity of Additional Court Fees Under Kerala Law; Confirms Legislative Competence and Fee Classification.

AP. Ismail (Anwar Traders) Versus State of Kerala and another

The HC upheld the constitutional validity of Section 76 of the Kerala Court Fees and Suits Valuation Act, 1959, affirming the State's legislative ... Constitutional validity of section 76 of the Kerala Court Fees and Suits Valuation Act, 1959 ('the CF Act') - levy of additional court fee - HELD THAT:- The adoption of the machinery under the KGST Act for the collection and enforcement of the tax payable under the Central Sales Tax Act, 1976 makes the provisions of the KGST Act applicable to such matters. Therefore, the Tribunal constituted under the KGST Act is authorised to hear the matters relating to the CST Act. The provisions of section 76(1) of the CF Act get attracted to such situations also. The levy of a fee, as already noticed, is a matter of fiscal policy and the lack of perfection in a legislative measure does not necessarily imply its unconstitutionality. As rightly pointed out on behalf of the State, one ought not to be heard to contend that no law that arrived after him shall bind him. Conclusions: - i. Section 76 of the Kerala Court Fees and Suits Valuation Act, 1959 (Kerala Act 10 of 1960), is valid. ii. The fee payable as per the Notification S.R.O. No. 226/2002 published in the Kerala Gazette Extraordinary No. 420 dated April 5, 2002, has to be on the amount of the tax in dispute. iii. Such fee is payable only on appeals/revisions arising from assessment orders issued in relation to and from the assessment year in which the said notification was issued on April 5, 2002. iv. The circular issued by the Chairman of the Sales Tax Appellate Tribunal will be read subject to the aforesaid modifications. v. The levy as per S.R.O. No. 226/2002 shall be in terms of the declarations contained herein. It is so directed. vi. The mode of collection shall be such that it is ensured that the amounts collected as per S.R.O. No. 226/2002 shall be credited to the legal benefit fund, since such credit is provided for. The writ petitions are disposed of in the above terms, with the declarations and directions as aforesaid. The levy as per S.R.O. shall be in terms of the declarations contained herein. It is so directed. Writ petitions disposed of. Issues Involved:1. Constitutional validity of Section 76 of the Kerala Court Fees and Suits Valuation Act, 1959.2. Validity of the notification S.R.O. No. 226/2002 issued by the Government of Kerala.3. Validity of the circular issued by the Chairman of the Sales Tax Appellate Tribunal.4. Legislative competence of the State to impose additional court fees.5. Whether the imposition under Section 76 is a tax or a fee.6. Impact of Section 2(2) on Section 76 of the CF Act.7. Whether the right of appeal is impaired by the imposition.8. Interpretation of the notification S.R.O. No. 226/2002.Detailed Analysis:1. Constitutional Validity of Section 76 of the Kerala Court Fees and Suits Valuation Act, 1959:The petitioners challenged the constitutional validity of Section 76 of the CF Act, arguing it imposes an additional court fee on proceedings before Tribunals, which goes beyond the legislative competence of the State. The court held that the CF Act, which received the President's assent and was published in the Kerala Gazette, is within the legislative competence of the State. The court emphasized the broad interpretation of legislative entries and affirmed that administration of justice, now a concurrent subject under Entry 11A of List III, includes the power to levy additional court fees. The court concluded that Section 76 is valid and within the legislative competence of the State.2. Validity of the Notification S.R.O. No. 226/2002:The notification authorized the levy of an additional court fee at the rate of 0.5% of the amount involved in the dispute or Rs. 50 in other cases. The petitioners argued that this imposition is vague and lacks clarity. The court interpreted the notification to mean the value of the amount of the tax in dispute in appeals/revisions. The court held that the notification is not vague and is constitutionally valid, provided it is applied to appeals/revisions arising from assessment orders issued from the assessment year in which the notification was issued.3. Validity of the Circular Issued by the Chairman of the Sales Tax Appellate Tribunal:The circular issued by the Chairman of the Sales Tax Appellate Tribunal provided guidelines for levying the additional court fee. The court held that the circular is clarificatory and not in excess of the notification. However, the circular must be read subject to the modifications declared by the court, ensuring that the additional court fee applies only to appeals/revisions arising from assessment orders issued from the relevant assessment year.4. Legislative Competence of the State to Impose Additional Court Fees:The court examined the legislative competence of the State under various entries in the Seventh Schedule of the Constitution. It concluded that the State Legislature had the competence to enact Section 76 of the CF Act under Entry 11A of List III, which pertains to the administration of justice. The court emphasized that the imposition of additional court fees is within the State's legislative power and does not conflict with any Union legislation.5. Whether the Imposition Under Section 76 is a Tax or a Fee:The court analyzed whether the additional court fee is a tax or a fee, focusing on the existence of quid pro quo. It referred to the decision in P.M. Ashwathanarayan Shetty v. State of Karnataka, which distinguished a fee from a tax based on the presence of a special service provided in return for the fee. The court concluded that the additional court fee under Section 76 is intended to satisfy the mandate of Article 39A of the Constitution, promoting equal justice and free legal aid. Therefore, the imposition is a fee and not a tax.6. Impact of Section 2(2) on Section 76 of the CF Act:Section 2(2) of the CF Act excludes certain proceedings from the levy of court fees. The court held that Section 76, which starts with a non obstante clause, stands independent of Section 2(2) and other provisions of the CF Act. The additional court fee under Section 76 is payable irrespective of whether a court fee is prescribed under other provisions of the CF Act or the statutes providing for appeals/revisions.7. Whether the Right of Appeal is Impaired by the Imposition:The petitioners argued that the additional court fee imposes an unreasonable restriction on the right of appeal. The court held that the imposition of the additional court fee does not impair the vested right of appeal, provided it applies only to appeals/revisions arising from assessment orders issued from the relevant assessment year. The court emphasized the need to interpret fiscal impositions reasonably to avoid impairing the right of appeal.8. Interpretation of the Notification S.R.O. No. 226/2002:The court interpreted the notification to mean that the additional court fee is based on the value of the amount of the tax in dispute in appeals/revisions. It held that the notification is not vague and is constitutionally valid. The court directed that the additional court fee should be credited to the legal benefit fund as provided by Section 76(2) of the CF Act.Conclusions:i. Section 76 of the Kerala Court Fees and Suits Valuation Act, 1959, is valid.ii. The fee payable as per the Notification S.R.O. No. 226/2002 has to be on the amount of the tax in dispute.iii. Such fee is payable only on appeals/revisions arising from assessment orders issued from the assessment year in which the notification was issued.iv. The circular issued by the Chairman of the Sales Tax Appellate Tribunal will be read subject to the aforesaid modifications.v. The levy as per S.R.O. No. 226/2002 shall be in terms of the declarations contained herein.vi. The amounts collected as per S.R.O. No. 226/2002 shall be credited to the legal benefit fund.The writ petitions were disposed of in the above terms with the declarations and directions as stated.