2025 (9) TMI 992 - HC - VAT / Sales Tax

Appeal under Section 55(2) maintainable against part-payment direction and linked summary rejection; Section 56 does not oust right of appeal

The Commissioner of Sales Tax Maharashtra Versus M/s. Superphone India Ltd.

HC held the appeal before the Tribunal was maintainable under Section 55(2); the Tribunal rightly entertained challenge to the First Appellate Authority's ... Maintainability of appeal before the Tribunal - Rejection of First Appeal for non-payment of Part Payment fixed by the First Appellate Authority to interfere with the amounts fixed by the First Appellate Authority towards Part Payment - said Authority has not exercised the discretion properly, even though the Respondent has not challenged the validity or correctness of the Order fixing the amount of Part Payment under Section 55(5) of the Bombay Sales Tax Act, 1959 in Second Appeal when that Order was passed - Order of Summary Rejection can not be separated or bifurcated from the Order of Part Payment - HELD THAT:- Section 55(1) is concerned with appeals from every original order, not being an order mentioned in Section 56 of the said Act or the Rules made thereunder. Section 56 of the said Act lists certain orders against which no appeal or application for revision shall lie. Though the order determining part payment or, for that matter, the order dismissing the appeal for non-compliance with the direction for the deposit of the part payment have not been referred to in Section 56, still that circumstance would not be very relevant because Section 55(1) is concerned with an appeal from an original order. In this case, we are mainly concerned with the issue of maintainability of an appeal before the Tribunal against the order dated 29 August 1995 made by the Deputy Commissioner of Sales Tax (Appeals), i.e, the First Appellate Authority. The provisions of Section 55(2) would apply to such a situation. Section 55(2) provides that in case of an order passed in appeal by an Assistant Commissioner or by a Deputy Commissioner, a second appeal shall lie at the option of the appellant, either to the Commissioner or to the Tribunal. The appeal filed before the Tribunal, in which the Tribunal has made the impugned Judgment and Order dated 22 November 1996, therefore, relates to Section 55(2) of the said Act. The expression “every order” fell for consideration before the Division Bench of this Court in the case of M/s. Bhambani Shipping Ltd Vs. The State of Maharashtra & Ors. [2017 (12) TMI 629 - BOMBAY HIGH COURT]. The Division Bench was considering the provisions of Section 27(1) of the Maharashtra Value Added Tax, 2002 in which it was provided that an appeal shall lie to the High Court from “every order” passed by the Tribunal, including a Judgment by way of advance ruling, if the High Court is satisfied that a case involves a substantial question of law. In Gokal Chand [1966 (9) TMI 142 - SUPREME COURT], the Hon’ble Supreme Court referred to the decision of the Constitution Bench in Shankarlal Aggarwal & Ors Vs Shankarlal Poddar & Ors. [1963 (1) TMI 40 - SUPREME COURT]. The Constitution Bench was interpreting the provisions of Section 202 of the Indian Companies Act, 1913, which conferred a right of appeal “from any order or decision made or given in the matter of winding up of a company by the Court”. The Constitution Bench held that these words, though wide, would exclude merely procedural orders or those which did not affect the rights and liabilities of the parties. The Tribunal in this case has correctly concluded that the appeal against the order dated 28 August 1995 was maintainable and in such an appeal, the Respondent-Assessee was not precluded from challenging the order dated 11 July 1995 made by the First Appellate Authority as a step towards the final disposal of the appeal. Reference disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether, in an appeal to the Tribunal under Section 55(2) against a final order dismissing a first appeal for non-payment of a part payment, the Tribunal is precluded from examining or interfering with the interlocutory order fixing the part payment when that interlocutory order was not separately challenged. 2. Whether the validity of an order directing part payment (a procedural/interlocutory order) can be questioned in a second appeal filed against the final order dismissing the first appeal for non-deposit of that part payment. 3. Whether the final order dismissing the first appeal for non-payment of part payment is separable/bifurcatable from the interlocutory part-payment order such that the latter must be independently challenged. 4. Whether the part-payment order attains finality (and renders the appeal incompetent) by non-challenge before dismissal for non-deposit, thereby precluding subsequent review in the second appeal. 5. Whether earlier High Court authority (referred to by the Revenue) holds that a tribunal cannot deal with the quantum of part payment in a second appeal where no separate appeal was filed against the part-payment order. 6. Whether the Tribunal has power, while hearing a second appeal against a final dismissal for non-payment of part payment, to modify the part-payment order made in the first appeal. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2 (Interrogation of interlocutory part-payment order in second appeal) Legal framework: Section 55(2) confers an option to prefer a second appeal to the Tribunal against an order passed in appeal by an Assistant or Deputy Commissioner. Section 55(3) states that every order passed in appeal under Section 55 shall, subject to Sections 57, 61 and 62, be final. Section 55(5) contains the proviso permitting appellate authorities to entertain appeals subject to part payment or security. Section 55(6) vests appellate authorities with powers to confirm, reduce, annul, set aside or modify assessments and other orders. Precedent treatment: The Court relied on Supreme Court authority holding that broad phrases such as 'every order' do not extend to interlocutory or procedural orders (principles from Gokal Chand and Shankarlal Agarwal as applied in Bhambani Shipping). The Court also relied on Achal Misra to the effect that interlocutory orders need not be appealed separately and can be challenged with the final order. Interpretation and reasoning: An order fixing part payment is essentially interlocutory/procedural - a step towards final disposal - and therefore need not be deemed final merely because it was not separately challenged. Section 55(2) permits an appeal against the final order dismissing the first appeal; nothing in the scheme excludes raising grounds in that appeal attacking antecedent interlocutory directions, including part-payment orders, on legality or improper exercise of discretion. Analogous principles under CPC (Section 105 and related jurisprudence) support permitting challenge to interlocutory orders via appeal from a final order. Ratio vs. Obiter: Ratio - an appellate tribunal hearing a second appeal against a final dismissal for non-payment may examine the legality of the interlocutory part-payment order when that order is a step in the disposal of the first appeal and was not separately challenged. Obiter - cross-references to CPC provisions are by analogy, since CPC does not strictly apply. Conclusion: Questions 1 and 2 answered against the Revenue and in favour of the assessee: the Tribunal was not precluded from examining or interfering with the part-payment order in the second appeal. Issue 3 (Separability / bifurcation of part-payment order and final dismissal) Legal framework: As above - Section 55 provisions and appellate powers under Section 55(6). Precedent treatment: Decisions cited (Achal Misra, Bhambani Shipping, Gokal Chand, Shankarlal Agarwal) support that interlocutory orders may be challenged along with the final order and are not necessarily required to be the subject of independent appeals. Interpretation and reasoning: Although the part-payment order (11 July) and the final dismissal (28 August) are distinct in form, the part-payment order is procedural and one of the steps towards final disposal. There was no statutory warrant in the Act to require separate, independent challenges to such interlocutory orders when a final appeal is litigated; therefore, the two need not be bifurcated in practice. Ratio vs. Obiter: Ratio - interlocutory part-payment orders that are procedural steps need not be separately challenged and can be questioned in an appeal against the final order disposing the appeal. Conclusion: Question 3 answered against the Revenue; no bar to challenging the part-payment order in the appeal against the final dismissal. Issue 4 (Finality of the part-payment order by non-challenge rendering appeal incompetent) Legal framework: Interaction of finality clause in Section 55(3) with interlocutory nature of part-payment directions under Section 55(5) and appellate powers under Section 55(6). Precedent treatment: Authorities establishing that 'every order' does not include mere interlocutory or procedural orders and that non-appeal from such orders does not necessarily confer finality (Gokal Chand, Shankarlal Agarwal, Bhambani Shipping, Achal Misra). Interpretation and reasoning: The phrase 'every order' cannot be read to assimilate all interlocutory directions into finality; to do so would allow procedural steps to acquire unwarranted conclusiveness and promote multiplicity of proceedings or unjust outcomes. The maintainability of an appeal against a pure interlocutory part-payment order is itself doubtful; hence non-challenge cannot be mechanically treated as conferring finality that renders subsequent appeals incompetent. Ratio vs. Obiter: Ratio - part-payment interlocutory orders do not automatically attain finality by non-challenge so as to render subsequent appeals incompetent. Conclusion: Question 4 answered against the Revenue; the Tribunal was right to treat the part-payment order as open to challenge in the second appeal. Issue 5 (Authority of earlier High Court decision relied upon by Revenue) Legal framework and treatment of precedent: The earlier High Court decision appears to have taken the view that a deposit direction under a provision similar to Section 55(5) is mandatory and final if not immediately challenged. That decision did not advert to controlling Supreme Court authorities on 'every order' nor to later jurisprudence (e.g., Achal Misra). Interpretation and reasoning: The present Court finds the earlier High Court's conclusion insufficiently reasoned in light of Supreme Court precedents and subsequent authority; the earlier decision did not consider the full statutory scheme or the line of authorities holding that interlocutory orders can be attacked with the final order. Even if certain observations in that earlier decision are not entirely correct, the ultimate conclusion of the Tribunal in the present matter stands on binding principles from Supreme Court and this Court. Ratio vs. Obiter: Obiter - critique of the earlier High Court reasoning; not decisive to overturn Tribunal's conclusion, because the Tribunal's conclusion aligns with higher authority. Conclusion: Question 5 answered to sustain the Tribunal's conclusion; earlier observations do not displace the principles allowing challenge to the part-payment order in the second appeal. Issue 6 (Power of the Tribunal to modify part-payment order in second appeal) Legal framework: Section 55(6) confers expansive appellate powers, including power to pass such orders as the appellate authority deems just and proper, and to set aside or modify assessments and related directions. Precedent treatment and interpretation: The Tribunal, acting as an appellate authority, possesses the statutory power to modify the part-payment order while hearing the second appeal. Whether the Tribunal exercised that discretion correctly in the particular facts is not a matter for the reference under Section 61. Ratio vs. Obiter: Ratio - Tribunal has jurisdiction and power under Section 55(6) to modify the part-payment order in the course of deciding the second appeal; the correctness of exercise of discretion is not addressed in the reference. Conclusion: Question 6 answered against the Revenue and in favour of the assessee: the Tribunal had power to modify the part-payment order while deciding the second appeal. Overall Disposition The Court concluded that the Tribunal was justified in entertaining and examining the legality and quantum of the part-payment order in the second appeal, in declining to treat the part-payment order as having attained unassailable finality by non-challenge, and in exercising power to modify the part-payment order; related objections founded on an earlier High Court decision are rejected to the extent they conflict with controlling Supreme Court authority and the statutory scheme.