Case: K. Raveendranathan Nair Vs. Commissioner of Income Tax &amp; Another

in holding that in all those cases where the appeals are filed in the High Court, whether by the assessee or the Income Tax Department, after the insertion of Section 52A, i.e. after October 26, 2002, fee is payable as provided under Section 52A of the 1959 Act. In this hue, it was also pointed out that Section 260A of the IT Act was inserted with effect from October 01, 1998 and, therefore, from this date right to file the appeal in the High Court accrued as a vested right. Thus, all those proceedings where the assessment orders were passed after October 01, 1998 by the Assessing Officer and the assessee had approached the High Court by filing appeal under Section 260A of the IT Act, fee as per the unamended provision was payable and not under Section 52A of the 1959 Act. Likewise, it was argued, in those cases where the Revenue filed the appeal in the High Court where the disputed demand was negative by the appellate authority after October 01, 1998 and before October 26, 2002, court fee was payable as per the unamended provision.9. Mr. Pallav Sishodia, learned senior counsel appearing for the State of Kerala, submitted that though there was no quarrel about the proposition laid down in the judgments cited by the learned counsel for the appellants, these judgments are premised on two postulates, namely:(i) there exists a vested right of appeal and it accrued prior to coming into force of Section 52A of the 1959 Act; and(ii) such a vested right stands impaired and/or made conditional retrospectively expressly or by necessary intendment.He, thus, submitted that it was imperative to have requisite foundational facts to demonstrate the aforesaid two conditions. According to him, however, the issue appears academic as no assessee has come forward as aggrieved by levy of court fee under Section 52A of the 1959 Act in a case in which appeal is filed where assessment is made and/or disputed demand in appeal is raised prior to October 26, 2002. Nor the details are available of the appeals filed by the Income Tax or Wealth Tax Departments where assessments are reversed in part of full and/or disputed demand is quashed by the Commissioner (Appeals) or Income Tax Appellate Tribunal prior to October 26, 2002, particularly number of such appeals pending before the High Court of Kerala, if at all. In any case, in the other appeals filed, if any, for the tax demands negatived by the appellate authorities prior to October 26, 2002, this issue of court fees does not appear to have been kept alive for grant of any effective relief. He cited few judgments in support of his submission that this Court should restrain itself from undertaking academic exercise and deciding the issue in question.10. We are not inclined to accept the aforesaid plea inasmuch as the High Court has decided the issue in categorical terms. Therefore, it would be appropriate to reflect on the said decision and to find out as to whether this decision is correct in law. It is a different matter that after the legal position is clarified, the same can be applied in respect of those appeals which are covered thereby.11. Hence, we proceed to decide the legal issue involved in these appeals.12. We may mention at the outset that after referring to the judgments noted above even the High Court in the impugned judgment has accepted that right of appeal is not a matter of procedure and that it is a substantive right. It is also recognised that this right gets vested in the litigants at the commencement of the lis and, therefore, such a vested right cannot be taken away or cannot be impaired or imperilled or made more stringent or onerous by any subsequent legislation unless the subsequent legislation said so either expressly or by necessary intendment. An intention to interfere with or impair or imperil a vested right cannot be presumed unless such intention be clearly manifested by express words or by necessary implication. However, the High Court has still dismissed the writ petition as it was of the opinion that the vested right of appeal conferred under Section 260A of the IT Act, insofar as payment of court fee is concerned, is taken away by necessary implication. In other words, the provisions of Section 52A of the 1959 Act inserted by the Amendment Act of 2003, in that sense, have retrospective operation thereby effecting the earlier assessment also. This proposition is advanced with the logic that before prior to introduction of Section 260A in the IT Act with effect from October 01, 1998, there was no right of appeal.13. It is difficult to accept such a logic given by the High Court. No doubt, before October 01, 1998, in the absence of any statutory right of appeal to the High Court, there was no such vested right. At the same time, the moment Section 260A was added to the statute, right to appeal was recognised statutorily. Therefore, as already pointed out, in respect of those proceedings where assessment orders were passed after October 01, 1998, vested right of appeal in the High Court had accrued. Same was the position qua Department in respect of those cases where the demand raised by the Department stood negatived by the appellate authority after October 01, 1998.14. In the present case, as noted above, when Section 260A of the IT Act was introduced by way of amendment with effect from October 01, 1998, it contained provision in the form of clause (2) of sub-section (2) thereof relating to payment of court fee as well. As per that provision, fixed court fee of Rs.2,000/- was provided. This provision was, however, omitted with effect from June 01, 1999. The court fee became payable as per Section 52 of the 1959 Act. The amendment in question in the 1959 Act, i.e. Section 52A, was made effective from March 06, 2003. This provision has not been made retrospective.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. We are not inclined to accept the aforesaid plea inasmuch as the High Court has decided the issue in categorical terms. Therefore,it would be appropriate to reflect on the said decision and to find out as to whether this decision is correct in law.It is a different matter that after the legal position is clarified, the same can be applied in respect of those appeals which are covered thereby.We may mention at the outset that after referring to the judgments noted above even the High Court in the impugned judgment has accepted that right of appeal is not a matter of procedure and that it is a substantive right. It is also recognised that this right gets vested in the litigants at the commencement of the lis and, therefore, such a vested right cannot be taken away or cannot be impaired or imperilled or made more stringent or onerous by any subsequent legislation unless the subsequent legislation said so either expressly or by necessary intendment. An intention to interfere with or impair or imperil a vested right cannot be presumed unless such intention be clearly manifested by express words or by necessary implication. However, the High Court has still dismissed the writ petition as it was of the opinion that the vested right of appeal conferred under Section 260A of the IT Act, insofar as payment of court fee is concerned, is taken away by necessary implication. In other words, the provisions of Section 52A of the 1959 Act inserted by the Amendment Act of 2003, in that sense, have retrospective operation thereby effecting the earlier assessment also. This proposition is advanced with the logic that before prior to introduction of Section 260A in the IT Act with effect from October 01, 1998, there was no right of appeal.13. It is difficult to accept such a logic given by the High Court. No doubt, before October 01, 1998, in the absence of any statutory right of appeal to the High Court, there was no such vested right. At the same time, the moment Section 260A was added to the statute, right to appeal was recognised statutorily. Therefore, as already pointed out, in respect of those proceedings where assessment orders were passed after October 01, 1998, vested right of appeal in the High Court had accrued. Same was the position qua Department in respect of those cases where the demand raised by the Department stood negatived by the appellate authority after October 01, 1998.14. In the present case, as noted above, when Section 260A of the IT Act was introduced by way of amendment with effect from October 01, 1998, it contained provision in the form of clause (2) of(2) thereof relating to payment of court fee as well. As per that provision, fixed court fee of Rs.2,000/was provided. This provision was, however, omitted with effect from June 01, 1999. The court fee became payable as per Section 52 of the 1959 Act. The amendment in question in the 1959 Act, i.e. Section 52A, was made effective from March 06, 2003. This provision has not been made retrospective.