JUDGMENT
G.S. Singhvi, J.
1. Having failed to persuade the Haryana Tax Tribunal (for short, “the Tribunal”) to review its earlier order dated March 4, 2004, the petitioner has invoked jurisdiction of this Court under article 226 of the Constitution of India and has prayed for quashing orders dated November 28, 2002 (annexure P2), March 4, 2004 (annexure P3) and November 8, 2004 (annexure P5) passed by the Joint Excise and Taxation Commissioner (Appeals), Faridabad (respondent No. 3) and the Tribunal, respectively.
2. The petitioner is a registered dealer under the Haryana General Sales Tax Act, 1973 (for short, “the State Act”) and the Central Sales Tax Act, 1956. For the assessment year 2000-01, the Excise and Taxation Officer-cum-Assessing Authority, Faridabad, (respondent No. 4) created a demand of Rs. 9,84,517 against the petitioner. The latter challenged the same by filing an appeal under Section 39 of the State Act. It also filed an application under Section 39(5) for stay of the demand. By an order dated November 28, 2004 respondent No. 3 entertained the appeal subject to the condition that the petitioner shall deposit the amount in monthly instalments of Rs. 1,50,000 payable from December, 2002 on or before 25th day of every month. The relevant extract of that order is reproduced below:
The learned advocate has stated that the financial position of the appellant is weak. In his support, he has submitted balance sheet for the year 2001-02 which shows income of Rs. 73,12,219 and gross profit of Rs. 16,08,000 with net profit of Rs. 22,412. The departmental representative has stated that the financial position of the appellant is quite sound. The gross turnover is around Rs. 75 lacs for the year 2000-01. He can very well deposit the amount of additional demand without any adverse effect on his day-to-day business. I feel that though he may not be able to deposit the amount in lumpsum he can very well deposit the amount in instalments. Keeping in view the facts and circumstances of the case, the appeal is entertained subject to the conditions that the appellant shall deposit the amount of additional demand in instalments at the rate of Rs. 1,50,000 per month starting from December, 2002 payable on or before 25th of every month. He shall also submit surety bond for the balance amount along with the deposit of first instalment. The appellant shall meet the abovesaid conditions in time without delay or default. Should the appellant fail for any reason to comply with these directions, his appeal shall be liable to be dismissed in default. Case to come up after compliance.
3. Feeling dissatisfied with the conditional order passed by respondent No. 3, the petitioner filed an appeal before the Tribunal which was disposed of vide order dated March 4, 2004 (annexure P5). The Tribunal directed that the demand created by respondent No. 4 shall be deposited in 12 equated monthly instalments. The operative part of the order passed by the Tribunal reads as under:
Keeping in view that when dealer had raised that turnovers in the year 2000-01 and 2001-02 which must have brought him rich profits, we do not see any reason to stay the recovery of tax demand. We, however, provide him some succour and allow him to deposit the tax demand in 12 equated monthly instalments. First instalment shall be payable on or before 25th of each of subsequent month. With the first instalment, the dealer shall furnish surety bond qua the balance amount. Joint Excise and Taxation Commissioner (Appeals), Faridabad, will hear the appeal after the dealer has deposited six instalments.
4. The petitioner did not comply with the direction given by the Tribunal. Instead, it filed an application under Section 41 of the State Act for review of order dated March 4, 2004 by asserting that its financial condition was too weak and that it had not been able to pay even the statutory dues, like electricity charges, provident fund contribution, contribution towards insurance of the employees under the ESI Scheme and the arrears of rent. The Tribunal dismissed the review application by observing that in the garb of review application, the dealer cannot seek re-hearing of the matter. The Tribunal noted that the petitioner had already enjoyed respite of 2 1/2 years and disposed of the review application by directing that the first instalment of the demand be deposited on or before December 31, 2004 and the surety bond be furnished for the balance amount. The Tribunal further directed that respondent No. 3 shall hear the appeal after deposit of six instalments.
5. Shri Avneesh Jhingan, learned Counsel for the petitioner made strenuous efforts to persuade us to entertain the petitioner’s plea that its financial position was weak and the Tribunal committed an illegality by refusing to stay the recovery of the demand. Shri Jhingan pointed out that even though, the petitioner’s turnover for the years 2000-01 and 2001-02 was Rs. 75,00,000 and Rs. 73,12,219, respectively, for the succeeding years, i.e., 2002-03 and 2003-04, it had come down to Rs. 34,00,000 and Rs. 30,00,000 respectively and argued that the Tribunal committed an error by refusing to entertain its prayer for stay. In the end, he submitted that even if the court is not inclined to interfere with the impugned orders, the time for deposit of the second instalment may be extended.
6. We have given serious thought to the arguments of the learned Counsel. The question whether the High Court can, in exercise of jurisdiction under article 226 of the Constitution of India, interfere with the discretion exercised by the competent authority under Section 39(5) of the State Act is no longer res integra. In State of Haryana v. Maruti Udyog Ltd. , their Lordships of the Supreme Court approved the ratio of the judgment of the Full Bench of this Court in Emerald International Ltd. v. State of Punjab [2001] 122 STC 382 : [1997] STI 113 (P&H) and laid down the following propositions : (see pages 289, 291 and 292)
…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. Section 39(5) 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 Section 39(5) of the Act. Once the conditions specified under Section 39(5) are complied with, the appeal is born for being disposed of on merits after hearing both the sides.
. . . the inability mentioned in the first proviso to Section 39(5) refers to the paying capacity and financial position of the company and its scope cannot be widened to the extent as suggested by the respondent. 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 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 word ‘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 object of Section 39(5) of the Act is to ensure the deposit of amount claimed from an assessee in case of an appeal filed against the tax demanded. However, power is given to the Appellate Tribunal to relieve him from the rigour of the 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 provision appears to have been made to explore further sources for raising the revenue of the State.
7. If the legality and correctness of the impugned orders are examined in the light of the aforementioned judgment, we do not find any difficulty in rejecting the contention of the learned Counsel that the Tribunal had erred in refusing to entertain the petitioner’s prayer for stay. It is an undisputed position that for the years 2000-01 and 2001-02, the turnover of the petitioner was Rs. 75,00,000 and Rs. 73,12,219. This by itself is indicative of the fact that the petitioner’s financial position was sound and it was in a position to pay the additional demand created by respondent No. 4. Therefore, we do not find any valid ground to interfere with the discretion exercised by respondent No. 3 and the Tribunal against the stay of demand created by respondent No. 4.
8. We are further of the view that respondent No. 3 and the Tribunal had virtually shown favour to the petitioner by directing it to deposit the amount of additional demand in instalments and the petitioner has taken undue advantage of the liberal approach adopted by the authorities concerned.
9. In the result, the writ petition is dismissed. However, we direct that if the petitioner pays the second instalment on or before February 15, 2005 then the appeal filed by it against the assessment order shall not be dismissed on the ground of non-compliance with the direction contained in the Tribunal’s order dated November 8, 2004. This will, however, be subject to the condition that the petitioner pays the remaining instalments strictly in accordance with the time schedule prescribed by the Tribunal.