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CASE NO.: Special Leave Petition (civil) 9680  of  1999

PETITIONER: STATE OF HARYANA

       Vs.

RESPONDENT: M/S.MARUTI UDYOG LTD. & ORS.

DATE OF JUDGMENT:       07/09/2000

BENCH: K.T. Thomas & R.P. Sethi.

JUDGMENT:

SETHI,J.

       Leave granted.

L...I...T.......T.......T.......T.......T.......T.......T..J     What  is the ambit and scope of the words "unable to pay the  whole of the amount of tax assessed" used in proviso to Sub-section  (5) of Section 39 of the Haryana General  Sales Tax  Act,  1973,  is  the  question  of  law  requiring  our interpretation  in  this  appeal by special  leave.   It  is contended  on  behalf  of the appellant that  the  inability mentioned in the proviso refers to the financial position of the assessee, whereas the respondents contend that the words "unable" used in the Section is of wider amplitude being not restricted to only financial position of the assess.

   In  order  to  determine  the  rival  contention  it  is necessary  to  have  a resume of the facts  leading  to  the filing  of  the present appeal.  The respondent,  M/s.Maruti Udyog Limited a public limited company (hereinafter referred to  as "the Company"), having its factory at Gurgaon in  the State  of Haryana is engaged in the business of  manufacture and  sale of various types of cars, namely, Maruti 800, Omni and Esteem, etc.  along with their spare parts.  The Company is  a registered dealer under the Haryana General Sales  Tax Act,  1973  (hereinafter referred to as the "Act")  and  the Central  Sales Tax Act, 1956 (hereinafter referred to as the "Central  Act") with the Excise & Taxation Officer, Gurgaon. For the Assessment Year 1986-87, the Company was assessed to tax  by  the  Excise & Taxation Officer,  Gurgaon  vide  his orders  dated  20th  November, 1990 under the  Act  and  the Central  Act.   On  16th March, 1992, the  Deputy  Excise  & Taxation  Commissioner  (I), Gurgaon served a notice on  the Company  proposing to suo motu revise the assessment  orders of  the  Excise  &  Taxation  Officer,  Gurgaon  dated  20th November,  1990 on the grounds that the orders were  illegal and improper for the reasons specified in the notice served. Subsequently,  the  suo motu revised assessment orders  were passed enhancing the gross turnover of the Company by adding excise  duty in the turnover returned by it and assessed  by the  Excise & Taxation Officer, Gurgaon disallowing part  of

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the  amount  of rebate allowed by the  Assessing  Authority. The  turnover  of Omni product was taxed at the rate of  10% instead of 6% treating the same as "Vans".  Aggrieved by the aforesaid  order,  the  Company filed an appeal  before  the Haryana  Sales Tax Tribunal (hereinafter referred to as  the "Tribunal"),  challenging the enhancement of turnover  along with  an  application  for stay of recovery  of  demand  and entertainment  of  appeal without prior payment of  tax  and interest  as  required under Sub-section (5) of Section  39. The  application  was  rejected on 29th June, 1992  and  the Company  given  time to deposit the entire amount  within  a period of one month.

   Feeling  aggrieved,  the  Company  filed  writ  petition No.10088  of 1992 in the High Court of Punjab and Haryana at Chandigarh  which was disposed of on 7.8.1992 directing  the Company  to furnish bank guarantee for the additional demand for entertainment of appeal, instead of depositing the whole amount in terms of Sub-section (5) of Section 39 of the Act. The  appeal  filed  by the Company was disposed  of  by  the Tribunal by remanding the case to Deputy Excise and Taxation Commissioner  for fresh decision after giving the Company  a reasonable  opportunity  of being heard.  The Deputy  Excise and  Taxation Commissioner vide its order dated 29th  March, 1994  again revised the orders and created additional demand of Rs.23,10,995/- under the Act and Rs.78,44,607/- under the Central Act.

   Feeling  aggrieved,  the Company again filed  an  appeal before  the  Tribunal  along with application  for  stay  of recovery of demand and entertainment of appeal without prior demand  of tax and interest.  Such application was  rejected on  7.9.1994  giving the Company time to deposit the  entire demand by 30th November, 1994.  The Company again filed writ petition  No.16537  of  1994 in the High Court  against  the order  of  the  Tribunal   rejecting  its  application.   On 5.12.1994,  the High Court quashed the order of the Tribunal and  directed it to pass a speaking order after hearing  the Company in accordance with law.  The Tribunal vide its order dated  20th  February, 1998 rejected the application of  the Company  relying  upon  a Full Bench Judgment  of  Punjab  & Haryana  High  Court  in   M/s.Emerald  International  Ltd., Ludhiana  v.  State of Punjab & Ors.  [STI (1997) Pb.  & Hn. High  Court  113]  and directed the Company to  deposit  the amount  within  a period of one month.  Not  satisfied,  the Company  again  filed writ petition No.6932 of 1998  in  the High  Court which was allowed on 4.12.1998 vide the judgment impugned in this appeal.

   Before  appreciating the legal position, it is necessary to  refer  to  the  averment  made by  the  Company  in  its application   seeking  stay  of   recovery  of  demand   and entertainment  of  appeal without prior payment of  tax  and interest.   The  only ground taken in that application  was: "That  the  petitioner has not collected any additional  tax from  the  customers and is unable to deposit the amount  of additional demand created by patently illegal orders."

   Section 39 of the Act confers a right of appeal upon the assessee against any original order including an order under Section  40  passed  under  the   Act  and  the  Rules  made thereunder.  Sub-section (5) thereof provides:

   "No  appeal  shall  be entertained unless  it  is  filed within  sixty  days  from  the date of  the  order  appealed

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against  and the appellate authority is satisfied, that  the amount of tax assessed and the penalty and interest, if any, recoverable from the persons has been paid.

   Provided  that the said authority, if satisfied that the person  is  unable  to pay the whole of the  amount  of  tax assessed,  or  the penalty imposed, or the interest due,  he may,  if  the  amount of tax and interest  admitted  by  the appellant  to  be  due  has been paid,  for  reasons  to  be recorded  in writing, entertain the appeal and may stay  the recovery  of the balance amount subject to the furnishing of a  bank  guarantee  or adequate security in  the  prescribed manner to the satisfaction of the appellate authority."

   Provided  further that in the case of an appeal  against any  order  which has to be communicated by the  appropriate authority  to the appellant, the period of sixty days  shall commence  from the date of receipt of the copy of the  order by  the  appellant and in the case of an appeal against  any other order made under this Act, the time spent in obtaining the  certified  copy  of  the order  shall  be  excluded  in computing the period of sixty days."

   There  cannot be any dispute that right of appeal is the creature  of the statute and has to be exercised within  the limits  and according to the procedure provided by law.   It is  filed  for  invoking the powers of a superior  court  to redress  the  error  of court below, if any.   No  right  of appeal can be conferred except by express words.  An appeal, for its maintainability, must have a clear authority of law. Sub-section  (5) of Section 39 of the Act vests a discretion in  the appellate authority to entertain the appeal if it is filed within sixty days and the amount of tax assessed along with  penalty  and  interest, if any, recoverable  from  the persons has been paid.  The aforesaid restriction is subject to  the  proviso  conferring discretion upon  the  appellate authority to dispense with the deposit of the amount only on proof  of the fact that the appellant was unable to pay  the amount.  Before deciding the appeal, the appellate authority affords  an opportunity to the party concerned to either pay the  amount  or  make out a case for the stay  in  terms  of proviso  to Sub-Section (5) of Section 39 of the Act.   Once the conditions specified under sub-section (5) of Section 39 are  complied with, the appeal is born for being disposed of on merits after hearing both the sides.

   Interpreting  the  word "entertain" in relation  to  the filing  of an appeal, as is also the mandate of  Sub-Section (5)  of  Section  39 of the Act this Court  in  Lakshmiratan Engineering  Works Ltd.  vs.  Asstt.Commissioner  (Judicial) I,  Sales Tax, Kanpur Range, Kanpur and another (AIR 1968 SC 488) observed:

   "To  begin  with  it must be noticed  that  the  proviso merely  requires  that the appeal shall not  be  entertained unless  it  is  accompanied  by satisfactory  proof  of  the payment of the amount of tax admitted by the appellant to be due.  A question thus arises what is the meaning of the word ’entertained’  in the context?  Does it mean that no  appeal shall  be  received or filed or does it mean that no  appeal shall   be  admitted  or  heard   and  disposed  of   unless satisfactory  proof is available?  The dictionary meaning of the  word  ’entertain’  was  brought to our  notice  by  the parties,  and both sides agreed that it means either to deal

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with  or  admit to consideration.  We are also of  the  same opinion.   The question, therefore, is at what stage can the appeal  be  said  to be entertained for the purpose  of  the application  of the proviso?  Is it ’entertained’ when it is filed  or  is it ’entertained’ when it is admitted  and  the date  is  fixed for hearing or is it  finally  ’entertained’ when  it is heard and disposed of?  Numerous cases exist  in the  law  reports in which the word entertained  or  similar cognate  expressions  have been interpreted by  the  courts. Some  of them from the Allahabad High Court itself have been brought  to  our notice and we shall deal with them  in  due course.    For  the  present,  we   must  say  that  if  the legislature  intended that the word ’file’ or ’receive’  was to  be  used, there was no difficulty in using those  words. In  some  of the statutes which were brought to  our  notice such....under Order 41 Rule 1 of the Code of Civil Procedure it  is  stated  that  a memorandum shall  not  be  filed  or presented  unless  it  is accompanied etc.  in S.17  of  the Small  Causes Courts Act, the expression is ’at the time  of presenting the application’.  In Section 6 of the Court Fees Act,  the words are ’File’ or ’shall be received’.  It would appear  from this that the legislature was not at a loss for words  if  it had wanted to express itself in such  forceful manner as is now suggested by counsel for the State.  It has used  the  word ’entertain’ and it must be accepted that  it has used it advisedly.  The word has come in for examination in  some  of  the cases of the Allahabad High Court  and  we shall now refer to them.....

   In  our opinion these cases have taken a correct view of the  word  ’entertain’  which according to  dictionary  also means ’admit to consideration’.  It would, therefore, appear that  the  direction to the Court in the proviso to  S.9  is that  the Court shall not proceed to admit to  consideration an  appeal which is not accompanied by satisfactory proof of the payment of the admitted tax.  This will be when the case is  taken  up  by  the Court for the  first  time.   In  the decision  on  which the Assistant Commissioner  relied,  the learned  Chief  Justice  (Desai C.J.) holds that  the  words "accompanied  by"  showed  that something  tangible  had  to accompany  the  memorandum of appeal.  If the memorandum  of appeal  had to be accompanied by satisfactory proof, it  had to  be  in  the  shape of  something  tangible,  because  no tangible  thing can accompany a document like the memorandum of  appeal.   In  our  opinion,   making  ’an  appeal’   the equivalent  to the memorandum of appeal is not sound.   Even under   Order  41  of  the   Code  of  Civil  Procedure  the expressions  "appeal" and "memorandum of appeal" are used to denote  two instinct things.  In Wharton’s Law Lexicon,  the word ’appeal’ is defined as ’the judicial examination of the decision  by  a higher court of the decision of an  inferior court.   The  appeal  is   the  judicial  examination;   the memorandum  of  appeal  contains the grounds  on  which  the judicial examination is invited.  For purposes of limitation and  for  purposes of the rules of the Court it is  required that  a  written memorandum of appeal shall be filed.   When the  proviso speaks of the entertainment of appeal, it means that  the  appeal such as was filed will not be admitted  to consideration  unless there is satisfactory proof  available of the making of the deposit of admitted tax."

   The  object of Sub-section (5) of Section 39 of the  Act is  to ensure the deposit of amount claimed from an assessee in  case  of  an  appeal filed  against  the  tax  demanded.

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However, power is given to the Appellate Tribunal to relieve him   from  the  rigor  of   above  restriction  under   the circumstances  spelt  out  in the proviso of  the  aforesaid Section.  Sub-section (5) regulates the exercise of right of appeal  conferred  upon an assessee under Section 39 of  the Act,  the  object being to keep in balance the right of  the aggrieved  person  and  the  right of the  State  to  speedy recovery  of  tax.  The Full Bench of the Punjab  &  Haryana High  Court  in  M/s.Emerald   International  Ltd.   (supra) considered  the  scope  of  Section 39(5)  of  the  Act  and concluded:

   "As  a  sequal to our discussion on the question of  law referred to us the following conclusions can be deduced:

   (a)  The appeal is a creation of a statute and in case a person  wants  to  avail of the right of appeal, he  has  to accept the conditions imposed by the statute.

   (b)  The right of appeal being a creature of Statute the legislature  could impose conditions for exercise of such  a right.    Neither  there  is  a  constitutional  nor   legal impediment for imposition of such a condition.

   (c)  The right of appeal is neither natural nor inherent attaching  to  a litigation and such a right neither  exists nor can be assumed unless expressly given by the Statute.

   (d)  Even  if,  this  Court was to  interpret  the  bare provisions  of two Statutes, i.e., The Punjab General  Sales Tax  Act  and  the Haryana General Sales Tax Act,  it  could safely  be  held  that  there  is  a  complete  bar  to  the entertainment  of  an  appeal  by  the  Appellate  Authority without  the  payment of tax amount unless the Authority  is satisfied  that  the dealer is unable to pay the  amount  so assessed  and only in the situation the appellate  authority for  the reasons to be recorded in writing can entertain the appeal without deposit of the payment of such amount.

   (e)  Neither on the wording nor in view of the spirit of the  Punjab  and Haryana Acts is possible to hold  that  the Appellate Authority should see the prima facie nature of the case while hearing the stay matter.

   (f) The factum of tax assessed being illegal cannot be a relevant  consideration  for grant of stay by  an  appellate authority.

   (g) The High Court in exercise of its jurisdiction under Article  226  of the Constitution of India in rarest of  the rare  cases in the given facts and circumstances, can  grant stay  and waive the condition of pre-deposit of tax and  the existing  alternative remedy in such circumstances would  be no ground to refuse interference."

   We find substance in the submission of Mr.K.T.S.  Tulsi, Senior  Advocate that the inability mentioned in the proviso refers  to the paying capacity and financial position of the Company  and  its scope cannot be widened to the  extent  as suggested   by   Mr.Nariman.   The   word  "pay"  with   its grammatical  variation  and cognate expressions,  when  used with reference to the tax amount, means "deliver and render" the  amount,  it  indicates the discharge of  an  obligation rather  than an investment of money.  "To pay" is a  generic

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term  and  the  rest of the proviso refers to the  modes  of payment.   It  may  mean the payment of the  amount  of  tax assessed.   The  dictionary meaning of the "payment" is  the performance  of an obligation for the delivery of money.  In legal  contemplation  "payment"  is   the  discharge  of  an obligation  by the delivery of money or its equivalent.  The word  "unable" used in the proviso has been defined to  mean ’not  having  sufficient  strength, power  and  means’.   In relation  to  money,  it means insufficiency of  funds.   It follows,  therefore, that the inability to pay the amount is referable to the paying capacity of the person concerned and not  his  legal  or  actual  liability  to  pay  the  amount demanded.   It has to be kept in mind that the payment  made under  the  proviso  only  enables the  appellate  court  to entertain  the  appeal for adjudication and does not  decide the rights of the parties.

   The  Act  has  been  enacted and  the  right  of  appeal provided  with a dual purpose of protecting the interests of the  assessee  and  also to safeguard the interests  of  the Revenue.  The provision appears to have been made to explore further  sources  for  raising Revenue of the  State.   This Court  in  Assistant  Collector of Central  Excise,  Chandan Nagar,  West Bengal v.  Dunlop India Ltd.  & Ors.  [1985 (1) SCC  260]  oberved that "..No governmental business  or  for that  matter no business of any kind can be run on mere bank guarantees.   Liquid cash is necessary for the running of  a Government as indeed any other enterprise.  We consider that where  matters  of  public revenue are concerned, it  is  of utmost  importance to realise that interim orders ought  not to  be  granted merely because a prima facie case  has  been shown.  More is required."

   In the instant case the prayer was made to grant stay on the  ground  that  "the  petitioner has  not  collected  any additional  tax from the customers and is unable to  deposit the  amount of additional demand created by patently illegal orders".   The  respondent Company nowhere mentioned  to  or referred  its inability to pay the amount on account of  its alleged  financial  difficulties or incapacity to  make  the requisite  payment.   The legality of the additional  demand created  could  not  be  made the  basis  for  insisting  to entertain  the  appeal without prior payment, as that  would have required the determination on the merits of the appeal. Relying  upon the Full Bench judgment of the  jurisdictional court in M/s.Emerald International Ltd.’s case, the Tribunal was  competent in passing the order (Annexure P-8) which was impugned  in the High Court.  The Division Bench of the High Court  was not justified in ignoring the Full Bench judgment and the judgment of another Bench of coordinate jurisdiction while  allowing  the  writ  petition of  the  Company.   The Division  Bench  even  failed to mention  the  circumstances which  justified  the passing of the order for allowing  the writ petition with direction to the Tribunal for disposal of the  appeal  on  furnishing  of the bank  guarantee  by  the Company.   Merely because the Tribunal had insisted upon the payment  of  the amount in terms of proviso to Sub-  section (5)  of  Section 39 of the Act, should not have annoyed  the court  while  granting the relief in exercise of its  powers under  Article 226 of the Constitution.  The impugned  order being  contrary  to  settled  principles of  law  cannot  be sustained and is accordingly set aside.

   Shri  R.F.   Nariman,  learned counsel made a  last  and alternative  plea that in case this Court is not inclined to

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uphold the impugned judgment, a relief may be granted to the respondent  for dispensing with the deposit of the  interest portion at least on the amount of Central sales tax assessed by  the order challenged in the statutory appeal.  Since  no such plea was made before the appellate Tribunal, we are not considering  such  a  plea  now.   However,  we  permit  the respondent to make such a plea before the appellate Tribunal after  depositing  the entire balance amount.  If  any  such plea  is  made  within 15 days after depositing  the  entire balance amount, the appellate Tribunal shall take a decision thereon before considering the statutory appeal on merits.

   The appeal is disposed of accordingly.