IMPORTANT POINT
Proceedings prior to March 06, 2003 will not be governed by section 52A.

Headnote:Kerala Court Fee Act, 1959 – Section 52A r/w section 260A, Income Tax Act, 1961 – Vested right of appeal in High Court accruing in respect of those proceedings where assessment orders were passed after October 01, 1998, the date of insertion of section 260A – Provision fixing court fee on appeal – Omitted with effect from June 01, 1999 – Thereafter section 52 of Act, 1959 becoming applicable – Section 52A coming into force from March 06, 2003 and not made retrospective – Held, proceedings prior to March 06, 2003 will not be governed by section 52A. (Para 14, 15)
       (1969) 2 SCR 261 – Relied upon
       1953 SCR 987; (1960) 3 SCR 640 – Referred
       Facts of the case:
       Interpretation of section 52A of the Kerala Court Fees and Suits Valuation Act, 1959 is called for in this case.
       Finding of the Court:
       Proceedings prior to March 06, 2003 will not be governed by section 52A.
       Result: Appeals allowed.

Judgement Key Points

Section 260A of the Income Tax Act, 1961 was inserted effective October 01, 1998, providing a statutory right of appeal to the High Court against orders of the Income Tax Appellate Tribunal, initially with a fixed court fee of Rs. 2,000/- under sub-section (2)(b), which was omitted effective June 01, 1999. (!) [1000596560001][1000596560013]
After omission of the fixed court fee provision in Section 260A, court fees for such appeals in Kerala became governed by Section 52 of the Kerala Court Fees and Suits Valuation Act, 1959. (!) [1000596560001][1000596560013]
Section 52A was inserted into the Kerala Court Fees and Suits Valuation Act, 1959 via Amendment Act of 2003, effective March 06, 2003 (deemed from October 26, 2002), prescribing court fee for appeals against Income Tax Appellate Tribunal or Wealth Tax Appellate Tribunal orders at 1% of assessed income exceeding two lakh rupees, subject to a maximum of ten thousand rupees, as per sub-item (c) of item (iii) of Article 3 of Schedule II.[1000596560001][1000596560016]
The right to appeal is a substantive vested right that accrues upon initiation of proceedings (e.g., date of assessment order for assessee appeals or date appellate authority negates demand for department appeals), not merely procedural, and cannot be impaired by subsequent legislation unless expressly or by necessary intendment made retrospective. (!) (!) [1000596560004][1000596560005][1000596560006][1000596560007][1000596560011][1000596560012]
For assessee appeals under Section 260A filed in the High Court, if the assessment order date is prior to March 06, 2003, Section 52A does not apply; court fee is payable as per the provision prevailing on the assessment date. (!) [1000596560014][1000596560015]
For department appeals under Section 260A filed in the High Court, if the date the appellate authority set aside or negated the Assessing Officer's order is prior to March 06, 2003, Section 52A does not apply; court fee is payable as per the provision prevailing on that date. (!) [1000596560014][1000596560015]
Section 52A of the Kerala Court Fees and Suits Valuation Act, 1959 is not retrospective and does not govern proceedings where the vested right to appeal accrued prior to March 06, 2003.[1000596560013][1000596560014]
High Court erred in holding that all appeals filed on or after October 26, 2002 are governed by Section 52A regardless of when the underlying assessment or appellate order occurred.[1000596560003][1000596560010][1000596560011][1000596560012]

JUDGMENT

A.K. SIKRI, J.

By amendment in the Income Tax Act, 1961 (hereinafter referred to as the ‘IT Act’) in the year 1998, Section 260A was inserted providing for statutory appeal against the orders passed by the Income Tax Appellate Tribunal. In this very Section, under sub-section (2)(b), court fees on such appeals was also prescribed which was fixed at Rs.2,000/-. However, sub-section (2)(b) of Section 260A prescribing the aforesaid fee was omitted by amendment carried out in the said Act, with effect from June 01, 1999. It was presumably for the reason that insofar as court fee payable on such appeals are concerned, which are to be filed n the High Court, it is the State Legislature which is competent to legislate in this behalf.

2) In the State of Kerala, the law of court fee is governed by the Kerala Court Fees and Suits Valuation Act, 1959 (hereinafter referred to as the ‘1959 Act’). Section 52 thereof relates to the fee payable in appeals. Thus, with the omission of clause (b) of sub-section (2) of Section 260A of the IT Act, fee became payable on such appeals as per Section 52. The State Legislature thereafter amended the 1959 Act by Amendment Act of 2003 and inserted Section 52A therein, which was passed on March 06, 2003. In fact, before that an Ordinance was promulgated on October 25, 2002 which was replaced by the aforesaid Amendment Act, the Act categorically provided that Section 52A is deemed to have come into force on October 26, 2002. As per the amended provision, viz. Section 52A of the 1959 Act, the fee on memorandum of appeals against the order of the Income Tax Appellate Tribunal or Wealth Tax Appellate Tribunal is to be paid at the rates specified in sub-item (c) of item (iii) of Article 3 of Schedule II. This sub-item (c) reads as under:

One percent of the assessed income, subject to a maximum of ten thousand rupees

It is clear from the above that fee is now payable, where such income exceeds two lakh rupees, at the rate of 1% of the ‘assessed income’, subject to a maximum of ten thousand rupees.

3) The question that arose for consideration before the High Court in the impugned judgment, against which these appeals arise, was payment of fee as per the aforesaid schedule on the appeals that are filed on or after October 26, 2002. As per the State of Kerala, on all appeals which are filed against the order of Income Tax Appellate Tribunal or the Wealth Tax Appellate Tribunal on or after October 26, 2002, fee is payable as per the aforesaid amended provisions. The appellant herein, however, contend that in all those cases which were even pending before the lower authorities, i.e. the Assessing Officer, Commissioner of Income Tax (Appeals) or Income Tax Appellate Tribunal and orders were passed even before October 01, 1998, the right to appeal had accrued with effect from October 01, 1998 and, therefore, such cases would be governed as on the date when the orders were passed by the lower authorities and the court fee would be payable as per the unamended provisions. The High Court has not accepted this plea of the appellant and has held that any appeal ‘filed’ on or after October 26, 2002 shall be governed by Section 52A of the 1959 Act.

4) The appeals are filed both by the writ petitioner, whose writ has been dismissed, as well as the Income Tax Department. The Commissioner of Income Tax (Appeals) has not accepted the decision of the High Court and the reason for that is obvious. Numerous appeals under Section 260A of the IT Act are filed by the Department as well and the Department also gets hit by the aforesaid Section 52A of the 1959 Act, as interpreted by the High Court.

5) Learned counsels appearing for the assessee as well as Income Tax Department submitted that the right of appeal is a matter of substantive right and not merely a

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2017 Supreme(SC) 729

SUPREME COURT OF INDIAA.K. SIKRI, ASHOK BHUSHAN, JJ.K. RAVEENDRANATHAN NAIR – APPELLANT(S) VERSUSCOMMISSIONER OF INCOME TAX & ANR. – RESPONDENT(S) CIVIL APPEAL NO. 3131 OF 2006 WITH CIVIL APPEAL NO. 3130 OF 2006 Decided On : 10-08-2017

IMPORTANT POINTProceedings prior to March 06, 2003 will not be governed by section 52A.

Cases Referred (3)

SUPREME COURT OF INDIA
A.K. SIKRI, ASHOK BHUSHAN, JJ.
K. RAVEENDRANATHAN NAIR – APPELLANT(S)
VERSUS
COMMISSIONER OF INCOME TAX & ANR. – RESPONDENT(S)
CIVIL APPEAL NO. 3131 OF 2006 WITH CIVIL APPEAL NO. 3130 OF 2006
Decided On : 10-08-2017

IMPORTANT POINT
Proceedings prior to March 06, 2003 will not be governed by section 52A.