TaxTMI 
TaxTMI 
2019 (9) TMI 788
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....2017 CIVIL APPEAL NO.7364 OF 2019 SLP(C) No. 36302/2016 CIVIL APPEAL NO.7365 OF 2019 SLP(C) No. 36294/2016 CIVIL APPEAL NO.7366 OF 2019 SLP(C) No. 36297/2016 CIVIL APPEAL NO.7375 OF 2019 SLP(C) No. 1741/2017 CIVIL APPEAL NO.7381 OF 2019 SLP(C) No. 4406/2017 CIVIL APPEAL NO.7374 OF 2019 SLP(C) No. 1740/2017 CIVIL APPEAL NO.7367 OF 2019 SLP(C) No. 36292/2016 CIVIL APPEAL NO.7368 OF 2019 SLP(C) No. 36298/2016 CIVIL APPEAL NO.7380 OF 2019 SLP(C) No. 4383/2017 CIVIL APPEAL NO.7383 OF 2019 SLP(C) No. 6381/2019 Uday Umesh Lalit And Indu Malhotra, JJ. JUDGMENT Uday Umesh Lalit, J. 1. Special leave to appeal granted. 2. These appeals challenge the judgment and order dated 23.12.2015 passed by the High Court of Punjab and Haryana at Chandigarh in Civil Writ Petition No.26920 of 2013 and all connected matters; and raise questions about the validity of Section 62(5) of the Punjab Value Added Tax Act, 2005 (hereinafter referred to as "the PVAT Act"). 3. The text of Section 62 of the PVAT Act is as under: "62. First Appeal (1) An appeal against every original order passed under this Act or the rules made thereunder shall lie, - (a) if the order is made by a Ex....
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....eal is onerous, harsh, unreasonable and, therefore, violative of Article 14 of the Constitution of India? (c) Whether the first appellate authority in its right to hear appeal has inherent powers to grant interim protection against imposition of such a condition for hearing of appeals on merits?" 5. Since number of petitions were filed challenging the validity of aforesaid Section 62(5), the High Court had considered CWP No.26920 of 2013 as the lead matter and the facts pertaining to said petition were set out by the High Court in detail in para 2 of its decision as under:- "The petitioner - Punjab State Power Corporation Limited is a statutory body constituted under the Electricity (Supply) Act, 1948. It is engaged in generation, distribution and supply of electric energy/electricity power and other allied material to the consumers viz. domestic, commercial and industrial consumers in the State of Punjab and for that purpose, it is governed by the Indian Electricity Act, 1910 and Electricity (Supply) Act, 1948 as well as the Rules and Regulations framed thereunder. The petitioner had been filing returns as prescribed and whatever tax was payable in terms of Se....
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....were no liquid assets so as to make payment of demand involved. Vide order dated 13.2.2013, the appellate authority directed the petitioner to make deposit of 25% of the additional demand in the government treasury by 27.2.2013 failing which the appeals would be dismissed in limine. Aggrieved by the order, the petitioner filed appeals before the Punjab VAT Tribunal (in short, "the Tribunal"). It was pleaded by the petitioner that its financial position was very poor and it was not in a condition to make payment of 25% and the losses incurred by the petitioner had been duly explained to the appellate authority. Since the petitioner had already paid voluntarily tax of Rs. 1,97,05,910/-, Rs. 1,88,34,187/- and Rs. 1,94,93,597/- for the assessment years in question, the same should be adjusted against the additional demand created by the assessing authority. The Tribunal agreed with the contentions raised by the petitioner to the extent that the amount of voluntarily tax was required to be adjusted against the additional demand created by the assessing authority. However, the Tribunal while disposing of the appeals had observed that the petitioner was required to deposit 25% of the amou....
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....tal authorities are set aside. It is difficult to conceive that the legislature should have left the entire matter to the administrative authorities to make such orders as they choose to pass in exercise of unfettered discretion. The Assessee, as has been pointed out before, has no right to even move an application when an appeal is pending before the appellate tribunal under Section 220(6) and it is only at the earlier stage of appeal before the Appellate Assistant Commissioner that the statute provides for such a matter being dealt with by the Income tax Officer. It is a firmly established rule that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective (Sutherland Statutory Construction, Third Edition, Articles 5401 and 5402). The powers which have been conferred by Section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective....... ... ... ... ..... In our opinion the Appellate Tribunal must be held to have the power ....
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.... before it. Therefore, the power to grant interim protection/injunction by the first appellate authority in appropriate cases in case of undue hardship is legal and valid. As a result, question (c) posed is answered accordingly." 7. The appellant in appeal arising out of SLP(C) No.27072 of 2016, though not party to the original proceedings, was granted permission to challenge the instant decision of the High Court. The appellant as well as those who are similarly placed are aggrieved by the decision of the High court as regards first two questions while challenge has been raised on behalf of the State In appeals arising out of SLP(C)Nos. 1742, 1743 and 4383 of 2017 to the conclusion of the High Court in relation to question (c). All these matters were listed along with petitions raising challenge with regard to the validity of Section 48(4) of the Chhattisgarh Value Added Tax Act, 2005. The matters from Chhattisgarh were disposed of by this Court by order dated 16.04.2019 passed in Writ Petition (Civil) No.212 of 2014 and connected matters. The provisions of the PVAT Act being somewhat different, the matters from the State of Punjab were directed to be dealt with separately. We ....
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....ew the fact that discretion is vested in the appellate Judge to dispense with the compliance of the above requirement. All that the statutory provision seeks to do is to regulate the exercise of the right of appeal. The object of the above provision is to keep in balance the right of appeal, which is conferred upon a person who is aggrieved with the demand of tax made from him, and the right of the Corporation to speedy recovery of the tax. The impugned provision accordingly confers a right of appeal and at the same time prevents the delay in the payment of the tax. We find ourselves unable to accede to the argument that the impugned provision has the effect of creating a discrimination as is offensive to the principle of equality enshrined in Article 14 of the Constitution. It is significant that the right of appeal is conferred upon all persons who are aggrieved against the determination of tax or rateable value. The bar created by Section 406(2)(e) to the entertainment of the appeal by a person who has not deposited the amount of tax due from him and who is not able to show to the appellate Judge that the deposit of the amount would cause him undue hardship arises out of his own....
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....persons who make the default or omission." 9. In Seth Nand Lal and Another vs. State of Haryana and Others. 1980 (Supp) SCC 574, the Constitution Bench of this Court was called upon to consider whether the condition of pre-deposit for exercise of right of appeal was valid or not. A submission was raised that unlike the provision which was considered in The Anant Mills Co. Ltd. (1975) 2 SCC 175, the Appellate Authority was not empowered to relieve the appellant of the requirement of pre-deposit. The submission was considered thus:- "22. It is well settled by several decisions of this Court that the right of appeal is a creature of a statute and there is no reason why the legislature while granting the right cannot impose conditions for the exercise of such right so long as the conditions are not so onerous as to amount to unreasonable restrictions rendering the right almost illusory (vide : the latest decision in Anant Mills Ltd. v. State of Gujarat (1975) 2 SCC 175). Counsel for the appellants, however, urged that the conditions imposed should be regarded as unreasonably onerous especially when no discretion has been left with the appellate or revisional authority to re....
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....categories, going by the width and extent of the concerned provisions:- a) Under the first category are the cases where, the concerned statutory provision, while insisting on pre-deposit, itself gives discretion to the Appellate Authority to grant relief against the requirement of predeposit if the Appellate Authority is satisfied that insistence on predeposit would cause undue hardship to the appellant. The decisions in this category are The Anant Mills Co. Ltd. (1975) 2 SCC 175, Vijay Prakash D. Mehta (1988) 4 SCC 402, Gujarat Agro Industries (1999) 4 SCC 468 and Maruti Udyog (2000) 7 SCC 348 . b) On the other hand, the decisions in said Seth Nand Lal 1980 (Supp) SCC 574, Shyam Kishore (1993) 1 SCC 22, P. Laxmi Devi (2008) 4 SCC 720, Har Devi Asnani (2011) 14 SCC 160 and S.E. Graphites (2019) SCC Online SC 842 dealt with cases where the statute did not confer any such discretion on the Appellate Authority and yet the challenge to the validity of such provisions was rejected. 12. The decision of the Constitution Bench of this Court in Seth Nand Lal 1980 (Supp) SCC 574 did consider whether the requirement of pre-deposit would cause undue hardship. However consi....
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....ent thing for the judge to stay the recovery till the disposal of the appeal; that would result in modifying the language of the proviso to read: "no appeal shall be disposed of until the tax is paid". Short of this, however, there is no reason to restrict the powers unduly; all he has to do is to ensure that the entire tax in dispute is paid up by the time the appeal is actually heard on its merits. We would, therefore, read clause (b) of Section 170 only as a bar to the hearing of the appeal and its disposal on merits and not as a bar to the entertainment of the appeal itself. 46. We only wish that the statute itself is soon amended to make this position clear. After all, under the D.M.C. Act, the appellate authority is a high judicial officer, being the District Judge, and there is no reason why the Legislature should not trust such a high judicial officer to exercise his discretion in such a way as to safeguard the interests of both the Revenue and the assessees. We think that, until this is done, the provision requires a liberal interpretation so as to preserve such interests and should not be so rigidly construed as to warrant the throwing out of an appeal in limine ....
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....l rule of interpretation for mitigating a hardship. 21. It has been held by a Constitution Bench of this Court in ITO v. T.S. Devinatha Nadar AIR 1968 SC 623 (vide AIR paras 23 to 28) that where the language of a taxing provision is plain, the court cannot concern itself with the intention of the legislature. Hence, in our opinion the High Court erred in its approach of trying to find out the intention of the legislature in enacting the impugned amendment to the Stamp Act. 22. In this connection we may also mention that just as the reference under Section 47-A has been made subject to deposit of 50% of the deficit duty, similarly there are provisions in various statutes in which the right to appeal has been given subject to some conditions. The constitutional validity of these provisions has been upheld by this Court in various decisions which are noted below. 23. In Gujarat Agro Industries Co. Ltd. v. Municipal Corpn. of the City of Ahmedabad (1999) 4 SCC 468 this Court referred to its earlier decision in Vijay Prakash D. Mehta v. Collector of Customs (1988) 4 SCC 402 wherein this Court observed: (Vijay Prakash case, SCC p. 406, para 9) "9. Righ....
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....Laxmi Devi (2008) 4 SCC 720 this Court, while upholding the proviso to sub-section (1) of Section 47-A of the Stamp Act introduced by Andhra Pradesh Amendment Act 8 of 1998, observed: (SCC p. 737, para 29) "29. In our opinion in this situation it is always open to a party to file a writ petition challenging the exorbitant demand made by the registering officer under the proviso to Section 47-A alleging that the determination made is arbitrary and/or based on extraneous considerations, and in that case it is always open to the High Court, if it is satisfied that the allegation is correct, to set aside such exorbitant demand under the proviso to Section 47-A of the Stamp Act by declaring the demand arbitrary. It is well settled that arbitrariness violates Article 14 of the Constitution (vide Maneka Gandhi v. Union of India (1978) 1 SCC 248 = AIR 1978 SC 597 ). Hence, the party is not remediless in this situation." 28. In our view, therefore, the learned Single Judge should have examined the facts of the present case to find out whether the determination of the value of the property purchased by the appellant and the demand of additional stamp duty made from the appe....
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....implied power to grant such solace and for arriving at such conclusion reliance is placed on the decision of this Court in Kunhi (1969) 2 SCR 65. 19. Kunhi (1969) 2 SCR 65 undoubtedly laid down that an express grant of statutory power carries with it, by necessary implication, the authority to use all reasonable means to make such grant effective. But can such incidental or implied power be drawn and invoked to grant relief against requirement of pre-deposit when the statute in clear mandate says - no appeal be entertained unless 25% of the amount in question is deposited? Would not any such exercise make the mandate of the provision of pre-deposit nugatory and meaningless? 20. While dealing with the scope and width of implied powers, the Constitution Bench of this Court in Matajog Dubey v. H. C. Bhari 1955 (2) SCR 925 also touched upon the issue whether exercise of such power can permit going against the express statutory provision inhibiting the exercise of such power. The discussion was as under:- "Where a power is conferred or a duty imposed by statute or otherwise, and there is nothing said expressly inhibiting the exercise of the power or the performance of the....
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....cedure in the appeal under Section 169 of the Act. With all due respect we do not agree with the reasoning of the learned Single Judge in the said case. In fact in the judgment under appeal all the three Judges have also dissented from this view of the learned Single Judge in the matter of Punj Sons 1982 Rajdhani LR 247: (1982) 21 DLT 182 (Del HC). The reason is simple as Section 457 itself states that the procedure provided in the Code of Civil Procedure in regard to suits are to be followed "as far as it can be made applicable". The other provisions of the statute totally bar the grant of such relief. The other provisions have to be harmoniously read with it and not in derogation thereto. Section 457 itself, therefore, does not help the assessee whose case depends entirely on the construction to be placed on Section 170(b). But still one has to examine Section 170(b) carefully to see whether, short of dismissing an appeal for default of payment of tax, the District Judge has any latitude in the matter." (Emphasis added) 22. Similar limitation has always been read into the width of inherent powers acknowledged by provisions like Section 151 of the CPC Code of Civil Procedure, 1....
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....ntions of the legislature." 31. In Ram Chand and Sons Sugar Mills (P) Ltd. v. Kanhayalal Bhargava (AIR 1966 SC 1899) this Court reiterated that the inherent power of the court is in addition to and complementary to the powers expressly conferred under the Code but that power will not be exercised if its exercise is inconsistent with, or comes into conflict with any of the powers expressly or by necessary implication conferred by the other provisions of the Code. Section 151 however is not intended to create a new procedure or any new right or obligation. 32. In Nain Singh v. Koonwarjee (1970) 1 SCC 732 this Court observed: (SCC p. 735, para 4) "4. ... Under the inherent power of courts recognised by Section 151 CPC, a court has no power to do that which is prohibited by the Code. Inherent jurisdiction of the court must be exercised subject to the rule that if the Code does contain specific provisions which would meet the necessities of the case, such provisions should be followed and inherent jurisdiction should not be invoked. In other words the court cannot make use of the special provisions of Section 151 of the Code where a party had his remedy provid....