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1993 DIGILAW 185 (KER)

Kerala Products v. Sales Tax Officer

1993-03-26

T.L.VISWANATHA IYER

body1993
Judgment :- The petitioner is an assessee to tax under the Kerala General sales Tax Act, 1963 (the KGST act) and the Central sales Tax Act, 1956 (the CST act) on the files of the first respondent. It is a small scale industrial unit. By the order of assessment dated 11-5-1990, a copy of which is Ext.P2, the petitioner was assessed to tax under the CST Act for the assessment year 1984-85 exempting the inter-state sales turnover of desiccated coconut powder produced out of coconuts purchased within the state on the basis of the notification SRO.350/65 dated 13-8-1965, issued by the Government of Kerala under s.8(5) of the CST Act. subsequently, and in the view that the exemption had been wrongly granted, the second respondent, the Deputy Commissioner of Agricultural Income Tax and sales Tax reopened the assessment suo motu in exercise of the powers vested in him under s.35 of the KGST Act, and remitted the matter back to the first respondent assessing authority for passing fresh orders, in the light of the conclusions and observations made in his order, a copy of which is Ext.P6. In that order the Deputy Commissioner had taken the definite view that the petitioner was not entitled to the exemption under s.R.O.350/65. 2, The petitioner challenged this order Ext.P6 in appeal under s.39 of the KGST Act, before the sales Tax Appellate Tribunal (the Appellate Tribunal for short) a copy of the memorandum of appeal being Ext.P7. The appeal was filed on 13-1-1993. But even before the appeal could be filed, the first respondent had implemented the order Ext.P6, made a revised order of assessment Ext.P5 on 28-12-1992 and called upon the petitioner to make payment of further amounts as due consequent on the revision. The petitioner has challenged this order in appeal Ext.P9 before the Appellate Assistant Commissioner of sales Tax, along with an application for stay, Ext.P1O. The Appellate Assistant Commissioner has not disposed of the appeal nor passed any order on the application for stay Ext.P1O. Meanwhile proceedings for recovery of the amount demanded as per the order Ext.P5 have been initiated. This writ petition has thereupon been filed. The Appellate Assistant Commissioner has not disposed of the appeal nor passed any order on the application for stay Ext.P1O. Meanwhile proceedings for recovery of the amount demanded as per the order Ext.P5 have been initiated. This writ petition has thereupon been filed. What the petitioner seeks mainly in this petition under Art.226 of the Constitution of India is a stay of the proceedings for recovery of the amounts demanded pursuant to the revised order of assessment Ext.P5 pending his appeal Ext.P7 before the Appellate Tribunal against the order of the Deputy Commissioner. He points out that it is futile to expect any order from the Appellate Assistant Commissioner who is inferior in status to the Deputy Commissioner. He would also submit that he has no right to move the Appellate Tribunal for any interim relief as according to him, the Tribunal has no power to act in circumstances such as this. 3. The Government Pleader appeared for the respondents on receipt of a copy of the original petition. 4. The petition as it stands at present is that the order Ext.P6 passed by the Deputy Commissioner in exercise of the power of suo mote revision is now pending in statutory appeal under s.39 of the KGST Act before the Appellate Tribunal. The question is whether the petitioner can move the Appellate Tribunal for interim relief or whether he is left without any remedy, so as to constrain him to move this court under Art.226 of the Constitution of India for the relief of stay of the proceedings for recovery of the tax due as per the revised order of assessment pending disposal of his appeal before the Appellate Tribunal. Prima facie it is a strange request, invoking the extraordinary jurisdiction of this court under Art.226 to pass interlocutory orders to avail pending a substantive appeal before a statutory authority. But according to counsel for the petitioner, that is the predicament in which the petitioner is placed. According to him, the petitioner does not have any statutory forum from which to obtain any interim relief of stay. He would submit that the Appellate Tribunal does not have the power to pass any order staying either the further proceedings after the remand by the Deputy Commissioner, or the recovery of the amounts demanded as per the revised order of assessment. He would submit that the Appellate Tribunal does not have the power to pass any order staying either the further proceedings after the remand by the Deputy Commissioner, or the recovery of the amounts demanded as per the revised order of assessment. But I am not satisfied that the situation is as bad as is portrayed to be, or that the Tribunal is helpless and powerless in such cases. On the other hand, lam firmly of the view that the Tribunal does have the power to grant relief in such circumstances, by passing such interim orders as are necessary in the interests of justice and as the circumstances of the cases warrant. 5. section 39 of the KGST Act provides for an appeal to the Appellate Tribunal against orders passed by the Appellate Assistant Commissioner under s.34, or by the Deputy Commissioner in suo mote revision under s.35. The powers of the Tribunal in dealing with such appeals are set forth in sub-section (4) and are quite wide in their scope. sub-section (6) vests a discretion in the Tribunal to give directions regarding payment of the disputed tax, subject to security being furnished for the amount of tax due. The sub-section reads: - "Notwithstanding that an appeal has been preferred under sub-section (1), the tax shall be paid in accordance with the order of assessment against which the appeal has been preferred: Provided that the Appellate Tribunal may, in its discretion, give such directions as it thinks fit in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to its satisfaction in such form and in such manner as may be prescribed." 6. It will be seen from the above provision that power is conferred specifically only to give directions regarding payment of the tax; due under the impugned assessment; stay of further proceedings pursuant to the remit is not strictly taken in by the language of the proviso. So far as this case is concerned, where the amount of tax payable, stands crystallised by the revised order of assessment Ext.P5, I am of the opinion that the proviso by itself, is sufficient to vest the Appellate Tribunal with the power to stay the recovery of the amount pending the appeal before it. So far as this case is concerned, where the amount of tax payable, stands crystallised by the revised order of assessment Ext.P5, I am of the opinion that the proviso by itself, is sufficient to vest the Appellate Tribunal with the power to stay the recovery of the amount pending the appeal before it. This is because the tax due has been determined consequent on the order under challenge before the Appellate Tribunal and is directly attributable to the said order. The fact that the assessee may have a right of appeal against the revised order before the Appellate Assistant Commissioner is irrelevant in this context in as much as the said authority may not be able to grant any interim relief regarding the demand which is attributable to the order of the Deputy Commissioner, so long as that order is in force. Even otherwise, the revised order will stand or fall depending on the decision of the Appellate Tribunal so that the Tribunal should necessarily possess the power to relieve the assessee from being proceeded against for recovery of the amount in enforcement of a demand, which is consequential on the order under challenge before it. Therefore, even on the terms of the proviso as it stands, (when it authorises directions being given regarding payment of the tax) the Tribunal can exercise its discretion, and pass orders regarding the recovery of the amount demanded pursuant to the revised order of assessment Ext.P5 on such terms and conditions as it may think fit to impose. 7. But cases may arise where motion is made before the Appellate Tribunal for stay of the proceedings before the assessing authority pursuant to the order of the Deputy Commissioner, including the completion of the revised order of assessment. The very conferment of the appellate power on the Appellate Tribunal carries with it the power to pass such orders that are necessarily incidental or ancillary to the exercise of the appellate power, or which are necessary to be exercised in the interests of justice or to make the appeal an effective one. This is implied in the very conferment of appellate jurisdiction. This is implied in the very conferment of appellate jurisdiction. In Income Tax Officer v. Mohammed Kunhi, AIR 1969 5C 430, the Supreme Court approved the principle of the decisions of this court in Themmalapuram Bus Transport Ltd. v. Revisional Transport Officer, AIR 1957 Ker.142 and Dliarmadas v. State Transport Appellate Tribunal, 1962 KLT 505 (FB) = AIR 1963 Ker. 73 and held that the power to stay was a necessary corollary to the power to entertain an appeal or revision. It was thus held that the Income Tax Appellate Tribunal, functioning under Ss.254 and 255 of the Income Tax Act, 1961 possessed the power to grant stay as incidental or ancillary to its appellate jurisdiction, though there was no express conferment of such power by the Act. 8. A question similar to the one on hand, arose in The Burhanpur Tapti Mill Ltd. v. Board of Revenue, Madhya Pradesh, (1955) 6 STC 670 (Nagpur) where the court held that since the Board of Revenue had the power to adjudge the correctness of an order passed by the Commissioner of Sales Tax, it had also the power to stay the fresh assessment proceedings started pursuant to the order of the Commissioner. It must be mentioned here that this was one of the decisions referred to and approved by the Supreme Court in Mohammed Kunhi's case. 9. The petition so far as the Sales Tax Appellate Tribunal is concerned is similar. Its appellate powers are of the widest amplitude. The very conferment of the appellate power carries with it the power to pass such interim orders as are necessary in the interests of justice or to effectuate the appellate jurisdiction. S.39(6) cannot be read as limiting the powers of the Tribunal to grant stay only in particular situations where the amount of tax stands determined after the remand. In the case of appeals arising out of orders of suo mote revision by the Deputy Commissioner, it is not necessary to relegate the assessee to the stage of completion of the revised assessment before moving for stay before the Tribunal. In the case of appeals arising out of orders of suo mote revision by the Deputy Commissioner, it is not necessary to relegate the assessee to the stage of completion of the revised assessment before moving for stay before the Tribunal. The Tribunal has the power to stay all further proceedings after the remit at the threshold itself, pending the appeal before it and in cases where the revised order has been passed pursuant to the remit, it will be open to the Tribunal to stay the proceedings for recovery, on such terms and conditions as it may think fit to impose. What form the order should take in a given case, is a matter which will depend upon the facts and circumstances of the case and the interests of justice to be subserved by the order to be passed by the Tribunal. 10. The petitioner could therefore, have approached the Tribunal for interim relief regarding the recovery proceedings initiated pursuant to the revised order of assessment Ext.P5. When such a remedy is available, it is not for this court to step in with an interim order to avail pending the appeal before the Tribunal. That will be highly incongruous. I decline to entertain this writ petition. 11. The petitioner seems to have entertained a genuine doubt about the competence of the Tribunal to pass such interim orders having regard to the absence of any specific power in S.39 and the language of sub-section (6) thereof. I therefore, grant the petitioner one month's time to move the Tribunal for such orders as are necessary. The proceedings for recovery of the amount due as per Ext.P5 will be kept in abeyance for a period of one month from today. The original petition is dismissed subject to the above directions.