2009 (3) TMI 1092 - HC - VAT and Sales Tax

Pre-deposit Rule in Orissa Entry Tax Act Not Retroactive; Appeals to Proceed Without Pre-deposit Requirement.

Indian Oil Corporation Versus Orissa Sales Tax Tribunal, CTC and Ors.

The HC concluded that the pre-deposit requirement under Section 17 of the Orissa Entry Tax (Amendment) Act, 2005, should not apply retrospectively, as the ... Petition filled without pre-deposit - appeals are pending - Act was amended deleting the condition for pre-deposit for entertaining the appeal - notices issued to the Petitioner to make the deposit of the 50% of the total demand - Entertain' - sale of petroleum products- High Speed Diesel & lubricants - entry tax on the scheduled goods - HELD THAT:- It is the settled legal proposition that taxing statute must be construed strictly. Manish Maheshwari v. Asst. CIT and Ors.[2007 (2) TMI 148 - SUPREME COURT]; The purpose of imposing the pre-deposit condition is that right of appeal may not be abused by any recalcitrant party & there may not be any difficulty in enforcing the order appealed against if ultimately it is dismissed. There must be speedy recovery of the amount of tax due to the authority. 'Entertain' means either 'to deal with or admit to consideration'. 'Entertain' means when it is admitted & the matter is kept under consideration for hearing i.e. for consideration on merit. State of Haryana v. Maruti Udyog Ltd. and Ors.[2000 (9) TMI 946 - SUPREME COURT]. In CIT, Bombay v. Filmistan Limited [1961 (2) TMI 2 - SUPREME COURT], the Supreme Court examined a case where appeal under the provisions of Income Tax Act, 1922 was filed within limitation without meeting requirement of pre-deposit condition. However, tax was paid after the period of limitation prescribed for presenting the appeal. The provisions read that 'no appeal shall lie' in view of the proviso to Section 30(1) of the Income Tax Act & it mean that appeal could not be held have been properly filed until tax was paid & any memorandum of appeal could not be presented. In view of the above, law can be summarised that if a condition of pre-deposit is imposed, a party while filing the appeal is bound to meet the requirement of the pre-deposit condition. However, it will depend upon the language of statutory provisions & particularly the words use therein as to whether the memo of appeal can be presented/filed or instituted without meeting the pre-deposit condition. In case 'entertaining' the appeal is not permissible, the appeal can be filed, but may not be heard on merit unless the pre-deposit condition is met. The pre-deposit condition is imposed to regulate the procedure of appeal. Therefore, in such an eventuality, where there is no prohibition for filing the memorandum of appeal without meeting 'the pre-deposit condition, the appeal can be heard only after meeting it. In the instant case, as the provision of the pre-deposit condition for entertaining the appeal has been deleted prior to entertaining the appeal being a procedural matter, the amendment would apply retrospectively. The instant case is squarely covered by the Judgment of the Hon'ble Supreme Court in Lakshmi Rattan Engineering Works Ltd.[1967 (9) TMI 116 - SUPREME COURT]. The Writ Petition succeeds & is allowed. The impugned notices dated 28th November, 2006 in connection with Second Appeal are quashed. Issues Involved:1. Requirement of pre-deposit under Section 17 of the Orissa Entry Tax (Amendment) Act, 2005.2. Retrospective application of the amendment.Issue-wise Detailed Analysis:1. Requirement of Pre-deposit under Section 17 of the Orissa Entry Tax (Amendment) Act, 2005:The petitioner sought a declaration that Section 17 of the Orissa Entry Tax (Amendment) Act, 2005, which required a pre-deposit for entertaining an appeal, should not apply to its case. The petitioner argued that the pre-deposit condition had been deleted by the amendment, and thus, no deposit was required for the appeal to be entertained. The petitioner contended that the term 'entertain' means consideration by application of mind and not merely performing a ministerial act to accept the memorandum of appeal. Therefore, since the pre-deposit condition was removed before the appeal could be entertained on its merits, the petitioner argued it was not liable to make any deposit.2. Retrospective Application of the Amendment:The respondent argued that the amendment does not apply retrospectively, and the petitioner was required to meet the pre-deposit condition that was in force at the time of filing the appeal. The court examined various precedents and legal principles regarding the retrospective application of amendments and the nature of the right to appeal. The court noted that the right to appeal is a statutory right, and the legislature can impose conditions for maintaining the same. The court referred to several Supreme Court judgments, including Kondiba Dagadu Kadam v. Savitribai Sopan Gujar and Ors., Vijay Prakash D. Mehta & Jawahar D. Mehta v. Collector of Customs (Preventive), Bombay, and others, which emphasized that the right to appeal is not absolute and can be regulated by statutory provisions.The court also considered the principle that procedural laws, such as those governing the pre-deposit condition for appeals, are generally applied retrospectively unless expressly stated otherwise. The court cited cases like Lakshmi Rattan Engineering Works Ltd. v. Asst. Commissioner of Sales Tax, Kanpur and Anr., where the term 'entertain' was interpreted to mean consideration on merits, and procedural amendments were applied retrospectively.Conclusion:The court concluded that since the pre-deposit condition for entertaining the appeal had been deleted prior to the appeal being entertained, the amendment would apply retrospectively. The writ petition was allowed, and the impugned notices requiring the petitioner to make a pre-deposit were quashed. The court directed the appellate forum to decide the pending appeals expeditiously within three months.Separate Judgments:B.N. Mahapatra, J. concurred with the judgment delivered by B.S. Chauhan, C.J., agreeing with the analysis and conclusions reached.Final Orders:The writ petition was allowed, and the impugned notices dated 28th November 2006, in connection with Second Appeal Nos. 64 (ET), 65 (ET), and 66 (ET) of 02-03 were quashed. The appellate forum was requested to decide the appeals expeditiously within three months.