TaxTMI 
TaxTMI 
1984 (2) TMI 102
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....0) hereinafter referred to as the Act. The amendment inserted a new Chapter VIA containing a series of Sections 35, 35A to 35P and 36 in the Act in substitution of the previous Sections 35, 35A and 36 of the old Act. We will first extract the relevant amended provisions of the said Act. They read as follows :- Section 35 Appeals to Collector (Appeals). - (1) Any person aggrieved by any decision or order passed under this Act by a Central Excise Officer lower in rank than a Collector of Central Excise may appeal to the Collector of Central Excise (Appeals) [hereafter in this Chapter referred to as the Collector (Appeals)] within three months from the date of the communication to him of such decision or order : Provided that the Collector (Appeals) may if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months allow it to be presented within a further period of three months. Every appeal under this section shall be in the prescribed(2) form and shall be verified in the prescribed manner. Section 35B(1) Appeals to the Appellate Tribunal. - (1) Any person aggrieved by any of the follow....
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....ction 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 Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied : Provided that where in any particular case, the Collector (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. Section 35L Appeal to Supreme Court. - An appeal shall lie to the Supreme Court from - any judgment of the High Court delivered on a reference made(a) under Section 35G in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved immediately after the ....
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....arising out of or connected with such proceeding and which is so pending shall continue to be dealt with by the Board or the Collector of Central Excise, as the case may be, as if the said section had not been substituted. Any person who immediately before the appointed day was authorized to appear in any appeal or proceeding transferred under sub-section (1) or sub-section (2) shall, notwithstanding anything contained in Section 35-O have the right to appear before the Appellate Tribunal in relation to such appeal or proceeding. 3.The principal argument on behalf of the appellant is that the right of appeal is a substantive right and not merely a matter of procedure Reliance is placed on : (i)Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh, 1983 (13) E.L.T. 1277 (S.C.) = AIR 1953 S.C. 221; (ii)Garikapati v. Subbiah Choudhary, AIR 1957 S.C. 540; State of Bombay v. Supreme General Films Exchange, AIR 1960(iii) S.C. 980; and (iv)Collector of Customs v. A.S. Bawa, 1978 (2) E.L.T. (J 333) (S.C.) = AIR 1968 S.C. 13. 4.The first judgment of the Supreme Court we shall be dealing in detail later and the second and third judgments referred to above are on....
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....o hear appeals which is sufficient requirement under law. There were other arguments as well but we need not deal with them in view of the clear legal position which we are discussing hereinafter. 7.First of all, we must make it clear that we do not intend to rule upon the vires or otherwise of the amendment carried out by the Finance Act of 1980 or of the Act as amended. To us the amendment appears to be squarely intra vires, but this Tribunal being itself a creature of the amended Act, cannot go into vires of the Act. We therefore decline to rule upon the constitutionality or otherwise of the Act as amended and proceed on the basis that the Act and the amendment are all constitutional and that we are only to construe the provisions as they stand. 8.The main-stay of the submission by the appellant has been the dictum of the Supreme Court in "M/s. Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh", AIR 1953 S.C. 221 = 1983 (13) E.L.T. 1277 (S.C.) wherein it was observed that :- "A right of appeal is not merely a matter of procedure. It is a matter of substantive right. This right of appeal from the decision of an inferior tribunal to supreme Tribunal becomes v....
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.... old Act are now to be subject to an appeal before the Tribunal. This provision is expressly retrospective. The substantive right of appeal arising out of the proceedings under the old Act lay to the Central Board of Excise and the Appellate Collector under the old Act. This right has been taken away from the appellants and the appellants have been told that their appeals would lie to the Tribunal only and not to the Appellate Collector and the Central Board of Excise. Thirdly, under Section 35B(d) appeals against the order before or after the appointed day under Section 35A as it stood immediately before that day, namely, before the amendment, are also to be heard by the Tribunal. This is another provision which expressly treats the pending proceedings in the same way as those which are initiated under the amended Act. Fourthly, Section 35B(2) empowers the Collector to file an appeal against an order made under Section 35 as it stood immediately before the appointed day, or an order passed under Section 35A to file an appeal to the Tribunal. This again is a provision affecting the pending proceedings and is therefore retrospective. Fifthly, Section 35E(4) enables an appeal to be f....
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....ctment such right of appeal is taken away expressly or impliedly with retrospective effect, and when the Court to which appeal lay under the unamended Act stands abolished. (Jose Da'Costa v. Bascora Sadasiva Sinia - AIR 1975 S.C. 1843) Para 28 relying upon AIR 1957 S.C. 540 and 1905 AC 369 already referred to above. 12.These exceptions are also satisfied in the present case. Firstly, the right of appeal as it existed before is expressly taken away from the appellants in so far as they cannot now file the appeal before the Central Board of Excise & Customs. This is why the present appellants have not filed their appeals before those authorities. This is an admission on the part of the appellants that their previous right of appeal under the old Act has been taken away from then by the amendment. The second exception also applies because the Central Board of Excise & Customs acting as Appellate authority has been abolished by the amending Act. The abolition of these bodies as appellate authorities is material and significant, even if these bodies continue to do work other than the hearing of appeals. Hence by this test also the amending Act is retrospective and applies to....
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....e Court in Ittyavira Mathai v. Varkey Varkey and another AIR 1964 S.C. 907 para 15 & 16. In this case also the amending Act showed contrary intention and, therefore, the Court held that : "A litigant has no right to contend that a Tribunal before whom he should have taken an appeal when he instituted the suit should not be abolished. The Legislature has full power to enact a law of that kind and it is not contended before us that the repeal of the previous Act was unconstitutional. It would, therefore, follow that whatever rights may have vested in the party in the matter of filing an appeal were abrogated by competent legislature. New rights were conferred in place of those which were taken away and it is only the new rights which could be availed of. After the new rights were conferred even they were modified in one respect and that was with regard to the hearing of certain kinds of appeals by a Full Bench. The rights to have the appeal heard by a Full Bench by virtue of a new provision never vested in any of the parties to the present litigation. Therefore, their abrogation by a later law cannot entitle them to make a complaint." 16.These observations aptly apply to the pr....
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....vertheless, after anxious consideration I find myself compelled to record my dissent from the conclusion reached by them. 20.As a party to the order No. 246/1983-C, dated 17-8-1983 on the Stay Application of M/s. Piya Pharmaceutical Works, Ghaziabad, which was recorded by my learned brother Shri S.D. Jha and concurred in by my learned brother Shri H.R. Syiem, I had occasion to apply my mind even earlier to the present issue. As would be evident from the Order in the Piya Pharmaceutical Works case, the arguments centred on the Supreme Court judgment in the case of Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh & Ors. (Reported in AIR 1953 S.C. 221 1953 SCR 987 = 1983 (13) E.L.T. 1277), referred to for convenience henceforth as "The Hoosein Kasam Dada case." During the hearing of the Piya Pharmaceutical case, most of the points raised in the case of M/s. Amin Chand Pyarelal (in which the learned Vice-President and my learned brother Shri A.J.F. D' Souza took the view—which apparently was not shared by the other learned Member of that bench Smt. V.S. Rama Devi - that the provisions of Section 35F were applicable even to a first appeal in all cases) and during the ....
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....nst 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." The important findings in the judgment, in the context of the present case, are as follows :- A right of appeal is not merely a matter of procedure, but a matter of substantive right (para 9); It becomes vested in a party when proceedings are first initiated in, and before a decision is given by the inferior Court (ibid); Such a vested right cannot be taken away except by express enactment or necessary intendment, and an intention to interfere with or impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication (ibid); The right that the amended Section gave 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....
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....cessary implication, according to the learned Advocate, that the amended provisions applies to an appeal from an assessment order made before the date of amendment as well as to an appeal from an order made after that date. A similar argument was urged before the Calcutta Special Bench in Sardar Ali v. Bolimuddin (supra), namely, that after the amendment the Court had no authority to entertain an appeal without a certificate from the Single Judge. Rankin C.J., repelled this argument with the remark at p. 643 : "Unless the contrary can be shown, the provision which takes away jurisdiction is itself subject to the implied saving of the litigants' right." In our view the above observations is apposite and applies to the case before us. The true implication of the above observation as of the decisions in the other cases referred to above is that the pre-existing right of appeal is not destroyed by the amendment if the amendment is not made retrospective by express words or necessary intendment. The fact that the pre-existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the conti....
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....rovision is not a matter of procedure but of(c) substantive right. 26.The Garikapati case contains a very detailed discussion of the question of vested right and the circumstances in which they can be taken away by a subsequent enactment. That case related to a suit for a value exceeding Rs. 10,000 but below Rs. 20,000. The suit was instituted on 22-4-1949, before the coming into force of the Constitution, when there was a right of appeal to the Federal Court in such a case. On the coming into force of the Constitution the Federal Court was abolished and replaced by the Supreme Court, and the valuation necessary for appeal to the Supreme Court was raised to Rs. 20,000. An application to the High Court of Andhra for leave to appeal to the Supreme Court was dismissed on the ground, inter alia, that the value of the property involved was less than Rs. 20,000. Against this dismissal the petitioner made an application to the Supreme Court for Special Leave to appeal under Article 136 of the Constitution. The Supreme Court by a majority of 4 to 1 held that since the suit had been instituted before the date of the Constitution the parties thereto had, from the date of the institution o....
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....ples which emerge from these as well as other judgments. 31.The first principle is that, when a statute effects changes in law, the procedural changes would ordinarily have retrospective effect whereas those affecting substantive rights would not apply retrospectively in the absence of express enactment or necessary intendment. This principle has been repeatedly stated, but a few instances will suffice : Privy Council judgment in(a) Delhi Cloth and General Mills Co. Ltd. v. Income Tax Commissioner, Delhi, 54 Ind. App. 421 : ILR of Lah 284 (AIR 1927 PC 242 (C). This has been cited with approval by the Supreme Court in Garikapati's case (para (6) at page 546) :- "the principle which their Lordships must apply in dealing with this matter has been authoritatively enunciated by the Board in 1905 AC 369 (A), where it is in effect laid down that, while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or neces....
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....ill generally apply to this as well. The specific enunciation given above is taken from the Garikapati judgment (para 27 supra). 33.The third principle is that, "In order to see whether the rights and liabilities under the repealed law have been put to an end by the new enactment, the proper approach is not to enquiry if the new enactment has by its new provisions kept alive the rights and liabilities under the repealed law but whether it has taken away those rights and liabilities. The absence of a saving clause in a new enactment preserving the rights and liabilities under the repealed law is neither material nor decisive of the question." (AIR 1971 S.C. 1193 in the case of Jayantilal Amratlal v. Union of India & Ors., following AIR 1955 S.C. 84 in the case of State of Punjab v. Mehar Singh, and AIR 1969 S.C. 79 in the case of T.S. Baliah v. Income-tax Officer, Central Circle VI, Madras). The same principle has been followed in a recent judgment of the High Court of Assam, reported in AIR 1980 Gauhati 3. The relevant paragraph from this judgment is extracted below :- Whenever there is a repeal of an enactment the consequences"5. laid down in Section 6 of the General Clau....
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....ti judgment. 36.At this stage it would be useful to refer to an aspect which has tended to dilute the application of the second principle, namely that a vested right of appeal can be taken away only by a subsequent amendment, if it so provides expressly or by necessary intendment and not otherwise. This is how the principle has been set out in the Garikapati Judgment. However, sometimes another contingency is also included, namely where the Court to which the appeal lay at the commencement of the suit stands abolished. For instance, this has been stated as a second exception (in addition to the one set out above) in the judgment of the Supreme Court in Jose da Costa and Another v. Bascora Sadashiva Sinai Narcornin and Others, reported in AIR 1975 S.C. 1843 (para 28 at page 1850). The inclusion of this second "exception" led to some argument before us as to when an appellate Court or Tribunal can be said to be "abolished". 37.The authority cited in Josa da Costa for this second exception is also the Garikapati case. One would, therefore, have to go back to that judgment for illumination. However, before doing so, it would be useful to refer to a slightly earlier judgment of th....
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....st one as set out by the Supreme Court in the Garikapati case, and a second one, namely when the Court to which the appeal would lie is abolished. The following extract from para 36 of the Garikapati judgment is significant :- "It is clear from the above passage that the reason why the appeal was held to be incompetent was not that the court to which an appeal lay at the date of the institution of the suit had been abolished and, therefore, the right of appeal ceased to exist nor that the court was abolished and a new court was set up in its place and nothing was mentioned about the vested right of appeal but that the new court which took the place of the court to which the appeal originally lay was given jurisdiction in all cases "unless otherwise provided by this Act" and that that very Act having declared the whole of the sections of the Code in which the provisions relating to the Circuit Court and rights of appeal found place to be replaced by other provisions and those other provisions relating to the appeal from the Circuit Court, it was held that the statute "had otherwise provided." In other words this case illustrates that the matter really came within the first except....
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....roduces a condition which did not exist prior to 11-10-1982, namely that a person desirous of appealing against a decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied. (It also provides for the pre-deposit being waived in cases of undue hardship, but this being a matter of discretion would not materially affect the interpretation of the Section, in the same way as the similar proviso to the old Section 129 of the Customs Act did not make any difference in the situation covered by the A.S. Bava case). If the affect of this provision is examined, it will be seen that :- in terms of the(a) Hoosein Kasam Dada and A.S. Bava judgments, it is clearly calculated to whittle down the previously unfettered right of appeal; and there is no express provision stating that this requirement(b) shall apply in respect of appeals filed after the coming into force of this Section, notwithstanding that the original proceedings were instituted prior to that date. 42.No doubt the Section on the face of it appears to be mandatory, and to require that the condition of pre-deposit be applied in the case of every appeal filed af....
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..... Reference has already been made [vide para 31(c) supra] to the observations of the Delhi High Court in Syndicate Bank v. Rallis India Ltd. 46.It has also been stated that certain of the amended provisions, such as Section 35P(1), are specifically retrospective, and it is implied that therefore all the amended provisions should be given retrospective effect. In my view this would go against the basic principle that procedural provisions would (unless such a construction is textually inadmissible) have retrospective effect, whereas provisions touching substantive vested rights even if contained in the same amending statute, would not have retrospective effect in the absence of express enactment or necessary intendment. This has been brought out in the judgment of the Delhi High Court in Syndicate Bank v. Rallis India Ltd. (vide para 31(c) supra). Such an approach would also be contrary to the third principle enunciated earlier (vide para 33 supra). 47.It could also be argued that, by filing his appeal in terms of the new provisions an appellant is bound by all those provisions. This argument pre-supposes that the intending appellant has a choice between resorting to the amend....
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....owed, according to Shri Lakshmi Kumaran, that the necessary intendment was present. 49.With all respect to the learned SDR, I consider that this argument misses the essential point. Section 35F no doubt shows the `intendment' to introduce (or restore) the requirement of pre-deposit : but it does not show from the necessary intendment that it should apply retrospectively even to cases where the proceedings were initiated, or the lis arose, prior to the coming into force of that Section. And it is precisely for this reason that the Special Bench in the Piya Pharmaceutical Works case reached the decision that it did. 50.Another submission of Shri Lakshmi Kumaran, and a very interesting one, was that the interpretation given to Section 35F in the Piya Pharmaceutical Works case amounted to "reading down" that Section, and this was something the Tribunal was not competent to do. Shri Lakshmi Kumaran's submission would certainly be valid if the Tribunal of its own accord, and without any compelling reason, proceeded to "read down" a provision of law. However, applying the law as laid down by the Supreme Court in a relevant context when a litigant brings the interpretation of the Sup....
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....very reason that it could lead to a departure from the principle of harmonious construction). 52.The result of the above discussion is that none of the authorities and precedents so far cited points to the need for any modification of the decision in the Piya Pharmaceutical Works case. However, towards the conclusion of the arguments before the Larger Bench, the learned Secretary of the Bar Association, Shri R.K. Jain, drew our attention to another judgment of the Supreme Court which would appear to have a bearing on the issue. This is the judgment in the case of Messrs. Hardeodas Jagannath v. State of Assam and Others, reported in AIR 1970 S.C. 724, and referred to for convenience henceforth as "the Hardeodas case." This was a case with reference to the Assam Sales Tax Act, which is in some respects similar to the case of Hoosein Kasam Dada, in that the said Act originally contained provisions similar to the unamended provisions of Section 22(1) of the Central Provinces and Berar Sales Tax Act, and amended provisions on the lines of the amended provisions in the Central Provinces and Berar Sales Tax Act came into force with effect from 1-4-1958. In this case also the question a....
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....which the new provisions were to be applied or not applied. To that extent, the judgment could be regarded as modifying the judgment in the case of Hoosein Kasam Dada, although neither that case nor other cases on the same point have been explicitly referred to. 55.Before setting out my final conclusions, I think it would be desirable to indicate what exactly was decided in the Piya Pharmaceutical Works case. That was a case relating to a first appeal. (As was brought out at the hearing before the Larger Bench, the same Special Bench, in its earlier Order No. 199/1983C, in the case of Messrs. Nuchem Plastics Ltd., had not accepted the applicability of the Hoosein Kasam Dada judgment to the case of a second appeal, since it was held that the right of revision which was in existence prior to 11-10-1982 was not synonymous with a right of appeal. The Special Bench had accordingly held that the provisions of Section 35E would be applicable to all cases of a second appeal filed after 11-10-1982). Further, it was made clear in para 5 of the Piya Pharmaceutical Works decision that the decision was concerned only with the question of pre-deposit under Section 35F, and that the nature and....