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India Tyre and Rubber Co. (India) Pvt. Ltd. Vs. Commercial Tax Officer Ii, Central Assessment Circle, Madras and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberWrit Appeal Nos. 602, 603, 624 and 625 of 1979 in W.P. Nos. 682 of 1977 and 1449 to 1451 of 1978
Judge
Reported in[1981]47STC273(Mad)
ActsTamil Nadu General Sales Tax Act, 1959 - Sections 2, 3, 4A, 11, 12, 14, 15, 16, 17, 18, 20, 22, 22(2), 23, 24, 25, 26, 27, 31, 31(3), 32, 32(1), 33, 34, 35, 36, 36(1), 36(2), 37, 38, 38(1), 43, 45(2), 48, 51, 54, 54(1), 57 and 57(1)
AppellantIndia Tyre and Rubber Co. (India) Pvt. Ltd.
RespondentCommercial Tax Officer Ii, Central Assessment Circle, Madras and ors.
Cases ReferredMartin Burn Ltd. v. R. N. Banerjee
Excerpt:
sales tax - liability to tax - section 36 of tamil nadu general sales tax act, 1959 - whether tribunal has jurisdiction to implead petitioner-company in appeals preferred by dunlop india limited - tribunal is creature of statute and all its powers confined to four corners of statute - section 36 deals with appellate jurisdiction conferred on tribunal - it cannot be said that power to implead third parties as parties to proceedings is either implied in power conferred under section 36 or incidental to power - held, petitioner not entitled to be impleaded as party in appeals preferred by dunlop india limited against orders of appellate assistant commissioner before tribunal. - - if no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return.....orderpadmanabhan, j. 1. india tyre and rubber co. (india) private limited, the petitioner in all the writ petitions, has filed w. p. no. 682 of 1977 for the issue of a writ of certiorarified mandamus to quash the order of the sales tax appellate tribunal, the second respondent herein, dated 22nd march, 1977, and to direct the second respondent to implied the petitioner in appeal no. 891 of 1976 on his file. w.p. nos. 1449, 1450 and 1451 of 1978 are filed by the petitioner for the issue of a writ of mandamus restraining the second respondent from taking up and considering appeals nos. 892, 893 and 894 of 1976. the facts leading to the filing of the writ petitions may be briefly stated as follows : the petitioner-company carries on business in the sales of tyres and rubber products. it also.....
Judgment:
ORDER

Padmanabhan, J.

1. India Tyre and Rubber Co. (India) Private Limited, the petitioner in all the writ petitions, has filed W. P. No. 682 of 1977 for the issue of a writ of certiorarified mandamus to quash the order of the Sales Tax Appellate Tribunal, the second respondent herein, dated 22nd March, 1977, and to direct the second respondent to implied the petitioner in Appeal No. 891 of 1976 on his file. W.P. Nos. 1449, 1450 and 1451 of 1978 are filed by the petitioner for the issue of a writ of mandamus restraining the second respondent from taking up and considering Appeals Nos. 892, 893 and 894 of 1976. The facts leading to the filing of the writ petitions may be briefly stated as follows : The petitioner-company carries on business in the sales of tyres and rubber products. It also holds a manufacturing licence for tyres and rubber products. On 4th May, 1960, the petitioner-company entered into a contract with Dunlop India Limited, the third respondent herein. Under the said contract, Dunlop India Limited agreed to manufacture on behalf of the petitioner-company tyres and rubber products. It is further agreed that in all matters relating to purchase of raw materials, engagement of labour, conducting of such operations as may be incidental to or necessary for the manufacture of the said goods in the factory of Dunlop India Limited, the latter shall be acting on behalf of the petitioner-company. Under the terms of the said contract, Dunlop India Limited would be entitled to be reimbursed the actual cost of production together with incidental expenses at the rate of 5 per cent of such raw materials and production costs. The petitioner had also covenanted to bear and pay all actual charges and expenses incurred in connection with the said goods. It is the petitioner's case that the nature of the transactions under which Dunlop India Limited agreed to manufacture tyres and rubber products for the petitioner-company is a works contract. The petitioner-company had been submitting returns under the Tamil Nadu General Sales Tax Act (hereinafter called the Act) and the sales tax authorities had been finalising the assessment on the basis that the first point of sale in the State is at the point where the petitioner has been selling the goods manufactured for them by Dunlop India Limited. It is further averred in the affidavit filed in support of the writ petitions that till 1975 the sales tax authorities had accepted that the nature of the transaction between Dunlop India Limited and the petitioner-company was in the nature of a 'works contract'.

2. While so, the Commercial Tax Officer II, Central Assessment Circle, Madras, the first respondent herein, issued a notice to the third respondent on 4th March, 1975. The notice was issued under section 16 of the Act for the assessment years 1969-70 to 1972-73 on the basis that the transaction between the petitioner and Dunlop India Limited was one of sale and that this factor had escaped notice at the time of the original assessment. Ultimately, the first respondent held that the transaction between the petitioner and Dunlop India Limited was one of sale and the assessment was finalised on that basis. Against the orders of the first respondent, Dunlop India Limited preferred appeals before the Appellate Assistant Commissioner and the latter dismissed the appeals by his order dated 10th September, 1976, but however the matter was remitted to the assessing authority for the purpose of determining the correct amount. Against the orders of the appellate authority, Dunlop India Limited have preferred Appeals Nos. 891 to 894 of 1976 before the second respondent, the Sales Tax Appellate Tribunal (hereinafter called the Tribunal), Madras. All the above appeals are now pending before the Tribunal.

3. While so, the petitioner-company filed petitions on 15th March, 1977, before the Tribunal which were diarised as serial Nos. 6767 to 6770 praying that it might be impleaded as party to Appeals Nos. 891 to 894 of 1976 filed by Dunlop India Limited. The Tribunal by its order dated 22nd March, 1977, returned the petitions on the ground that they did not fall under section 36(1) of the Act. The said order has been signed by the Secretary to the Tribunal. W.P. No. 682 of 1977 has been filed to quash the order of the Tribunal returning the petitions filed by the petitioner-company and to get itself impleaded in Appeal No. 891 of 1976 filed by Dunlop India Limited; and W.P. Nos. 1449, 1450 and 1451 of 1978 are filed to restrain the second respondent from taking up and considering Appeals Nos. 892, 893 and 894 of 1976.

4. Counter-affidavits have been filed on behalf of respondents Nos. 1 and 2. According to the counter-affidavit, Dunlop India Limited is an assessee on the file of the first respondent. The first respondent revised the assessments for the years 1969-70 to 1972-73 by the order dated 10th November, 1975, by which it was held that the transactions between the assessee and the petitioner-company were sales eligible to single point tax at the assessee's hands. Against these orders, the assessee filed appeals before the Appellate Assistant Commissioner and the appellate authority concurred with the assessing authority in its finding as regards the liability of Dunlop India Ltd. to tax, but remanded the case for determination of the correct turnover. Against the said orders of the appellate authority, Dunlop India Limited have preferred Appeals Nos. 891 to 894 of 1976. Dunlop India Limited themselves have preferred petitions purporting to be under section 36(2) of the Act for impleading the petitioner-company as the second respondent. That petition is still pending consideration. While so, the petitioner filed four petitions before the Tribunal for being impleaded as a party in the appeals filed by Dunlop India Limited. As the petitions themselves were not maintainable, the Tribunal rejected the petitions under regulation 7(2) of the Sales Tax Appellate Tribunal Regulations. It is stated that since the petitioner-company was not a party before the assessing authority or the appellate authority, it had no locus standi to get itself impleaded as a party in the appeals before the Tribunal. It is further stated that under regulation 7(2) of the Sales Tax Appellate Tribunal Regulations, the Chairman, Sales Tax Appellate Tribunal, has power either to reject or order the papers to be returned to the party. The papers were returned in view of the fact that the Chairman had invoked the power under the said provisions.

5. Mr. Parasaran, the learned counsel for the petitioner, raised the following contentions : (1) The petitioner was not heard before the second respondent passed the order returning the petitions filed by the petitioner-company to get itself impleaded in Appeals Nos. 891 to 894 of 1976. (2) The Tribunal has an inherent power to implied necessary or proper parties in the appeals, which are pending before them. (3) Under section 36 any person objecting to an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31 or an order passed by the Deputy Commissioner under sub-section (1) of section 32 has a right of appeal to the Tribunal. The words used in the section being 'any person', any person aggrieved by the order of the Appellate Assistant Commissioner or the order passed by the Deputy Commissioner will have a right of appeal to the Tribunal. The words 'any person' in the section, according to Mr. Parasaran, should not be confined only to the assessee alone against whom an order has been passed by the Appellate Assistant Commissioner or the Deputy Commissioner. In the submission of the learned counsel, the impact of the order of the assessing authority and the Appellate Assistant Commissioner, holding that the transaction between the petitioner and Dunlop India Limited is not in the nature of a works contract but in the nature of a sale, will be on the petitioner-company. Dunlop India Limited will be entitled to recover the amount of sales tax that might be levied against them from the petitioner-company. The amount involved will come to about Rs. 62,00,000. Therefore, the petitioner-company is aggrieved by the order of the assessing authority and the appellate authority and will have even a right of appeal against the order of assessment passed by the Appellate Assistant Commissioner under section 36 of the Act as a person aggrieved. If that is so, then certainly the petitioner-company will be a proper party in the appeals pending before the Tribunal. The real persons who will be affected by any order that might be finally passed by the Tribunal will be the petitioner-company and that, consequently, the petitioner-company has got a right to be heard in the appeals filed by Dunlop India Limited.

6. The question for consideration is whether the contentions of the learned counsel for the petitioner are sustainable.

7. Though Mr. Parasaran, at the first instance, contended that the impugned order was liable to be set aside on the ground of violation of the principles of natural justice, in view of the fact that the petitioner was not beard before the order was passed, the learned counsel did not pursue this ground of objection. This is because ultimately the question whether the Tribunal had authority or jurisdiction to implead the petitioner-company in the appeals preferred by Dunlop India Limited is a question of law and that the same could be decided once for all by this Court.

8. The point that falls for consideration therefore is whether the Tribunal has jurisdiction to implead the petitioner-company in the appeals preferred by Dunlop India Limited.

9. In this context, it will be useful to understand the scheme of the Act. Section 2(g) defines a dealer as meaning any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes a local authority, company or Hindu undivided family which carries on such business, a casual trader, a commission agent, a broker or a del credere agent or an auctioneer or any other mercantile agent by whatever name called who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal and every local branch of a firm or company situated outside the State. Section 3 is the charging section. It states that every dealer other than a casual trader or agent of a non-resident dealer whose total turnover for a year is not less than fifty thousand rupees and every casual trader or agent of a non-resident dealer, whatever be his turnover for the year shall pay a tax for each year at the rate of four per cent of his taxable turnover. Section 11 states that the tax under the Act shall be assessed, levied and collected in such manner as may be prescribed. Section 12 deals with the procedure to be followed by the assessing authority. The assessment of a dealer shall be on the basis of the prescribed return relating to his turnover submitted in the prescribed manner within the prescribed period. If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incomplete or incorrect, the assessing authority shall, after making such enquiry as it may consider necessary, assess the dealer to the best of its judgment. Section 15 provides that where a dealer dies, his executor, administrator or other legal representative shall be deemed to be the dealer for the purposes of the Act and the provisions of the Act shall apply to him in respect of the business of the said deceased dealer and the liability of the executor, administrator or other legal representative is confined to the extent of the assets of the deceased dealer in his hands. Section 16 provides for assessment of escaped turnover. Section 18 deals with liability to tax of persons not observing restrictions and conditions notified under section 17. Section 20 provides for registration of dealers. Section 22 deals with collection of tax by a dealer. Section 23 provides for levy of penalty in certain cases. Sections 24 to 26 deal with payment and recovery of tax as well as recovery of penalty and mode of recovery. Section 31 provides that any person objecting to an order passed by the appropriate authority under section 4-A, section 12, section 14, section 15, sub-sections (1) and (2) of section 16, section 18, sub-section (2) of section 22, section 23 or section 27 may within a period of thirty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Assistant Commissioner having jurisdiction. Section 32 confers special suo motu powers on the Deputy Commissioner to call for and examine an order passed or proceeding recorded by the appropriate authority under section 4-A, section 12, section 14, section 15 or sub-sections (1) and (2) of section 16. Section 33 enables any person, objecting to an order passed or proceeding recorded under the Act for which an appeal has not been provided for in section 31, may within a period of thirty days from the date on which a copy of the order or proceeding was served on him in the manner prescribed, to file an application for revision of such order or proceeding to the Deputy Commissioner. Under section 34 suo motu power of revision has been conferred on the Board of Revenue to call for and examine an order passed or proceeding recorded by the appropriate authority under section 4-A, section 12, section 14, section 15 or sub-section (1) or (2) of section 16 or an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31 or by the Deputy Commissioner under sub-section (1) of section 32. Section 35 confers on the Board of Revenue powers of revision over the order passed by the Deputy Commissioner. Section 36 provides for appeal to the Appellate Tribunal. It reads as follows :

'(1) Any person objecting to an order passed by the Appellate Assistant Commissioner under sub-section (3) of section 31, or an order passed by the Deputy Commissioner under sub-section (1) of section 32 may, within a period of sixty days from the date on which the order was served on him in the manner prescribed, appeal against such order to the Appellate Tribunal :

Provided that the Appellate Tribunal may admit an appeal presented after the expiration of the said period if it is satisfied that the appellant had sufficient cause for not presenting the appeal within the said period.

(2) The appeal shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by such fee not exceeding one hundred rupees as may be prescribed.

(3) In disposing of an appeal, the Appellate Tribunal may, after giving the appellant a reasonable opportunity of being heard, -

(a) in the case of an order of assessment -

(i) confirm, reduce, enhance or annul the assessment or penalty or both;

(ii) set aside the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed; or

(iii) pass such other orders as it may think fit; or

(b) in the case of any other order, confirm, cancel or vary such order.'

10. Section 37 provides for appeal to the High Court against an order of the Board of Revenue passed under section 34. Section 38 confers power of revision on the High Court against the orders of the Deputy Commissioner. It is therefore seen that only a dealer is affected either by an order of assessment or an assessment of escaped turnover under section 16. A dealer is given a right of appeal under section 31 to the Appellate Assistant Commissioner. In a dispute between the dealer and the commercial tax authorities regarding the correctness of the original assessment or assessment of escaped turnover, a third party has no interest at all to intervene. The question involved is purely one between the dealer concerned and the commercial tax authorities. Any assessment order that might be passed by the assessing authority or the various appellate or revisional authorities provided for in the Act will not be binding on any person other than the dealer. It is therefore difficult to conceive of a case where any person other than a dealer will be a necessary or a proper party either to the original assessment proceedings or in the appeals or revisions that may be filed by the dealer against the order of the assessing authority. The only persons who might be aggrieved by such orders will be the executor, administrator or other legal representatives of a dealer in the event of his death. In such a case, section 15 provides that where a dealer dies, his executor, administrator or the legal representatives shall be deemed to be the dealer for the purposes of this Act. Therefore, by virtue of this provision, they step into the shoes of the dealer in the proceedings taken under the different provisions of the Act.

11. It is argued that under section 31 the right to object to an order passed by the appropriate authority is given to any person by preferring an appeal before the Appellate Assistant Commissioner. Similarly, under section 36 the right to prefer an appeal before the Tribunal against the order passed by the Appellate Assistant Commissioner is given to any person. It is further argued that the right of appeal is not confined only to a dealer. It must be implied that a right of appeal is also given to every person who feels aggrieved by the order of assessment. Extending this argument to the facts of this case, it is stated that by reason of the Appellate Assistant Commissioner and the assessing authority holding that the transaction between the petitioner-company and Dunlop India Limited is not a works contract but a sale, the petitioner-company will be liable to pay a sum of Rs. 62,00,000 to Dunlop India Limited. The petitioner-company is therefore an aggrieved person and will be consequently entitled to canvass the correctness of the order of the Appellate Assistant Commissioner confirming the original order of assessment before the Tribunal. A further argument is advanced that if section 36 is not so interpreted as to enable the petitioner-company to file an appeal or to intervene in the appeal preferred by Dunlop India Limited before the Tribunal, the petitioner-company will be without any remedy if Dunlop India Limited chooses not to press the appeal. I am not impressed by these contentions.

12. Sections 12, 14, 15 and sub-sections (1) and (2) of section 16 deal with orders of assessment. Under section 22 no person who is not a registered dealer shall collect any amount by way of tax or purporting to be by way of tax under the Act and no registered dealer shall make any such collection except in accordance with the provisions of the Act and the Rules made thereunder. Section 22(2) provides that if any person or registered dealer collects any amount by way of tax or purporting to be by way of tax in contravention of the provisions of sub-section (1), whether or not any tax is due from such person or dealer under the Act in respect of the transaction in which he collects such amount, the assessing authority may after giving such person or dealer a reasonable opportunity of being heard, by order in writing impose upon him by way of penalty a sum not exceeding one and a half times such amount. It is seen from this section that not only a registered dealer but also a person other than a registered dealer shall be subject to penalty if he contravenes the provisions of sub-section (1) of section 22. Section 31 similarly provides for an appeal against an order passed under section 23. Section 23 provides that if any person purchasing goods is guilty of an offence under clause (e) of sub-section (2) of section 45, the assessing authority may impose upon him by way of penalty a sum not exceeding one and a half times the tax payable on the turnover relating to the sale of such goods. It can therefore be seen that the words 'any person' are used in contradistinction with the word 'dealer' in sections 22(2) and 23. Such a person is given a right of appeal under section 31 against any order that might be passed against him under section 22(2) or 23. That is the reason why section 31 used the words 'any person'. Therefore, merely from the fact that a right of appeal is given under section 31 or 36 to 'any person' it does not follow that a right of appeal is given to all persons whoever they may be who might for reasons known to them feel aggrieved by the order of either the assessing authority or the appellate authority. If the contention of the learned counsel for the petitioner is accepted then all persons with whom Dunlop India Limited might enter into contract for the manufacture and supply of tyres might have to be impleaded.

13. Further, sections 31 and 36 contemplate that a copy of the order should be served on a person to enable him to file an appeal. It therefore follows that only a person against whom an order is passed will have a right of appeal.

14. Mr. Parasaran referred to section 96 of the Civil Procedure Code. The language of section 96 is that an appeal shall lie from every decree passed by any court exercising original jurisdiction to the court authorised to hear appeals from the decisions of such court. As a general principle no one can appeal from a decree unless he was a party to the action or was treated as such or is the legal representative of a party, or unless his privity in estate, title or interest is apparent on the face of the record. But a person who is not a party to the action may be allowed to appeal if he is adversely affected by the order, provided the appellate court thinks fit in its discretion to grant such leave. In State of Punjab v. Amar Singh : [1974]3SCR152 , the Supreme Court observed as follows : 'A person who is not a party to a decree or order may, with the leave of the court, prefer an appeal from such decree or order if he is either bound by the order or is aggrieved by it or is prejudicially affected by it.' It is therefore clear that any person claiming a right to prefer an appeal against a decree or order under section 96, C.P.C., must be a person who is bound by the decree or order or he is aggrieved by it or is prejudicially affected by it. In Maharaj Singh v. State of U.P. : [1977]1SCR1072 , it is stated : 'The test whether a person is 'an aggrieved person' is to see whether he has a genuine grievance because an order has been made which prejudicially affects his interests.' A person can be said to be aggrieved by an order only if that order directly affects or prejudices his interest. Decisions under section 96 have laid down that as a general rule a decision cannot be said to adversely affect a person unless it will operate as res judicata against him in any future suit. Therefore, under section 96, a person, who is not a party to the suit or his legal representative but cannot be affected by the decision of the court in any way, cannot file an appeal. It has been observed by a Bench of this Court in Kasi Chettiar v. Secretary of State (A.I.R.1941Mad.577.) that 'a right of appeal is not a mere matter of procedure. It is a substantive right and is primarily a creature of statute. As such, it can be exercised only by those in whom the power vests either expressly or by necessary implication'.

15. Even if the principles, that have been applied to decide as to who will have a right of appeal under section 96, C.P.C., are applied to sections 31 and 36 of the Act, it will be clear that no person other than the person against whom an order has been passed will be adversely affected by the order and will be an aggrieved' person entitled to file an appeal. The assessment order will only be binding on the dealer who will be the assessee or his executor, administrator and legal representatives who are also deemed to be a dealer under the provisions of the Act. The petitioner, by any stretch of imagination, cannot be considered to be a person who is adversely or prejudicially or directly affected by the order of assessment. The effect of the order passed by the assessing authority is only that certain transactions of Dunlop India Limited would constitute a sale and not a works contract and, therefore, those transactions have to be included in the turnover of Dunlop India Limited for the years in question. Any opinion or finding that might be given by the assessing authority or by the appellate authorities under the Act on the question whether the transaction between Dunlop India Ltd. and the petitioner is a sale or a works contract will not be binding upon the petitioner and it will still be open to it to contend that this is only a works contract in any proceeding that may properly arise between Dunlop India Limited and the petitioner. If the assessment order or any of the orders of the appellate authorities confirming the assessment order is not binding on the petitioner, it cannot be said that the petitioner is aggrieved or adversely affected by such order. The order of assessment holding these transactions to be sale can only be enforced against Dunlop India Limited and if for any reason Dunlop India Limited does not pay the amount as per the order of assessment the commercial taxes department cannot enforce the order against the petitioner as the latter has nothing to do with Dunlop India Limited. Viewed from any point of view, it is not possible to conceive of any situation by which it can be said that the petitioner is adversely affected by the order.

16. It is argued that the consequence of the commercial tax authorities holding that the supplies of tyres and rubber products by Dunlop India Limited to the petitioner under the agreement entered into between the two are in the nature of sale and not works contract will be to render the petitioner liable to pay to Dunlop India Limited the amount of sales tax levied on them on the said turnover. So far as the commercial tax authorities are concerned they are interested in realising the legitimate taxes from Dunlop India Limited. They are not concerned with the fact that, as a result of the order, Dunlop India Limited would be compelled to call upon the petitioner to reimburse the amount. The agreement between Dunlop India Limited and the petitioner itself does not make any reference to the petitioner's liability to pay the sales tax on the tyres and rubber products to be supplied by Dunlop India Limited if the transactions are found to be sale by the authorities concerned. Clause (c) of the agreement states that the petitioner would reimburse Dunlop India Limited with the cost of raw materials obtained by them for the manufacture of the goods. It is further agreed that the petitioner would pay a sum at the rate of 5 per cent of such cost of raw materials and production to cover incidental expenses to Dunlop India Limited. It is also further agreed that the petitioner would bear and pay Dunlop India Limited all actual charges and expenses incurred in connection with the said goods. On the face of the agreement there is no term by which the petitioner had unconditionally undertaken that it would pay whatever amount that Dunlop India Limited might be called upon to pay by way of sales tax if it is found by the commercial tax authorities that the transaction covered by the agreement constitutes a sale. Such being the case, the petitioner cannot be considered to be an aggrieved person entitling it to file an appeal under section 31 or 36 of the Act. Further it will be open to the petitioner to contend that the nature of the transaction between it and Dunlop India Limited is a works contract and not a sale in a civil court as and when Dunlop India Limited chooses to claim the amount from the petitioner. The right of the petitioner to get appropriate relief from the civil court is not taken away merely by the fact that in assessment proceedings against Dunlop India Limited the commercial tax authorities have held that the transaction in question is a sale and not a works contract. It therefore follows that the petitioner will not be a person entitled to file an appeal against the order of assessment either under section 31 or 36 of the Act. Therefore, the further argument that the petitioner is a necessary or a proper party in the appeals that are pending before the Tribunal also must fall to the ground. If the petitioner is not adversely affected or aggrieved by the order of assessment passed against Dunlop India Limited, the petitioner cannot be considered either to be a necessary party or a proper party in the appeals that are pending before the Tribunal. The petitioner will not equally be affected by whatever order that the Tribunal may pass in the appeals preferred by Dunlop India Limited.

17. Mr. Parasaran then contended that there is an inherent power in the Appellate Tribunal to implead third parties in proceedings pending before it and the Tribunal was wrong in returning the applications preferred by the petitioner on the ground that they are not maintainable under section 36 of the Act. The existence of an implied or inherent power in any authority is based on the following principle found in Maxwell on the Interpretation of Statutes :

'Where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui jurisdictio data est, ea quoqe concessa esse vindentur, sine quibus jurisdictio explicari non potuit.'

18. The principle is thus stated in articles 5401 and 5402 of Sutherland Statutory Construction, III Edition :

'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.'

19. In Domat's Civil Law, Cushing's Edition, Vol. 1, at page 88, it has been stated thus :

'It is the duty of the Judges to apply the laws, not only to what appears to be regulated by their express dispositions but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it.'

20. Craies Observes : 'One of the first principles of law with regard to the effect of an enabling act is that if a legislature enables something to be done, it gives power at the same time, by necessary implication, to do everything which is indispensable for the purpose of carrying out the purpose in view' (Craies on Statute Law, page 239). This principle is contained in the legal maxim 'quando lex aliquid concedit concedere videtur et illud sine quo res ipsa esse non potest'. This maxim has been translated in Broom's Legal Maxims, Tenth Edition, page 313, thus : 'Whenever anything is authorised, and especially if, as matter of duty, required to be done by law and it is found impossible to do that thing unless something else not authorised in express terms be also done, then that something else will be supplied by necessary intendment.'

21. In B. B. L. & T. Merchants' Association v. Bombay State : (1961)IILLJ663SC , Gajendragadkar, J., as he then was, observed as follows :

'In other words, the doctrine of implied powers can be legitimately invoked when it is found that a duty has been imposed or a power conferred on an authority by a statute and it is further found that the duty cannot be discharged or the power cannot be exercised at all unless some auxiliary or incidental power is assumed to exist. In such a case, in the absence of an implied power the statute itself would become impossible of compliance. The impossibility in question must be of a general nature so that the performance of duty or the exercise of power is rendered impossible in all cases. It really means that the statutory provision would become a dead-letter and cannot be enforced unless a subsidiary power is implied.'

22. In Income-tax Officer v. Mohd. Kunhi A.I.R.1969 S.C.430, the Supreme Court had to consider the question whether the Income-tax Appellate Tribunal had an inherent power to grant stay. Grover, J., observed :

'An express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective. 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.'

23. This principle has been reiterated by Ismail, J., in Ramamurthi v. Rangachari ( : (1975)1MLJ407 .), where the learned Judge held that the appellate power of the Commissioner, H.R. & C.E., is not restricted by the statute either expressly or by necessary implication and it has been conferred in its widest possible term and includes a power to remand the matter to the Deputy Commissioner, viz., the original authority, for reconsideration which is incidental and necessary to effectively utilise the appellate power conferred upon him.

24. Therefore no statutory authority has unlimited inherent powers. They have only such implied or incidental powers as are necessary for an effective exercise of the powers granted to them under the statute. In this particular case, the appellate power of the Tribunal under section 36(1) of the Act must be deemed to include by necessary implication all powers and duties incidental to and necessary for the effective exercise of its appellate jurisdiction. It cannot be contended that a power to implead third parties who are neither necessary parties nor proper parties for the effective disposal of the appeals preferred by Dunlop India Limited, the assessee, is also covered by necessary implication within its appellate jurisdiction. The nature of the incidental or implied powers held by a statutory authority for the effective exercise of its powers under the statute will vary from statute to statute and depend upon the particular context. Viewed in this light, I have no hesitation to repel the contention of the learned counsel for the petitioner that under section 36 of the Act the Tribunal had an inherent or implied or incidental power to implead all those who may feel themselves aggrieved by the assessment orders.

25. I shall now refer to certain decisions cited by Mr. Parasaran. The first is the decision in Dhani Devi v. S. B. Sharma : [1969]2SCR507 . There, it was held that in the case of death of an applicant for the grant of a permit under the Motor Vehicles Act, the Regional Transport Authority has the power to substitute the person succeeding to the possession of the vehicle in place of the deceased applicant and to allow the successor to prosecute the application. This is on the principle that the relief sought for in the application is dependent upon and related to the possession of the vehicle. Therefore it was held that the application was capable of being revived at the instance of the person succeeding to the possession of the vehicle. This decision does not apply to the facts of the present case.

26. The learned counsel then strongly relied upon the decision in Union of India v. Kailasam 1974 87L.W.670. In that case, an accident to a motor vehicle took place at a railway-crossing gate. The claim petition was filed under the Motor Vehicles Act against the owner of the bus and the insurance company. The owner of the bus and the insurance company contended that it was the railway that was negligent inasmuch as the gateman employed at the level-crossing was responsible for the accident as he had kept the railway gate wide open for the highway traffic to pass, without any signal of the passing train. The claimants filed an interlocutory application to implead the railways. That was resisted by the railways on the ground that the Motor Accidents Claims Tribunal had no authority to hold the railways liable for payment of damages to the claimants. The Tribunal directed the railways to be impleaded as an additional party to the proceedings. Kailasam, J., as he then was, dismissed the revision petition filed by the railways on the ground that the question of negligence of the railways was a vital question and if it ultimately turned out that the Tribunal found the railways to be negligent, the railways would have a genuine grievance as that finding would be without giving an opportunity to them to repudiate the suggestion of negligence on their part. The situation before Kailasam, J., in that case was entirely different. There the question that directly arose was whether the accident happened due to the negligence of the driver of the bus or due to the negligence of the gateman of the railways employed at the level-crossing. Naturally therefore the railways were not only proper parties but also necessary parties to rebut any evidence that might be let in by the bus owner and the insurance company to throw the negligence on the part of the railways. In this particular case, there could be no competition between the petitioner and Dunlop India Limited in the proceedings pending before the Tribunal. It is open to the dealer, i.e., Dunlop India Limited, to produce all advance all necessary contentions before the tribunal to show that the transaction by which they made supplies of tyres and rubber products to the petitioner would constitute a works contract and not a sale. I am therefore of the view that the above decision is distinguishable on its own facts.

27. The decision in Martin Burn Ltd. v. R. N. Banerjee : (1958)ILLJ247SC relates to the power of the Labour Appellate Tribunal to set aside an ex parte order. That turned upon the interpretation of section 9(1) of the Industrial Disputes (Appellate Tribunal) Act, Which invested the Labour Appellate Tribunal with the same powers as are invested in a civil court when hearing an appeal under the Code of Civil Procedure, 1908. Therefore, that decision cannot be of any help to the petitioner.

28. Having regard to the foregoing discussion, I am of the view that the petitioner is not entitled to be impleaded as a party in the appeals preferred by Dunlop India Limited against the orders of the Appellate Assistant Commissioner before the Tribunal. The Tribunal is a creature of the statute and all its powers must be confined to the four corners of the statute. Section 36 of the Act deals with the appellate jurisdiction conferred on the Tribunal and, consequently, it cannot be said that such a power to implead third parties as parties to the proceedings is either implied in the power conferred under section 36 or incidental to the said power. I therefore hold that there are no merits in these writ petitions. The writ petitions fail and are dismissed with costs. One set Rs. 500 - Advocate's fees.

29. [The petitioner appealed under clause 15 of the Letters Patent.]

30. K. K. Venugopal for M. Krishnappan, for the appellant.

31. K. S. Bakthavatsalam for the Additional Government Pleader, for respondents Nos. 1 and 2.


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