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1971 Supreme(AP) 34
Andhra Pradesh High Court
Judges : OBUL REDDI, VENKATESWARA RAO
K.Balakrishnaiah - Appellant
Versus
Commercial Tax Officer, Mahaboobnagar - Respondent
Decided On : 02-23-71
A classification of appeals for the purpose of imposing a condition precedent for the entertainability of such appeals is violative of Article 14 of the Constitution if it is unreasonable, discriminatory, and has no nexus with the object sought to be achieved by the Act.
Headnote:
CONSTITUTIONAL LAW - ARTICLE 14 - EQUALITY BEFORE LAW - SECTION 21 (6) OF THE ANDHRA PRADESH GENERAL SALES TAX ACT, 1957 - VALIDITY - CLASSIFICATION OF APPEALS - REASONABLENESS - DISCRIMINATION - SECTION 21 (6) STRUCK DOWN AS VIOLATIVE OF ARTICLE 14.
Fact of the Case:
The petitioner, a commission agent, returned a gross turnover of Rs. 7,23,570-24 for the assessment year 1967-68 and claimed exemption in respect of Rs. 1,54,715-90 alleged to represent the value of goods sold and purchased on behalf of its principals on the ground that the tax payable thereon had already been paid by the principals. This claim was rejected by the Commercial Tax Officer, Mahaboobnagar and he levied a tax of Rs. 27,332-23. Except for a slight modification, the appeal filed by the petitioner against the order of the assessing authority was dismissed by the Assistant Commissioner of Commercial Taxes, Kurnool. A further appeal was thereafter preferred by the petitioner to the Sales Tax Appellate Tribunal. The petitioner applied to the Deputy Commissioner of Commercial Taxes for stay of collection of tax pending disposal of that appeal in vain and the Tribunal refused to entertain the appeal on the ground that it was not accompanied by satisfactory proof of payment of tax, as required by section 21 (6) of the Act. Hence this petition to quash the order of the Tribunal.
Finding of the Court:
The court held that section 21 (6) of the Andhra Pradesh General Sales Tax Act, 1957, which insists on satisfactory proof of payment of tax as a condition precedent for the entertainability of the appeals specified in sub-section (1), offends the principle of equality before the law and equal protection of the laws enshrined in Article 14 of the Constitution besides being repugnant to Article 19 (1) (f) and (g) for the reason that it renders the substantive right of appeal conferred by sub-section (1) illusive if not nugatory.
Issues: 1. Whether section 21 (6) of the Andhra Pradesh General Sales Tax Act, 1957, is ultra vires the powers of the State Legislature? 2. Whether section 21 (6) of the Act is violative of the principle of equality before the law and equal protection of the laws enshrined in Article 14 of the Constitution?
Ratio Decidendi: 1. The court held that the State Legislature has power under Entry 54 of List II of the Seventh Schedule to the Constitution to make laws for all ancillary and incidental matters as well as to regulate and control the jurisdiction and powers of the Sales Tax Appellate Tribunal constituted under section 3 of the Act. 2. The court held that section 21 (6) of the Act, which insists on satisfactory proof of payment of tax as a condition precedent for the entertainability of the appeals specified in sub-section (1), offends the principle of equality before the law and equal protection of the laws enshrined in Article 14 of the Constitution. The court found that the classification of appeals for the purpose of section 21 (6) is unreasonable and discriminatory and has no nexus with the object sought to be achieved by the Act.
Final Decision: The petition was allowed with costs and a direction to entertain the petitioner's appeal without insisting on proof of payment of tax was issued to the Tribunal.
( 1 ) THE validity of section 21 (6) of the Andhra Pradesh general Sales Tax Act which will hereinafter be referred to as the act is sought to be questioned in this petition filed under Article 226 of the Constitution of india.
( 2 ) THE petitioner is a firm carrying on business as commission agents. This firm returned a gross turnover of rs. 7,23,570-24 for the assessment year 1967-68 and claimed exemption in respect of Rs. 1,54,715-90 alleged to represent the value of goods sold and purchased on behalf of its principals on the ground that the tax payable thereon had already been paid by the principals. This claim was rejected by the Commercial Tax Officer, mahaboobnagar (R-1) and he levied a tax of Rs. 27,332-23. Except for a slight modification, the appeal filed by the petitioner against the order of the assessing authority was dismissed by the assistant Commissioner of Commercial Taxes, kurnool (R-2 ). A further appeal was thereafter preferred by the petitioner to the Sales Tax Appellate Tribunal (R-3 ). The petitioner applied to the Deputy commissioner of Commercial Taxes for stay of collection of tax pending disposal of that appeal in vain and the Tribunal refused to entertain the appeal on the ground that it was not accompanied by satisfactory proof of payment of tax, as required by section 21 (6) of the Act. Hence this petition to call for the records relating to Appeal No. 5 of 1969-70 and to quash the order dated 3oth April, 1969 of the 2nd respondent by issuing a writ of certiorari or any other appropriate writ order or direction; and in the alternative to direct the Sales Tax Appellate Tribunal (R-3) to entertain the appeal without insisting on proof of payment of tax as according to the petitioner, section 21 (6) of the Act is ultra vires the powers of the State Legislature besides being viola- tive of the fundamental rights guaranteed by Articles 14 and 19 (1) (f) and (g) of the Constitution of India.
( 3 ) IN the counter-affidavit filed on behalf of respondents 1 and 2 it is averred among other things that section 21 (6) is conceived in the interests of public revenue and also to discourage frivolous litigation, that it is well within the legislative competence of the State and is no t open to attack even under Articles 14 and 19 (1) (f) and (g) as it does not suffer from the vice of any discrimination or unreasonable restriction and does not also interfere with the petitioners right to carry on business.
( 4 ) SECTION 21 (1) of the Act provides for appeals to the Appellate Tribunal from orders passed or proceedings recorded by the authorities specified in clause (a) and (b) of that sub-section, While sub-section (6) lays down that "except in case where a stay is in operation as provided in subsection (2-C) of section 19, no appeal shall be entertained under sub-section (i) unless it is accompanied by a satisfactory proof of the payment of tax as determined in any appeal under section 19 or revision under section 20. " As already stated what is sought to be challenged is the validity of this sub-section (6) which enjoins upon the Tribunal not to entertain the appeal unless it is accompanied by satisfactory proof of payment of tax, except in cases where a stay of collection of tax is in force.
( 5 ) THE first ground urged for the petitioner to assail the validity of section 21 (6) is that it is ultra vires the powers of the state Legislature. The contention of the learned Counsel, Sri Dasaratharami reddv, in this regard is that the State legislature has power only to prescribe the jurisdiction and regulate the business of all Courts except the High Court and Supreme Court in exercise of the powers vested in it and Entries 3 and 65 of List II of the Seventh Schedule to the constitution but that it has no such power in the case of Tribunals and that the Parliament alone is competent to regulate the jurisdiction and powers of tribunals by virtue of the residuary powers vested in it by Entry 97
