TaxTMI 
TaxTMI 
2019 (11) TMI 779
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....and the legislative competence of the State. 2. The MVAT Act was brought into force with effect from 1 April 2005. The Act was to consolidate and amend the laws regarding levy and collection of tax on sale and purchase of certain goods in the State of Maharashtra. The Act was amended from time to time. Section 2 of the Act deals with the definition of the terms under the Act. Section 2(8) defines Dealer and various categories enumerated which would fall under the definition of Dealer. Goods were defined under section 2(12) as meaning every kind of movable property not being the properties mentioned in the said sub-section such as newspaper, actionable claims, money, stock, share etc. The sale was defined under section 2(24) as the sale of goods within the State for cash or deferred payment excluding the categories listed. The Chapter-II of the Act deals with the incidence and levy of tax. The incidence of tax is provided in Section 3, and certain goods on which tax was not leviable were referred to under Section 5 of the Act. Chapter-III deals with Sales Tax Authorities and the Tribunal. The Sales Tax Authorities as enumerated under Section 10 include Joint Commissioners, Deputy....
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.... and Validation) Act, 2017, shall be filed before the appellate authority in first appeal, unless it is accompanied by the proof of payment of an aggregate of the following amounts, as applicable,- (a) in case of an appeal against an order, in which claim against declaration or certificate, has been disallowed on the ground of non-production of such declaration or, as the case may be, certificate then, amount of tax, as provided in the proviso to sub-section (6), (b) in case of an appeal against an order, which involves disallowance of claims as stated in clause (a) above and also tax liability on other grounds, then, an amount equal to 10 per cent of the amount of tax, disputed by the appellant so far as such tax liability pertains to tax, on grounds, other than those mentioned in clause (a), (c) in case of an appeal against an order, other than an order, described in clauses (a) and (b) above, an amount equal to 10 per cent. of the amount of tax disputed by the appellant, (d) in case of an appeal against a separate order imposing only penalty, deposit of an amount, as directed by the appellate authority, which shall not in any case, exceed 10 p....
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....ourt. The Maharashtra Sales Tax Tribunal, Nagpur had dismissed the appeal filed by one Anshul Impex Private Limited for not depositing ten percent of the disputed tax as required under the provision of section 26(6B)(b) of the MVAT Act. Anshul Impex Private Limited filed a Sales Tax Appeal No.2/2018 at the Nagpur Bench of this Court. The Division Bench considered whether the Tribunal had committed an error in dismissing the appeal as not maintainable for want of deposit of ten percent of the amount assessed, to give retrospective effect to the amendment introduced on 15 April 2017 to Section 26 of the Maharashtra Value Added Tax Act, 2002. The Division Bench held that since the relevant year was 2010-11 and lis started in the year 2011, a right accrued to the appellant to be governed by the unamended provisions. The question of law was, answered, and the proceedings were remitted to the Maharashtra Sales Tax Tribunal, Nagpur STAX No.2/18 decided on 28 Sept.2018 (Anshul Impex Pvt. Ltd. V. State of Maharashtra) 6. The State of Maharashtra filed a Special Leave to Appeal No.6310/2010 challenging the judgment and order passed by the Division Bench in Anshul Impex. The Supreme Court ....
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.... have emerged from the submissions : (a) Whether the State of Maharashtra, after the 101st constitutional amendment dated 16 September 2016, has legislative competence to amend the MVAT Act to enact the mandatory condition of pre-deposit of the disputed amount for filing appeal regarding the goods; (b) Whether the explanation to section 26 of the MVAT Act nullifies the decision of the Division Bench of this Court in the case Anshul Impex and takes away the right of the assessee to file an appeal without statutory deposit in respect of assessment orders passed before 15 April 2017, and (c) Whether the decision of the Division Bench of this Court in Anshul Impex requires reconsideration. 11. On the question of legislative competence, the Petitioners have contended that the source of power to legislate of the State of Maharashtra is from the articles of the Constitution of India. The entries in Schedule VII to the Constitution are the fields of legislation. After coming into force the 101st constitutional amendment, various articles of the Constitution have been amended. The Goods and Service Tax as defined under Article 366(12A) of the Constitution has b....
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.... provision. Thus the 2019 amendment, i.e. explanation, is invalid because it encroaches upon the powers of the judiciary seeking to overrule a decision with no legal basis. There is nothing in subsections 6A to 6C, expressly or by implication, to apply to assessment years before 15 April 2017. The Explanation seeks to impose a new condition which did not exist, and is absent in sub-sections 6A to 6C to Section 26 of the MVAT Act. The Explanation violates Article 14 of the Constitution because it discriminates between two assessees in the same assessment year and the delay in passing the assessment orders by the authorities. The State responds that the Explanation is inserted with a specific deeming effect and takes away the basis of the decision in Anshul Impex. The 2019 amendment, clarifies the intention of the Legislature in inserting the said new provisions by 2017 amendment. The 2019 amendment removes the doubt created by the judgment delivered in Anshul Impex. Even if it is assumed that the 2017 Amendment created a doubt such confusion/doubt is now cleared by adding the Explanation by the 2019 amendment. The subsequent amendment of 2019 takes away the very basis of the judgmen....
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....he Counsel for the parties agree that even if findings are given regarding the two issues and the third issue is referred to the larger bench. These findings would remain only as prima facie findings with no jurisprudential status. The Counsel took time to examine whether a part controversy can be decided and partly, the issue can be referred to the larger bench. The learned Counsel inform that they have not come across any rule or a decision where such a course of action can be adopted. The Petitioners contend the first two issues should also be referred to the larger bench for consideration. According to Petitioners, the issue regarding the effect of 101st amendment regarding legislative competence of the State have arisen for the first time in this form in the country and is of importance. The learned Advocate General fairly placed on record the decision in the case of Ambarish Rangshashi Patnigere and Ors. v State of Maharashtra and Ors. 2012(1) Mh.L.J. 900 in Writ Petition No. 1797 of 2011 wherein, the entire matter was referred to the larger bench for consideration. 16. We now explain why we cannot persuade ourselves with the view taken in Anshul Impex. 17. The Division....
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.... of the balance amount of disputed tax, d) in case of an appeal against any other order, an amount as directed by the Tribunal. Provided that the amount required to be deposited under clause (b) or, as the case may be, clause (c) shall not exceed rupees fifteen crores." So far as present appeal is concerned, provisions of section 26 (6-B)(c) are found attracted, which refer to deposit of an amount equal to 10% of balance amount of disputed tax along with appeal presented before Tribunal. It is not disputed that the said amended provision came into effect from 15/4/2017. It is also not disputed that review order passed by respondent no.4 was challenged by initiating proceedings on 13/4/2017 itself and that the amended provision has no retrospective effect. 13) Facts in the case of Messers Hoosein Kasam Dada (India) Ltd., referred supra and relied by appellant, are identical as would reveal that during continuation of the assessment proceedings, there was an amendment to Section 21 of the C.P. and Berar Sales Tax Act, 1947. Being aggrieved by the order of assessment, the assessee on 10/5/1950 preferred an appeal to the Sales Tax Commissioner, Madhy....
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....riginally expressed in the 12 stxa2.18 following terms : "22(1) Any dealer aggrieved by an order under this Act may, in the prescribed manner, appeal to the prescribed authority against the order : Provided that no appeal against an order of assessment, with or without penalty, shall be entertained by the said authority unless it is satisfied that such amount of tax or penalty or both as the appellant may admit to be due from him, has been paid." The relevant portion of Section as amendment runs as follows : "Section 22(1) - Any dealer aggrieved by an order under this Act may, in the prescribed manner, appeal to the prescribed authority against the order : Provided that no appeal against an order of assessment, with or without penalty shall be admitted by the said authority unless such appeal is accompanied by a satisfactory proof of the payment of the tax, with penalty, if any, in respect of which the appeal has been preferred." 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, ....
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....rn a 'lis' may not immediately arise, for under Section 11(1), the Authority may accept the return as correct and complete. But if the authority is not satisfied as to the correctness of the return and calls for evidence, surely a controversy arises involving a proposition by the assessee and an opposition by the State. The circumstance that the authority who raises the dispute is himself the judge can make no difference, for the authority raises the dispute in the interest of the State and in so acting only represents the State. It will appear from the dates given above that in this case the 'lis' in the sense explained above arose before the date of amendment of the Section. Further, even if the 'lis' is to be taken as arising only on the date of assessment, there was a possibility of such a 'lis' arising as soon as proceedings started with the filing of the return or at any rate, when the authority called for evidence and started the hearing and the right of appeal must be taken to have been in existence even at those dates. For the purposes of the accrual of the right of appeal, the critical and relevant date is the date of initiation of the proceedings and not ....
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....aving right of appeal, which does not speak of pre-deposit of 10% of the disputed tax. 17) Similar issue is once again considered by the Apex Court in the case of National Traders and others vs. State of Karnataka (Civil Appeal No. 4579/2007) wherein on considering effect of amendment on right to appeal, it is held in para 2 of its judgment that the amendment made by the State of Karnataka shall be prospective in nature from the date of its coming into force. 18) As against this, having considered submissions made for respondents and the law laid down in the case of Satya Nand Jha (supra) decided along with bunch of petitions, facts therein are distinguishable as against the facts involved in the appeal in hand, as challenge in that case was to Section 35F of the Central Excise Act, 1944, which is reproduced 17 stxa2.18 below for the purpose of convenience as it stood prior to amendment, i.e. prior to 6/8/2014 : "35F Deposit, pending appeal, of duty demanded or penalty levied : Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central ....
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....uch penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause(b) of sub-section (1) of Section 35B, unless the appellant has deposited ten per cent of the duty in case where duty or duty and penalty are in dispute or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; Provided that the amount required to be deposited under this Section shall not exceed rupees ten crores. Provided further that the provisions of this Section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014. Explanation - For the purposes of this Section "duty demanded" shall include : (i) amount determined under Section 11D; (ii) amount of erroneous Cenvat credit taken; (iii) amount payable under Rule 6 of the Cenvat Credit Rules, 2001 or the Central Credit Rules, 2002 or the Cenvat Credit Rules, 2004." Thus, it is found that before Section 35F of the Central Excise Act, 1944 was amended, power was vested with the Authority....
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....uestion formulated as aforesaid, we are required to consider if the amended provisions of Section 26(6B) of the Act of 2002 directing deposit of 10% of the disputed tax as a pre-condition for filing of appeal before Tribunal are applicable to appellant. 20) Perused of impugned judgment reveals that the order which was challenged before the Tribunal is dated 27/7/2017, i.e. after amended provision came into effect on 15/4/2017, thus the Tribunal held that appellant was statutorily bound to deposit an amount equal to 10 per cent of the balance amount of disputed tax as a pre-condition for admission of appeal. However, the Tribunal has failed to consider the fact of initiation of review proceedings on 13/4/2017 as stated above when admittedly amended provisions were not in force. Having considered the facts and for the reasons aforesaid, it is clear that amended Section 26(6B) of the Act of 2002 requiring appellant to deposit 10% of the disputed tax is not applicable to appellant since lis started in the year 2011 while effect of amendment is prospective with effect from 15/4/2017. Accordingly, question no.1 framed as aforesaid is replied holding that the Tribunal has committ....
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....tion of deposit regulates the right of appeal in the matters of Tax legislations. The object is to balance the right of appeal with a need for the speedy recovery of the tax. Such provisions, while conferring a right of appeal, seek to prevent the delay in the realization of tax. These conditions therefore, merely regulate the right of appeal. Such conditions, however, have to be imposed by express words or by necessary implications. A vested right of an appeal can be taken away by the legislature by express or by necessary intendment and not otherwise. The conditions imposed however, cannot be so oppressive that in effect, it takes away the right of appeal. In the case of Garikapatti Veeraya, which Anshul Impex refers to, the Supreme Court, after taking a review, has laid down these principles: (i) The legal pursuit of a remedy, suit, appeal and second appeal are really, but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. (ii) The right of appeal is not a mere matter of procedure, but is a substantive right. (iii) The institution of the suit carries with it the implication that all righ....
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....tion 26(6A) amounting express intention of the legislature to make the right of appeal conditional, have not been considered by the Division Bench in Anshul Impex. The decision in Anshul Impex proceed on the ground that the appeal is governed by the legal position on the date of order of assessment. Anshul Impex, though it has noticed the decisions of the Supreme Court in Hoosein Kasam Dada (India) Ltd. and Garikapatti Veeraya, which refers to the right of the legislature to curtail the right of appeal or make it conditional, does not comment on the same. 22. This leaves us with two options. One is to distinguish the decision in the case of Anshul Impex on the ground that it is per incuriam and decide the challenge. The second option is to refer the issue to a larger bench. The learned Advocate General fairly submitted that he is not raising the contention that the decision is per incuriam, but he contends that the matter be referred to the larger bench. The Division Bench in Anshul Impex has analyzed the decisions in the case of Hoosein Kasam Dada (India) Ltd. and Garikapatti Veeraya and also considered the very same amended provisions. Since the Division Bench has considered t....