C.A. Akthar & Company vs Commercial Tax Officer, Vepery … on 17 March, 1986

Madras High Court
C.A. Akthar & Company vs Commercial Tax Officer, Vepery … on 17 March, 1986
Equivalent citations: 1987 64 STC 70 Mad
Author: Shanmukham
Bench: P Shanmugam


Shanmukham, J.

1. A question of great importance common to all these writ petitions falls for determination in these proceedings.

2. Pending the appeal before the Appellate Assistant Commissioner of Commercial Taxes, against the assessment order passed by the Commercial Tax Officer, every one of the petitioners applied for stay of collection of the disputed tax on the security of immovable property. But the Appellate Assistant Commissioner by his “non-speaking order” directed every one of the petitioners to pay the disputed tax in instalments. It is this order that is sought to be quashed by every one of the petitioners in separate petitions.

3. It is common ground that the Appellate Assistant Commissioner is vested with the power to grant stay and that such a power is discretionary. The argument of the learned counsel for the petitioners is that even the discretionary power has to be exercised judiciously and that in view of the non-speaking order, it is obvious that such discretion was exercised arbitrarily, but not judiciously. The above line of argument finds support from a series of judicial pronouncements both reported and unreported. They are :

(1) [1973] 32 STC 464 (Mad.) (Chesebrough Pond’s Inc. v. Appellate Assistant Commissioner)

(2) [1985] 58 STC 137 (Mad.) (Dolton Printers Private Limited v. State of Tamil Nadu)

(3) (R. P. David v. Agricultural Income-tax Officer, Madras)

(4) [1964] 15 STC 57 (Mys) (Muthuvalli L. Hajee Ahamed Hussain Sahib & Co. v. State of Mysore)

and unreported decision in W.P. Nos. 10322 and 10323 of 1984 dated 26th October, 1984 (S. S. S. Ganesan v. Deputy Commercial Tax Officer, Bodinayakanur), W.P. No. 1341 of 1985 dated 21st February, 1985 (S. Ramachandran Chettiar and Sons v. Deputy Commercial Tax Officer IV (Main), Madurai), W.P. No. 2168 of 1985 dated 26th April, 1985 (New Shanmuga Traders v. Tamil Nadu Sales Tax Appellate Tribunal), W.P. No. 4257 of 1985 dated 26th April, 1985 (K. P. R. Rajeswari v. Commercial Tax Officer), W.P. No. 8481 to 8483 of 1985 dated 13th August, 1985 (Panayappan Leather Industries, represented by its Partner S. M. Angammai v. Commercial Tax Officer), W.P. Nos. 8861 to 8865 of 1985 dated 22nd August, 1985 (V. N. Surulivel Nadar & Brothers, represented by its Partner N. Pandian, Bodinayakanur v. Deputy Commercial Tax Officer, Bodinayakanur), W.P. No. 9515 of 1985 dated 10th September, 1985 (Popular Automobiles represented by its Managing Partner K. P. Thimoth v. Commercial Tax Officer), W.P. Nos. 11968 to 11971 of 1985 dated 19th November, 1985 (A. N. Govinda Pillai and N. J. Mani Chettiar v. Deputy Commercial Tax Officer, Kanchipuram (North), W.P. No. 13134 of 1985 dated 18th December, 1985 (Essar Glass Works (P.) Ltd. represented by its Chief Executive R. Ravindranathan v. Commercial Tax Officer) and W.P. No. 1929 of 1986 dated 10th March, 1986 (K. Lakshmanaswamy Chettiar & Sons v. Appellate Assistant Commissioner (Commercial Taxes), Cuddalore). The last of these unreported decisions was rendered by me.

4. It is at once convenient to refer to the principle of a larger Bench binding on the lesser Bench and also of a decision of equal Bench being respected by such constituted Bench. In Mahadeolal v. Administrator General of West Bengal , the principle is enunciated thus :

“A Division Bench should not take upon itself to say that an earlier Division Bench ruling of the same High Court cited before it, is wrong, but should follow the usual procedure in case of difference of opinion with an earlier decision, of referring the question to a larger Bench. Judicial decorum, no less than legal propriety forms the basis of judicial procedure. Similarly, a single Judge differing from a decision of another single Judge in a previous case on a question of law should refer the case to a larger Bench instead of deciding the case in accordance with his own view.”

5. At the same time it is also well-settled that a single Bench of a High Court is bound by the dictum of the Supreme Court, notwithstanding the decision of a larger Bench of that High Court.

6. The immediate and ticklish question is whether the principle settled by the Supreme Court in Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd. has to be preferred to the series of decisions of this Court and also of a large Bench of this Court. It is apposite to consider the petitioners’ arguments that the decision in Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd. will not govern the present case. The points urged in this context are :

(1) The decision was rendered under the Excise Act, in particular stress is laid on the time of payment of excise duty;

(2) No provision in the Excise Act to grant stay of collection of excise duty as was done by the High Court; on the other hand, the Appellate Assistant Commissioner had the authority to grant stay as per the rules;

(3) Here by granting stay, the main relief is not claimed;

(4) Absence of reasoning will lead to abuse of power.

7. At the outset, I am to point out that the great emphasis with which the principle is asserted by the Supreme Court leaves no room for any doubt that the same is not confined to facts in that case nor to the Excise Act but is of universal application to matters involving the revenue where statutory remedies are available. The Supreme Court observed in paragraph 3 as follows :

In Titaghur Paper Mills Co. Ltd. v. State of Orissa A. P. Sen, E. S. Venkataramiah and R. B. Misra, JJ., held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the prescribed authority, a second appeal to the Tribunal and thereafter to have the case stated to the High Court, it was not for the High Court to exercise its extraordinary jurisdiction under article 226 of the Constitution ignoring as it were, the complete statutory machinery. That it has become necessary, even now, for us to repeat this admonition is indeed a matter of tragic concern to us. Article 226 is not meant to short-circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to article 226 of the Constitution. But then the court must have good and sufficient reason to by-pass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged.

We repeat and deprecate the practice of granting interim orders which practically give the principal relief sought in the petition for no better reason than that a prima facie case has been made not, without being concerned about the balance of convenience, the public interest and a host of other relevant considerations. Regarding the practice of some clever litigants of resorting to filing writ petitions in far-away courts having doubtful jurisdiction, we had this to observe :

‘Having regard to the fact that the registered office of the company is at Ludhiana and the principal respondents against whom the primary relief is sought are at New Delhi, one would have expected the writ petition to be filed either in the High Court of Punjab and Haryana or in the Delhi High Court. The writ petitioners however, have chosen the Calcutta High Court as the forum perhaps because one of the interlocutory reliefs which is sought is in respect of a consignment of beef tallow which has arrived at the Calcutta Port. An inevitable result of the filing of writ petitions elsewhere than at the place where the concerned offices and the relevant records are located is to delay prompt return and contest. We do not desire to probe further into the question whether the writ petition was filed by design or accident in the Calcutta High Court when the office of the company is in the State of Punjab and all the principal respondents are in Delhi. But we do feel disturbed that such writ petitions are often deliberately filed in distant High Courts, as part of a manoeuvre in a legal battle, so as to render it difficult for the officials at Delhi to move applications to vacate stay where it becomes necessary to file such applications.’

……. We have come across cases where land reform and important welfare legislations have been stayed by courts. Incalculable harm has been done by such interim orders. All this is not to say that interim orders may never be made against public authorities. There are, of course, cases which demand that interim orders should be made in the interests of justice. Where gross violations of the law and injustices are perpetrated or are about to be perpetrated, it is the bounden duty of the court to intervene and give appropriate interim relief. In cases where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen’s faith in the impartiality of public administration, a court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a court must be circumspect in granting interim orders of far-reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties have come to the court alleging prejudice, inconvenience or harm and that a prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration. We often wonder why in the case (of) indirect taxation where the burden has already been passed on to the consumer, any interim relief should at all given to the manufacturer, dealer and the like !

We do not have the slightest doubt that the orders of the learned single Judge as well as Division Bench are wholly unsustainable and should never have been made. Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by the High Court. There was no question of any balance of convenience being in favour of the respondent-company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere bank guarantees. We notice that very often some courts act as if furnishing a bank guarantee would meet the ends of justice. 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. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the public interest. We are very sorry to remark that these considerations have not been borne in mind by the High Court and interim order of this magnitude had been granted for the mere asking. The appeal is allowed with costs.”

8. Though these are parent proceedings, yet the reliefs claimed are of interim character because they are directed against orders of conditional stay passed by the authority pending the appeal before it. For unless the petitioners are favoured with the interim stay in writ miscellaneous proceedings, the main proceedings by themselves would become infructuous. In other words, mere admission of the writ petition is of no benefit to the petitioners. Thus the petitioners’ attempt to distinguish this case, is in my view, in vain. It is true that very recently I took a view favourable to the petitioners. But at that time this decision of the Supreme Court was not brought to my notice; besides the matter was conceded by the learned counsel for the Revenue. At any rate, the law is not static, but dynamic and therefore the court shall take into consideration, the change in the law.

9. Above all, unlike in the said Supreme Court case, the impugned orders in those cases do not settle the controversy between the assessee and the Revenue because the appeal itself is still pending. Then the ratio in the above case will apply to those with great rigour.

10. Is it expedient for this Court to exercise its jurisdiction under article 226 of the Constitution and to interfere with such interlocutory orders when such matters pertain to revenue and affect the exchequer of the Government, State or Central, simply because the orders do not disclose the reasonings to support the conclusion ? Is this Court bereft of power to sustain the conclusion of such orders if reasons are not for the seek ? Is it prudent for this Court to interfere with such interim orders, particularly when the vires of the statute is not in question, nor are private or public wrongs so inextricably mixed up as to cause public injury ? On my careful consideration, I am convinced that I should answer these questions in the negative. On my part I may add that in a case where the payment in instalment will have such adverse impact on economic condition of the assessee as to paralyse his very running of the business, it might be that article 226 of the Constitution can be resorted to. Even in such exceptional cases, the court shall exercise its power with due caution as administered by the Supreme Court in (Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd.)

11. The argument that immovable property security or bank guarantee are offered and that such security ought to have been accepted by the appellate authority, is equally without merit. For as pointed out by the Supreme Court, such security is no ready cash and no Government business or for that matter no business of any kind can be run on mere bank guarantee or security. So too the fact that the impugned orders made no reference to the security furnished by the assessee, will not make the order any the less invalid because what is ordered is that disputed tax shall be paid in instalments indicating that the security is not accepted.

12. Is it worthwhile for this Court to encumber its files with like proceedings when no fundamental right is infringed, nor is any public interest in imminent danger, but only some inconvenience is caused to an assessee ? I hasten to answer this question in the negative.

13. Though it is desirable that the order should indicate some reasoning if not all and also that the instalments should be spread over at reasonable intervals this is not in my view, an exceptional or extraordinary case where this Court owes a duty to exercise its power under article 226 of the Constitution of India.

14. In the result, the writ petitions are dismissed in limine.

15. Writ petitions dismissed.

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