# M/S TECNIMONT PVT. LTD. (FORMERLY KNOWN AS TECNIMONT ICB PRIVATE LIMITED) v. STATE OF PUNJAB & OTHERS

- **Citation:** [2019] 12 S.C.R. 229
- **Court:** Supreme Court of India
- **Decided:** 2019-09-18
- **Case number:** Civil Appeal No. 7358 of 2019
- **Bench:** Uday Umesh Lalit, Indu Malhotra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-tecnimont-pvt-ltd-formerly-known-as-tecnimont-icb-private-limited-v-state-33157
- **Pages:** 26

## Headnote

Punjab Value Added Tax Act, 2005:
s. 62(5) - First Appeal - Validity of s. 62(5) - Condition of
25% pre-deposit for hearing first appeal - Reasonableness of -
Held: State is empowered to enact s. 62(5) - Thus, s. 62(5) is legal
and valid and the condition of 25% of pre-deposit is not onerous,
harsh, unreasonable and violative of Article 14 of the Constitution
of India.
s. 62(5) - First Appeal - Condition of 25% pre-deposit for
hearing first appeal - Power of appellate authority to grant relief
against requirement of pre-deposit - Held: It cannot be said that
the first appellate authority in its right to hear appeal has inherent
powers to grant interim protection against imposition of such a
condition for hearing of appeals on merits - First appellate authority
is not empowered to partially or completely waive the condition of
pre-deposit contained therein in the given facts and circumstances
- Any such exercise would make the provision itself unworkable
and render the statutory intendment nugatory - Thus, the view taken
by the High Court as regards waiving of the condition of pre-deposit
is set aside.
Dismissing the appeals filed by the assessees and allowing
those filed by the State, the Court
HELD: 1.1 The High Court rightly held Section 62(5) of
the Punjab Value Added Tax Act, 2005 to be legal and valid and
that the condition of 25% of pre-deposit not to be onerous, harsh,
unreasonable and violative of Article 14 of the Constitution of
India. [Para 17][249-E]
 [2019] 12 S.C.R. 229
229
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SUPREME COURT REPORTS
[2019] 12 S.C.R.
1.2 In the instant case, the High Court found that the
Appellate Authority would have implied power to grant such solace
and for arriving at such conclusion reliance is placed on the
decision of this Court in Kunhi. Kunhi undoubtedly laid down 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. But can such incidental or implied power be
drawn and invoked to grant relief against requirement of predeposit when the statute in clear mandate says - no appeal be
entertained unless 25% of the amount in question is deposited?
Would not any such exercise make the mandate of the provision
of pre-deposit nugatory and meaningless? [Para 18, 19][249-H;
250-A-B]
1.3 If the inherent power the existence of which is
specifically acknowledged by provisions such as Section 151 of
the CPC and Section 482 of the Cr.P.C. is to be read with the
limitation that exercise of such power cannot be undertaken for
doing that which is specifically prohibited, same limitation must
be read into the scope and width of implied power of an appellate
authority under a statute. In any case the principle laid down in
Matajog Dobey case states with clarity that so long as there is no
express inhibition, the implied power can extend to doing all such
acts or employing such means as are reasonably necessary for
such execution. The reliance on the principle laid down in Kunhi
cannot go to the extent, as concluded by the High Court, of
enabling the Appellate Authority to override the limitation
prescribed by the statute and go against the requirement of predeposit. The High Court was clearly in error in holding that even
when no express power has been conferred on the first appellate
authority to pass an order of interim injunction/protection, by
necessary implication and intendment in view of various
pronouncements and legal proposition expounded and in the
interest of justice, it would essentially be held that the power to
grant interim injunction/protection is embedded in Section 62(5)
of the PVAT Act. The first appellate authority is empowered to
partially or completely waive the condition of pre-deposit contained
therein in the given facts and circumstances. Therefore, the power
to grant interim protection/injunction by the first appellate
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authority in appropriate cases in case of undue hardship is l

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M/S TECNIMONT PVT. LTD.
(FORMERLY KNOWN AS TECNIMONT ICB PRIVATE
LIMITED)
v.
STATE OF PUNJAB & OTHERS
(Civil Appeal No. 7358 of 2019)
SEPTEMBER 18, 2019
[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]
Punjab Value Added Tax Act, 2005:
s. 62(5) - First Appeal - Validity of s. 62(5) - Condition of
25% pre-deposit for hearing first appeal - Reasonableness of -
Held: State is empowered to enact s. 62(5) - Thus, s. 62(5) is legal
and valid and the condition of 25% of pre-deposit is not onerous,
harsh, unreasonable and violative of Article 14 of the Constitution
of India.
s. 62(5) - First Appeal - Condition of 25% pre-deposit for
hearing first appeal - Power of appellate authority to grant relief
against requirement of pre-deposit - Held: It cannot be said that
the first appellate authority in its right to hear appeal has inherent
powers to grant interim protection against imposition of such a
condition for hearing of appeals on merits - First appellate authority
is not empowered to partially or completely waive the condition of
pre-deposit contained therein in the given facts and circumstances
- Any such exercise would make the provision itself unworkable
and render the statutory intendment nugatory - Thus, the view taken
by the High Court as regards waiving of the condition of pre-deposit
is set aside.
Dismissing the appeals filed by the assessees and allowing
those filed by the State, the Court
HELD: 1.1 The High Court rightly held Section 62(5) of
the Punjab Value Added Tax Act, 2005 to be legal and valid and
that the condition of 25% of pre-deposit not to be onerous, harsh,
unreasonable and violative of Article 14 of the Constitution of
India. [Para 17][249-E]
 [2019] 12 S.C.R. 229
229
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SUPREME COURT REPORTS
[2019] 12 S.C.R.
1.2 In the instant case, the High Court found that the
Appellate Authority would have implied power to grant such solace
and for arriving at such conclusion reliance is placed on the
decision of this Court in Kunhi. Kunhi undoubtedly laid down 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. But can such incidental or implied power be
drawn and invoked to grant relief against requirement of predeposit when the statute in clear mandate says - no appeal be
entertained unless 25% of the amount in question is deposited?
Would not any such exercise make the mandate of the provision
of pre-deposit nugatory and meaningless? [Para 18, 19][249-H;
250-A-B]
1.3 If the inherent power the existence of which is
specifically acknowledged by provisions such as Section 151 of
the CPC and Section 482 of the Cr.P.C. is to be read with the
limitation that exercise of such power cannot be undertaken for
doing that which is specifically prohibited, same limitation must
be read into the scope and width of implied power of an appellate
authority under a statute. In any case the principle laid down in
Matajog Dobey case states with clarity that so long as there is no
express inhibition, the implied power can extend to doing all such
acts or employing such means as are reasonably necessary for
such execution. The reliance on the principle laid down in Kunhi
cannot go to the extent, as concluded by the High Court, of
enabling the Appellate Authority to override the limitation
prescribed by the statute and go against the requirement of predeposit. The High Court was clearly in error in holding that even
when no express power has been conferred on the first appellate
authority to pass an order of interim injunction/protection, by
necessary implication and intendment in view of various
pronouncements and legal proposition expounded and in the
interest of justice, it would essentially be held that the power to
grant interim injunction/protection is embedded in Section 62(5)
of the PVAT Act. The first appellate authority is empowered to
partially or completely waive the condition of pre-deposit contained
therein in the given facts and circumstances. Therefore, the power
to grant interim protection/injunction by the first appellate
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authority in appropriate cases in case of undue hardship is legal
and valid. [Para 24, 6][238-F-G; 239-A, D; 254-B-D]
1.4 As stated in P. Laxmi Devi and Har Devi Asnani case, in
genuine cases of hardship, recourse would still be open to the
concerned person. However, it would be completely a different
thing to say that the Appellate Authority itself can grant such
relief. As stated in Shyam Kishore's case any such exercise would
make the provision itself unworkable and render the statutory
intendment nugatory. Thus, the view taken by the High Court as
regards the said question is set aside. [Para 25][254-D-F]
Shyam Kishore and others v. Municipal Corporation
of Delhi and another (1993) 1 SCC 22 - relied on.
Commissioner of Income Tax v. Bansi Dhar & Sons and
Others (1986) 157 ITR 665 (SC) : (1986) 1 SCC 523 :
[1985] 3 Suppl. SCR 850; The Anant Mills Co. Ltd. v.
State of Gujarat and Others (1975) 2 SCC 175 :
[1975] 3 SCR 220; Seth Nand Lal and Another v. State
of Haryana and Others 1980 (Supp) SCC 574 : [1980]
SCR 1181; Vijay Prakash D. Mehta and another v.
Collector of Customs (Preventive), Bombay (1988) 4
SCC 402 : [1988] 2 Suppl. SCR 434; Gujarat Agro
Industries Co. Ltd. v. Municipal Corporation of the City
of Ahmedabad and others (1999) 4 SCC 468 : [1999]
2 SCR 895; State of Haryana v. Maruti Udyog Ltd.
and others (2000) 7 SCC 348 : [2000] 3 Suppl. SCR
185; S.E. Graphites Private Limited v. State of
Telangana and Ors. (2019) SCC Online SC 842;
Matajog Dubey v. H. C. Bhari 1955 (2) SCR 925 :
[1955] 2 SCR 925; Vinod Sethi v. Devinder Bajaj (2010)
8 SCC 1 : [2010] 7 SCR 424; Sooraj Devi v. Pyare Lal
and Another (1981) 1 SCC 500 : [1981] 2 SCR 485;
Simrikhia v. Dolley Mukherjee and Chhabi Mukherjee
and Another (1990) 2 SCC 437 : [1990] 1 SCR 788;
State v. K. V. Rajendran and Others (2008) 8 SCC 673
: [2008] 12 SCR 1141; Government of Andhra Pradesh
and others v. P. Laxmi Devi (Smt.) (2008) 4 SCC 720
: [2008] 3 SCR 330; Har Devi Asnani v. State of
M/S TECNIMONT PVT. LTD. (FORMERLY KNOWN AS TECNIMONT ICB
PVT. LTD.) v. STATE OF PUNJAB
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SUPREME COURT REPORTS
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Rajasthan and others (2011) 14 SCC 160 : [2011] 11
SCR 599; Income Tax Officer v. M. K. Mohammed Kunhi
(1969) 2 SCR 65 - referred to
Case Law Reference
[1969] 2 SCR 65
relied on
Para 18, 19
[1985] 3 Suppl. SCR 850
referred to
Para 6
[1975] 3 SCR 220
referred to
Para 8
[1980] SCR 1181
referred to
Para 9
[1988] 2 Suppl. SCR 434
referred to
Para 10
[1992] 1 Suppl. SCR 349
relied on
Para 25
[1999] 2 SCR 895
referred to
Para 10
[2000] 3 Suppl. SCR 185
referred to
Para 10
[2008] 3 SCR 330
relied on
Para 18, 25
[2011] 11 SCR 599
relied on
Para 18, 25
(2019) SCC Online SC 842
referred to
Para 10
[1955] 2 SCR 925
referred to
Para 20
[2010] 7 SCR 424
referred to
Para 22
[1981] 2 SCR 485
referred to
Para 23
[1990] 1 SCR 788
referred to
Para 23
[2008] 12 SCR 1141
referred to
Para 23
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7358
of 2019
With
Civil Appeal Nos. 7359, 7360, 7379, 7373, 7378, 7372, 7382, 7362,
7361, 7371, 7376, 7370, 7369, 7363, 7377, 7364, 7365, 7366, 7375, 7381,
7374, 7367, 7368, 7380, 7383 of 2019.
From the Judgment and Order dated 23.12.2015 of the High Court
of Punjab and Haryana at Chandigarh in Civil Writ Petition No. 26920
of 2013.
 V. Shekhar, Dev Datt Kamat, Sr. Advs., V. Lakshmikumaran,
Ms. Charanya L., Aaditya Bhattacharya, Ms Apeksha Mehta, Victor
Das, Manish Rastogi, Vikas Singh Jangra, Praveen Kumar, Rajiv
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Agnihotri, Ms. Babita Sant, Sandeep Goyal, Pawanshree Agrawal,
Ms. Abhipsa Anamika, Kuldip Singh, Ms. Uttara Babbar, Ms. Bhavana
Duhoon, Manan Bansal, Alok Yadav, Harish Pandey, Ms. Ranjeeta
Rohatgi, Nishanth Patil, Javed Ur Rahman Pai Amit, Priyadarshi
Chaitanyashil, Ms. Sujata Kurdukar, Satinder S. Gulati, Mrs. Kamaldeep
Gulati, Praveen Kumar, Ms. Manju Jetley, Ms. Neha Gulati, Jatinder Pal
Singh, Mayank Pandey, Ms. Sakshi Kakkar, Shakti Singh, Sandeep
Chilana, Jasmeet Singh, Advs. for the appearing parties.
The Judgment of the Court was delivered by
UDAY UMESH LALIT, J.
1. Special leave to appeal granted.
2. These appeals challenge the judgment and order dated
23.12.2015 passed by the High Court of Punjab and Haryana at
Chandigarh in Civil Writ Petition No.26920 of 2013 and all connected
matters; and raise questions about the validity of Section 62(5) of the
Punjab Value Added Tax Act, 2005 (hereinafter referred to as "the PVAT
Act").
3. The text of Section 62 of the PVAT Act is as under:
"62. First Appeal (1) An appeal against every original order
passed under this Act or the rules made thereunder shall lie, -
(a) if the order is made by a Excise and Taxation Officer or
by an officer-in-charge of the information collection centre
or check post or any other officer below the rank of Deputy
Excise and Taxation Commissioner, to the Deputy Excise
and Taxation Commissioner;
(b) if the order is made by the Deputy Excise and Taxation
Commissioner, to the Commissioner;
(c) if the order is made by the Commissioner or any officer
exercising the powers of the Commissioner, to the Tribunal.
(2) An order passed in appeal by a Deputy Excise and Taxation
Commissioner or by the Commissioner or any officer on whom
the powers of the Commissioner are conferred, shall be further
appealable to the Tribunal.
(3) Every order of the Tribunal and subject only to such order, the
order of the Commissioner or any officer exercising the powers
of the Commissioner or the order of the Deputy Excise and
M/S TECNIMONT PVT. LTD. (FORMERLY KNOWN AS TECNIMONT ICB
PVT. LTD.) v. STATE OF PUNJAB
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Taxation Commissioner or of the designated officer, if it was not
challenged in appeal or revision, shall be final.
(4) No appeal shall be entertained, unless it is filed within a period
of thirty days from the date of communication of the order appealed
against.
(5) No appeal shall be entertained, unless such appeal is
accompanied by satisfactory proof of the prior minimum payment
of twenty-five per cent of the total amount of additional demand
created, penalty and interest, if any.
Explanation: For the purposes of this sub-section "additional
demand" means any tax imposed as a result of any order passed
under any of the provisions of this Act or the rules made
thereunder or under the Central Sales Tax Act, 1956 (Act 74 of
1956).
(7) In deciding an appeal, the appellate authority, after affording
an opportunity of being heard to the parties, shall make an order -
(a) affirming or amending or cancelling the assessment or the
order under appeal; or
(b) may pass such order as it deems to be just and proper.
(8) The appellate authority shall pass a speaking order while
deciding an appeal and send copies of the order to the appellant
and the officer whose order was a subject matter of appeal."
4. The questions involved in the matters were framed by the High
Court as under:-
"(a) Whether the State is empowered to enact Section 62(5) of
the PVAT Act?
(b) Whether the condition of 25% pre-deposit for hearing first
appeal is onerous, harsh, unreasonable and, therefore, violative of
Article 14 of the Constitution of India?
(c) Whether the first appellate authority in its right to hear appeal
has inherent powers to grant interim protection against imposition
of such a condition for hearing of appeals on merits?"
5. Since number of petitions were filed challenging the validity of
aforesaid Section 62(5), the High Court had considered CWP No.26920
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of 2013 as the lead matter and the facts pertaining to said petition were
set out by the High Court in detail in para 2 of its decision as under:-
"The petitioner - Punjab State Power Corporation Limited is a
statutory body constituted under the Electricity (Supply) Act, 1948.
It is engaged in generation, distribution and supply of electric
energy/electricity power and other allied material to the consumers
viz. domestic, commercial and industrial consumers in the State
of Punjab and for that purpose, it is governed by the Indian
Electricity Act, 1910 and Electricity (Supply) Act, 1948 as well as
the Rules and Regulations framed thereunder. The petitioner had
been filing returns as prescribed and whatever tax was payable in
terms of Section 15 of the Punjab Value Added Tax, 2005 (in
short, "the PVAT Act") was being deposited. For the year 200708, returns for the period from 1.4.2007 to 31.3.2008 under the
PVAT Act alongwith requisite information in prescribed form had
been filed with the authority. Thereafter, annual statement in Form
VAT 20 had been filed before the last date as prescribed under
section 26 of the PVAT Act and Rule 40(1) of the Punjab Value
Added Tax Rules, 2005 (in short, "the Rules"). Similarly, for the
years 2008-09 and 2009-10, returns were filed in time and annual
statements in Form VAT 20 were also filed before the last dates.
The Excise and Taxation Officer cum Designated Officer (ETO)
- respondent No.2 initiated assessment proceedings for the years
2007-08, 2008-09 and 2009-10 by issuing notice under section 29
of the PVAT Act. The representatives of the petitioner attended
the proceedings and tendered explanation. Assessments had been
framed under the PVAT Act vide orders dated 19.9.2011,
31.10.2012 and 31.11.2012 for the assessment years 2007-08,
2008-09 and 2009-10, Annexures P.1, P.1/A and P.1/B respectively.
The officer made following additions to the taxable turnover
declared in the returns:-
i)
the receipts in respect of charges from the customers as
meter rent had been brought to tax;
ii)
the receipts in respect of charges from the customers as
service line rental had been bought to tax while treating
these as meter rent.
In addition to the above tax, the ETO imposed penalties under
section 53 and interest under section 32 of the PVAT Act, resulting
M/S TECNIMONT PVT. LTD. (FORMERLY KNOWN AS TECNIMONT ICB
PVT. LTD.) v. STATE OF PUNJAB [UDAY UMESH LALIT, J.]
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in raising demand of Rs.26,52,79,716/-, Rs.27,64,73,245/- and
Rs.22,18,31,454/- respectively for the aforesaid years. The
petitioner challenged the order before this court by filing CWP
No.21127 of 2011. Vide order dated 7.11.2012, Annexure P.2,
this Court relegated the petitioner to the remedy of appeal. The
petitioner approached the appellate authority i.e. the Deputy Excise
and Taxation Commissioner (Appeals) by filing appeals under
Section 62 of the PVAT Act for all the aforesaid assessment years.
Alongwith the appeals, applications under Section 62 of the PVAT
Act for stay of recovery of tax and entertainment of the appeals
by dispensing with the requirement of pre-deposits had also been
filed on the ground that financial position of the petitioner was
very tight and there were no liquid assets so as to make payment
of demand involved. Vide order dated 13.2.2013, the appellate
authority directed the petitioner to make deposit of 25% of the
additional demand in the government treasury by 27.2.2013 failing
which the appeals would be dismissed in limine. Aggrieved by
the order, the petitioner filed appeals before the Punjab VAT
Tribunal (in short, "the Tribunal"). It was pleaded by the petitioner
that its financial position was very poor and it was not in a condition
to make payment of 25% and the losses incurred by the petitioner
had been duly explained to the appellate authority. Since the
petitioner had already paid voluntarily tax of Rs.1,97,05,910/-,
Rs.1,88,34,187/- and Rs.1,94,93,597/- for the assessment years in
question, the same should be adjusted against the additional demand
created by the assessing authority. The Tribunal agreed with the
contentions raised by the petitioner to the extent that the amount
of voluntarily tax was required to be adjusted against the additional
demand created by the assessing authority. However, the Tribunal
while disposing of the appeals had observed that the petitioner
was required to deposit 25% of the amount of tax, penalty and
interest in terms of the order in the case of Ahulwalia Contracts
India Pvt. Limited. Aggrieved by the order, the petitioner filed
CWP Nos.17370 of 2013, 17031 and 17053 of 2013 which were
disposed of vide order dated 31.10.2013, Annexure P.8. The
petitioner was allowed to withdraw the writ petition so as to enable
it to challenge the vires of Section 62(5) of the PVAT Act alongwith
challenge to the orders passed by the Tribunal. Hence the instant
writ petitions by the petitioner(s)."
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6. After framing the questions as aforesaid, the High Court
considered the relevant decisions of this Court as well as some of the
High Courts and observed as under:-
"It is, thus, concluded that the State is empowered to enact Section
62(5) of the Act and the said provision is legal and valid. The
condition of 25% pre-deposit for hearing first appeal is not onerous,
harsh, unreasonable and violative of the provisions of Article 14
of the Constitution of India."
While considering question (c), the High Court principally relied
upon the decision of this Court in Income Tax Officer v. M. K.
Mohammed Kunhi1and various judgments of the High Courts which
had followed said decision. The relevant passages from the decision in
Kunhi1 are:-
"The argument advanced on behalf of the Appellant before us
that in the absence of any express provisions in Sections 254 and
255 of the Act relating to stay of recovery during the pendency of
an appeal it must be held that no such power can be exercised by
the Tribunal, suffers from a fundamental infirmity inasmuch as it
assumes and proceeds on the premise that the statute confers
such a power on the Income tax Officer who can give the
necessary relief to an Assessee. The right of appeal is a
substantive right and the questions of fact and law are at large
and are open to review by the appellate tribunal. 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 or 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
1 (1969) 2 SCR 65
M/S TECNIMONT PVT. LTD. (FORMERLY KNOWN AS TECNIMONT ICB
PVT. LTD.) v. STATE OF PUNJAB [UDAY UMESH LALIT, J.]
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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 (Sutherland
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.......
... ... ...
.....In our opinion the Appellate Tribunal must be held to have the
power to grant stay as incidental or ancillary to its appellate
jurisdiction. This is particularly so when Section 220(6) deals
expressly with a situation when an appeal is pending before the
Appellate Assistant Commissioner, but the Act is silent in that
behalf when an appeal is pending before the Appellate Tribunal.
It could well be said that when Section 254 confers appellate
jurisdiction, it impliedly grants the power of doing all such acts, or
employing such means, as are essentially necessary to its execution
and that the statutory power carries with it the duty in proper
cases to make such orders for staying proceedings as will prevent
the appeal if successful from being rendered nugatory."
The High Court also referred to the decision of this Court in
Commissioner of Income Tax v. Bansi Dhar & Sons and Others2.
Finally the High Court concluded :-
"It is, thus, concluded that even when no express power has been
conferred on the first appellate authority to pass an order of interim
injunction/protection, in our opinion, by necessary implication and
intendment in view of various pronouncements and legal proposition
expounded above and in the interest of justice, it would essentially
be held that the power to grant interim injunction/protection is
embedded in Section 62(5) of the PVAT Act. Instead of rushing
to the High Court under Article 226 of the Constitution of India,
the grievance can be remedied at the stage of first appellate
2 (1986) 157 ITR 665 (SC) = (1986) 1 SCC 523
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authority. As a sequel, it would follow that the provisions of Section
62(5) of the PVAT Act are directory in nature meaning thereby
that the first appellate authority is empowered to partially or
completely waive the condition of pre-deposit contained therein
in the given facts and circumstances. It is not to be exercised in
a routine way or as a matter of course in view of the special
nature of taxation and revenue laws. Only when a strong prima
facie case is made out will the first appellate authority consider
whether to grant interim protection/injunction or not. Partial or
complete waiver will be granted only in deserving and appropriate
cases where the first appellate authority is satisfied that the entire
purpose of the appeal will be frustrated or rendered nugatory by
allowing the condition of pre-deposit to continue as a condition
precedent to the hearing of the appeal before it. Therefore, the
power to grant interim protection/injunction by the first appellate
authority in appropriate cases in case of undue hardship is legal
and valid. As a result, question (c) posed is answered accordingly."
7. The appellant in appeal arising out of SLP(C) No.27072 of
2016, though not party to the original proceedings, was granted permission
to challenge the instant decision of the High Court. The appellant as
well as those who are similarly placed are aggrieved by the decision of
the High court as regards first two questions while challenge has been
raised on behalf of the State3 to the conclusion of the High Court in
relation to question (c). All these matters were listed along with petitions
raising challenge with regard to the validity of Section 48(4) of the
Chhattisgarh Value Added Tax Act, 2005. The matters from Chhattisgarh
were disposed of by this Court by order dated 16.04.2019 passed in Writ
Petition (Civil) No.212 of 2014 and connected matters. The provisions
of the PVAT Act being somewhat different, the matters from the State
of Punjab were directed to be dealt with separately. We heard learned
counsel for the parties
8. In The Anant Mills Co. Ltd. v. State of Gujarat and Others4,
a Bench of four Judges of this Court considered inter alia, challenge to
the validity of Section 406 of the Bombay Provincial Municipal
Corporations Act, 1949 as amended by Gujarat Act No.5 of 1970. As
per the relevant provision, no appeal against the ratable value or tax
3 In appeals arising out of SLP(C)Nos. 1742, 1743 and 4383 of 2017
4 (1975) 2 SCC 175
M/S TECNIMONT PVT. LTD. (FORMERLY KNOWN AS TECNIMONT ICB
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would be entertained unless the amount claimed was deposited with the
Commissioner. The proviso to said Section however empowered the
Judge considering the appeal to relieve the appellant from the rigour of
pre-deposit if in the opinion of the Judge it would cause undue hardship
to the appellant. The discussion in that behalf was as under:-
"40. After hearing the learned counsel for the parties, we are
unable to subscribe to the view taken by the High Court. Section
406(2)(e) as amended states that no appeal against a rateable
value or tax fixed or charged under the Act shall be entertained
by the Judge in the case of an appeal against a tax or in the case
of an appeal made against a rateable value after a bill for any
property tax assessed upon such value has been presented to the
appellant, unless the amount claimed from the appellant has been
deposited by him with the Commissioner. According to the proviso
to the above clause, where in any particular case the Judge is of
opinion that the deposit of the amount by the appellant will cause
undue hardship to him, the Judge may in his discretion dispense
with such deposit or part thereof, either unconditionally or subject
to such conditions as he may deem fit. The object of the above
provision apparently is to ensure the deposit of the amount claimed
from an appellant in case he seeks to file an appeal against a tax
or against a rateable value after a bill for any property tax assessed
upon such value has been presented to him. Power at the same
time is given to the appellate Judge to relieve the appellant from
the rigour of the above provision in case the Judge is of the opinion
that it would cause undue hardship to the appellant. The
requirement about the deposit of the amount claimed as a condition
precedent to the entertainment of an appeal which seeks to
challenge the imposition or the quantum of that tax, in our opinion,
has not the effect of nullifying the right of appeal, especially when
we keep in view the fact that discretion is vested in the appellate
Judge to dispense with the compliance of the above requirement.
All that the statutory provision seeks to do is to regulate the exercise
of the right of appeal. The object of the above provision is to keep
in balance the right of appeal, which is conferred upon a person
who is aggrieved with the demand of tax made from him, and the
right of the Corporation to speedy recovery of the tax. The
impugned provision accordingly confers a right of appeal and at
the same time prevents the delay in the payment of the tax. We
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find ourselves unable to accede to the argument that the impugned
provision has the effect of creating a discrimination as is offensive
to the principle of equality enshrined in Article 14 of the
Constitution. It is significant that the right of appeal is conferred
upon all persons who are aggrieved against the determination of
tax or rateable value. The bar created by Section 406(2)(e) to the
entertainment of the appeal by a person who has not deposited
the amount of tax due from him and who is not able to show to the
appellate Judge that the deposit of the amount would cause him
undue hardship arises out of his own omission and default. The
above provision, in our opinion, has not the effect of making
invidious distinction or creating two classes with the object of
meting out differential treatment to them; it only spells out the
consequences flowing from the omission and default of a person
who despite the fact that the deposit of the amount found due
from him would cause him no hardship, declines of his own volition
to deposit that amount. The right of appeal is the creature of a
statute. Without a statutory provision creating such a right the
person aggrieved is not entitled to file an appeal. We fail to
understand as to why the Legislature while granting the right of
appeal cannot impose conditions for the exercise of such right. In
the absence of any special reasons there appears to be no legal or
constitutional impediment to the imposition of such conditions. It
is permissible, for example, to prescribe a condition in criminal
cases that unless a convicted person is released on bail, he must
surrender to custody before his appeal against the sentence of
imprisonment would be entertained. Likewise, it is permissible to
enact a law that no appeal shall lie against an order relating to an
assessment of tax unless the tax had been paid. Such a provision
was on the statute book in Section 30 of the Indian Income Tax
Act, 1922. The proviso to that section provided that ". . . no appeal
shall lie against an order under sub-section (1) of Section 46 unless
the tax had been paid". Such conditions merely regulate the
exercise of the right of appeal so that the same is not abused by a
recalcitrant party and there is no difficulty in the enforcement of
the order appealed against in case the appeal is ultimately dismissed.
It is open to the Legislature to impose an accompanying liability
upon a party upon whom legal right is conferred or to prescribe
conditions for the exercise of the right. Any requirement for the
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discharge of that liability or the fulfilment of that condition in case
the party concerned seeks to avail of the said right is a valid piece
of legislation, and we can discern no contravention of Article 14
in it. A disability or disadvantage arising out of a party's own default
or omission cannot be taken to be tantamount to the creation of
two classes offensive to Article 14 of the Constitution, especially
when that disability or disadvantage operates upon all persons
who make the default or omission."
9. In Seth Nand Lal and Another vs. State of Haryana and
Others5, the Constitution Bench of this Court was called upon to consider
whether the condition of pre-deposit for exercise of right of appeal was
valid or not. A submission was raised that unlike the provision which
was considered in The Anant Mills Co. Ltd.4, the Appellate Authority
was not empowered to relieve the appellant of the requirement of predeposit. The submission was considered thus:-
"22. It is well settled by several decisions of this Court that the
right of appeal is a creature of a statute and there is no reason
why the legislature while granting the right cannot impose conditions
for the exercise of such right so long as the conditions are not so
onerous as to amount to unreasonable restrictions rendering the
right almost illusory (vide : the latest decision in Anant Mills Ltd.
v. State of Gujarat4). Counsel for the appellants, however, urged
that the conditions imposed should be regarded as unreasonably
onerous especially when no discretion has been left with the
appellate or revisional authority to relax or waive the condition or
grant exemption in respect thereof in fit and proper cases and,
therefore, the fetter imposed must be regarded as unconstitutional
and struck down. It is not possible to accept this contention for
more than one reason. In the first place, the object of imposing
the condition is obviously to prevent frivolous appeals and revision
that impede the implementation of the ceiling policy; secondly,
having regard to sub-sections (8) and (9) it is clear that the cash
deposit or bank guarantee is not by way of any exaction but in the
nature of securing mesne profits from the person who is ultimately
found to be in unlawful possession of the land; thirdly, the deposit
or the guarantee is correlated to the landholdings tax (30 times
the tax) which, we are informed, varies in the State of Haryana
5 1980 (Supp) SCC 574
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around a paltry amount of Rs 8 per acre annually; fourthly, the
deposit to be made or bank guarantee to be furnished is confined
to the landholdings tax payable in respect of the disputed area i.e.
the area or part thereof which is declared surplus after leaving
the permissible area to the appellant or petitioner. Having regard
to those aspects, particularly the meagre rate of the annual landtax payable, the fetter imposed on the right of appea1/revision,
even in the absence of a provision conferring discretion on the
appellate/revisional authority to relax or waive the condition, cannot
be regarded as onerous or unreasonable. The challenge to Section
18(7) must, therefore, fail."
10. The principles laid down in The Anant Mills Co. Ltd.4and in
Seth Nand Lal5have consistently been followed, for instance in (i) Vijay
Prakash D. Mehta and another vs. Collector of Customs
(Preventive), Bombay6; (ii) Shyam Kishore and others vs. Municipal
Corporation of Delhi and another7; (iii) Gujarat Agro Industries Co.
Ltd. vs. Municipal Corporation of the City of Ahmedabad and
others8; (iv) State of Haryana vs. Maruti Udyog Ltd. and others9;
(v) Government of Andhra Pradesh and others vs. P. Laxmi Devi
(Smt.)10; (vi) Har Devi Asnani vs. State of Rajasthan and others11;and
(vii) S.E. Graphites Private Limited vs. State of Telangana and
Ors.12.
11. The decisions of this Court can broadly be classified in two
categories, going by the width and extent of the concerned provisions:-
a) Under the first category are the cases where, the concerned
statutory provision, while insisting on pre-deposit, itself gives
discretion to the Appellate Authority to grant relief against the
requirement of pre-deposit if the Appellate Authority is satisfied
that insistence on pre-deposit would cause undue hardship to the
appellant. The decisions in this category are The Anant Mills
Co. Ltd.4, Vijay Prakash D. Mehta6, Gujarat Agro
Industries8and Maruti Udyog9
6 (1988) 4 SCC 402
7 (1993) 1 SCC 22
8 (1999) 4 SCC 468
9 (2000) 7 SCC 348
10 (2008) 4 SCC 720
11 (2011) 14 SCC 160
12 (2019) SCC Online SC 842
M/S TECNIMONT PVT. LTD. (FORMERLY KNOWN AS TECNIMONT ICB
PVT. LTD.) v. STATE OF PUNJAB [UDAY UMESH LALIT, J.]
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b) On the other hand, the decisions in said Seth Nand Lal5, Shyam
Kishore7, P. Laxmi Devi10, Har Devi Asnani11 andS.E.
Graphites12 dealt with cases where the statute did not confer
any such discretion on the Appellate Authority and yet the challenge
to the validity of such provisions was rejected.
12. The decision of the Constitution Bench of this Court in Seth
Nand Lal5 did consider whether the requirement of pre-deposit would
cause undue hardship. However considering that the liability in question
and consequential requirement of pre-deposit was a meagre rate of the
annual land-tax payable, the fetter imposed on the right of appeal/
revision, even in the absence of a provision conferring the discretion
on the appellant/revisional authority to relax or waive the condition
was not found to be onerous or unreasonable.
13. In Shyam Kishore7, the provision that came up for
consideration was Section 170(b) of the Delhi Municipal Corporation
Act, 1957 under which the amount in dispute relating to property tax is
required to be deposited before the appeal can be entertained. Said
Section 170(b) is as under:
"S.170 Conditions of right to appeal - No appeal shall be
heard or determined under Section 169 unless-
(a) .....
(b) the amount, if any, in dispute in the appeal has been deposited
by the appellant in the office of the Corporation."
After considering relevant decisions on the point, a modality was
suggested under which some relief could be granted to the concerned
appellant but finally a Bench of three Judges of this Court suggested
that the solution lay in having the statute itself amended. The discussion
in that behalf was as under:-
"44. ......... The appellate judge's incidental and ancillary powers
should not be curtailed except to the extent specifically precluded
by the statute. We see nothing wrong in interpreting the provision
as permitting the appellate authority to adjourn the hearing of the
appeal thus giving time to the assessee to pay the tax or even
specifically granting time or instalments to enable the assessee to
deposit the disputed tax where the case merits it, so long as it
does not unduly interfere with the appellate court's calendar of
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hearings. His powers, however, should stop short of staying the
recovery of the tax till the disposal of the appeal. We say this
because it is one thing for the judge to adjourn the hearing leaving
it to the assessee to pay up the tax before the adjourned date or
permitting the assessee to pay up the tax, if he can, in accordance
with his directions before the appeal is heard. In doing so, he does
not and cannot injunct the department from recovering the tax, if
they wish to do so. He is only giving a chance to the assessee to
pay up the tax if he wants the appeal to be heard. It is, however,
a totally different thing for the judge to stay the recovery till the
disposal of the appeal; that would result in modifying the language
of the proviso to read: "no appeal shall be disposed of until the
tax is paid". Short of this, however, there is no reason to restrict
the powers unduly; all he has to do is to ensure that the entire tax
in dispute is paid up by the time the appeal is actually heard on its
merits. We would, therefore, read clause (b) of Section 170 only
as a bar to the hearing of the appeal and its disposal on merits and
not as a bar to the entertainment of the appeal itself.
46. We only wish that the statute itself is soon amended to make
this position clear. After all, under the D.M.C. Act, the appellate
authority is a high judicial officer, being the District Judge, and
there is no reason why the Legislature should not trust such a
high judicial officer to exercise his discretion in such a way as to
safeguard the interests of both the Revenue and the assessees.
We think that, until this is done, the provision requires a liberal
interpretation so as to preserve such interests and should not be
so rigidly construed as to warrant the throwing out of an appeal in
limine merely because the tax is not paid before the appeal is
filed."
14. In P. Laxmi Devi10, validity of the proviso to Section 47A of
the Indian Stamp Act, 1899 was in issue. The High Court had held said
provision to be unconstitutional, which view was reversed by this Court.
The proviso to said Section 47A reads:-
"Provided that no reference shall be made by the registering
officer unless an amount equal to fifty per cent of the deficit
duty arrived at by him is deposited by the party concerned."
The relevant discussion was as under:-
M/S TECNIMONT PVT. LTD. (FORMERLY KNOWN AS TECNIMONT ICB
PVT. LTD.) v. STATE OF PUNJAB [UDAY UMESH LALIT, J.]
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"18. In our opinion, there is no violation of Articles 14, 19 or any
other provision of the Constitution by the enactment of Section
47-A as amended by A.P. Amendment Act 8 of 1998. This
amendment was only for plugging the loopholes and for quick
realisation of the stamp duty. Hence it is well within the power of
the State Legislature vide Entry 63 of List II read with Entry 44
of List III of the Seventh Schedule to the Constitution.
19. It is well settled that stamp duty is a tax, and hardship is not
relevant in construing taxing statutes which are to be construed
strictly. As often said, there is no equity in a tax vide CIT v. V.MR.P.
Firm Muar13. If the words used in a taxing statute are clear, one
cannot try to find out the intention and the object of the statute.
Hence the High Court fell in error in trying to go by the supposed
object and intendment of the Stamp Act, and by seeking to find
out the hardship which will be caused to a party by the impugned
amendment of 1998.
20. In Partington v.