Judgment:
B.N. Kirpal, J.
1. The interesting question of law which arises in this case relates to the interpretation of section 43(5) of the Delhi Sales Tax Act, 1975, which, inter alia, requires an assessed/appellant to deposit the tax demanded before the appeal filed by him can be entertained.
2. Briefly stated, the facts are that the petitioner is a dealer, who is registered both under the Delhi Sales Tax Act, 1975 (hereinafter referred to as 'the said Act') as well as under the Central Sales Tax Act, 1956. As I am not concerned with the merits of the assessment, it is not necessary to refer to, in any great detail, the particulars about the returns filed and the amounts assessed, except to note that the assessment orders were passed against the petitioner on 17th December, 1985, under both the said Act as well as the Central Act. The assessment order was passed under section 23(4) of the said Act and was assessed on best judgment.
3. Being aggrieved the petitioner filed appeals before the Additional Commissioner of Sales Tax, but the same were dismissed. Thereafter, the petitioner filed appeals before the Sales Tax Tribunal. Along with the appeal the petitioner also filed an application under section 43(5) of the said Act read with rule 36(6) of the Delhi Sales Tax Rules, 1975, praying that there should be a stay of recovery of the amount of tax demanded from the petitioner. The Sales Tax Tribunal (respondent No. 1) vide its order dated 1st December, 1987, directed the petitioner to deposit 50 per cent of the tax demanded and furnish surety for the balance amount within a period of 30 days of the communication of the order.
4. The aforesaid order dated 1st December, 1987, is sought to be challenged by the petitioner in this writ petition.
5. The only contention which has been raised challenging the said order of respondent No. 1 is that the provisions of section 43(5) of the said Act are not applicable to any second appeal which is filed under the Act. The submission of the learned counsel for the petitioner is that under section 43(5) an assessed is required to deposit the tax demanded, as a pre-condition of filing of the appeal, only if the appeal is against an order of assessment. It is submitted that the second appeal which is filed to the Tribunal is an appeal against an appellate order and is not an appeal against the order of assessment and, thereforee, there is no pre-condition for deposit of tax.
6. In order to appreciate the rival contentions raised in this case it is necessary to refer to the relevant provisions of the said Act.
7. The said Act provides for assessment being made under section 23 of the Act. The section provides that on the returns filed the Commissioner of Sales Tax shall compute the tax payable and pass an order of assessment. Though the Commissioner is stated to be the assessing authority under section 23, but under section 10 the Commissioner is empowered to delegate any of his powers to any person appointed under section 9. In the present case, as will be evident, the assessment was made by the Sales Tax Officer, who was an authority under section 9, and to whom power had been delegated by the Commissioner under section 10 of the Act. The next relevant provision is section 43 which deals with the appeals. The said section reads as under :
'43. Appeals. - (1) Any person aggrieved by any order, not being an order mentioned in section 44 passed under this Act or the rules made there under, may appeal to the prescribed authority :
Provided that where an order, not being an order mentioned in section 44 or made under section 47 is passed by the Commissioner, the person aggrieved may appeal there from to the Appellate Tribunal.
(2) The Commissioner or any person aggrieved by an order passed in appeal by the prescribed authority may appeal to the Appellate Tribunal against such order.
(3) Subject to the provisions of section 62, no appeal shall be entertained unless it is filed within sixty days from the date of service of the order appealed against.
(4) Every appeal filed under this section shall be in the prescribed form and shall be verified in the prescribed manner and in the case of an appeal to the Appellate Tribunal filed by any person other than the Commissioner, shall be accompanied by a fee of fifty rupees.
(5) No appeal against an order of assessment with or without penalty or against an order imposing the penalty shall be entertained by an appellate authority unless such appeal is accompanied by a satisfactory proof of the payment of tax with or without penalty or, as the case may be, of the payment of the penalty in respect of which the appeal has been preferred :
Provided that the appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order -
(a) without payment of the tax and penalty, if any, or as the case may be, of the penalty, on the appellant furnishing in the prescribed manner security for such amount as it may direct, or
(b) on proof of payment of such smaller sum, with or without security for such amount of tax or penalty which remains unpaid, as it may direct :
Provided further that no appeal shall be entertained by the appellate authority unless it is satisfied that such amount of tax as the appellant may admit to be due from him has been paid.
(6) The appellate authority may, after giving the appellant an opportunity of being heard, -
(a) confirm, reduce, enhance or annul the assessment (including any penalty imposed), or
(b) set aside the assessment (including any penalty imposed) and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed, or
(c) pass such order as it may think fit.
(7) Save as provided in section 45, an order passed by the Appellate Tribunal on appeal shall be final.'
8. It is not in dispute that against the original order by which an assessment is framed by the Sales Tax Officer, the provisions of sub-section (6) of section 43 are applicable. This means that a first appeal cannot be entertained without payment of tax unless the appellate authority for reasons to be recorded exercises powers under the first proviso to sub-section (5) of section 43. According to the learned counsel for the petitioner this provision is not applicable when a second appeal is filed.
9. Section 43(1) enables any person aggrieved by an order to file an appeal to the prescribed authority. The proviso states that if the order which is passed is by the Commissioner, then the appeal there from is to be filed to the Appellate Tribunal. Sub-section (2) provides for appeals against the orders of the prescribed authority. This is a second appeal provided under the Act and right to file such an appeal is granted both to the assessed as well as to the Commissioner. Sub-section (5) talks of appeals being entertained 'by an appellate authority'. It is significant to note that the expression used in sub-section (5) is not 'prescribed authority', but the expression is 'an appellate authority'. When an appeal is provided against an original order, not being an order of Commissioner of Sales Tax, then under sub-section (1) of section 43 the appeal has to be filed before the prescribed authority. The scheme of the Act, thereforee, is that the assessed is first given an opportunity of representing its case before the assessing authority. If the decision of the assessing authority is against the assessed, then a first appeal can be filed subject to the assessed paying the tax under section 43(5). It is inconceivable that if the assessed was required to pay the tax before filing the first appeal, then why he should not be required to pay the tax when the first appeal is also decided against the assessed. The provision requiring the payment of tax before the appeal being entertained is to safeguard the interest of the Revenue. But it is contended, as already noticed, that under sub-section (5) it is only in the case of appeal against 'an order of assessment' that the tax or penalty has to be deposited.
10. In my opinion, the expression 'an order of assessment' occurring in sub-section (5) of section 43 would include within its ambit not only the order passed by the Sales Tax Officer, but would also include the orders passed in appeal. The words 'an order of assessment' would mean an order whereby an assessed's tax liability has been determined. The word 'assessment' has various connotations and would include within its ambit the whole procedure of the charge, levy, determination and realisation of tax. As held by the Supreme Court in Kalawati Devi Harlalka v. Commissioner of Income-tax : [1967]66ITR680(SC) : 'It is quite clear from the authorities cited above that the word 'assessment' can bear a very comprehensive meaning; it can comprehend the whole procedure for ascertaining and imposing liability upon the taxpayer.' In that case the Supreme Court was concerned with the expression 'procedure for the assessment', and the Supreme Court held that this expression included, inter alia, appeals and revisions as well.
11. Applying the aforesaid ratio to the present case it would mean that the expression 'an order of assessment' occurring in sub-section (5) of section 43 of the Act would include an order in appeal. As both the original and the appellate orders are concerned with the computation of tax liability of an assessed, it will be fair and proper to regard the appellate order as an order of assessment as well.
12. It appears to me that in view of the decision of the Supreme Court in the case of Tel Utpadak Kendra v. Deputy Commissioner of Sales Tax [1981] 48 Stc 248, the matter is put beyond all doubt. In that case the Supreme Court was concerned with the powers of revision of the Commissioner during the pendency of an appeal before the Tribunal. The Bombay Sales Tax Act enabled the Commissioner of Sales Tax to call for and examine and revise any order which may have been passed under the Act. In that case an order passed by the Assistant Commissioner was subject-matter of an appeal filed by the assessed before the Sales Tax Tribunal. During the pendency of the appeal, the Deputy Commissioner of Sales Tax issued a notice seeking to revise the order of the Assistant Commissioner, which order was already the subject-matter of an appeal before the Tribunal. The assessed contended, in a writ petition filed in the High Court, that the Deputy Commissioner had no power to revise the order of the Assistant Commissioner because an appeal against that very order was pending before the Tribunal, which was an authority superior to that of the Deputy Commissioner. On behalf of the respondents it was contended that it was necessary for the Deputy Commissioner to have the power to revise the order of an Assistant Commissioner, even during the pendency of an appeal before the Tribunal, because if such a power was not there, the Revenue would lose its right to enhance the amount of tax, if it feels that an order prejudicial to the interest of the Revenue had been passed by the Assistant Commissioner. The submission which was made was that if an appeal is pending before the Tribunal and the jurisdiction of the Deputy Commissioner to revise was ousted, then the Revenue would be gravely prejudiced as it would have no right of enhancing the sales tax, if the case so warranted. The Supreme Court, in this context, construed the provisions of section 55(6) of the Bombay Sales Tax Act with a view to examine as to whether the Tribunal had the power to enhance the tax or not. The High Court had decided in favor of the Commissioner because it was of the opinion that if the Commissioner was not entitled to revise the order at any stage, then there would be cases where assessment could not be enhanced.
13. The provisions of the said section 55(6) with which the Supreme Court was concerned are as follows :
'(6) Subject to such rules of procedure as may be prescribed, every appellate authority (both in the first appeal and the second appeal) shall have the following powers :-
(a) in an appeal against an order of assessment, it may confirm, reduce, enhance or annul the assessment; or it may set aside the assessment and refer the case back to the assessing authority for making a fresh assessment in accordance with the direction given by it and after making such further inquiry as may be necessary; and the assessing authority shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment;
(b) in an appeal against an order imposing a penalty, the appellate authority may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty;
(c) in any other case, the appellate authority may pass such orders in the appeal as it deems just and proper :
Provided that, the appellate authority shall not enhance an assessment or a penalty or reduce the amount of drawback, set-off or refund of the tax, unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.'
14. As already noted, the Supreme Court was concerned with an appeal against an order of assessment. The aforesaid sub-section was interpreted by the Supreme Court in the following words :
'Now the sub-section speaks of an 'appellate authority both in the first appeal and the second appeal'. It is quite clear, thereforee, that the appellate powers detailed in clause (a) have the same amplitude in a second appeal as in a first appeal. An appellate authority disposing of a first appeal has power to enhance the assessment. So has an appellate authority in a second appeal. We may also point out that when an appellate authority is considering a second appeal against a 'first appellate' order, it is examining an order which can be broadly described as an order of assessment. It is a final order disposing of an appeal which, in a sense, is a continuation of the assessment. A second appeal against such an order is an appeal against an order of assessment.'
15. It appears to me that the provisions of sub-section (5) of section 43 of the said Act is in pari materia with that of section 55(6) of the Bombay Act and in both the provisions the expression 'an order of assessment' is used. The Supreme Court has categorically observed that the first appellate order can be broadly described as an order of assessment. It appears to me that the interpretation of the Supreme Court relating to section 55(6) of the Bombay Act would apply with equal force to section 43(5) of the Delhi Act.
16. It was contended by the learned counsel for the petitioner that the aforesaid observations were an obiter and, thereforee, were not binding on this Court. I am unable to agree with this submission. The Supreme Court was squarely concerned with the interpretation of section 55(6) of the Bombay Act, which uses an identical expression, namely, 'an order of assessment'. It is while dealing with this provision that the Supreme Court observed that the order passed by the appellate authority can be generally regarded as an order of assessment. It is by giving this interpretation to section 55(6) that the Supreme Court came to the conclusion that the Tribunal had the power to enhance tax. Under these circumstances, it is not possible to hold that the aforesaid observations of the Supreme Court were an obiter.
17. I may at this stage also notice two other decisions, though rendered in a slightly different context. A question arose whether C forms could be filed before the appellate authority or not. The Central Sales Tax (West Bengal) Rules, 1958 required the production of the C forms 'at the time of the assessment'. A question arose before the Calcutta High Court in Mohatta Brothers v. Additional Member, Board of Revenue, West Bengal [1975] 36 Stc 682 whether the said rules permitted the production of the C forms along with an appeal before the Assistant Commissioner or not. It was observed by the High Court that 'the time of assessment contemplated in the proper context, in our opinion, must include all stages of assessment and necessarily permits production of declaration forms before any appellate or revisional authority before whom the question of assessment is pending'. The court, thereforee, regarded the appellate proceedings as being a part or continuation of the assessment proceedings. A necessary corollary of this would be that an order in appeal could loosely be regarded as an 'order of assessment'. To the same effect is a decision of a Full Bench of the Madras High Court in the case of State of Tamil Nadu v. Arulmurugan and Company [1982] 51 Stc 381. There also a question arose whether C forms could be produced before the appellate authority and the court first noticed the nature and the duties of the appellate authority and observed as follows :
'An appellate authority under the taxing enactments sits in appeal, only in a manner of speaking. What it does, functionally, is only to adjust the assessment of the appellant in accordance with the facts on the record and in accordance with the law laid down by the legislature. An appeal is a continuation of the process of assessment, and an assessment is but another name for adjustment of the tax liability to accord with the taxable event in the particular tax-payer's case. There can be no analogy or parallel between a tax appeal and an appeal, say, in civil cases. A civil appeal, like a law suit in the court of first instance out of which it arises, is really and truly an adversary proceeding, that is to say, a controversy or tussle over mutual rights and obligations between contesting litigants ranged against each other as opponents. A tax appeal is quite different. Even as the assessing authority is not the tax-payer's 'opponent', in the strictly procedural sense of the term, so too the appellate authority sitting in appeal over the assessing authority's order of assessment is not strictly an arbitral tribunal deciding a contested issue between two litigants ranged on opposite sides. In a tax appeal, the appellate authority is very much committed to the assessment process. The appellate authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the tax-payer's appeal, even though the appeal itself has been mooted only with a view to a reduction in the assessment. These are special and exceptional attributes of the jurisdiction of a tax appellate authority. These attributes underline the truth that the appellate authority is not different, functionally and substantially, from the assessing authority itself.'
18. I am in complete agreement with the aforesaid observations that functionally and substantially the appellate authority is not different from an assessing authority and this being so, the order which is passed in appeal is, in effect an order of assessment. More so, when the original order passed by the Sales Tax Officer has to be regarded as having merged in the appellate order.
19. It is true that in a number of sections and rules there is reference to the original order being regarded as an order of assessment. This may be so, but as I have already observed, the word 'assessment' may have different connotations in the different parts of the Act. Under section 43(5) the words 'an order of assessment' would include not only the order passed by the Sales Tax Officer, but would also include an order of the appellate authority, or the prescribed authority. The Tribunal, thereforee, could not entertain the appeal filed by the petitioner without the provisions of sub-section (5) of section 43 being complied with. In the present case, the Tribunal gave an opportunity to the petitioner to deposit 50 per cent of the tax demanded and give surety for the balance amount, which has not been availed of by the petitioner. In the absence of the direction being followed, the Tribunal cannot entertain the said appeal.
20. In the writ petition there is also a challenge to the orders passed by the Sales Tax Officer as well as by the Additional Commissioner of Sales Tax. In my opinion, this is not a proper forum to agitate the contentions raised against the correctness of the said orders. The petitioner has an alternative remedy open to it under the Act, namely, filing of an appeal in the Tribunal, and as this remedy has been availed of by the petitioner, this Court should not interfere under article 226 of the Constitution.
21. Before concluding I would like to record a concession of the learned counsel for the respondents. On 7th January, 1988, the recovery of tax was stayed by this Court on the petitioner depositing Rs. 25,000 and furnishing security for the balance amount. It is stated by the learned counsel for the respondents that if this interim order has been complied with by the petitioner, then the appeal will be restored to the file of the Tribunal. I accordingly direct that if the petitioner has complied with the interim orders passed by this Court, then the appeals shall stand restored to the file of the Tribunal, who will dispose of the same on merits. No further relief can be granted to the petitioner.
22. The writ petition accordingly stands disposed of.
23. There will be no orders as to costs.
24. Writ petition disposed of accordingly.