National Agricultural Co-operative Marketing Federation of India Ltd. Vs. State of Haryana and ors. - Court Judgment

Excerpt:
sales tax - assessment - quashing of - speaking order - section 44 of haryana general sales tax act, 1973 - petitioner is co-operative society - respondents created additional demand in respect of assessment - petitioner filed appeal - appeal allowed and order of assessment quashed - matter remanded back to respondents - petitioner applied for refund of amount deposited - refund of petitioner was withheld by respondents - hence, present petition - held, respondents has recorded finding granting approval to withhold refund without observing any reason as to how recovery is likely to be affected if refund is allowed - provisions of section 44 of act were not complied with by respondents - order is totally laconic as it does not give any reasons - there is not even whisper of material forming basis of satisfaction by respondents - it is well-settled that order cannot be justified on grounds other than one given in order itself - petition allowed - hindu law -- custom: [vijender jain, c.j., m.m. kumar, jasbir singh, rajive bhalla & rajesh bindal, jj] alienation of ancestral property - punjab and haryana - held, in respect of state of punjab by virtue of punjab amendment act, 1973 there is a complete bar to contest any alienation of ancestral or non-ancestral immovable property or appointment of an heir to such property on ground that such alienation or appointment was contrary to custom. in punjab the property in hands of a successor has to be treated as coparcenary property and its alienation has to be governed by hindu law except to the extent it is regulated by sections 6 and 30 of the hindu succession act. in haryana, property in hands of successor has to be treated as coparcenary property as well as ancestral property. parties can fall back upon hindu law in case they fail to establish that rule of decision is custom. therefore, in haryana both under hindu law and the customary law, the alienation would be open to challenge. custom was given precedent over uncodified hindu law presumably for reason that custom has been consistently replacing the hindu law. however, it was soon realized that ancestral immovable property, which ordinarily held to be inalienable amongst jats of punjab by virtue of custom except for necessity, no limitation was placed on degrees of collateral, eligible to contest such alienation. it was, therefore, felt necessary to engraft certain restriction on degrees of collateral, eligible to contest an alienation, which under the custom itself was not limited. accordingly, the punjab custom (power to contest) act, 1920 (act no.2 of 1920) was enacted. the hindu succession act was extended to the state of punjab. act 2 of punjab act defined expression alienation to include any testamentary disposition of property and appointment of an heir was to include any adoption made or purporting to be made according to custom. a further provision was made by section 3 that hindu succession act was to apply only in respect of alienation of immovable property or appointment of heirs made by persons who in regard to such alienation or appointment were governed by custom. whereas section 4 declared that hindu succession act was not to affect any right to contest any alienation or appointment of an heir made before the date on which the succession act was to come into force. in other words, act, no.2 of 1920 was not to affect alienation or appointments of heir made before date on which it came into force. it also preserved the rights of any alienation or appointment of an heir made by a family. after section 7 was inserted in act of 1920 by the punjab amendment act of 1973 right of contest being contrary to custom had been totally effaced and taken away. therefore, no person has any right to contest any alienation of immovable property whether ancestral or non-ancestral on ground of being contrary to custom after january 23, 1973. in haryana, the situation as enunciated by act no.2 of 1920 continued to prevail in respect of alienation because no reforms parallel to punjab as brought by amendment act of 1973, had been enacted although right to pre-emption has been substantially abolished in haryana also. no steps even have been taken in that regard. therefore, situation in haryana have to be regarded as it existed under act no. 2 of 1920. hindu succession act,1956[c.a.no.30/1956] -- sections 6 & 30: [vijender jain, c.j., m.m.kumar, jasbir singh, rajive bhalla & rajesh bindal, jj] alienation of coparcenary property - law laid down by full bench in joginder singh kundha singh v kehar singh dasaundha singh [air 1965 punjab 407] and pritam singh v assistant controller of estate duty, patiala [1976 punj lr 342] -whether there is any conflict? - held, the basic controversy in the full bench decision of joginder singhs case was regarding constitutional validity of section 14 of hindu succession act and as to whether it infringes article 14 of constitution. it was held that the estate held by male and limitation on his power of alienation were in no way removed and the reversioners were not debarred from challenging such alienations. the full bench held that section 14 of hindu succession act postulates that estate held by a hindu female before enforcement of succession act either by inheritance or otherwise, was enlarged and on date of enforcement of succession act, she became a full owner. likewise, if she has inherited any estate after the commencement of the act, she was to be regarded as absolute owner rather than a limited owner. consequently, the limitations on power of alienation automatically vanished. this was the necessary result of the provisions made in section 14 of the act. the full bench further held that in respect of male proprietors, no corresponding provision was made either enlarging their estate in ancestral property or enlarging their power of alienation over property inherited by them. however, it noticed section 30 and observed that it only deals with power of his share in coparcenary property by will, which prior to enforcement of the act, he had no right to do. the only provision made in respect of male proprietor regarding alienation of property was his power of alienation by will. in so far as persons governed by custom are concerned, they continued to be governed by the restriction on the power of alienation of a male holder as existed before enforcement of the act. likewise, other restriction on alienation other than disposal by will also continued. the full bench, thus, recognized the superior right of hindu females by virtue of section 14 and upheld the provision as intra vires. the argument that reversioners have ceased to exist after enactment of provisions of section 14 of succession act, was rejected as there was no provision pointed out to that effect. the proposition laid down by the full bench in pritam singhs case was that the hindu succession act has not abolished joint hindu family with respect to rights of those who were members of mitakshara coparcenary, except in the manner and to the extent mentioned in sections 6 and 30 of the act, this statement should also imply, though it does not say so expressly, the succession act to this extent does not affect the rights of the members governed by dayabhaga coparcenary. the full bench in pritam singh;s case expressly noticed the judgment of earlier full bench in joginder singhs case but construed the same as irrelevant by observing that it dealt with the power of alienation of a person governed by customary law and constitutional validity of section 14 of hindu succession act. thus there is no real conflict between the two full bench judgments. both the full bench judgments have been delivered on the assumption that joginder singhs case dealt with question of alienation whereas pritam singhs case had decided the question concerning succession. even on fact in joginder singhs case the issue was validity of alienation by consent decree by a father to his two sons, which was challenged by third son, whereas in pritam singhs case the question of nature of property in hands of sons on death of their father had arisen for purposes of assessment of estate duty. in pritam singhs case the property in the hands of the sons was held to be coparcenary property and only 1/3rd of property belonging to deceased father was considered eligible for estate duty. therefore, there was no question of alienation in pritam singhs case. - the commissioner has failed to record any reason as to how the recovery is likely to be affected. the state authorities would be better advised if the aforesaid rationale is kept in view. 11. the argument of the learned state counsel referring to the stand taken by the society in its application filed for waiving payment of assessed amount by the assessing authority and hearing of the appeal without complying with the requirement of deposit of assessed amount has failed to impress us because the aforesaid reasons firstly do not constitute the basis of the impugned order dated april 28, 2006 (p8). it is well-settled that an order cannot be justified on the grounds other than the one given in the order itself.m.m. kumar, j.1. the instant petition filed under article 226 of the constitution prays for quashing order dated april 28, 2006 (p8) passed by the excise and taxation commissioner, haryana - respondent no. 2 whereby he has accorded approval to withhold the refund of rs. 4,32,21,206 due to the petitioner.2. brief facts of the case are that the petitioner is a co-operative society (for short, 'society'). it has turnover of rs. 6,38,137.68 for the year 2006-07 and a turnover of rs. 4,70,665 for the year 2007-08. a perusal of details of turnover of ten years is given in the annual report, which is annexure p9. the assessment for the year 2002-2003 in respect of the society was finalised on february 27, 2004 and the assessing authority created an additional demand of rs. 1,49,69,527, under the haryana general sales tax act, 1973 (for brevity, 'the act') and rs. 2,82,51,680, under the central sales tax act, 1956 (for brevity, 'the cst act'). the demand was created by rejecting the rd sales (sales made to registered dealers) and certain additions were also made to gross turnover. the first appellate authority accepted the appeal on july 28, 2005 by quashing the assessment order and remanded the matter to the assessing authority with the directions to dispose of the same within three months. on november 29, 2005, the society applied for refund of the amount deposited. they also appeared on various dates in remand proceedings and furnished various declaration forms and documents., etc., as and when asked for by the department. however, the proceedings are still going on. they issued a reminder on february 8, 2006 for refund. on december 13, 2006, the society was informed by the excise and taxation officer that its refund has been withheld but no order was supplied. a copy of the order was, however supplied to the petitioner on october 27, 2008.3. in response to the notice of motion, the respondents have filed the reply. the prayer for refund has been opposed on the ground that the petitioner in their application for exemption from payment of assessed amount, filed along with the appeal had pleaded financial stringency. it has been asserted that the applicant was facing financial problem and that cash in hand was hardly sufficient to meet the day-to-day business of the petitioner. on that basis, the petitioner had requested for entertaining the appeal without deposit of the assessed amount. the application was rejected on march 18, 2004 by the appellate authority which was challenged before the haryana sales tax tribunal (for brevity, 'the tribunal'). the tribunal vide its order dated may 12, 2004 allowed the petitioner to pay the amount by depositing eight equal monthly instalments. the first instalment was to be paid on or before june 30, 2004. the order of the tribunal was further challenged by the society before this court in cwp nos. 8887 of 2004 and 8888 of 2004. the financial position of the petitioner was pleaded to be extremely precarious. the writ petitions were dismissed on september 9, 2004. even the instalments were not paid by the petitioner as per schedule.4. it is pertinent to notice that the impugned order dated april 28, 2006 (p8) does not record any such reasons which have now been pleaded in the written statement. it would be profitable to read the impugned order, which is as under:whereas refund amounting to rs. 4,32,21,206 (rupees four crores thirty two lacs twenty one thousand two hundred and six only) is due to m/s national agricultural cooperative marketing federation of india ltd. ambala.and whereas the proceedings under the haryana general sales tax act, 1973 are still pending against the dealer.and whereas it has been certified that recovery of this amount will be adversely affected later on, if the refund is allowed.now, therefore, i, h.s. rana ias, excise and taxation commissioner, haryana chandigarh in exercise of the powers conferred under section 44 of the haryana general sales tax act, 1973 do hereby accord approval to withholding of refund of rs. 4,32,21,206 (rupees four crores thirty two lacs twenty one thousand two hundred and six only) due to m/s. national agricultural co-operative marketing federation of india ltd. ambala.5. we have heard the learned counsel for the parties and have perused the record with their able assistance. the primary question which needs determination is whether the impugned order dated april 28, 2006'(p8) is in accordance with the requirements of law. in order to determine the aforesaid issue it would be necessary to refer to the provisions of section 44 of the act, which reads thus:44. power to withhold refund. - (1) where an order giving rise to a refund is the subject-matter of an appeal or further proceedings or where any other proceedings under this act are pending, and the assessing authority or a person appointed to assist the commissioner under sub-section (1) of section 3, as the case may be, is of the opinion that the grant of the refund is likely to adversely affect the recovery, he may withhold the refund and refer the case to the commissioner for order. the orders passed by the commissioner shall be final.(2) the period during which the refund remains so withheld shall be excluded for the purpose of calculation of interest under section 43.6. a perusal of the aforesaid provision shows that during the pendency of appeal or any other proceedings pending under the act, the commissioner may order withholding of refund by recording opinion that the grant of refund is likely to adversely affect the recovery.7. a perusal of impugned order dated april 28, 2006 (p8) shows that it has recorded a finding granting approval to withhold refund of rs. 4,32,21,206 by observing that recovery of the aforesaid amount would be adversely affected later on if the refund is allowed. the commissioner has failed to record any reason as to how the recovery is likely to be affected. the order is totally laconic as it does not give any reasons. there is not even a whisper of the material forming basis of aforesaid satisfaction by the commissioner. the impugned order is wholly unsustainable in the eyes of law and is, thus, liable to be set aside.8. we are further of the view that the 'society' made categorical averments in para 12 of the petition by asserting that their total turnover for the year 2006-07 was rs. 6,38,137.68 lakhs. the turnover for the year 2007-08 is also asserted to be rs. 4,70,665 lakhs in the annual report (p9). the total turnover for the last ten years has been given, which is also reproduced in the following table:turnover during the last 10 years---------------------------------------------------------------year total turnover---------------------------------------------------------------1998-1999 0---------------------------------------------------------------1999-2000 0---------------------------------------------------------------2000-2001 0---------------------------------------------------------------2001-2002 0---------------------------------------------------------------2002-2003 2,31,182.53---------------------------------------------------------------2003-2004 1,41,213.75---------------------------------------------------------------2004-2005 0---------------------------------------------------------------2005-2006 3,18,617.34---------------------------------------------------------------2006-2007 6,38,137.68---------------------------------------------------------------2007-2008 4,70,665---------------------------------------------------------------9. the aforesaid averments made by the society has not been controverted and the only defence put forward is that the society had expressed inability to make payment of assessed amount in their application filed along with the appeal before the remand order was passed.10. in similar circumstances this court has quashed order withholding refund in the case of sadhu overseas v. state of haryana : [2008] 12 vst 19 (p&h;) : [2007] 30 pht 582 and ratti woollen mills v. state of punjab : [2007] 9 vst 105 (p&h;) : [2007] 29 pht 566. it may be pertinent to point out that the order withholding refund of huge amount running into crores should not be mechanically passed and the authorities working under the act are required to be sensitized that the entrepreneurs who have limited liquidity are likely to suffer in their business enterprise. if the business enterprise comes to a standstill it does not advance the interest of the revenue because the state would stop earning revenue when the business of an entrepreneur comes to a grinding halt. the state authorities would be better advised if the aforesaid rationale is kept in view. while passing order withholding refund a balanced approach has to be adopted.11. the argument of the learned state counsel referring to the stand taken by the society in its application filed for waiving payment of assessed amount by the assessing authority and hearing of the appeal without complying with the requirement of deposit of assessed amount has failed to impress us because the aforesaid reasons firstly do not constitute the basis of the impugned order dated april 28, 2006 (p8). it is well-settled that an order cannot be justified on the grounds other than the one given in the order itself. in that regard reliance may be placed on the judgment of the honourable supreme court in the case of mohinder singh gill v. chief election commissioner : [1978] 1 scc 405. moreover, the aforesaid claim of financial stringency made by the society was not accepted either by the appellate authority or by the tribunal as has already been noticed in the preceding paras. even this court has rejected their claim pleading financial stringency. therefore, we find that the argument raised on behalf of the respondent-state is wholly untenable and we have no hesitation to reject the same.12. for the reasons aforementioned this petition succeeds. the impugned order dated april 28, 2006 (p8) is set aside. the respondents are directed to refund a sum of rs. 4,32,21,206 in respect of assessment year 2002-03 along with interest to the assessee-society. the assessee-society is further held entitled to statutory interest on delayed payment of refund in respect of assessment year 2002-03. the interest shall be calculated at the statutory rate of 12 per cent per annum in respect of delay for the first month of delay and at the rate of 18 per cent per annum in respect of delay caused for the subsequent months. however, the society shall co-operate in finalisation of the assessment proceedings which are pending before the assessing authority after the remand by the appellate authority.