CONSTITUTIONAL WRIT JURISDICTION v. THE SENIOR JOINT COMMISSIONER, SALES TAX, CENTRAL AUDIT

Appearance:- Mr. Boudhayan Bhattacharyya, Mr. Anil Kumar Dubey, Mr. Rajarshi Chatterjee, Ms. Sretapa Sinha ........For the Appellants (in MAT 792/2017; MAT 982/2017; MAT 985/2017; MAT 986/2017; MAT 1619/2017; MAT 1751/2017; MAT 1752/2017; MAT 791/2017; MAT 373/2018; MAT 374/2018; & FMA 733 OF 2018) Mr. Anil Dugar Mr. Rajarshi Chatterjee ........For the Appellants (in MAT 783/2017 to MAT 786/2017; MAT 1370/2017; MAT 1664/2017; MAT 896/2017 to MAT 1898/2017; MAT 2072/2017; MAT 652/2018 & MAT 676 OF 2018) Mr. Sandip Choria, Mr. Himangshu Kr. Ray ……For the appellants (in MAT 1786 of 2017; MAT 1899 of 2017, MAT 1958 of 2017 and MAT 1991 of 2017) Mr. J. Ahmed Khan, Mr. T.A. Khan Mr. Vivekananda Bose Mr. Avisek Guha Mr. Piyal Gupta ……For the appellant (in MAT 1787 of 2017) …..For the appellant (in FMA 915/2019 & FMA 916/2019) …..For the appellant (in MAT 694/2018, MAT 669/2017, MAT 724/2017, MAT 1031/2017, FMA 912/2019 & FMA 918/2019) Mr. Anirban Ray, Ld. Government Pleader, Mr. Talay Masood Siddiqui, Mr. S. Mukherjee, Mr. Debasish Ghosh, Mr. N. Chatterjee, Mr. V. Kothari ……For the State JUDGMENT (Judgment of the Court was delivered by T.S.SIVAGNANAM, J.)

1. These intra court appeals filed by the dealers who were registered under the provisions of the West Bengal Value Added Tax, Act 2003 (the Act) are directed against the judgment and order dated March 30, 2017 in M/s. Vatech Wabag Limited Versus Deputy Commissioner, Commercial Taxes, Midnapore Charge and Others 69 Sales Tax Advisors 120. The appellants had filed the writ petitions seeking varied prayers and essentially in all the cases, the writ petitioners had challenged the vires of the second proviso to Section 84 (1) of the Act. The Learned Single Bench by judgment dated March 30, 2017, dismissed all the writ petitions and upheld the vires of the second proviso to section 84 (1) of the Act.

2. Mr. Bhattacharya, Learned Advocate appearing for the appellant Vatech Wabag Limited, the lead case broadly raised five contentions:-

2.1. The first being that payment of 15 % of the disputed tax under Section 84 is a compulsory extraction and partakes the colour of a separate levy/tax hence unauthorized by law. Secondly, it was contended that under certain circumstances the Act gives an opportunity to file appeal without prepayment which the revenue does not accept. Thirdly, the right to appeal is a substantive right which cannot be taken away, once the lis has started. Fourthly, the impugned provision is hit by the general principles of arbitrariness and unreasonableness, and, lastly the impugned provision infringes the fundamental rights guaranteed under Article 19(1)(g) as the restriction contained in the impugned provision is far from being reasonable and realistic.

2.2. Elaborating his submission, on the first contention, it is submitted that the word used in Section 84 is “payment” and not “deposit”. The impugned proviso to Section 84 (1) nowhere specifically mentions that the amount has to be returned to the dealer and even Section 62 of the Act which deals with refunds does not specifically mention that the prepayment made in terms of the impugned provision has to be returned. Reference was made to the P. Ramanatha, Advance Law Lexicon to state that the payment is defined to be act of paying or that which is paid; discharge of a debt, obligations or duty; satisfaction of claim; recompense; the fulfillment of a promise or the performance of an agreement; the discharge in money of a sum due. Further it is submitted that the payment has no narrow technical legal meaning restricted to payment of money, as it signifies satisfaction of a claim. With regard to the meaning of the word “deposit”, it is submitted that the Advance Law Lexicon explains deposit to mean that there must be a liability to return it to the party by whom it is made, it is not a sum lent but a sum deposited. Relying upon the decision of the Hon’ble Supreme Court in Commissioner of Income Tax. U.P - II Versus Bazpur Co-operative Sugar Factory Limited, 1 it is submitted that it has been clearly held that essence of deposit is a liability to return. Referring to the decision of the Hon’ble Full Bench of this Court in Secretary, West Bengal Council of H.S. Education Versus Soumyadeep Banerjee, 2 it is submitted that the “deposit” cannot be synonymous with “payment”. It is submitted that insisting upon payment of 15 % of the disputed tax in terms of the impugned proviso is in the nature of a compulsory extraction and therefore it has to be in the nature of a tax however, the WBVAT has no provision to tax the right to appeal of an aggrieved dealer.

2.3. With regard to the second contention, it is submitted that Section 2(45) of the Act defines the term “tax”, Section 2(46) defines “tax due” and Section 1 (1988) 172 ITR 321 2 AIR 2010 CAL 161 (FB) 2(49) defines “tax payable”. It is submitted that the “tax payable” is defined as tax payable under the Act on the sales or purchases but does not include tax due. “Tax due” is defined as the amount which becomes due as per any notice of demand, but after the date mentioned therein. It is submitted “tax due” is the quantum against which an appeal under Section 84 is filed and hence “tax due” is the “tax” as referred to in the impugned proviso. It is further submitted that by juxta posing clause (b) of the second proviso to Section 84(1) shows that if an appeal is filed after issuance of notice of demand but before the date mentioned in the said notice, then such appeals can be filed without making prepayment of 15 %, as the date has not yet passed.

2.4. The third contention is that appeal being a substantive right, cannot be taken away and/or modified retrospectively, unless expressly enacted to the said effect. To support such argument, reliance has been placed on the decision of the Hon’ble Supreme Court in H.K. Dada (India) Limited Versus State of M.P. 3 It is submitted that the impugned provision expressly states 01st day of April, 2015 to be the date for making prepayments for all appeals filed on or after such date, but such appeals which are filed on or after 01st April, 2015, all originated from various original proceedings much before such date, for which there is no specific enactment or intendment, on the part of the state legislature to make it retrospective. It is submitted that in all cases where the appeals were filed on or after 01st day of April, 2015, the original lis arose much before the said date, hence the substantive and vested right to appeal cannot be taken away and/or prejudicially modified under the facts and circumstances. 3 AIR 1953 SC 221

2.5. The fourth contention is that the provision is ultravires being hit by the general principles of arbitrariness and unreasonableness as contained under Article 14 of the Constitution of India, as the impugned provision fails to distinguish between the quantum of demands and all dealers are compelled to pay 15 % prepayment in order to file an appeal. Further the impugned proviso does not take into account the different kinds of assessments such an exparte assessment, best judgment assessment and assessments where dealer had reasonable opportunity of being heard and therefore the provision is arbitrary and unreasonable. To support such contention, reliance was placed on the decision of the Hon’ble Supreme Court in Shayara Bano Versus Union of India & Ors., 4. It is further submitted that the Learned Writ Court while dismissing the writ petition placed heavy reliance on the decision of the Hon’ble Supreme Court in State of Madhya Pradesh Versus Rakesh Kohli and Another, 5 and this judgment has been overruled on the same point in “Shayara Bano”. “RiG-Veda” was referred to explain the doctrine of equality. Reliance was placed on the decision of the Hon’ble Supreme Court in Uttar Pradesh Power Corporation Limited Versus Ayodhya Prasad Mishra & Another 6, for the proposition that equals cannot be treated unequally. For the same proposition, reliance was placed on the decision of High Court of Rajasthan, in State of Rajasthan Versus Khem Chand Sharma & Another 7. To further support such contention of in-equal treatment, reliance was placed on the decision of the Hon’ble