Commissioner, Commercial Tax vs Vijay Pal Singh

@DELETEUPPERDATA

K.M. Joseph, C.J.—This is a revision petition filed under section 55 of the Uttarakhand Value Added Tax Act, 2005 (hereinafter referred to as "the Act"). The revision is directed against the order passed by the Tribunal, by which the Tribunal disposed of two appeals, from one of which the present revision arises, by ordering the release of two trucks after setting aside the order passed by the Deputy Commissioner rejecting applications for the release of the trucks. The following are the substantial questions of law, which have been raised in the memorandum of revision:

"(i) Whether second appeal was maintainable against the order dated September 10, 2009 passed by the Deputy Commissioner (Enforcement), Commercial Tax Department, Kashipur, under section 43(8) of the Uttarakhand VAT Act, 2005, in view of the fact that no direction to release the goods had been issued by the order of the Deputy Commissioner (Enforcement) dated September 10, 2009 and particularly in view of legal bar as contained under section 56(b) of the Uttarakhand VAT Act, 2005?

(ii) Whether by entertaining and deciding second appeal against the order of dismissal of the application of the respondent-driver, passed under section 43(8) of the Uttarakhand VAT Act, 2005, the Commercial Tax Tribunal, Haldwani exceeded its jurisdiction and, therefore, the impugned judgment and order dated September 16, 2009 passed by the Tribunal is liable to be set aside on this ground alone?

(iii) Whether despite of non-availability of remedy of second appeal before the Commercial Tax Tribunal, against an order of dismissal of the application under section 43(8) of the Uttarakhand VAT Act, 2005 an aggrieved person may have an extraordinary remedy to assail the said order under article 226 of the Constitution of India before this honourable High Court?

(iv) Whether learned Tribunal was justified to set aside the order of the Deputy Commissioner (Enforcement) and to release the goods without depositing the amount of security inspite of the fact that the respondent had clearly violated the mandatory provision of section 50(1) of the VAT Act?

(v) Whether learned Tribunal was justified to have made adverse remarks against the Assistant Commissioner (Mobile Squad), Commercial Tax, Rudrapur overlooking the facts on record and provisions of law?"

Before we proceed to consider the substantial questions of law, it may be necessary to advert to a few facts. The truck in question was intercepted when it was in the territory of the State of Uttarakhand. It appears that the truck was coming from Jharkhand and was bound for Muzzafarnagar in the State of Uttar Pradesh. The case of the appellant is that, when it entered the State of Uttarakhand, there was a check-post. It was obliged to take a transit pass. Furthermore, it had to fill-up the trip sheet. On receiving information that the persons in charge of the truck had not complied with the requirements, inasmuch as, they had not taken a transit pass and that the trip sheet was also not there, and on the information being passed on to the mobile unit, the truck was caught. It was taken into custody under a mahasar. The provisions of section 43 of the Act were pressed into service. Security was demanded under section 43(7). Thereupon, the application was made invoking section 43(8) of the Act. According to the revisionist, this application was rejected. The order rejecting the application was challenged before the Tribunal. It is this order of the Deputy Commissioner rejecting the application under section 43(8) of the Act, which has been set aside by the Tribunal as aforesaid and relief was granted in the form of directing release of the truck.

We have heard the learned brief holder for the State/revisionist. In view of the fact that there was no appearance for the respondent though served and also having regard to the vexed nature of the provisions to which we shall presently advert, we have also heard Mr. H.M. Bhatia, learned counsel as Amicus Curiae.

The learned brief holder for the State/revisionist would address the following submissions before us:

(i) She would submit that the appeal filed before the Tribunal was not maintainable. According to her, there was no direction within the meaning of section 43(8) of the Act warranting interference in the appeal by the Tribunal. Unless there is a direction to release the goods issued under section 43(8) of the Act, no appeal could be maintainable under section 53 of the Act. To re-enforce herself in her stand, she also seeks support from the provisions contained in section 56(b) of the Act. She would also submit that the Tribunal has proceeded to make unwarranted observations against certain officers. According to her, the officer, against whom the observations were made, was actually not the in-charge of the mobile unit and it was actually somebody else, who was in-charge of the mobile unit. It was also submitted that the officer only acted in accordance with law and, as pointed out earlier, there was neither transit pass obtained nor trip sheet filled-up, as was required in law. Therefore, the order of the Tribunal deserves to be set aside.

The learned Amicus Curiae would submit as follows:

(i) He invited our attention to rule 4(7) and rule 5(2) of the Uttarakhand Value Added Tax Rules, 2005, which we extract hereinbelow:

"4. Commercial tax authorities and their powers.--(1) to (6) . . .

(7) Subject to the general control of the Commissioner, the Joint Commissioner and Deputy Commissioners shall also exercise the powers conferred, and perform the duties imposed by or under the Act or these Rules or as may, consistent with the Act or these Rules, be conferred on or assigned to them.

Powers of assessment and matters incidental thereto.-- (1) . . . (2) All Joint Commissioners, Deputy Commissioners and Assessing Authorities, and all other officers authorised under sub-rule (3) shall be competent to exercise all or any of the powers under section 42 or section 43:

Provided that prior permission of the higher authority shall be necessary before any powers under the said sections are exercised by any of the aforesaid authorities beyond the limits of his jurisdiction."

(ii) These provisions are referred to in an attempt to point out that what section 43(8) of the Act contemplates is only the passing of an order granting release on such terms as are found fit. In other words, it is his argument that there is no discretion vested with the officer concerned to refuse relief under section 43(8) of the Act.

(iii) He also brings to our notice, no doubt, the judgment of the apex court in the case of Income Tax Officer, A-Ward, Sitapur Vs. Murlidhar Bhagwandas, Lakhimpur Kheri, . This is a judgment, which we shall advert to as we progress further in the judgment.

Now that we have set out the facts, it is necessary for us to set out the relevant sections. Section 43 of the Act reads as under:

"43. Power to seize goods.--(1) An officer authorized under subsection (1) or sub-section (2) of section 42 shall have the power to seize any goods--

(a) which are found in the dealer''s place of business or vehicle or any other building or place; or

(b) which, such officer has reason to believe to belong to the dealer and which are found in any place of business or vehicle or building or place, but are not accounted for by the dealer in his accounts or registers or other documents maintained in the course of his business:

Provided that a list of all the goods seized under this sub-section shall be prepared by such officer and be signed by him, and a copy thereof shall be given to the dealer.

(2) Where any officer empowered by the State Government in this behalf has reason to believe that the goods found in any vehicle, building or place are not traced to any bona fide dealer or it is doubtful if such goods are properly accounted for by any dealer in his accounts, register or other documents, maintained in the course of his business, he shall have power to seize such goods and the remaining provisions of this section shall mutatis mutandis apply in relation to such seizure.

(3) An officer seizing the goods under sub-section (1) shall take all the measures necessary for their safe custody and forward the list, referred to in the proviso to sub-section (1), along with other documents relating to the seizure to the assessing officer concerned.

(4) The said assessing authority shall serve on dealer or, as the case may be, the person in charge of goods at the time of seizure (hereinafter in this section referred to as the person in charge) a notice in writing requiring him to show cause, why a penalty should not be imposed.

(5) If such officer, after taking into consideration the explanation, if any, of the dealer, or as the case may be, the person in-charge and giving him an opportunity of being heard, is satisfied that the said goods were willfully omitted from being shown in the accounts, registers and other documents referred to in sub-section (1), it shall pass an order imposing a penalty not exceeding forty per cent of the value of such goods as he deems fit.

(6) A copy of the order imposing penalty under sub-section (5) shall be served on the dealer or, as the case may be, the person in-charge.

(7) The officer seizing the goods shall serve on the dealer or, as the case may be, the person in-charge an order in writing mentioning the fact of such seizure and indicating the amount, not exceeding such amount as would be sufficient to cover the penalty likely to be imposed, on the deposit whereof in cash, the goods so seized shall be released in favour of the dealer or, as the case may be, the person in-charge.

(8) Notwithstanding anything contained in sub-section (7), the Commissioner or such officer, not below the rank of Deputy Commissioner, as may be authorised in this behalf by the Commissioner, may, for sufficient reasons to be recorded in writing, direct that goods be released without any deposit or on depositing such lesser amount, or furnishing security in such form other than cash, as he may deem fit.

(9) The penalty or such part thereof as remains after adjustment of any amount deposited under sub-section (7) shall be deposited in the prescribed manner within thirty days of the date of service of the copy of the order imposing the penalty. In default, the assessing authority shall cause the goods to be sold in such manner as may be prescribed and apply sale proceed thereof towards the penalty and, subject to the provisions of section 36, refund the balance, if any, to the dealer or, as the case may be, to the person in-charge.

(10) Where the officer seizing the goods, before forwarding the list and other documents referred in sub-section (2) or the assessing authority at any time thereafter, is of the opinion that the goods are subject to speedy and natural decay or where the tax assessed or penalty imposed, as the case may be, is not deposited in accordance with the provisions of this Act, the officer seizing the goods or the assessing authority, as the case may be, may, without prejudice to any other action that may be taken in accordance with other provisions of this Act, cause the goods to be sold by public auction in the prescribed manner. The sale proceeds of such goods shall be adjusted towards the expenses and tax assessed or penalty imposed. The balance, if any, shall be refunded to the dealer or, as the case may be, the person in-charge in accordance with the provisions of sub-section (9).

(11) If the amount deposited under sub-section (7) is more than the amount of penalty imposed under sub-section (5), the excess amount so deposited shall be refunded to the dealer or, as the case may be, the person in-charge, by the officer with whom it was so deposited in accordance with the provisions of section 36."

Section 51 of the Act provides for a first appeal. It, inter alia, provides as follows:

"51. First appeal.--(1) Any dealer or other person aggrieved by an order made by the assessing authority, other than an order mentioned in section 56 or sub-section (7) and sub-section (8) of section 43, may, within sixty days from the date of the service of the copy of the order, appeal to such authority as may be prescribed, and shall also serve a copy of the memorandum of appeal on the assessing authority."

Section 53 of the Act provides for an appeal to the Appellate Tribunal. Section 53(1), insofar as it is relevant for us, is extracted hereinbelow along with the Explanation:

"53. Appeal to the Appellate Tribunal.--(1) Any person aggrieved by an order passed under section 51 (other than an order referred to under sub-section (2) of that section), under section 52, or under section 76, or a decision under section 57, or a direction under sub-section (8) of section 43, may within ninety days from the date of service of the copy of such order, decision or direction on him, prefer an appeal to the Tribunal:

Explanation.--For the purpose of this sub-section, the expression ''any person'' in relation to any order passed by an authority other than the Commissioner includes the Commissioner and, in relation to any order passed by the Commissioner includes the State Government."

Lastly, we also advert to section 56 of the Act, which reads as follows:

"56. Orders against which no appeal or revision shall lie.--No appeal and no application for revision shall lie against--

(a) an order or notice under section 24, section 25, section 26 and section 29 initiating an enquiry for assessment or reassessment;

(b) any order or action under section 42 or sub-section (1), subsection (2), sub-section (4), sub-section (7) of sub-section (8) of section 43 or sub-section (6) of section 48."

A perusal of the same would show that the scheme, which emerges, is as follows:

(i) When goods are seized invoking the power under section 43 of the Act, the person concerned may become liable to deposit a penalty, which may extend to 40 per cent, of the price of the goods. The goods can be released under section 43(7) of the Act. Then, the officer will demand security to the extent of the penalty that is imposable. Section 43(8) of the Act, on the other hand, provides for a power with the superior officer to direct release of the goods on terms, which are more advantageous to the concerned person. The goods may be directed to be released without any deposit or deposit of a lesser amount or furnishing security in such form other than cash. It is immediately necessary to notice that, if an order is passed under section 43(7), the officer is required to serve the same on the dealer or the person in-charge indicating the amount, not exceeding the amount as would be sufficient to cover the penalty, on deposit whereof in cash, the goods are to be released.

(ii) Section 51 of the Act provides for first appeal. A perusal of section 51 makes it very clear that an order made under sub-section (8) of section 43 is not appealable under section 51. On the other hand, section 53 of the Act expressly provides for an appeal against a direction issued under section 43(8). In fact, a perusal of section 53 of the Act will yield the following result:

Orders passed under section 51, except the orders under sub-section (2) of section 51; orders passed under section 52 and under section 76, are rendered appealable. A decision under section 57 is also made appealable. Lastly, a direction issued under section 43(8) is also made appealable.

(iii) Next, we must consider section 56(b) of the Act. Section 56 appears in the statute after sections 51 and 53, which provides for appeals to the first appellate authority and to the Appellate Tribunal respectively. Revision to the High Court is also provided under section 55. It is, thereafter, that it is provided in section 56 that no appeal and no revision shall lie, inter alia, against an order or action taken under sub-section (8) of section 43.

(iv) On the one hand, under section 53 of the Act, an appeal is expressly provided against a direction given under section 43(8) : at the same time, curiously, we find that section 56(b) bars filing of any appeal against any order or action passed under section 43(8). As we have already noted, no first appeal is maintainable under section 51 of the Act against an order passed under section 43(8) of the Act.

We must, at this juncture, note the submission of the learned Amicus Curiae that the court must make an effort to widen its jurisdiction as far as possible. In this regard, he drew our attention to the following maxim in Broom''s Legal Maxims and which pertains to the Judicial Office:

"BONI JUDICIS ESTAMPLIARE JURISDICTIONEM. (Chanc. Prec. 329.)

--It is the duty of a judge to extend this jurisdiction.

This maxim, as above-worded and literally rendered, is erroneous. Lord Mansfield suggested that for the word jurisdictionem, justitiam should be substituted and Sir R. Atkyns had previously remarked: ''it is indeed commonly said boni judicis est ampliare jurisdictionem; but I take that to be better advice which was given by Lord Chancellor Bacon to Mr. Justice Hutton upon the swearing him one of the judges of the court of common pleas,--that he should take care to contain the jurisdiction of the court within the ancient mere-stones without removing the mark''.

The true maxim of our law is to amplify its remedies, and, without usurping jurisdiction, to apply its rules, to the advancement of substantial justice the principle upon which our courts act is, to enforce the performance of contracts not injurious to society, and to administer justice to a party who can make his claim to redress appear, by enlarging the legal remedy, if necessary, in order to do justice; for the common law is the birthright of the subject and bonus judex secundum aequum et bonum judicat, et aequitatem stricto juri praefert.

I commend the judge," observed Lord Hobart, ''that seems fine and ingenious, so it tend to right and equity; . . . and I condemn them that either out of pleasure to show a subtle wit will destroy, or out of incuriousness or negligence will not labour to support, the act of the party by the art or act of the law."

He also drew our attention to the judgment of the Delhi High Court rendered in the case of Paramjit Singh Sarna, Delhi Sikh Gurdwara Committee and Another Vs. Avtar Singh Hit and Another, . He, then, drew our attention to the Full Bench judgment of the Bombay High Court passed in the case of R.S. Jiwani v. Ircon International Ltd. reported in [2010] 1 Arb. LR 451. The relevant paragraph of this judgment is extracted herein-below:

"31. Rival submissions have been made before us with regard to operation and effect of proviso to sub-clause (iv) of clause (a) of section 34. According to the appellants the proviso applies to the entire section while according to the respondent, its operation is limited to sub-clause (iv) alone. There seems to be some merit in the contention of the respondent inasmuch as the language of the proviso is directly referable to the section itself and, thus, must take its colour from the principal section, viz., 34(2)(iv). A reading of the proviso shows that where severability is possible, the court in the class of the cases falling under sub-clause (iv) is expected to set aside the award partially. In other words, a greater obligation is placed upon the court to adopt such an approach when the case in hand is covered under the provisions of sub-clause (iv). This contention will not have any adverse effect on the interpretation and scope of section 34 as a whole. It is a settled rule of interpretation that the statutory provision should be read as a whole to find out the real legislative intent and that provision should be read by keeping in mind the scheme of the Act as well as the object which is sought to be achieved by the Legislation while enacting such a law.

There is nothing in the proviso or in the language of section 34 which has an impact or effect to restrict the power of the court as contemplated under section 34(1) read with the opening words of sub-sections (2) and (4) of section 34 of the Act. Est boni judicis ampliare jurisdictionem is a settled canon of law courts should expand and amplify jurisdiction to achieve the ends of justice and not unnecessarily restrict its discretion particularly when the later approach would lead to frustrate the very object of the Act."

We must, first, consider the submission of the learned Amicus Curiae that, having regard to the provisions contained in the Rules, which we have adverted to, under section 43(8) of the Act, there is a duty to pass a positive direction whenever application is made. We have already referred to sub-sections (7) and (8) of section 43 of the Act. In our view, under section 43(8), there is a clear discretion vested with the authority to exercise the power to order release, as provided by it. We are fortified in the said view when we notice that the lawgiver mandates that, whenever power is exercised by giving a direction, it must be for reasons to be recorded. The provision containing the limitation on the exercise of power that there must be reasons recorded, itself, shows that the Legislature was anxious to protect the interest of the Revenue. The power was, no doubt, lodged with the superior officer; but, the Legislature has taken great care to see that the power is not exercised in a routine manner. It unerringly points out that the power under section 43(8) is a purely discretionary power. No doubt, any discretion vested with any public officer must be exercised bona fide and according to well established principles relating to exercise of discretion by statutory authorities. Suffice it for the purpose of this case to indicate that, under section 43(8) of the Act, when an application is made to invoke the power under section 43(8), the officer is not bound to exercise the power in favour of the person making the application. It is a power to be exercised based on the circumstances appearing in the case and the officer may exercise the power in favour of the person making the application. We must certainly not overlook the fact that the Legislature has used the word "may" in section 43(8) and that, again, goes a long way to persuade us to hold that the power is discretionary.

Having found that the power to be exercised is discretionary, we must pass on to the consideration of the main question involved in this revision, which is, whether the appeal filed before the Tribunal was maintainable. There is no dispute that there is no direction given to release the goods within the meaning of section 43(8) of the Act. The officer, who was approached to invoke the power under section 43(8), has declined to exercise the power under section 43(8) and has rejected the request to release the goods under section 43(8). This, he was certainly entitled to do. We are not here expressing any view regarding the merits of his decision in view of the course that we are adopting. Therefore, there is no direction directing release of the goods. Section 53 provides only for an appeal against a direction issued under section 43(8). We are of the view that, what the Legislature contemplated, is that, only when a direction is given within the meaning of section 43(8), it becomes appealable before the Tribunal under section 53. It is settled law that an appeal is a creature of the statute. It may be true that, whenever it is possible, courts must make an effort to expand their jurisdiction. It is a principle of justice and equity. In the first place, here, we are dealing with the jurisdiction not of this court, but that of the Tribunal. The Tribunal is a creature of the statute. But, we will proceed on the basis that, even in respect of the Tribunal, the principle contained in the maxim, commended for our acceptance by the learned Amicus Curiae, has operation. But, it cannot, in our view, apply in a case, where, on a proper interpretation of the provisions, the appeal is not maintainable. It is the case of the Revenue that the intention of the Legislature was that in cases, where a direction is not given under section 43(8), the matter can always be challenged in proceedings under article 226 of the Constitution. It is not as if the person concerned is left without any remedy.

It is not as if we are oblivious to the fact that a question may be posed that, when a direction is given under section 43(8), it should be appealable; and if, at the same time, a direction is refused, it should not be appealable. But the court does not sit in judgment over the wisdom of a legislative policy. There is no challenge to the same in a duly constituted proceeding. As we are considering this revision as a statutory proceeding under section 55, we have to take the statute as it is. At the same time, even though section 56(b) of the Act provided that no appeal and revision will lie against any order or action under section 43(8), we have to construe the provision by limiting the non-maintainability of an appeal only when there is no direction given under section 43(8) of the Act. In other words, when expressly an appeal is maintainable against a direction under section 43(8), we cannot hold that such an appeal will not lie with reference to the generality of the provision contained in section 56(b). We can harmonise these provisions by holding that the legislative intent was that an appeal will lie against a direction for release ordered under section 43(8) and, when it is refused, no appeal will lie under section 53. It may not be out of place to record that, subsequently in the year 2012, section 56(b), itself, was amended by the Legislature and, after the amendment in 2012, section 56(b) does not contain the prohibition against an appeal or revision against action under section 43(8). Therefore, it would appear to be an error, which was probably noticed by the Legislature as section 53 and section 56(b) were completely inconsistent with each other.

Incidentally, we may notice in the Explanation to section 53 that the person, who could file the appeal, includes the Commissioner. But, again, we notice curiously that it is in relation to an order and not in relation to a direction. But, nonetheless, we would think that, in view of the word "direction" under section 43(8), the Legislative intent is clear that it is only a direction under section 43(8) ordering release of the goods, which would be appealable.

Apparently, the goods would have been, in all probability, according to the learned brief holder and the learned Amicus Curiae, released pursuant to the order, as there was no order of stay. The outcome of the above discussion is that the revision is to be allowed and the same is allowed. We answer the question of law in regard to the maintainability of the appeal in favour of the revisionist. The impugned order, therefore, cannot be sustained on the ground that the appeal was not maintainable. Therefore, the impugned order is set aside. We, however, make it clear that this order will not stand in the way of the respondent challenging the impugned order before the Tribunal in appropriate proceedings.