1953 (2) TMI 35 - SC - VAT / Sales Tax

Amendment to Section 22(1) creating deposit requirement not retrospective; appeal admitted without payment and decided on merits

SC held that the amended proviso to Section 22(1) imposed a new substantive condition-proof of payment of assessed tax-reducing the prior unfettered right ... Change of law - Right to appeal on payment of tax admitted to be due - effect of the amendment to Section 22 of the Act - requisite to be fulfilled - appeal has to be accompanied by satisfactory proof of payment of the tax in respect of which the appeal had been preferred - HELD THAT:- It is clear from the language used in the proviso to Section 22(1) as it stood prior to the amendment that an aggrieved assessee had only to pay such amount of tax as he might admit to be due from him, whereas under the proviso to Section 22(1) as amended the appeal has to be accompanied by satisfactory proof of payment of the tax in respect of which the appeal had been preferred. The contention of the present assessee is that as the amendment has not been made retrospective its right of appeal under the original Section 22(1) remains unaffected and that accordingly as it does not admit anything to be due it was not liable to deposit any sum along with its appeal and the Commissioner was bound to admit its appeal and had no jurisdiction or power to reject it on the ground that it had not been accompanied by any proof of payment of the tax assessed against the appellant as required under the amended proviso and the Board of Revenue and the High Court were in error in not directing the Commissioner to admit the appeal. There can be no doubt that the new requirement 'touches' the substantive right of appeal vested in the appellant. Nor can it be overlooked that such a requirement is calculated to interfere with or fetter, if not to impair or imperil, the substantive right. The right that the amended section gives is certainly less than the right which was available before. A provision which is calculated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. Indeed the new requirement cannot be said merely to regulate the exercise of the appellant's pre-existing right but in truth whittles down the right itself and cannot be regarded as a mere rule of procedure. Thus, we are of the opinion that the appellant's appeal should not have been rejected on the ground that it was not accompanied by satisfactory proof of the payment of the assessed tax. As the appellant did not admit that any amount was due by it, it was under the section as it stood previously entitled to file its appeal without depositing any sum of money. We, therefore, allow this appeal and direct that the appeal be admitted by the Commissioner and be decided in accordance with law. The appellant is entitled to the costs of this appeal and we order accordingly. Issues: (i) Whether the amendment to the proviso of Section 22(1) of the Central Provinces and Berar Sales Tax Act, 1947, requiring satisfactory proof of payment of the tax as a condition for admission of an appeal, applies to an appeal arising out of proceedings initiated before the amendment.Analysis: The issue involves whether the amended proviso operates retrospectively to restrict a pre-existing right of appeal. The legal framework distinguishes substantive rights from mere procedural changes: a right of appeal vested by law at the commencement of proceedings is substantive and cannot be taken away or fettered by a later amendment unless a clear intention to make the amendment retrospective is manifested by express words or necessary implication. Precedent establishes that an amendment imposing new conditions that impair the unfettered right of appeal touches the substantive right and therefore does not apply to proceedings pending at the date of amendment. Where proceedings giving rise to an appeal were initiated before the amendment, the law prevailing at the time of initiation governs the right and the procedure for exercising it. The requirement of deposit or proof of payment introduced by the amended proviso imposes a substantive restriction and therefore cannot be applied to appeals arising from proceedings commenced prior to the amendment.Conclusion: The amended proviso to Section 22(1) does not apply to appeals arising from proceedings initiated before the amendment; the appeal filed without deposit or proof of payment must be admitted under the original law. The result is in favour of the assessee.