Indian Oil Corporation Vs Orissa Sales Tax Tribunal, CTC and Others

B.S. Chauhan, C.J.@mdashThis Writ Petition has been filed for a declaration that Section 17 of the Orissa Entry Tax (Amendment) Act, 2005 would not require the Petitioner to deposit any amount prior to entertaining of its appeal & the notice dated 2811.2006, issued by the Opposite Parties to deposit 50% of the disputed amount of tax be declared bad/illegal.

2. The facts & circumstances giving rise to this case are that Petitioner is a company incorporated under the Companies Act, 1956 & is having separate registration for entry tax at Balasore Bottling Plant, Jharsuguda Bottling Plant & also at Cuttack. Petitioner used to sell High Speed Diesel to South Eastern Railways in the course of inter state trade or commerce against Form-D for the period from December, 1999 to November, 2001. The movement of goods originated from Vishakha Terminal in Andhra Pradesh & culminated in the State of Orissa. Section 8 (1) of the CST Act provides that every dealer who in the course of inter state trade or commerce sells to the Government any goods would be taxed at a concessional rate & Section 8(4) of the CST Act provides that such dealer has to obtain a declaration duly filled in by an authorised officer of the Government. Petitioner had obtained declaration form from South Eastern. Railway. Marketing Division of the Petitioner''s company having its place of business in Vishakhapatnam effected the sale of petroleum products- High Speed Diesel & lubricants from Vishakhapatnam to its customer South Eastern Railways of various destinations in the State of Orissa. Opposite Party No. 3 issued notices on 21st January, 2002 (Annex.-2 series) asking the Petitioner to show cause as to why it should not pay entry tax on the scheduled goods i.e. High Speed Diesel imported from outside the State of Orissa. Petitioner filed its reply to the said show cause on 5th February, 2002 (Annex.-3) explaining that sale of said goods was made in the course of inter state trade. Hence liability of payment of entry tax would be on South Eastern Railway i.e. the purchaser. Opposite Party No. 2 issued a circular dated 23rd December, 2002 (Annex.-4) expressing his opinion that entry tax can be imposed on the Union of India also. However, after having the proceedings u/s 7 (4) of the Orissa Entry Tax Act, 1999 (hereinafter called the ''Act'') the assessment Order Dated 16th March, 2002 (Annex.-5 series) was passed levying entry tax on the Petitioner, holding that Petitioner was liable to entry tax amounting to Rs. 45,83,574, Rs. 1,51,41,280 & Rs. 1, 07,97,094 for the period December 1999 to March, 2000, April 2000 to March, 2001 & April 2001 to November, 2001 respectively on the scheduled goods. Being aggrieved, Petitioner preferred appeals u/s 16 of the Act along with applications for interim relief. Opposite Party No. 2 vide Order Dated 31st August, 2002 (Annex.-7 series) granted full stay of the demand raised. Thereafter, by separate Orders Dated 30th December, 2002 the Opposite Party No. 2 confirmed the orders of assessment dated 16th March, 2002 ex parte dismissing the appeal Being aggrieved, Petitioner preferred Second Appeals (Annex.-9 series) u/s 17 of the Act. Petitioner did not deposit any amount while filing the second appeals. The said appeals are pending. In the meanwhile, the Act has been amended deleting the condition for pre-deposit for entertaining the appeal. However, the notices have been issued to the Petitioner to make the deposit of the 50% of the total demand. Hence this petition.

3. Dr. Devi Pal, Learned Senior Counsel appearing for the Petitioner has submitted that there can be no bar to file/institute the appeal, however the pre-deposit condition is necessary to entertain the same. But ''entertain'' means ''entertaining on merit'', consideration by application of mind & not merely performing a ministerial act to accept the memorandum of appeal. Therefore, before the appeal could be entertained or take up for hearing on merit, as pre-deposit condition has "been deleted from the provision of the Act, 1999 vide Orissa Entry Tax (Amendment) Act, 2005, w.e.f. 9.9.2005, Petitioner is not liable to make any deposit whatsoever.

4. On the other hand Shri R.P. Kar, Learned Counsel for the Revenue has submitted that said amendment does not apply retrospectively & on the date of filing the appeal if the Petitioner was liable to met the pre-deposit condition, he is bound to meet the demand. The petition lacks merit & is liable to be dismissed.

5. We have considered the rival submissions made by the Learned Counsel for the parties & perused the record.

6. In Kondiba Dagadu Kadam Vs. Savitribai Sopan Gujar and Others, , the Hon''ble Supreme Court held as under:

It has to be kept in mind that the right of appeal is neither a natural nor an inherent right attached to the litigant being a substantive statutory right it has to be regulated in accordance with law in force at the relevant time. The conditions mentioned in the Section must be strictly fulfilled before a second appeal can be maintained & no Court has the power to add to or enlarge those grounds. The second appeal cannot be decided on merely equitable grounds.

7. Further, there can be no quarrel to the settled legal proposition that right of appeal may not be absolute. The legislature can put conditions for maintaining the same. In Vijay Prakash D. Mehta and Another Vs. Collector of Customs (Preventive), Bombay, , the Hon''ble Apex Court held as under:

Right to appeal is neither an absolute right nor an ingredient of natural justice, the principles of which must be followed in all judicial or quasi-judicial adjudications. The right to appeal is a statutory right & it can be circumscribed by the conditions in the grant... If the statute gives a right to appeal upon certain conditions, it is upon fulfilment of these conditions that he right becomes vested & exercisable to the Appellant...The purpose of the Section is to act in terrorem to make the people comply with the provisions of law.

8. Similar view has been reiterated by the Hon''ble Apex Court in The Anant Mills Co. Ltd. Vs. State of Gujarat and Others, ; & Shyam Kishore and others Vs. Municipal Corporation of Delhi and another, ; The Gujarat Agro Industries Co. Ltd. Vs. The Municipal Corporation of the City of Ahmedabad and Others Etc. Etc., . In Shyam Kishore (supra) the Hon''ble Supreme Court placed reliance upon its earlier Judgment in Seth Nand Lal and Another Vs. State of Haryana and Others, , wherein it has been held that "right of appeal is a creature of statute & there is no reason why the legislature, while granting the right, cannot impose conditions for the exercise of such right so long as the conditions are not so onerous as amount to unreasonable restrictions rendering the right almost illusory", the Court cannot interfere.

9. In The Bengal Immunity Company Limited Vs. The State of Bihar and Others, , the Hon''ble Supreme Court has observed that if there is any hardship, it is for the Parliament to amend the law, but the Court cannot be called upon to discard the cardinal rule of interpretation for mitigating a hardship. If the language of an Act is sufticiently clear, the Court has to give effect to it, however, inequitable or unjust the result may be. As is said, ''dura lex sed lex'' which means "the law is hard but it is the law". Even if the statutory provision causes hardship to some people, it is not for the Court to amend the law. A legal enactment must be interpreted in its plain & literal sense as that is the first principle of interpretation.

10. In The Mysore State Electricity Board Vs. Bangalore Woollen, Cotton and Silk Mills Ltd. and Others, a Constitution Bench of the Hon''ble Apex Court held that "inconvenience is not" a decisive factor in interpreting a statute.

11. In Martin Burn Ltd. Vs. The Corporation of Calcutta, , the Hon''ble Supreme Court while dealing with the same issue observed as under:

A result flowing from a statutory provision is never an evil. A Court has no power to ignore that provision to relieve what it considers a distress resulting from its operation. A statute must of course be given effect to whether a Court likes the result or not.

Similar view has been reiterated by the Hon''ble Supreme Court in The Commissioner of Income Tax, West Bengal 1, Calcutta Vs. Vegetables Products Ltd., .

12. It is the settled legal proposition that taxing statute must be construed strictly (vide Manish Maheshwari Vs. Asstt. Commissioner of Income Tax and Another, ; Southern Petrochemical Industries Co. Ltd. Vs. Electricity Inspector and E.T.I.O. and Others, ; & Bhavya Apparels Private Limited and Another Vs. Union of India (UOI) and Another, ).

13. In view of the above, it becomes evident that the appeal is a statutory right, which can be created only by the Legislature & it does not lie by acquiescence I consent of the parties or even the Writ Court is not competent to create the Appellate forum if not provided under the Statute. If legislature in its wisdom has imposed certain conditions, like pre-deposit for the purpose of filing or hearing of the appeal, the Courts are supposed to give strict adherence to the statutory provisions. The purpose of imposing the pre-deposit condition is that right of appeal may not be abused by any recalcitrant party & there may not be any difficulty in enforcing the order appealed against if ultimately it is dismissed. There must be speedy recovery of the amount of tax due to the authority.

14. In Lakshmi Rattan Engineering Works Ltd. Vs. Asstt. Commr. Sales Tax, Kanpur and Another, , the Hon''ble Supreme Court interpreted a similar provision i.e. Section 9 of the U.P. Sales Tax Act, 1948, which provided that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of payment of the amount of tax admitted by the Appellant to be due, & held that "entertain" means entertaining on merit & not mere filing/presentation.

15. ''Entertain'' means either "to deal with or admit to consideration". ''Entertain'' means when it is admitted & the matter is kept under consideration for hearing i.e. for consideration on merit (Vide State of Haryana Vs. M/s. Maruti Udyog Ltd. Ors., ). In Hindusthan Commercial Bank Ltd. Vs. Punnu Sahu (Dead) through Legal representatives, , the term "entertainment" was explained by the Hon''ble Supreme Court that it means "to proceed to consider on merit". In Jagdish Vs. State of Haryana, , the Supreme Court explained the meaning of the word "entertain" in the con text of the proviso to Section 21 (1) of the U.P. Urban Buildings (Regulation of letting, Rent & Eviction) Act, 1972 that it means taking cognizance of a case by the competent authority by issuing summons for hearing to the tenant. A similar view has been reiterated by the Supreme Court in Shri Arun B. Khanjire Vs. The Ichalkaranji Urban Co-op. Bank Ltd. and Others, . Thus, entertain means not mere filing, presentation but to consider on merits.

16. In Rajasthan State Road Transport Corporation, Jaipur Vs. Smt. Poonam Pahwa and others, , the Hon''ble Supreme Court considered the effect of Amendment Act, 1976 to the provisions of Order 21, Rule 1 C.P.C. & held that it being a procedural law in nature, amended provisions of Order 21, Rule 1 would apply retrospectively.

17. In Ramesh Singh and another Vs. Cinta Devi and others, the Hon''ble Supreme Court considered the provisions contained in first proviso to Sections 173 & 217 (4) of the Motor Vehicles Act, 1988 dealing with an accident claim filed u/s 110 of the Motor Vehicles Act 1939, Under the Act 1939, there was no requirement of pre deposit condition. However, u/s 173 of the Act 1988 a pre deposit condition has been incorporated. The Apex Court held that as the proviso of Section 173 does not apply retrospectively either by necessary implication or expressly the appeal is to be decided without enforcing the pre-deposit condition. The right of appeal under the old Act 1939 would not be dislodged by the proviso to Section 173 of the Act, 1988.

18. Hoosein Kasam Dada (India) Ltd. Vs. The State of Madhya Pradesh and Others, ; State of Bombay Vs. Supreme General Films Exchange Ltd., ; & Vitthalbhai Naranbhai Patel Vs. Commissioner of Sales Tax, M.P., Nagpur, , the Apex Court had taken a view that unless the new Act expressly or by necessary implication makes the provision applicable retrospectively, the right to appeal will crystallize for the Appellant in the institution of the application in the Tribunal & that vested right of appeal would not be dislodged by the enactment of the new Act.

19. In Rajendra Kumar Vs. Kalyan (D) by Lrs., , the Apex Court considered the application for amendment of the C.P.C. in 1976 in explanation VIII to Section 11 & held that in absence of any express ban on its retrospectivity, a statute dealing with matters of procedure is normally retrospective.

20. In K. Kapen Chako v. Provident Investment Company (P) Ltd. AIR 1976 SC 2610, a similar view has been reiterated by the Apex Court observing as under:

...Words not requiring retrospective operation so as to affect an existing statutory provision pre-judicially ought not be so construed. It is a well recognised rule that statute should be interpreted if possible so as to respect vested rights. Where the effect would be to alter a transaction already entered into, where it would be to make that valid which was previously invalid, to make an instrument which had no effect at all, & from which the party was at liberty to depart as long as he pleased, binding, the prima facie construction of the Act is that it is not to be retrospective If the legislature forms a new procedure alterations in the form of procedure are retrospective unless there is some good reason or other why they should not be. In other words, if a statute deals merely with the procedure in an action, & does not affect the rights of the parties it will be held to apply prima facie to all actions, pending as well as future.

21. In Commissioner of Income Tax, Bombay City I Vs. Filmistan Ltd., , the Supreme Court examined a case where appeal under the provisions of Income Tax Act, 1922 was filed within limitation without meeting requirement of pre-deposit condition. However, tax was paid after the period of limitation prescribed for presenting the appeal. The provisions read that "no appeal shall lie" in view of the proviso to Section 30(1) of the Income Tax Act & it mean that appeal could not be held have been properly filed until tax was paid & any memorandum of appeal could not be presented. It means appeal would be deemed to have been filed on the date on which tax was paid & the question would have to be decided whether there was sufficient cause for condonation of delay.

22. In view of the above, law can be summarised that if a condition of pre-deposit is imposed, a party while filing the appeal is bound to meet the requirement of the pre-deposit condition. However, it will depend upon the language of statutory provisions & particularly the words use therein as to whether the memo of appeal can be presented/filed or instituted without meeting the pre-deposit condition. In case "entertaining" the appeal is not permissible, the appeal can be filed, but may not be heard on merit unless the pre-deposit condition is met. The pre-deposit condition is imposed to regulate the procedure of appeal. Therefore, in such an eventuality, where there is no prohibition for filing the memorandum of appeal without meeting "the pre-deposit condition, the appeal can be heard only after meeting it.

23. The Apex Court time & again held that right of appeal is a substantive right, but how the appeal is to be decided is a matter of procedure. The rules of procedure are intended to advance justice & not to defeat it. "Procedural law is intended to facilitate & not to obstruct the course of substantive justice." (vide Hoosein Kasam Dada (India) Ltd. Vs. The State of Madhya Pradesh and Others, ; Garikapatti Veeraya Vs. N. Subbiah Choudhury, ; Ganesh Trading Co. Vs. Moji Ram, ; Harcharan Vs. State of Haryana, ; & Shiv Shakti Coop. Housing Society, Nagpur Vs. Swaraj Developers and Others, ).

24. In the instant case, as the provision of the pre-deposit condition for entertaining the appeal has been deleted prior to entertaining the appeal being a procedural matter, the amendment would apply retrospectively. The instant case is squarely covered by the Judgment of the Hon''ble Supreme Court in Lakshmi Rattan Engineering Works Ltd. (supra).

25. In view of the above, the Writ Petition succeeds & is allowed. The impugned notices dated 28th November, 2006 in connection with Second Appeal Nos. 64 (ET), 65 (ET) & 66 (ET) of 02-03 are quashed.

26. In the facts & circumstances of the case, we request the Learned Appellate Forum to decide the aforesaid three appeals expeditiously, preferably within a period of three months from the date of production of certified copy of this order before it.

B.N. Mahapatra, J.

27. I agree.