GST UPDATE

Hon’ble Court: SUPREME COURT OF INDIA
Case Title:HOOSEIN KASAM DADA (INDIA) LIMITED Versus STATE OF MADHYA PRADESH AND OTHERS
Appeal No. & Citation: Appeal No. 182 of 1952, 1983 (13) E.L.T. 1277 (S.C.)

Hon’ble Judge(s)	Mr. Justice Mahajan and Mr. Justice S.R. Das
Date of Order	25-2-1953
Outcome	Appeal allowed

Brief Facts of the Case

The appellant, Hoosein Kasam Dada (India) Ltd., had submitted its sales tax return for the first quarter before the Sales Tax Officer, Akola who was not satisfied with the correctness of the return and called upon the assessee to produce evidence in support of it. The assessee accordingly produced its account books. Since the Sales Tax Officer formed the view that the taxable turnover exceeded the prescribed amount, the matter was referred to the Assistant Commissioner of Sales Tax for assessment. The Assistant Commissioner subsequently issued a notice and commenced assessment proceedings which was decided against the appellant. Being aggrieved by the assessment order, the appellant preferred an appeal. However, by the time the appeal was filed, Section 22(1) had been amended by the Central Provinces and Berar Sales Tax (Second Amendment) Act, 1949. The amendment substantially changed the condition for admission of an appeal. Under the original provision, an assessee was required to pay only the amount of tax or penalty which he admitted to be due. Whereas, under the amended provision, the appeal was required to be accompanied by satisfactory proof of payment of the tax and penalty, if any, in respect of which the appeal was preferred. The assessee did not admit any amount as payable and therefore did not deposit the assessed tax while filing the appeal. The appellate authority declined to admit the appeal on the ground that the required proof of payment had not been furnished. The Board of Revenue also upheld this position, taking the view that the law applicable was the law existing when the appeal was actually filed.
The assessee thereafter approached the High Court under Articles 226 and 227 of the Constitution. The High Court dismissed the petition. The assessee then approached the Supreme Court to determine the effect of the amendment to Section 22 on the assessee's right of appeal.

Question before Hon’ble Court

Whether an amendment made after commencement of the assessment proceedings, which imposed a new condition requiring payment of the disputed tax for admission of an appeal, could be applied to an appeal arising from proceedings that had commenced before the amendment came into force?

Brief Arguments by Appellant

The assessee contended that its right of appeal had accrued under the law existing when the assessment proceedings were initiated. Since the proceedings had commenced before the amendment, the subsequent amendment could not be applied retrospectively so as to impose a new and onerous condition upon the existing right of appeal. The assessee therefore contended that it was entitled to have its appeal admitted without depositing the assessed tax because it did not admit any amount as due.

Brief Arguments by Respondent

The Revenue argued that the appeal was filed after the amendment had come into force. Therefore, according to the Revenue, the amended provision should govern the appeal. It was also argued that the amended provision did not take away the right of appeal itself. According to this argument, the right of appeal continued to exist, but the amendment merely introduced a procedural requirement requiring payment of the assessed amount before the appeal could be entertained. The Revenue further argued that the amended provision was mandatory and that the appellate authority had no jurisdiction to admit an appeal unless the prescribed payment had been made.

Cases Relied Upon

Colonial Sugar Refining Co. Ltd. v. Irvin:(1905) A.C. 369
It was held thatthat a vested right of appeal cannot be retrospectively taken away or restricted. In Colonial Sugar Refining Co. Ltd. v. Irving, the appellants had a right of appeal to the Privy Council under the existing law. During the pendency of the proceedings, the Judiciary Act, 1903 was enacted, under which the existing right of appeal to the Privy Council was taken away and an appeal was directed to lie to the High Court of Australia. The Privy Council held that the subsequent legislation could not affect the existing right of appeal because the Act was not retrospective by express enactment or necessary intendment.
Delhi Cloth and General Mills Co. Ltd. v. Income-tax Commissioner, Delhi Citation: A.I.R. 1927 P.C. 242
The right of appeal is “not a mere matter of procedure but was a vested right” which inheres in a party from the commencement of the action.
Kirpa Singh v. Rasalldar Ajaipal Singh Citation:A.I.R. 1928 Lah. 627 (F.B.)
The Full Bench of the Lahore High Court adopted the principle that the right of appeal is not merely procedural but is a vested right which inheres in a party from the commencement of the action in the Court of first instance.
Sardar Ali v. Dolimuddin Citation:A.I.R. 1928 Cal. 640 (F.B.)
The contention was that the amended provision could not be applied because it would “impair and indeed to defeat a substantive right which was in existence prior to the date of the amendment.” The Court accepted that the right had vested when the suit was instituted and held that an intention to interfere with, clog, impair or imperil that right could not be presumed unless clearly manifested by express words or necessary intendment.
Gordhan Das v. The Governor General in Council Citation:A.I.R. 1952 Punj. 103 (F.B.)
The case reinforces the proposition that the law applicable at the commencement of proceedings governs the vested right of appeal, unless the subsequent legislation clearly manifests an intention to operate retrospectively.

Findings and Judgement

The Supreme Court distinguished the decisions in the various case laws and held that the assessee's appeal should not have been rejected merely because it was not accompanied by satisfactory proof of payment of the assessed tax. Since the assessee did not admit that any amount was due, under the law applicable when the proceedings commenced, it was entitled to file the appeal without depositing the assessed amount.
A right of appeal is a substantive and vested right which accrues when the original proceedings are initiated. A subsequent amendment which imposes a new and onerous condition on the exercise of that right cannot be applied retrospectively unless the amendment expressly or by necessary intendment provides for such retrospective operation.
Accordingly, the appeal was allowed.

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Brief Facts of the Case

Question before Hon’ble Court

Brief Arguments by Appellant

Brief Arguments by Respondent

Cases Relied Upon

Findings and Judgement

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