Champaklal Nanabhai and another vs Commissioner of Sales Tax, Maharashtra State

Chapalgaonkar, J.—This is a petition under article 226 of the Constitution of India, challenging the order passed by the President of the Maharashtra Sales Tax Tribunal, Bombay, dismissing the stay application filed by the present petitioners, holding that while an application for a reference to the High Court u/s 61 of the Bombay Sales Tax Act, 1959, is pending before the Tribunal, the Tribunal has no jurisdiction to grant stay to the impugned order of assessment.

The petitioners have been assessed to pay a sales tax of Rs. 52,33,390 and were also directed to pay a sum of Rs. 52,11,000 as penalty. Against this order the petitioners have filed a second appeal before the Sales Tax Tribunal, which the Tribunal was pleased to dismiss. After dismissal of the second appeal, applications were moved bearing Nos. 16 to 25 in the various appeals filed by the present petitioners for making a reference u/s 61 of the Bombay Sales Tax Act, 1959 and during the pendency of these applications it was submitted by the applicants-petitioners that the impugned order of assessment be stayed. These applications came to be rejected by the learned President of the Sales Tax Tribunal vide his order dated March 27, 1991.

Shri Surte, the learned counsel for the petitioners, submitted that pendency of an application for a reference u/s 61 of the Bombay Sales Tax Act is continuation of the proceedings notwithstanding dismissal of second appeal and therefore, the Tribunal has not become functus officio and shall have the same jurisdiction which it enjoyed while deciding the second appeal. In support of his contention Shri Surte mainly relied on the judgment of the Supreme Court in the case of Commissioner of Income Tax Vs. Bansi Dhar and Sons, and contended that though this judgment of the Supreme Court has considered the provisions of section 265 of the Income Tax, the provisions of section 61(6) of the Bombay Sales Tax Act are to the same effect and therefore, the ratio of the judgment of the Supreme Court in Commissioner of Income Tax Vs. Bansi Dhar and Sons, can be applied to the instant case also.

It is necessary to compare the provisions of section 265 of the income tax-Act with section 61(6) of the Bombay Sales Tax Act. Section 265 of the Income Tax Act reads as under :

"Section 265. Tax to be paid notwithstanding reference, etc. - Notwithstanding that a reference has been made to the High Court or the Supreme Court or an appeal has been preferred to the Supreme Court tax shall be payable in accordance with the assessment made in the case."

Section 61(6) of the Bombay Sales Tax Act reads as under :

"Section 61(6). The payment of the amount of the tax, if any, due in accordance with the order of the Tribunal in respect of which an application has been made under sub-section (1) shall not be stayed pending the disposal of such application or any reference made in consequence thereof; but if such amount is reduced as the result of such reference, the excess tax paid shall be refunded in accordance with the provisions of section 43."

It appears, form perusal of above sections, that section 265 provides that the liability to pay the tax in accordance with the assessment would continue despite a reference to the High Court or to the Supreme Court. There is no specific prohibition to grant stay for the payment of the assessed amount in the provision. However, section 61(6) takes away power of the Tribunal to grant stay although application u/s 61(1) of the Bombay Sales Tax Act is made and pending.

In Commissioner of Income Tax Vs. Bansi Dhar and Sons, the main question before the Supreme Court was whether the High Court in exercise of its jurisdiction u/s 151 of the CPC has a power to stay the realisation of tax pending a reference before it. The honourable Judges of the Supreme Court have negatived the contention and have held that there is no inherent power or an incidental power with the High Court in the matter of reference pending before it to grant stay of realisation or injunction. In paragraph 42 of this judgment at page 430 of AIR (page 682 of ITR), the Supreme Court has ruled that the power to grant stay of realisation must remain within the jurisdiction of the appellate authority and pendency of a reference does not detract from that jurisdiction of the appellate authority. Relying on these observations of the Supreme Court Shri Surte wants us to hold that the Tribunal had a power to consider the application for the stay in this matter also. We are afraid that the ratio of Commissioner of Income Tax Vs. Bansi Dhar and Sons, is inapplicable in the instant case for the simple reason that phraseology used in both these provision is materially different. Though a general statement about the continuation of the liability to pay is there in section 265 of the Income Tax Act, but there is no specific prohibition to grant stay. Whereas, u/s 61(6) of the Bombay Sales Tax Act, which we have quoted above, there is a prohibition to grant stay. The exercise of inherent powers may be possible only in cases where the statute has not dealt with the specific situation, but when the situation has been specifically powers or similar powers to annul the provisions of the statute, as was held by the Supreme Court in the case of Manohar Lal Chopra Vs. Rai Bahadur Rao Raja Seth Hiralal, .

In this case it was observed that :

"These observation clearly mean that the inherent powers are not in any way controlled by the provisions of the Code as has been specifically stated in section 151 itself. But those powers are not to be exercised when their exercise may be in conflict with what had been expressly provided in the Code or against the intentions of the Legislature. This restriction, for practical purposes, on the exercise of those powers is not because those powers are controlled by the provisions of the Code but because it should be presumed that the procedure specifically provided by the Legislature for orders in certain circumstances is dictated by the interests of justice."

The inherent powers cannot be exercised to negate what is specifically denied by the statute. Therefore, we do not find any merit in the contentions raised by the learned counsel for the petitioners and we find that the learned President of the Sales Tax Tribunal has rightly held that he has no jurisdiction to grant a stay and loss, therefore, rightly, refused the application. There being no impropriety or illegality in the impugned order, the writ petition to stand summarily dismissed.

At this stage Shri Surte, the learned counsel for the petitioners, orally applies for leave to appeal to the Supreme Court. Leave refused.

Writ petition dismissed.