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Sri Gulshan Trading Company and anr. Vs. the State of Uttar Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ No. 5502 of 1970
Judge
Reported in[1971]28STC487(All)
AppellantSri Gulshan Trading Company and anr.
RespondentThe State of Uttar Pradesh and ors.
Appellant AdvocateR.R. Agarwal and ;A.S. Kapoor, Advs.
Respondent AdvocateStanding Counsel
DispositionPetition dismissed
Excerpt:
.....9 only on depositing the admitted amount of tax, fee or penalty assessed under the act, the revising authority could not stay recovery of the admitted amount of tax under the unamended section 10(3)(i). in regard to the disputed amount of tax, the revising authority enjoyed unconditional power under the unamended section 10(3). there was a condition in regard to the continuance of the stay already granted. if the income-tax officer and the appellate assistant commissioner have made assessments or imposed penalties raising very large demands and if the appellate tribunal is helpless in the matter of stay of recovery, the entire purpose of the appeal can be defeated if ultimately the orders of the departmental authorities are set aside. had the supreme court intended that the right..........1970, and subsequently by the u.p. sales tax (amendment) act (3 of 1971). section 9(1) confers a right of appeal. it has got two provisos. the first proviso enacts that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due or of such instalment thereof as may have become payable. the second proviso enacts that the appellate authority shall not exercise any powers or perform any other function except those conferred on or entrusted to him as such authority. section 9(3) specifies the powers of the appellate authority. section 10(1) creates the revising authority. section 10(3)(i) enacts that the revising authority may for the purpose of satisfying itself as to the.....
Judgment:

S.N. Dwivedi, J.

1. The petitioner No. 1 is the business name and style in which the petitioner No. 2 carries on his business as commission agent in kirana. The petitioner No. 2 was assessed to sales tax of Rs. 50,880 for the assessment year 1969-70. He filed an appeal against the assessment order before the Assistant Commissioner (Judicial). The appeal is numbered 2455 of 1970. The appeals still pending.

2. This petition owes its origin to certain provisions in the U.P. Sales Tax Act regarding grant of stay of recovery proceedings when an appeal is pending. Sections 9 and 10 of the Act are material for our purpose. These two sections were first amended by the U.P. Sales Tax (Amendment) Ordinance, 1970, and subsequently by the U.P. Sales Tax (Amendment) Act (3 of 1971). Section 9(1) confers a right of appeal. It has got two provisos. The first proviso enacts that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due or of such instalment thereof as may have become payable. The second proviso enacts that the appellate authority shall not exercise any powers or perform any other function except those conferred on or entrusted to him as such authority. Section 9(3) specifies the powers of the appellate authority. Section 10(1) creates the revising authority. Section 10(3)(i) enacts that the revising authority may for the purpose of satisfying itself as to the legality or propriety of any order made by any appellate or assessing authority call for and examine the record of such order and may pass such order as it may think fit. Section 10(3)(i) has three provisos. The first proviso enacts that no application in revision shall be entertained in any case where an appeal lay against the order but was not preferred. The second proviso is to this effect: '...an application for stay of realisation of any amount of tax, fee or penalty, shall not be entertained by the revising authority or by any additional revising authority, unless an appeal or revision from the order of the assessing authority or the appellate authority, as the case may be, is pending before proper authority.' The third proviso enacts that where the revising authority grants a stay of recovery of the amount of tax, fee or penalty, the applicant in revision shall furnish security to the satisfaction of the assessing authority concerned within such period as may be specified by the revising authority.

3. The Ordinance amended Sections 9 and 10 of Act. The effect of the amendment in Sub-section (1) of Section 9 was that no appeal against an assessment order could be entertained unless the appellant had furnished satisfactory proof of the payment of not less than the amount of tax or fee due on the turnover of sales or purchases, as the case may be, admitted by the appellant in the return filed by him or at a later stage in proceedings before the assessing authority, whichever is greater, or the amount of tax or fee due on the turnover of sales or purchases as the case may be, admitted at any stage in proceedings before the assessing authority or 20 per cent. of the amount of tax or fee assessed, whichever is greater, if no return has been filed. Section 10(4) was also amended by the Ordinance. The amended Sub-section (4) provided that the revising authority on an application of the dealer could after hearing the Commissioner of Sales Tax stay the realisation of any amount of tax, fee or penalty payable by him under an order against which an appeal or revision is pending. There were two provisos to the amended Sub-section (4). The first proviso enacted that no application for stay could be entertained unless the dealer had furnished satisfactory proof of the payment of not less than half of the disputed amount of tax, fee or penalty in addition to the amount of tax or fee required to be deposited by him under Section 9. The third proviso enacted that no stay order shall remain in force for more than thirty days after the making thereof unless in the meantime the applicant had furnished security to the satisfaction of the assessing authority for payment of the amount, the realisation whereof had been stayed.

4. The amending Act also amended Sections 9 and 10. The proviso to Sub-section (1) of Section 9, introduced by the amending Act, provides that no appeal against the assessment order shall be entertained unless the appellant has furnished satisfactory proof of the payment of not less than the amount of tax or fee on the turnover of sales or purchases admitted by the appellant in the return filed by him or at a later stage in the proceedings before the assessing authority, whichever is greater, or the amount of tax or fee on the turnover of sales or purchases admitted at any stage in the proceedings before the assessing authority, or 20 per cent. of the amount of tax or fee assessed, whichever is greater, if no return has been filed. This amendment is similar to the one introduced by the Ordinance in Section 9(1).

5. The amending Act has added Sub-section (3-A) to Section 9. The new Sub-section (3-A) provides that the appellate authority shall not have the power of staying realisation of any amount of tax, fee or penalty payable by the appellant under an order under appeal.

6. The amending Act has also amended Sub-section (4) of Section 10. The amended Sub-section (4) empowers the revising authority to stay realisation of any amount of tax, fee or penalty payable by the assessee under any order against which an appeal or revision is pending. It has three provisos. The first proviso enacts that no application for stay shall be entertained unless the dealer has furnished satisfactory proof of the payment of not less than one-third of the disputed amount of tax, fee or penalty in addition to the amount of tax, fee or penalty required to be deposited by him under Section 9. The second proviso enacts that the revising authority may, for special and adequate reasons to be recorded in writing waive or relax the requirement of the first proviso in respect of the disputed amount of tax, fee or penalty. The third proviso enacts that no stay order shall remain in force for more than sixty days after the making of the order unless in the meantime the applicant has furnished security to the satisfaction of the assessing authority for payment of the amount, the realisation whereof has been stayed.

7. Counsel for the petitioners has advanced before us a single argument. That argument relates to the power of the revising authority to grant stay of realisation of tax, fee or penalty assessed under the Act. The argument is twofold. Firstly, it is said that under the unamended Section 9 under which the appeal of the petitioners was filed, the appellate authority had unconditional power of stay of realisation of tax, fee or penalty assessed under the Act. After the amendment of this Sub-section (3-A) of Section 9 by the Legislature the appellate authority has. been shorn of that power. According to him as the right to apply for stay of realisation of tax, fee or penalty is an integral part of the right to appeal, the petitioners' application for stay may be considered only in accordance with the unamended Section 9 and not in accordance with the amended Section 9 as Sub-section (3-A) of Section 9 has not been given retrospective effect. The second argument is put forward in this manner. It is assumed that the unamended Section 9 did not empower the appellate authority to stay realisation of tax, fee or penalty assessed under the Act. But it is urged that the unamended Section 10(3) empowered the revising authority to stay recovery of tax, fee or penalty if an appeal or revision were pending. As an appeal could be filed under the unamended Section 9 only on depositing the admitted amount of tax, fee or penalty assessed under the Act, the revising authority could not stay recovery of the admitted amount of tax under the unamended Section 10(3)(i). In regard to the disputed amount of tax, the revising authority enjoyed unconditional power under the unamended Section 10(3). There was a condition in regard to the continuance of the stay already granted. That condition was that security should be furnished by the applicant in revision within thirty days from the date of the order made by the revising authority. But there was no condition on the power to stay recovery of tax, fee or penalty itself. The amended Sub-section (4) of Section 10 curtailed the power of the revising authority to grant stay. He cannot now grant stay unless it is shown to him that at least one-third of the disputed amount of tax, fee or penalty admitted by the appellant has already been paid in addition to the amount of tax or fee. The result of the amendment, therefore, is that after the amendment the revising authority cannot stay recovery of the entire disputed amount. He can stay recovery of only two-thirds of the disputed amount; one-third of it has got to be deposited by the applicant in revision before he can ask for stay of the remaining undisputed amount. Before this amendment the revising authority, however, could stay recovery of the entire disputed amount of tax, fee or penalty. So it is said that as the right to apply for stay is an integral part of the right to appeal and as the amended Sub-section (4) of Section 10 has no retrospective effect, the petitioners' application for stay is governed by the unamended Section 10(3) and not by the amended Section 10(4). As regards the first argument, the Standing Counsel has submitted that the appellate authority had no express or implied power under the unamended Section 9 to stay recovery of tax, fee or penalty assessed under the Act. He has referred us to the second proviso to Section 9. The second proviso says that the appellate authority shall not exercise any powers or any other additional functions except those conferred on or entrusted to him as such authority. This provision does not help the Standing Counsel's point for its language does not exclude the enjoyment of implied powers. The Standing Counsel has next referred us to the second proviso to Section 10(3)(i). The second proviso enacted that an application for stay of realisation of any tax, fee or penalty shall not be entertained by the revising authority unless an appeal or revision from the order of the assessing authority or the appellate authority is pending before the proper authority. It is claimed by the Standing Counsel that this enactment excludes the implication of power of stay in the appellate authority under the unamended Section 9. We are not quite sure that this is the only way of reading the second proviso to Section 10(3)(i); it is possible to read the second proviso in a manner that may not inhibit the implication of power of stay in the appellate authority under the unamended Section 9. But it is not necessary for us to express a definite opinion on the true meaning of the second proviso to Section 10(3)(i), for we think that the first argument of counsel for the petitioners fails for another reason. We are of opinion that the right to stay of the amount of tax, fee or penalty assessed under the Act is not an integral part of the right of appeal. Neither precedent nor principle is shown in support of the argument. Counsel for the petitioners has referred us to two decisions of the Supreme Court, Income-tax Officer v. M.K. Mohammed Kunhi [1969] 71 I.T.R. 815 (S.C.) and Kasibai v. Mahadu A.I.R. 1965 S.C. 703. The first decision was under the Income-tax Act. The question was whether the Income-tax Appellate Tribunal, which is empowered to entertain an appeal from an order of assessment, has got the power to grant stay of recovery of tax during the pendency of the appeal before it. The argument on behalf of the Income-tax department was that as the Act does not confer any express power to grant stay, the Tribunal has got no such power. The Supreme Court did not accept the argument. It was held that the Tribunal has got ample power to stay recovery of tax during the pendency of the appeal before it. It was said that the power to grant stay is incidental or ancillary to the appellate power. But nowhere in this decision it has been held that a right to stay is an integral part of an assessee's right of appeal. The Supreme Court observed:

If the Income-tax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Appellate Tribunal is helpless in the matter of stay of recovery, the entire purpose of the appeal can be defeated if ultimately the orders of the departmental authorities are set aside.

8. It is difficult to read in this passage the immanency of a right to stay in the right of appeal. Had the Supreme Court intended that the right to stay is an integral part of the right of appeal, we do not think that the example would have been confined to the case of assessments or penalties raising 'very large demands'. Again, it appears to us that the word 'can' in the above passage has been used in the sense of 'may'. It may be that in the event of very large demands the purpose of appeal may be defeated in some cases and may not be defeated in others. We are unable to read in this passage anything to the effect that the right to stay is an integral part of the right of appeal. In the second case formerly an appeal lay both on facts as well as on law. After the amendment an appeal lay only on questions of law. It was held that as the amendment was not retrospective, it will not apply to cases where a right of appeal has become vested in the appellant on the date of the institution of the suit or proceeding. This case does not help the petitioners. The power to reverse the order in appeal makes the right of appeal effective. If the power to reverse is completely taken away, the right of appeal becomes illusory. There is then no doubt that the right of appeal has been taken away. Similarly, where the extent of the power of reversal is by a subsequent amendment made less extensive than the former power of reversal, there is little doubt that that right of appeal is partially paralysed. If such an amendment is not retrospective, it should not apply to cases where a right of appeal has accrued much earlier. But where the power of stay of recovery of tax, fine or penalty is by a subsequent amendment taken away, it is difficult to see how the right of appeal is taken away or crippled. We are unable to discern any direct and necessary connection between the power of stay and the right of appeal. The latter may exist without the former. So the first argument fails.

9. For the reasons already given in relation to the first ground the second ground also cannot succeed, for the amended Sub-section (4) of Section 10 has curtailed the power of the revising authority to stay recovery of the amount of tax, fee or penalty, and the power of stay is now less extensive than what it was before the amendment.

10. There is no force in this petition. It is accordingly dismissed with costs.


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