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ORDINARY ORIGINAL CIVIL JURISDICTION
SALES TAX REFERENCE NO. 94 OF 2009
The Commissioner of Sales Tax, Maharashtra State, Mumbai, 8th
Floor, Vikrikar Bhavan, Sardar Balwantsingh Dhodi Marg, Mazgaon, Mumbai – 400 00. …Applicant
E-22 Electronic Zone, M.I.D.C. Bhosari, Pune. …Respondent
Applicant.
DATED: 11 September 2025
ORAL JUDGMENT
1. Heard Ms Chavan and Mr Takke for the applicant.
2. The Respondent is duly served. However, neither any representative of the Respondents nor any Advocate on their behalf appears in this reference.
3. This reference was made by the Maharashtra Sales Tax Tribunal (Tribunal) under Section 61 of the Bombay Sales Tax Act 1959 (said Act) by a common Judgment and Order dated 6 December 2002, referring the following questions for the determination of this Court. “(i) Whether the Hon'ble Tribunal was justified in law in holding that it is open to the Tribunal in deciding a Second Appeal under Section 55(2) of the Bombay Sales Tax Act, 1959 against the Order summarily rejecting the First Appeal for non-payment of Part Payment fixed by the First Appellate Authority to interfere with the amounts fixed by the First Appellate Authority towards Part Payment on the ground that the said Authority has not exercised the discretion properly, even though the Respondent has not challenged the validity or correctness of the Order fixing the amount of Part Payment under Section 55(5) of the Bombay Sales Tax Act, 1959 in Second Appeal when that Order was passed?
(ii) Whether the Hon'ble Tribunal was justified in law in holding that the validity of the Part Payment Order can be questioned in Second Appeal which was against the Summary Rejection of First Appeal for non-payment of Part Payment fixed under Section 55(5) of the Bombay Sales Tax Act, 1959?
(iii) Whether the Hon'ble Tribunal was justified in law in holding that the Order of Summary Rejection can not be separated or bifurcated from the Order of Part Payment?
(iv) Whether the Hon'ble Tribunal was justified in law in taking a view that the Part Payment Order had not attained finality and the Petitioner's Appeal was not rendered incompetent upon the Petitioner's failure to deposit the sum within the specified time?
(v) Whether the Hon'ble Tribunal was justified in law in holding that there was no direct finding given by the Delhi High Court in the case of M/s. Chetna Polycoats Pvt. Ltd., (95 STC 620) as regards to whether the Appellate Tribunal can deal with the question of quantum of payment fixed by the First Appellate Authority while hearing the Appeal against summary dismissal for non-payment of Part Payment when there was no Appeal filed against the Order fixing the Part Payment?
(vi) Whether the Hon'ble Tribunal was justified in law in holding that the Tribunal has power to modify the Order of Part Payment passed in First Appeal while hearing the Second Appeal filed against the final order of summary dismissal of the First Appeal for non-payment of Part Payment fixed, when there was no Appeal filed against the Order fixing the Part Payment ?(vi) Whether the Hon'ble Tribunal was justified in law in holding that the Tribunal has power to modify the Order of Part Payment passed in First Appeal while hearing the Second Appeal filed against the final order of summary dismissal of the First Appeal for non-payment of Part Payment fixed, when there was no Appeal filed against the Order fixing the Part Payment?”
4. The reference was made in the following facts and circumstances: - (a) The Respondent-assesses are manufacturers of Electrical Goods, sound Transferring Equipment and EPABX. (b) The assessees were assessed by the Assistant Commissioner of Sales Tax, [AO], for periods from 1 April 1989 to 31 March 1992 under the said Act as well as the Central Sales Tax Act 1956;
(c) The AO, by six separate assessment orders, raised tax demands, the details of which are specified in the statement of facts of the case at pages 12 to 17 of the paper book.
(d) The assessee instituted six separate first appeals before the Deputy Commissioner of Sales Tax (Appeals), Pune, under Section 55 of the Said Act. (e) The appellate authority, vide its orders dated 11 July 1995, directed the assessee to make part payments, the details of which have been set out in the statements of facts at pages 12 to 19 of this paper book. Such part payment had to be made before 8 August 1995. (f) Since the assessee failed to make the part payments, the Appellate Authority, by orders dated 28 August 1995, summarily rejected the assessee’s first appeals. (g) Against the orders dated 28 August 1995, the assessee preferred second appeals before the Tribunal, under the provisions of Section 55(2) of the said Act. (h) The Tribunal vide its Judgment and Order dated 22 November 1996 has set aside the First Appellate Authority’s order dated 28 August 1995, modified the part payment amount to Rs. 22,000/- in each of the appeals and upon noticing that the same was already paid, remanded the first appeals to the First Appellate Authority for disposal on merits.
(i) Aggrieved by the Tribunal’s judgment and order dated 22 November 1996, the applicant (Revenue) sought a reference under Section 61 of the said Act. This reference was ordered by Judgment and Order dated 6 December 2022, referring the above questions for the determination of this Court. (j) In the meantime, by order dated 11 December 2000, the First Appellate Authority, acting on the remand by the Tribunal vide its judgment and order dated 22 November 1996, allowed the assessee’s appeals, set aside the assessment order and remanded the matter for fresh assessment to the Assistant Commissioner of Sales Tax, i.e., the AO. The Revenue does not challenge this order; (k) However, the learned Counsel for the applicant, submitted that if this reference is answered in favour of the Revenue and the Judgment and order dated 22 November 1996 is set aside, then the First Appellate Authority’s order dated 11 December 2000, made on demand, will also not survive and will have to be set aside.
(l) Accordingly, we have heard the learned counsel for the Applicant in support of this reference.
5. The learned counsel submitted that the First Appellate Authority, by its orders dated 11 July 1995, determined the part amount and issued directions to the assessee to pay the same by 8 August 1995. The assessee never challenged this order, and therefore, the same attained finality.
6. The learned counsel submitted in the second appeal that the First Appellate Authority’s orders dated 28 August 1995, dismissing the first appeal, the assessee could not have challenged the order dated 11 July 1995 determining and directing the part payment as a condition precedent for entertaining the appeal. They submitted that the order dated 11 July 1995, and the order dated 28 August 1995 were two separate orders, and in the appeal challenging the order dated 28 August 1995, the validity of the order dated 11 July 1995 could not have been examined.
7. The learned Counsel submitted that the issue which he now urges is answered in favour of the Revenue by the Delhi High Court in the case of M/s Chetna Polycots (P) Ltd Vs Appellate Tribunal Sales Tax & Ors[1]. They submitted that the Tribunal distinguished the Delhi High Court’s Judgment on grounds which are not justifiable.
8. For all the above reasons, the learned counsel submitted that this reference may be answered in favour of the Revenue, the Judgment and Order dated 22 November 1996, be set aside, and consequently, the order dated 11 December 2000 (1994) 95 STC 620 made by the First Appellate Authority on remand, be also set aside.
9. The entire reference concerns the interpretation of Section 55 of the said Act as it obtained between 1995 and
1996. During this period, Section 55 of the said Act read as follows: - “55. (1) An appeal from every original order, not being an order mentioned in section 56 passed under this Act or the rules made thereunder shall lie− (a) if the order is made by a Sales Tax Officer, or any other officer subordinate thereto, to the Assistant Commissioner; (b) if the order is made by an Assistant Commissioner, [to the Deputy Commissioner];
(c) if the order is made by a Deputy Commissioner,
Additional Commissioner, to the Tribunal. (2) In the case of an order passed in appeal by an Assistant Commissioner or by Deputy Commissioner, a second appeal shall lie, at the option of the appellant, either to the Commissioner or to the Tribunal. (3) Every order passed in appeal under this section, shall, subject to the provisions of sections 57, 61 and 62 be final. (4) Subject to the provisions of section 60, no appeal shall be entertained unless it is filed within sixty days from the date of the communication of the order appealed against. (5) No appeal, against an order of assessment with or without penalty, [or interest] or against an order imposing a penalty, [or interest], or against an order directing the forfeiture of any tax collected by a dealer, shall ordinarily be satisfactory proof of the payment of the tax with or without penalty, [or interest] or as the case may be, of the payment of the penalty, [or interest], or the amount forefeited, in respect of which the appeal has been preferred: Provided that, an appellate authority may if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order− (a) without payment of the tax with penalty (if any), or as the case may be, of the penalty or of the sum forfeited, on the appellant furnishing in the prescribed manner security for such amount as it may direct, or (b) on proof of payment of such smaller sum, with or without security for such amount of tax, penalty or sum forefited which remains unpaid, as it may direct. [(6) Subject to such rules of procedure as may be prescribed, every appellate authority (both in the first appeal and the second appeal) shall have the following powers:− (a) in an appeal against an order of assessment, it may confirm, reduce, enhance or annul the assessment; or it may set aside the assessment and refer the case back to the assessing authority for making a fresh assessment in accordance with the direction given by it and after making such further inquiry as may be necessary; and the assessing authority shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment; (b) in an appeal against an order imposing a penalty [or interest] the appellate authority may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty [or interest);
(c) in any other case, the appellate authority may pass such orders in the appeal as it deems just and proper: Provided that, the appellate authority shall not enhance an assessment or a penalty [or interest], or reduce the amount of draw-back, set-off or refund of the tax, unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.]”
10. Section 55(1) is concerned with appeals from every original order, not being an order mentioned in Section 56 of the said Act or the Rules made thereunder. Section 56 of the said Act lists certain orders against which no appeal or application for revision shall lie. Though the order determining part payment or, for that matter, the order dismissing the appeal for non-compliance with the direction for the deposit of the part payment have not been referred to in Section 56, still that circumstance would not be very relevant because Section 55(1) is concerned with an appeal from an original order. In this case, we are mainly concerned with the issue of maintainability of an appeal before the Tribunal against the order dated 29 August 1995 made by the Deputy Commissioner of Sales Tax (Appeals), i.e, the First Appellate Authority.
11. Therefore, the provisions of Section 55(2) would apply to such a situation. Section 55(2) provides that in case of an order passed in appeal by an Assistant Commissioner or by a Deputy Commissioner, a second appeal shall lie at the option of the appellant, either to the Commissioner or to the Tribunal. The appeal filed before the Tribunal, in which the Tribunal has made the impugned Judgment and Order dated 22 November 1996, therefore, relates to Section 55(2) of the said Act.
12. Section 55(3) of the said Act provides that every order passed in appeal under this Section, i.e. Section 55, shall, subject to the provisions of Sections 57, 61 and 62, be final. Therefore, it was urged that the first appellate authority’s order dated 11.7.1995, determining the part payment and directing its payment, being included in the expression “every order” was final for want of any challenge, given the provisions of Section 55(3) of the said Act. Besides, by reference to the provisions in Section 55(2) of the said Act, it was urged that the first appellate authority’s order dated 11.7.1995, determining the part payment and directing its payment, was appealable.
13. The expression “every order” fell for consideration before the Division Bench of this Court in the case of M/s. Bhambani Shipping Ltd Vs. The State of Maharashtra & Ors.2. The Division Bench was considering the provisions of Section 27(1) of the Maharashtra Value Added Tax, 2002 in which it was provided that an appeal shall lie to the High Court from “every order” passed by the Tribunal, including a Judgment by way of advance ruling, if the High Court is satisfied that a case involves a substantial question of law.
14. The Division Bench of this Court, by referring to several precedents including the decision in the case of Central Bank of India Vs Shri Gokal Chand[3], held that though the words “every order” appear very wide, they do not include interlocutory orders, which are merely procedural or in the nature of steps taken towards final adjudication. The Division Bench quoted the observations in Gokal Chand (supra) to the effect that the legislature could not have intended that the parties would be harassed with endless expenses and delay by appeals from such procedural orders. The Hon’ble Supreme Court had in fact observed that “it is open to any party to set forth the error, defect or irregularity, if any, in such an order has a ground of objection in his appeal from the final order in the main proceeding”. Writ Petition No. 27789 of 2017 decided on 28 November 2017. AIR 1967 SC 799
15. In Gokal Chand (supra), the Hon’ble Supreme Court referred to the decision of the Constitution Bench in Shankarlal Aggarwal & Ors Vs Shankarlal Poddar & Ors[4]. The Constitution Bench was interpreting the provisions of Section 202 of the Indian Companies Act, 1913, which conferred a right of appeal “from any order or decision made or given in the matter of winding up of a company by the Court”. The Constitution Bench held that these words, though wide, would exclude merely procedural orders or those which did not affect the rights and liabilities of the parties.
16. The Division Bench, in M/s Bhambani Shipping Ltd (supra), after referring to the decisions in Gokal Chand (supra) and Shankarlal Aggarwal (supra) held as follows: - “In our view, what is held by the Apex Court and this Court will squarely apply to the provisions of sub-section (1) of Section 27 of the said Act of 2002 and an interlocutory or a procedural order passed by the Appellate Tribunal during the pendency of proceedings can be always challenged by the aggrieved party while preferring an appeal against the final order”.
17. Therefore, the words “every order” in Section 55(3) cannot be held to include an order determining the amount of payment or part payment required to be made by the Appellant for maintaining an appeal against an order of assessment with or without penalty or interest. The argument that such an order attained finality for want of appeal to the Tribunal, therefore, cannot be accepted. 1964 (1) SCR 717
18. Going by the decision of the Coordinate Bench of this Court in M/s. Bhambani Shipping Ltd (supra), it is doubtful whether an appeal would even lie against the order dated 11 July 1995 made by the First Appellate Authority, even if it is considered that such an order affects assets/rights and liabilities of the parties. Section 55(2), unlike Sections 55(1) or 55(3) does not use the expression “every order”. Section 55(2), under which the appeal was filed to the Tribunal, only refers to “an order”. Therefore, to conclude that the order dated 11 July 1995 attained finality because the same was not appealed against, when in fact, the maintainability of the appeal against such order was itself doubtful, would not be appropriate.
19. Even if the expression “an order” used in Section 55(2) is construed as “every order”, still, given the decisions of the Hon’ble Supreme Court referred to in M/s. Bhambani Shipping Ltd and the decision of the Coordinate Bench in Bhambani Shipping Ltd. (supra), it would again be doubtful whether an appeal would lie against the interlocutory order dated 11 July 1975.
20. In contrast, there can be no doubt that an appeal lies under Section 55(2) of the said Act against the order dated 28 August 1995 finally disposing of the assessee’s appeal. There is absolutely nothing in the scheme of Section 55 of the said Act which would indicate that in the appeal against the final order dated 28 August 1995, the assessee/appellant is in any way precluded from challenging the interlocutory order dated 11 July 1995, by simply raising a ground that the same was not legal or proper, or that the discretion was not exercised judiciously and fairly after adverting to all relevant circumstances.
21. Though the provisions of the Code of Civil Procedure may not apply to the appeals under the said Act, still, by way of analogy, a reference to the Code of Civil Procedure may not be out of place. In the context of the provision of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 and the Code of Civil Procedure, the Hon’ble Supreme Court Achal Misra Vs Rama Shanker Singh & Others[5] (supra)held that a party is not bound to appeal from every interlocutory order which is a step in the procedure that leads to a final decree. An interlocutory order which had not been appealed against or against which no appeal lay can be challenged from a final decree or order.
22. The two exceptions to this rule are found in Sections 97 and 105(2) of the Code of Civil Procedure. No such exceptions are present in the said Act relevant to us. Therefore, the general rule that interlocutory or procedural orders, which are steps leading to the final decree, can be challenged in an appeal from the final order, cannot be excluded in this case. Section 105(1) of the Code of Civil Procedure provides that save as otherwise expressly provided, no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but, where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal.
23. There is no reason why this principle should not apply to appeals under the said act. This is more so because there is doubt whether the order dated 11 July 1995 could have been appealed under Section 55(2) of the said Act. Therefore, if an appeal clearly lies against the order dated 28 August 1995, which is inter alia based upon the order dated 11 July 1995, we see no reason why, in the appeal against the order dated 28 August 1995, no ground could be raised to attack the validity of the order dated 11 July 1996.
24. From this perspective, we also hold that there was nothing wrong in the Tribunal examining the validity of the order dated 11 July 1995 in the appeal against the order dated 28 August 1995, disposing of the appeal in which the First Appellate Authority made the order dated 11 July 1995. Such a course of action would be consistent with the principles of Section 105 of the Code of Civil Procedure, though those provisions, per se, may not apply. Such a course of action would also be consistent with the principle laid down by the Hon’ble Supreme Court in the case of Achal Misra (supra), Gokal Chand (Supra), and Shankarlal Agarwal (Supra). Such a view is consistent with this Court’s decision in Bhambani Shipping (Supra).
25. The Tribunal in this case has correctly concluded that the appeal against the order dated 28 August 1995 was maintainable and in such an appeal, the Respondent-Assessee was not precluded from challenging the order dated 11 July 1995 made by the First Appellate Authority as a step towards the final disposal of the appeal. The tribunal’s view substantially aligns with the view in the above cases.
26. The Delhi High Court’s decision in Chetna Polycots (P) Ltd. Vs Appellate Tribunal, Sales Tax and others[6], upon which Mr. Takke placed reliance, does quote Section 43(5) of the Delhi Sales Tax Act, 1975, which appears to be similar to Section 55(5) of the said Act. However, none of the other provisions of the Delhi Sales Tax Act find reference in the said judgment.
27. Besides, the decisions of the Hon’ble Supreme Court interpreting the expression “every order” have neither been referred to nor considered by the Delhi High Court. The decision proceeds on the premise that an interlocutory order determining the amount to be paid or deposited becomes final unless challenged immediately or before the appeal is dismissed for non-compliance with the directions for payment or deposit of such amount. The issue of whether such an order was challengeable under Sections 57, 61 or 62 was never examined before finality was presumed in favour of such an order.
28. Given the above analysis, the Questions (i), (ii) and (iv) are liable to be answered against the Revenue and in favour of the assessee. We do so accordingly.
29. Insofar as Question (iii) is concerned, even though the order determining the amount of part payment, i.e. order dated 11 July 1995, and the order dismissing the appeal for non-payment of the amount determined within the prescribed period, i.e. final order dated 28 August 1995, may be different. There was no warrant to conclude that the two orders had to be challenged independently. The order dated (1994) 95 STC 620 11 July 1995 was basically a procedural order in the nature of one of the steps towards the disposal of the main appeal. Accordingly, in the appeal challenging the final disposal order dated 28 August 1995, there was no bar to the Respondent – Assessee questioning the order dated 11 July 1995.
30. The observations of the Hon’ble Supreme Court in Achal Mishra (Supra) support such a course of action in the context of the provisions of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act and the Code of Civil Procedure. The decisions in Bhambani Shipping (Supra), Gokal Chand (Supra), and Shankarlal Agarwal (Supra) also support such a course of action. There is nothing under the said Act which precludes such a course of action. The right to maintain an appeal against the order dated 11 July 1995 also appears rather doubtful. Therefore, the contention that the two orders were required to be separated or bifurcated cannot be accepted. Question (iii) referred for our consideration is answered accordingly.
31. So far as Question (v) is concerned, there is an observation in Chetna Poly cots (P) Ltd. (supra) about the order dated 30 September 1993 requiring the Petitioner to deposit a sum of Rs. 2,50,000/-, which has attained finality. The Court also observed that from a plain reading of Section 43(5), it was evident that the requirement of deposit was mandatory and, therefore, on the Petitioner’s failure to make the requisite deposit as directed under the proviso to Section 43(5), its appeal was rendered incompetent and could not be entertained by the Appellate Authority.
32. However, for the reasons discussed earlier and with profound respect, we are unable to agree with the conclusion drawn by the Delhi High Court. Of course, we did not have the benefit of examining other provisions of the Delhi Sales Tax Act, 1975 and therefore, we do not know if the provisions similar to those which we have referred to in the said Act were also available under the Delhi Sales Tax Act.
33. Further, the Delhi High Court, perhaps, had no occasion to advert to the decisions of the Hon’ble Supreme Court as were referred to in the case of M/s. Bhambani Shipping Ltd. (supra). The principle laid down by the Hon’ble Supreme Court in Achal Misra (supra) that a party is not bound to appeal from every interlocutory order which a step in procedure that leads to a final decree and that the interlocutory orders which had not been appealed against or against which no appeal lie can be challenged in appeal from final decree, was also not available for consideration by the Delhi High Court. The Delhi High Court decided the matter on 10 May 1994, and the decision of the Hon’ble Supreme Court in Achal Misra (supra) was delivered on 11 April 2005.
34. Therefore, though the Tribunal has held that there was no direct finding in Chetna Poly cots (P) Ltd. (supra), still, based on the said observations, no case is made out to interfere with the conclusion drawn by the Tribunal since this conclusion aligns with the decisions of this Court and the Hon’ble Supreme Court. The Question (v) is answered accordingly.
35. So far as Question (vi) is concerned, having regard to the provisions of Section 55(6), the Tribunal, acting as an Appellate Authority, certainly had powers to modify the order of part payment dated 11 July 1995. The issue as to whether the Tribunal exercised its discretion correctly or not is not the subject matter of this reference.
36. In any event, simply because we might not have reduced the deposit or part payment amount is not a good enough ground to interfere with the exercise of discretion in a reference under section 61 of the said Act. The subject matter of this reference relates to the powers of the Tribunal acting as an Appellate Authority under Section 55 of the said Act. Such powers undoubtedly exist, given the provisions of sub-section (6) of Section 55 of the said Act. Question (vi) is therefore answered against the revenue and in favour of the assessee.
37. Accordingly, this reference is disposed of by answering Questions (i), (ii), (iiii), (iv) and (vi) against the revenue and favouring the Respondent – Assessee. In so far as Question (v) is concerned, we hold that though the observations of the Tribunal regards the Delhi High Court decision in Chetna Polycots (P) Ltd. (supra) may not be correct, still, the final conclusion of the Tribunal can be sustained de hors such observations since the same aligns with the decisions of the Hon’ble Supreme Court and this Court discussed above. We do so accordingly.
38. The Reference is disposed of in the above terms without any order for costs. (Advait M. Sethna, J) (M.S. Sonak, J)