Appeals under HVAT Act, 2003

The term “appeal” is defined to mean “ An application for the judicial examination or review by a higher Court of the decision of any inferior court or authority. Appeal is a proceeding taken before a superior Court or Authority for reversing or modifying decision of an inferior Court or authority on ground of error, a call for help. The appeal is the judicial examination and memorandum of appeal contains the grounds on which judicial examination is invited or sought. (See 21-STC-154, 161 (SC) )

It amounts in essence to a complaint to a higher forum that the decision of the subordinate officer or tribunal is erroneous and liable to be set aside. In the case of Chiranji Lal & Bros vs. State of Delhi (1966) 18-STC-240 (Punjab), the High Court held that It (appeal) embraces all proceedings whereby a superior court is called upon to review, revise, affirm, reverse or modify the decision of an inferior court.

The essential criterion of appellate jurisdiction is, that it revises and correct the proceedings in a cause already instituted and does not create that cause. In reference to judicial tribunals, an appellate jurisdiction, therefore, necessarily implies that the subject matter has been already instituted and acted upon by some other court, whose judgement or proceedings are to be revised.

Contd..2…

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Where a particular statute confers two jurisdictions – one under an appeal and the other under revision, the two cannot be said to be one and the same but are distinct and different in the ambit and scope. While an appeal is a continuation of a suit or proceedings wherein the entire proceedings are again left open for consideration by the appellate authorities which has the power to review the entire evidence subject, of course, to the prescribed statutory limitations. But in the case of revision whatever powers the revisional authority may have, it has no power to reassess and reappreciate the evidence unless the statute expressly confers on it that power. That limitation is implicit in the concept of revision. (Lachhman Dass Vs. Santokh Singh (1995) 4 SCC 201, 205.

It is now a well settled that the right of appeal is not an inherent right. It is a creation of the statute and accordingly is subject to conditions and restrictions imposed on it. It is open to the Legislature to give or not to give right of appeal against decisions made by the authoritieis under the Act and enactment on that account.

The absence of corrective machinery by way of appeal or revision, per se will not make a provision unreasonable. It will depend upon the scheme of the Act, the nature of powers vested in the authorities, the effect and consequences of the orders passed under the Act on the person concerned. If it is found that very serious consequences might flow in the absence of adequate and effective correct machinery by way of appeal or revision, the law can be held to be harsh, oppressive and unjust and violative of Article 14 of the Constitution.

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In fact, it is not the phraseology of statute that governs the situation but it is the effect of the law i.e. decisive. If the effect is to render it arbitrary and oppressive, Article 14 will be attracted. ( 81-STC – 291, page 300 relying upon Babubhai & Co. Vs. State of Gujarat –AIR 1985 SC 613, Express Hotels (P) Ltd. Vs. State of Gujarat – 178 ITR-151, 167 SC. The deprivation of an appellate remedy against an imposition of tax  may render such  provision unconstitutional and also open to challenge as arbitrary and unreasonable and, therefore, violative of Art.14. (B.Ganesha  Krishna Bhatt Vs. State of  Karnatka – 73-STC-267, page 275 ( Karn.) .

Under section 33 of the HVAT Act, 2003, any assessee considering himself aggrieved by an original order may prefer an appeal. The opening words of sub-section (1) of S.33 start from the word “any assessee” and not the term “registered or unregistered dealer” as one normally could assume. Again the term “assessee” has been defined in clause (d) of sub-section (1) of S. 2 of the HVAT Act. The term “assessee” has been defined to mean “ any person who is required to pay any tax, interest, penalty, fee or any other sum under this Act or the rules made thereunder.

From the above what emanates is that an appeal under the HVAT Act can be filed any person on whom a liability to any tax, interest, penalty, fee or any other sum under the HVAT Act and such person not necessary to be the registered dealer under the HVAT or CST Act in the State.

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The person who can be made to pay any tax, interest, penalty, fee or any other sum under the HVAT Act can enter into the shoes of the term “any assessee” and if they are aggrieved by an original order passed by any taxing authority under the HVAT Act can file an appeal under section 33 of the HVAT Act. Such a person could be dealer himself, his successor, his surety, owner of the goods not being a registered dealer, owner-incharge of  the goods, members of HUF in case Karta dies, or any person on whom a liability to pay any tax, interest, penalty, fee or any sum is created.

Second part of sub-section (1) is that the assessee considering himself aggrieved by the an original order may prefer an appeal and appeal shall lie –  if the order is passed by any authority or officer lower in rank to the Jt.ETC, to the JETC and if not lower to the JETC, to the ETC. If the order is made by the ETC, the appeal shall lie to the Tribunal.

Through a Note, it has been explained that an original order means an order passed under this Act except an order passed on appeal or on revision.

By virtue of sub- section ( 2) of S. 33, an appeal can be filed by either side against the orders passed by the Revising or Appellant Authority. Similar provision did not exist under the Haryana General Sales Tax Act. As a result of this the assessing authority or the taxing authority can file appeal against the orders of  JETC Appeal or the Revising authority.                                                      

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The limitation period for filing of an appeal under HVAT Act is 60 days from the date of order appealed against. The time spent in obtaining copy of the order is to be excluded from this limitation period. Further the aggrieved person will have to pay the amount of admitted tax and interest thereon. Besides a Bank Guarantee or Adequate Security is to be furnished to the satisfaction of assessing authority in respect of amount in dispute. This requirement is applicable on and from 20^th March, 2009. The limitation period for filing of the Departmental Appeal before the Tribunal is 180 days from the date of the order appealed against.

Fee for filing appeals has been prescribed as follows:

a) On a memorandum of first appeal : Rs. One hundred only

b) On a memorandum of appeal before: Rs. Five hundred only

        the Tribunal

The Appellant Authority is not obliged to entertain any additional evidence on behalf of either side in appeal, such as any account, register, record or document unless for reasons to be recorded in writing it considers that such account, register, record or document is genuine and the same could not be produced before the authority below for reasons beyond the control of the party producing the same. The effect of this provision is that no assessee is allowed to produce additional evidence except prevented by sufficient cause to produce the same at the first instance in appeal.

Contd…6…

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As per section 33 of the HVAT Act, the order passed by the Tribunal is final subject to the provision of section 35 & 36 of the HVAT Act. While section 35 is in respect of review power of the Tribunal, section 36 has been with regard to the reference to be made to the High Court.

Section 36 of the HVAT Act has been substituted by an amended section effective from 20^th September, 2011. The provisions of “Reference” as contained in the earlier section have been done away with and in accordance with the substituted section, provisons for Appeal have been incorporated. Instead of Reference, now the aggrieved party – whether the dealer or department can file an appeal against any order of the Tribunal including any order passed under sub-section (5) of S. 56 of the Act can file an appeal before the High Court.

The new section, however, makes a restriction with regard to appeal. The appeal can be filed against the order of the Tribunal, if a “substantial” question of law is involved. The satisfaction of the High Court that the case involves a substantial question of law is a pre-requisite for an appeal before the High Court.

The Commissioner or an aggrieved person may file an appeal within a period of sixty days from the date on which the order appealed against is received by the aggrieved party or the Commissioner.

Contd…7….

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If the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. The respondent in appeal would be competent to argue to that the case does not involve such question.

The High Court would be vested with the  powers to decide whether a substantial question of law is involved or not.

Filing of appeal to the High Court would not result into automatic stay of recovery in respect of any tax which has been determined to be due from any person by the Tribunal’s order. High Court has not been vested with the powers of staying the recovery of any tax for which Tribunal has passed the order.

Filing of appeal from the orders of the Tribunal is a welcome step because earlier mode of reference resulted in delay and also put extra financial burden on the dealer and the result achieved was the same what has now been granted by way of substituted section 36 of the HVAT Act.