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

By amendment in the Income Tax Act, 1961 (hereinafter referred to as the IT Act) in the year 1998, Section 260A was inserted providing for statutory appeal against the orders passed by the Income Tax Appellate Tribunal. In this very Section, under(2)(b), court fees on such appeals was also prescribed which was fixed at Rs.on (2)(b) of Section 260A prescribing the aforesaid fee was omitted by amendment carried out in the said Act, with effect from June 01, 1999. It was presumably for the reason that insofar as court fee payable on such appeals are concerned, which are to be filed in the High Court, it is the State Legislature which is competent to legislate in this behalf.2. In the State of Kerala, the law of court fee is governed by the Kerala Court Fees and Suits Valuation Act, 1959 (hereinafter referred to as the 1959 Act). Section 52 thereof relates to the fee payable in appeals. Thus, with the omission of clause (b) of(2) of Section 260A of the IT Act, fee became payable on such appeals as per Section 52. The State Legislature thereafter amended the 1959 Act by Amendment Act of 2003 and inserted Section 52A therein, which was passed on March 06, 2003. In fact, before that an Ordinance was promulgated on October 25, 2002 which was replaced by the aforesaid Amendment Act, the Act categorically provided that Section 52A is deemed to have come into force on October 26, 2002. As per the amended provision, viz. Section 52A of the 1959 Act, the fee on memorandum of appeals against the order of the Income Tax Appellate Tribunal or Wealth Tax Appellate Tribunal is to be paid at the rates specified in(c) of item (iii) of Article 3 of Schedule II. This(c) reads as under:(c) Where such income exceeds two lakh rupeesOne percent of the assessed income, subject to a maximum of ten thousand rupees.The question that arose for consideration before the High Court in the impugned judgment, against which these appeals arise, was payment of fee as per the aforesaid schedule on the appeals that are filed on or after October 26, 2002. As per the State of Kerala, on all appeals which are filed against the order of Income Tax Appellate Tribunal or the Wealth Tax Appellate Tribunal on or after October 26, 2002, fee is payable as per the aforesaid amended provisions. The appellant herein, however, contend that in all those cases which were even pending before the lower authorities, i.e. the Assessing Officer, Commissioner of Income Tax (Appeals) or Income Tax Appellate Tribunal and orders were passed even before October 01, 1998, the right to appeal had accrued with effect from October 01, 1998 and, therefore, such cases would be governed as on the date when the orders were passed by the lower authorities and the court fee would be payable as per the unamended provisions. The High Court has not accepted this plea of the appellant and has held that any appeal filed on or after October 26, 2002 shall be governed by Section 52A of the 1959 Act.4. The appeals are filed both by the writ petitioner, whose writ has been dismissed, as well as the Income Tax Department. The Commissioner of Income Tax (Appeals) has not accepted the decision of the High Court and the reason for that is obvious. Numerous appeals under Section 260A of the IT Act are filed by the Department as well and the Department also gets hit by the aforesaid Section 52A of the 1959 Act, as interpreted by the High Court.

Reasoning:
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.