:COMMON ORDER ***** These two writ petitions are directed against the proceedings of the first respondent in RC.No.5163246 (2003-2004) and (2004-2005) respectively, dated 31.07.2008, whereby the petitioner was issued a distraint order for recovery of the tax amount pending disposal of the statutory proceedings initiated under Section 16(D) of the Tamil Nadu General Sales Tax Act (hereinafter referred to as the 'TNGST Act') PLEADINGS:-
2. The petitioner is a dealer in paper products and is an assessee on the file of the first respondent. With respect to the assessment year 2003- 2004, they have reported a total and taxable turnover of Rs.21,30,755/- and after enquiry, an assessment order was passed on 20.03.2004. Subsequently, the assessment was revised under Section 16 of the TNGST Act by redetermining the total and taxable turnover. The said order was challenged by the petitioner before the second respondent invoking Section 16(D) of the TNGST Act.
3. The assessment with respect to 2004-2005 and the consequential proceedings are the subject matter of W.P.(MD).No.2146 of 2009. This issue relates to the assessment year 2004-2005 and the total and taxable turnover was determined on the basis of the accounts submitted by the petitioner and an order of assessment was made on 23.03.2006. Subsequently, the order was revised under Section 16 of the TNGST Act by redetermining the total and taxable turnover. The said order was challenged before the second respondent under Section 16(D) of the TNGST Act.
4. During the pendency of the proceedings before the second respondent, the first respondent has issued a notice of recovery. Aggrieved by the recovery proceedings, the petitioner has filed these two writ petitions.
SUBMISSIONS:-
5. The learned counsel for the petitioner contended that the second respondent has no power to pass an order of stay of recovery of the sales tax during the pendency of the statutory proceedings under Section 16(D) of the TNGST Act and as such, the first respondent should have kept the recovery proceedings in abeyance till the disposal of the statutory proceedings. According to the learned counsel, there is no specific provision in the TNGST Act empowering the Special Committee constituted under Section 16(D) of the TNGST Act to pass interlocutory orders and as such, the petitioner was not in a position to obtain orders of stay of recovery during the pendency of the proceedings. In such circumstances, the petitioner prayed for a stay of recovery during the pendency of the statutory proceedings before the second respondent.
6. The learned Special Government Pleader appearing for the respondents would submit that there is no provision to stay the recovery of the tax amount during the pendency of a proceeding under Section 16(D) of the TNGST Act and as such, the petitioner has to pay the tax due and in the event of setting aside the order by the special committee, it would always possible for the petitioner to claim refund of the tax already paid by them. In such view of the matter, the learned Special Government Pleader justified the proceedings initiated by the first respondent.
ISSUE TO BE DECIDED:-
7. The only question involved in the writ petition is as to whether the special committee constituted under Section 16(D) of the TNGST Act was entitled to pass interlocutory orders during the pendency of the proceedings.
SCHEME OF THE ACT:-
8. The TNGST Act provided for the constitution of a special committee comprising the senior officers of the Government to exercise the powers of revision. Section 16(D) of the TNGST Act would read thus:- "16-D. Constitution of Special Committee.- (1) The Government shall appoint a Special Committee consisting of (1) Secretary to Government, Commercial Taxes Department; (2) Commissioner of Commercial Taxes, (3) Secretary to Government, Finance Department or his nominee.
(2) Notwithstanding anything contained in this Act, the Special Committee may, of its own motion or on application, call for and examine the records of the assessing authority in respect of any proceeding or order under sub-section (2) or (3) of Section 12 or sub-section (1) or (2) of Section 16, if such proceeding or order is passed in violation of the provisions of the Act or rules made thereunder or without following the principles of natural justice, set aside the said proceeding or order and direct the assessing authority to make a fresh assessment and pass fresh proceeding or order in such manner as may be directed :
Provided that such proceeding or order against which any appeal or writ is pending shall not be entertained under this sub-section. (3) The order passed under sub-section (2) shall be final."
9. Section 16(D) of the TNGST Act shows that the special committee was entrusted with a revisional jurisdiction either suo motu or on application by the aggrieved assessee and on a careful consideration of the matter, if the special committee was of the opinion that the proceeding or order impugned before them was passed in violation of the provisions of the Act or rules made thereunder or without following the principles of natural justice, the Committee was empowered to set aside the proceeding and direct the assessing authority to make a fresh assessment. Therefore, wide powers are given to the special committee.
10. When the committee is given such wide powers to correct any other illegality in the order of assessment both suo motu and at the instance of an aggrieved assessee, the question is as to whether such a high power committee could regulate its own procedure and for maintaining the status quo during the pendency of the proceedings.
STATUTORY TRIBUNALS - JURISDICTION:-
11. The Courts and Tribunals are created for the purpose of deciding the lis between the parties. More and more Tribunals are constituted to exercise the jurisdiction hitherto exercised by Courts. The jurisdiction and the conduct of proceedings of the tribunals are prescribed in the Act itself. When the Tribunal was vested with powers to decide the matter and to do justice, it has got the inherent power to pass appropriate orders during the pendency of such proceedings. Merely because the Act constituting the Tribunal does not contain a provision enabling the Tribunal to pass interlocutory orders, like stay or an order for restoration of the matter, it cannot be said that the Tribunal is powerless to act according to the situation, and to pass such interlocutory orders in the interest of justice. The possible misuse of a power is not an answer to deny such inherent powers to the Tribunal. When the Tribunal and other quasi judicial authorities are entitled to decide the dispute, as a necessary corollary, they should be given the power to prescribe their own procedure and to take care of the incidental proceedings which are connected with the substantial proceedings. Such powers are absolutely necessary for the effective functioning of the Tribunals.
12. The salient features of a Tribunal and its power of adjudication was considered by the Supreme Court in A.C.Companies v. P.N.Sharma [AIR 1965 SC 1595], wherein it was held thus:-
"(8). In every State there are administrative bodies or authorities which are required to deal with matters within their jurisdiction in an administrative manner and their decisions are described as administrative decisions. In reaching their administrative decisions, administrative bodies can and often do take into consideration questions of policy. It is not unlikely that even in this process of reaching administrative decisions, the administrative bodies or authorities are required to act fairly and objectively and would in many cases have to follow the principles of natural justice; but the authority to reach decisions conferred on such administrative bodies is clearly distinct and separate from the judicial power conferred on Courts, and the decisions pronounced by administrative bodies are similarly distinct and separate in character from judicial decisions pronounced by Courts. (9) Tribunals which fall within the purview of
Art.136(1) occupy a special position of their own under the scheme of our Constitution. Special matters and questions are entrusted to them for their decision and in that sense, they share with the Courts one common characteristic; both the Courts and the tribunals are "constituted by the State and are invested with judicial as distinguished from purely administrative or executive functions". (vide Durga Shankar Mehta v. Raghuraj Singh, 1955-1 SCR 267 at p.272: (AIR 1954 SC 520 at p.522). They are both adjudicating bodies and they deal with and finally determine disputes between parties which are entrusted to their jurisdiction. The procedure followed by the Courts is regularly prescribed and in discharging their functions and exercising their powers, the Courts have to conform to that procedure. The procedure which the tribunals have to follow may not always be so strictly prescribed, but the approach adopted by both the Courts and the tribunals is substantially the same, and there is no essential difference between the functions that they discharge. As in the case of Courts, so in the case of tribunals, it is the State's inherent judicial power which has been transferred and by virtue of the said power, it is the State's inherent judicial function which they discharge. Judicial functions and judicial powers are one of the essential attributes of a sovereign State, and on considerations of policy, the State transfers its judicial functions and powers mainly to the Courts established by the Constitution; but that does not affect the competence of the State, by appropriate measures, to transfer a part of its judicial powers and functions to tribunals by entrusting to them the task of adjudicating upon special matters and disputes between parties. It is really not possible or even expedient to attempt to describe exhaustively the features which are common to the tribunals and the Courts, and features which are distinct and separate. The basis and the fundamental feature which is common to both the Courts and the tribunals is that they discharge judicial functions and exercise judicial powers which inherently vest in a sovereign State."
13. In Income Tax Officer v. Mohd. Kunhi [AIR 1969 SC 430], the issue before the Supreme Court was as to whether the Income Tax Tribunal was having the power to stay the impugned assessment order during the pendency of the appeal. The Supreme Court found that as per the Income Tax Appellate Tribunal Rules, 1963, there was no power expressly conferred upon the Appellate Tribunal to stay the proceedings relating to recovery of penalty or tax due from an assessee during the pendency of the appeal. On a consideration of the wide powers given to the Tribunal, the Supreme Court held that the Income Tax Tribunal has the authority to pass such incidental orders which are necessary to make the exercise of the power granted to the Tribunal fully effective. In the said factual context, the Supreme Court observed thus:- "4. .........................
Indeed the tribunal has been given very wide powers under Section 254(1) for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the Income-tax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the appellate tribunal is entirely helpless in the matter of stay of recovery the entire purpose of the appeal can be defeated if ultimately the orders of the departmental authorities are set aside. It is difficult to conceive that the legislature should have left the entire matter to the administrative authorities to make such orders as they choose to pass in exercise of unfettered discretion. The assessee, as has been pointed out before, has no right to even move an application when an appeal is pending before the appellate tribunal under Section 220(6) and it is only at the earlier stage of appeal before the Appellate Assistant Commissioner that the statute provides for such a matter being dealt with by the Income-tax Officer. It is a firmly established rule that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective (Southland Statutory Construction, Third Edition, Articles 5401 and 5402). The powers which have been conferred by Section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective."
14. In a recent decision reported in Pareena Swarup vs. Union of India [2008(13) Scale 84], the Supreme Court observed that while creating a new avenue of judicial forums, it is the duty of the Government to see that they are not in breach of basic constitutional scheme of separation of powers and independence of judicial function. In the said decision, the issue before the Supreme Court was regarding the provisions of the Prevention of Money Laundering (Appointment and Conditions of Service of Chairperson and Members of Adjudicating Authorities) Rules 2007, as they were inconsistent with the separation of power and independence of judicial functioning of the Tribunal and thus ultra vires to the Constitution of India. In the said factual context, the Supreme Court observed thus:-
"8...........................
The independence and impartiality which are to be secured not only for the Court but also for Tribunals and their members, though they do not belong to the 'Judicial Service' are entrusted with judicial powers. The safeguards which ensure independence and impartiality are not for promoting personal prestige of the functionary but for preserving and protecting the rights of the citizens and other persons who are subject to the jurisdiction of the Tribunal and for ensuring that such Tribunal will be able to command the confidence of the public."
15. The Supreme Court in Rakesh Wadhawan v. Jagdamba Industrial Corpn. [2002(5) SCC 440], reiterated the legal position with regard to the jurisdiction to pass procedural orders though not specifically conferred by the statute. The consideration in the said decision was regarding the power of the Court to pass interlocutory orders in the absence of a specific provision. The Supreme Court observed thus:-
"28. A statute can never be exhaustive, and therefore, Raghubar Dayal, J. speaking for himself and Wanchoo and Das Gupta, JJ. observed in Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal, AIR at P.532, para 18, "that the legislature is incapable of contemplating all the possible circumstances which may arise in future litigation and consequently for providing the procedure for them". Sometimes when a difficult situation arises it may demand such directions being made as would pragmatically meet the needs of the situation and resort can be had to the inherent powers of the court, if need be. Krishna Iyer, J. in Newabganj Sugar Mills Co. Ltd. v. Union of India held (at SCC p.123, para 6) "the difficulty we face here cannot force us to abandon the inherent powers of the Court to do", and he quoted Jim R.Carrigan to say: "The inherent power has its roots in necessity and its breadth is coextensive with the necessity." H.R.Khanna, J. observed in Jaipur Mineral Development Syndicate v. CIT. (SCC p.511, para 5).
"The courts have power, in the absence of any express or implied prohibition, to pass an order as may be necessary for the ends of justice or to prevent the abuse of the process of the court. To hold otherwise would result in quite a number of cases in gross miscarriage of justice." Jurisdiction to pass procedural orders though not specifically contemplated by statute can be spelled out from what was said by Hidayatullah, J. (as he then was) in Mahanth Ram Das v. Ganga Das when orders are "in essence in terrorem, so that dilatory litigants might put themselves in order and avoid delay" the courts are not powerless to meet a situation for "such orders are not like the law of the Medes and the Persians" (AIR p.883, para 5)."
16. When the special Committee exercises powers of such wide amplitude in revenue matters, it goes without saying that such a high powered committee is also having the jurisdiction to pass procedural orders which includes the power to stay the impugned order, during the pendency of the proceedings. There is no express power required for doing justice in such matters. When the special committee is having the power to set aside an assessment order and direct the assessing authority to make a fresh assessment and also to indicate the matters to be considered during the process of such fresh assessment, the said authority is also having the power to decide about the interim arrangement with regard to the order impugned before the committee. It is always possible for the special committee to pass such interlocutory orders in the interest of both revenue and the assessee. No specific power is necessary to pass such procedural orders, as it was inherent in the very constitution of the committee. The fact that the order of the special committee in exercise of the power under Section 16(D) of the TNGST Act is final as provided under Section 16(D)(3) shows the extent of powers of the committee in the matter of assessment proceedings.
17. The TNGST Act is a self-contained code, which makes provision for constitution of different authorities for the purpose of assessment and for challenging the assessment orders. The Act provides for appeals and revisions both before the statutory authorities as well as before the Special Tribunal. The assessee is entitled to file an appeal before the Tribunal, only after exhausting the remedy of appeal before the appellate authority. However, that is not the case of a revision before the special committee. The committee is entitled to exercise the power of revision, even in cases wherein there was no statutory appeal preferred by the assessee against the order of assessment.
18. While exercising the revisional jurisdiction under Section 16(D) of the TNGST Act, the special committee is well within their powers to pass such interlocutory orders, like stay of recovery during the pendency of the appeal, order for restoration of the revision, which was dismissed for default and such other incidental matters. However, such interlocutory powers are not unlimited. When there is a power vested with a statutory authority, the same has to be exercised only within the four corners of the statute and the exercise of powers must be for rendering justice. While exercising the inherent jurisdiction, the special committee should record reasons which made them to pass such interlocutory orders during the pendency of the statutory proceedings. In case reasons are supplemented in the order, it would avoid an arbitrary exercise of power. The order should speak itself. When a challenge is made in respect of such orders, it would enable the Court to ascertain the reasons which actually weighed with the authority in taking a decision.
19. Therefore, I am of the opinion that the second respondent has got the inherent powers to entertain an application to pass such interlocutory orders during the pendency of the statutory revision. In such circumstances, I am of the view that the petitioner should be permitted to make an application before the second respondent to stay the further proceedings during the pendency of the statutory revision.
20. Accordingly, the petitioner is granted liberty to file a stay petition before the second respondent and in the event of filing any such application within a period of two weeks from the date of receipt of a copy of this order, the same shall be considered by the second respondent on merits and as per law within a period of four weeks thereafter.
21. The Writ Petitions are disposed of with the above direction. Consequently, the connected miscellaneous petitions are closed. No costs.
SML To
1.The Deputy Commercial Tax Officer, Madurai Rural (South) Circle, Madurai.
2.The Special Committee, O/o.Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai.