The Delhi High Court has admitted the appeals preferred under Section 81 of the Delhi Sales Tax Act and held that appeals preferred after 1 April 2005 cannot be subject to rigours of procedure under Sales Tax Act.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that the obligation to petition the Tribunal for drawal of a statement of case cannot be construed as a liability accrued or incurred. It was merely a matter of procedure and which did not impair the right of appeal. This more so since a referral by the Tribunal to draw a statement of case was subject to review and correction.
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Background – Sales Tax Act
The respondent/department take a preliminary objection with respect to maintainability, asserting that the appeals would have to follow the procedure as contemplated under Section 45 of the Delhi Sales Tax Act, 1975, a statute which now stands repealed by virtue of the Delhi Value Added Tax Act, 2004 and which came to be promulgated on 01 April 2005.
The department contended that in light of the provisions enshrined in Section 106 of the DVAT Act, the appellants would have been legally obliged to approach the Appellate Tribunal for drawing up a ‘statement of case’ for the consideration of the Court and that the appeals which have come to be directly instituted would not be maintainable.
The department submitted that since these appeals pertain to a tax period prior to 01 April 2005, it is the stipulated procedure enshrined in Section 45 of the DST Act which would consequently apply and be liable to be adhered to.
Relevant Provisions
As per Section 45 of the DST Act, a person desirous of challenging an order passed by the Appellate Tribunal, was required to submit a request to that Tribunal to refer a question of law arising out of such order for the consideration of the High Court. In terms of Section 45(2), if the Appellate Tribunal were to refuse to state the case on forming the opinion that no question of law arose, both the dealer as well as the Commissioner stood enabled to apply to the High Court against such refusal.
The hierarchy of remedies as created under the DST Act, insofar as appeals are concerned, is essentially replicated and re-enacted by the DVAT Act. Under the DVAT Act, the assessee stands accorded the remedy of preferring an appeal to the Appellate Tribunal which stands constituted.
The DVAT Act further enables an aggrieved person to approach the High Court by way of an appeal in respect of every order passed by the Appellate Tribunal. The appeal to the High Court, however, is subject to the appellant establishing that the case involves a ‘substantial question of law’.
The fundamental difference between the two enactments, insofar as appeals to the High Court are concerned, lies in the fact that a person aggrieved, now and post the promulgation of the DVAT Act, is entitled to approach the High Court directly as opposed to petitioning the Tribunal for drawing up a ‘statement of case’ and referring the same to the Court.
The DVAT Act is a cognate statute, similar to the DST Act. The DVAT Act, as its Preamble itself states, constitutes a consolidating legislation relating to a levy of tax on the sale of goods, tax on the transfer of property in goods, tax on the transfer of a right to use and allied subjects. The tax which the DST Act sought to impose also pertained to sale of goods and the regulation of transactions in relation thereto.
The DVAT Act thus would appear to be the re- enactment of a similar legislation pertaining to the levy of a tax on the sale of goods and other transactions made subject to the impost created in terms thereof.
Conclusion
The court held that the remedy of appeal was preserved by virtue of the savings clauses forming part of Section 106. Both the respondent as well as the appellants had the right to prefer an appeal against an order passed by the Appellate Tribunal if it were recognized to give rise to a question of law under the DST Act.
The court stated that there is thus no substantial modification or variation of the right of appeal which existed. Section 81 of the DVAT Act merely changes the procedure liable to be followed for the purposes of petitioning the High Court against an order passed by the Tribunal. That provision cannot possibly be construed or interpreted as regulating a matter of procedure. It is concerned with preservation of positive rights which had accrued as well as liabilities incurred or accrued.
The court while listing the matter on 17.12.2024, stated that the appeals as instituted in accordance with Section 81 of the DVAT are, consequently, held to be maintainable.
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Case Details
Case Title: M/S Calcom Electronics Ltd. Vs The Commissioner, VAT
Case No.: ST.APPL. 3/2023
Date: 06/11/2024
Counsel For Appellant: Santanu Kanengo
Counsel For Respondent: Rajeev Aggarwal
