Back
2013 Supreme(Del) 518
High Court of Delhi
BADAR DURREZ AHMED & VIBHU BAKHRU, JJ.
Bajaj Overseas Impex & Another
Versus
The Special Commissioner-I & Another
W.P.(C) Nos. 2763 & 2766 of 2013
Decided on : 08-05-2013.
For the Appellants:Balram Sangal, Rajesh Jain, Rajesh Mahna, Virag Tiwari, Vineet Bhatia, Advocates.
For the Respondents:Ms. Avnish Ahlawat, Nitesh Kumar, Advocates.
The main legal point established in the judgment is that the right of appeal is a substantive right vested at the date of filing returns and cannot be taken away retrospectively. The court emphasized that the date of filing returns, not objections, was the relevant date for determining the applicability of the proviso to Section 74(1) of the Delhi Value Added Tax Act.
Headnote:
Delhi Value Added Tax Act - Proviso to Section 74(1) - [Writ Petitions, Common Issues, Special Commissioner's Order, Relevant Period, Default Assessment Orders, Objections, Pre-deposit Condition, Contention, Right to File Objections, Amendments, Legal Provisions, Interpretation, Harmonious Reading, Applicability, Retrospective Effect, Pre-deposit Requirement, Objection Hearing, Commissioner's Power, Collection of Assessed Tax and Penalties, Right of Appeal, Vested Right, Commencement of Lis, Filing of Returns, Substantive Rights, Objections vs Appeals, Division Bench Decision, Impediment in Hearing Objections, Material Date, Distinction Between Appeals and Objections, Right of Making Objections, Legislative Provision, Decision of Sales Tax Bar Association]
Fact of the Case:
The petitioner challenged the order directing a deposit as a condition for hearing objections under the Delhi Value Added Tax Act. The relevant period, financial year 2010-2011, saw default assessment orders and imposition of penalties. The petitioner contended that the proviso to Section 74(1) did not exist during the relevant period and that their substantive right to file objections could not be taken away by an amendment. The respondents argued that the requirement of making a deposit existed prior to the amendment and that the proviso would be applicable at the date of filing objections. The court considered the provisions of Section 35 and 74 of the Act and relevant case laws to determine the applicability of the proviso and the requirement of pre-deposit for hearing objections.
Finding of the Court:
The court found that the proviso to Section 74(1) was not made retrospective and did not apply to returns filed prior to its introduction. It held that the right of appeal is a substantive right vested at the date of filing returns and cannot be taken away retrospectively. The court also noted that the proviso created an impediment in the hearing of objections and that the date of filing returns, not objections, was the relevant date for determining the applicability of the proviso. The court set aside the impugned orders and directed the respondents to hear the objections without requiring any pre-deposit.
Issues: The issues involved the applicability of the proviso to Section 74(1) of the Delhi Value Added Tax Act, the retrospective effect of the proviso, the relevant date for considering the applicability of the proviso, and the distinction between appeals and objections.
Ratio Decidendi: The court held that the proviso to Section 74(1) was not retrospective and did not apply to returns filed prior to its introduction. It emphasized that the right of appeal is a substantive right vested at the date of filing returns and cannot be taken away retrospectively. The court also determined that the date of filing returns, not objections, was the relevant date for determining the applicability of the proviso.
Final Decision: The court allowed the writ petitions, set aside the impugned orders, and directed the respondents to hear the objections without requiring any pre-deposit.
Oral: Badar Durrez Ahmed, J.
1. These writ petitions raise common issues and are, therefore, being decided together. We shall refer to the facts of the W.P.(C) No.2763/2013. The petitioner has challenged the order dated 21.03.2013 whereby the Special Commissioner has directed the petitioner to deposit a sum of Rs.25 lacs as a condition precedent for hearing the objections. W hile doing so, the said Special Commissioner invoked the provisions of the 3rd proviso to Section 74(1) of the Delhi Value Added Tax Act, 2004 (hereinafter referred to as the “said Act”). The said 3 rd proviso was introduced with effect from 01.10.2011 by virtue of the Delhi Value Added Tax (Second Amendment) Act, 2011.
2. In respect of W.P.(C) No.2763/2013, the relevant period is the financial year 2010-2011 whereas in W.P.(C) No.2766/2013, the relevant period is the financial year 2008-2009. In so far as W.P.(C) No.2763/2013 is concerned, the petitioner had filed returns on a monthly basis under the assessment procedure provided in Section 31 of the said Act. Subsequently, the Value Added Tax Officer passed 12 separate default assessment orders for each month of the financial year 2010-2011 on 26.12.2012. By virtue of the said default assessment orders an additional tax demand of Rs.83,20,595/- was raised. The interest amount was also computed at Rs.25,43,571/-and, therefore, the disputed tax amount along with interest thereon was computed at Rs.1,08,64,166/-. In addition, penalties were also imposed totaling to Rs.89,17,873/-. Since the petitioner was dissatisfied with the default assessment orders, the petitioner filed objections under Section 74 of the said Act on 11.02.2013. As a pre-condition for hearing those objections, the Special Commissioner (the Objection Hearing Authority) by virtue of the impugned order dated 21.03.2013, as mentioned above, imposed a pre-condition of a deposit of Rs.25 lacs being made by the petitioner. It is against that order that the petitioner in W.P.(C) No.2763/2013 is before us. In the other writ petition, that is W.P.(C) No.2766/2013, a similar sequence of events has occurred and it ultimately resulted in the impugned order dated 19.03.2013 whereby the petitioner has been asked to pre-deposit 25% of the disputed tax and interest and 10% of the penalty amount.
3. In both these petitions, the contention raised on behalf of the petitioner is that the 3rd proviso to Section 74(1) did not exist on the statute book during the relevant period, that is 2008-2009 in W.P.(C) No.2766/2013 and 2010-2011 in W.P.(C) No.2763/2013. Secondly, it was contended that their right to file objections was a substantive right and was more or less like the right to file an appeal. At the point of time when they filed their returns, the 3rd proviso to Section 74(1) of the said Act did not exist on the statute book. Therefore, their substantive right of preferring objections without the requirement of making a pre-deposit could not be taken away by virtue of an amendment which was neither expressly retrospective nor by implication. In support of these arguments, the learned counsel for the petitioners relied upon the following decisions:-
1. Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh & Ors.: 4 STC 114 (SC).
2. Khazan Chand Nathi Ram v. State of Haryana & Others: 136 STC 261 (P& H).
3. Vitthalbhai Naranbhai Patel v. Commissioner of Sales Tax, Madhya Pradesh: 12 STC 219 (SC).
4. Deputy Commercial Tax Officer v. Cameo Exports & Others: 147 STC 218 (Mad).
4. In response to the arguments advanced by the learned counsel for the petitioners, the learned counsel appearing on behalf of the respondents, first of all, submitted that there was nothing new which was introduced by virtue of the insertion of the 3rd proviso to Section 74(1) of the said Act. It was contended that Section 35(2) permitted the enforcement of recovery of the assessed tax and penalty even before the objections were disposed of or resolved by the Objectio
