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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 07TH DAY OF OCTOBER, 2015

BEFORE

THE HON'BLE MRS.JUSTICE B.V.NAGARATHNA

WRIT PETITION NOs.10559-10560/2015 (T-TAR)

C/w. W.P.NO.54017/2014 (T-RES), W.P.NO.54018/2014 (T-RES) &

W.P.NO.21492/2015 (T-TAR) IN W.P.NOs.10559-10560/2015:

BETWEEN:

1. M/S. HINDUSTAN PETROLEUM CORPORATION LTD.,

MANGALORE POL TERMINAL, VILLAGE BALA, VIA KATIPALLA, MANGALORE-575 030.

2. MR. V.K. JAIN, AGED 55 YEARS,

GENERAL MANAGER (TAX), M/S. HINDUSTAN PETROLEUM CORPORATION LTD., CORPORATE OFFICE, NO.17, JAMSHEDJI TATA ROAD, P.O. BOX NO. 11041, MUMBAI-400 020. ... PETITIONERS

(BY SRI: G. SHIVADASS, ADVOCATE) AND:

1. UNION OF INDIA,

MINISTRY OF FINANCE, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI-110 001.

2. COMMISSIONER OF CENTRAL

EXCISE & SERVICE TAX, 7TH FLOOR, TRADE CENTER, BUNTS HOSTEL ROAD, MANGALORE-570 003.

R

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3. THE DEPUTY REGISTRAR,

CUSTOMS EXCISE AND SERVICE, TAX APPELLATE TRIBUNAL, FKCCI BUILDING, K.G. ROAD, BANGALORE-560 009.

4. THE REGISTRAR,

CUSTOMS, EXCISE AND SERVICE, TAX APPELLATE TRIBUNAL, WEST BLOCK 2, R.K. PURAM, NEW DELHI-110 022.

5. THE CENTRAL BOARD OF EXCISE AND CUSTOMS,

MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL REVENUE BUILDINGS, LP. ESTATE, ITO, NEW DELHI-110 002. ... RESPONDENTS

(BY SRI: K.M.NATARAJ, ADDL. SOLICITOR GENERAL A/W. SRI. JEEVAN J.NEERALGI, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO 1)HOLD THAT SEC. 35F OF THE CENTRAL EXCISE ACT, 1944 AS AMENDED BY SEC. 105 OF THE FINANCE ACT (NO.2) , 2014 W.E.F. 6/8/2014 WHICH PROVIDES FOR MANDATORY PRE-DEPOSIT OF 7.5% FOR FIRST APPEALS AND 10% FOR SECOND APPEALS OF THE TOTAL TAX OR PENALTY DEMANDED, AS A MANDATORY CONDITION FOR ENTERTAINING AN APPEAL AS ILLEGAL AND VIOLATIVE OF ARTICLES 14, 19 (1) (g) AND 265 OF THE CONSTITUTION OF INDIA AND ETC.,

*****

IN W.P.NO.54017/2014: BETWEEN:

PRESTIGE GARDEN CONSTRUCTIONS PRIVATE LIMITED, A COMPAMY INCORPORATED UNDER THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE AT "THE FALCON HOUSE" NO.1 MAIN GUARD CROSS ROAD, INFANTRY ROAD, BANGALORE-560 001.

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REP.BY ITS AUTHORISED REPRESENTATIVE MR. MANOJ KRISHNA J V. ... PETITIONER

(BY SRI: ARUN KUMAR .K, ADVOCATE) AND:

1. UNION OF INDIA,

REPRESENTED BY THE FINANCE SECRETARY, NORTH BLOCK, NEW DELHI-110 001.

2. CENTRAL BOARD FOR EXCISE

AND CUSTOMS (CBEC) DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, REPRESENTED BY THE DIRECTOR (JUDICIAL CELL), NORTH BLOCK, NEW DELHI-110 001.

3. CENTRAL EXCISE AND SERVICE

TAX APPELLATE TRIBUNAL, NEW DELHI, REPRESENTED BY THE REGISTRAR, PRINCIPAL BENCH, WEST BLOCK, NO.II, R.K. PURAM, NEW DELHI-66. ... RESPONDENTS

(BY SRI: K.M. NATARAJ, ADDL. SOLICITOR GENERAL A/W. SRI. JEEVAN J. NEERALGI, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH SECTION 35F OF THE CENTRAL EXCISE ACT OF 1944 AS AMENDED BY SECTION 105 OF THE FINANCE ACT OF 2014 AND THE SAID SECTION 105 OF THE FINANCE ACT OF 2014 AS BEING UNCONSTITUTIONAL.

******

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IN W.P.NO.54018/2014:

BETWEEN:

EXORA BUSINESS PARKS PRIVATE LIMITED, A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE AT "THE FALCON HOUSE" NO.1, MAIN GUARD CROSS ROAD, INFANTRY ROAD, BANGALORE-560 001, REPRESENTED HEREIN BY ITS AUTHORISED REPRESENTATIVE MR. MANOJ KRISHNA J V. ... PETITIONER

(BY SRI: ARUN KUMAR .K, ADVOCATE) AND: 1. UNION OF INDIA,

REPRESENTED BY THE FINANCE SECRETARY, NORTH BLOCK, NEW DELHI-110 001.

2. CENTRAL BOARD FOR EXCISE

AND CUSTOMS (CBEC), DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, REPRESENTED BY THE DIRECTOR (JUDICIAL CELL), NORTH BLOCK, NEW DELHI-110 001.

3. CENTRAL EXCISE AND SERVICE

TAX APPELLATE TRIBUNAL, NEW DELHI, REPRESENTED BY THE REGISTRAR, PRINCIPAL BENCH, WEST BLOCK, NO.II, R.K. PURAM, NEW DELHI-66. ... RESPONDENTS

(BY SRI: K.M. NATARAJ, ADDL. SOLICITOR GENERAL A/W. SRI. JEEVAN J.NEERALGI, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226

AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH

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SEC.35F OF THE CENTRAL EXCISE ACT OF 1944 AS AMENDED BY SEC.105 OF THE FINANCE ACT OF 2014 & THE SAID SECION 105 OF THE FINANCE ACT OF 2014 AS BEING UNCONSTITUTIONAL.

******

IN W.P.NO.21492/2015:

BETWEEN: M/S HEWLETT PACKARD INDIA SALES PVT. LTD., NO.24, SALARPURIA ARENA, HOSUR MAIN ROAD, ADUGODI, BANGALORE-560 030. BY ITS MANAGER SHESHADRI SRINIVASAN. ... PETITIONER

(BY SRI: G. SHIVADASS, ADVOCATE) AND: 1. UNION OF INDIA,

MINISTRY OF FINANCE, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI-110 001.

2. COMMISSIONER OF CENTRAL

EXCISE & SERVICE TAX, LARGE TAX PAYERS UNIT, JSS TOWER: 10 FEET RING ROAD, BANASHANKARI III STAGE, BANGALORE-560 085.

3. THE DEPUTY REGISTRAR, CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, FKCCI BUILDING, K.G. ROAD, BANGALORE-560 009.

4. THE REGISTRAR, CUSTOMS,

EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK 2, R.K. PURAM, NEW DELHI-110 022.

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5. THE CENTRAL BOARD OF EXCISE AND CUSTOMS, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL REVENUE BUILDINGS, LP. ESTATE, ITO, NEW DELHI-110 002. ... RESPONDENTS

(BY SRI: K.M. NATARAJ, ADDL. SOLICITOR GENERAL A/W. SRI. JEEVAN J.NEERALGI, ADVOCATE)

*****

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO 1)DECLARE SECTION 35F OF THE CENTRAL EXCISE ACT, 1944 AS AMENDED BY SEC. 105 OF THE FINANCE ACT (NO.2) , 2014 W.E.F. 6.8.2014 WHICH PROVIDES FOR MANDATORY PRE-DEPOSIT OF 7.5% FOR FIRST APPEALS AND 10% FOR SECOND APPEALS OF THE TOTAL TAX OR PENALTY DEMANDED, AS A MANDATORY CONDITION FOR ENTERTAINING AN APPEAL AS UNCONSTITUTIONAL VIDE ANN-B AND ETC.

THESE PETITIONS HAVING BEEN HEARD AND RESERVED ON 11/9/2015 AND IT BEING LISTED FOR PRONOUNCEMENT OF ORDERS TODAY, COURT PRONOUNCED THE FOLLOWING:

O R D E R

As common questions of law arise in these writ

petitions, they have been heard together and are

disposed of by this common order.

2. The petitioners have assailed amendment

made to Section 35F of the Central Excise Act, 1944

(hereinafter referred to as the ‘Act’, for the sake of

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brevity), as amended by Section 105 of the Finance

Act (No.2) 2014 (hereinafter referred to as ‘2014 Act’,

for the sake of convenience) with effect from

6/8/2014, which provides for monetary pre-deposit of

7.5% for first appeals and 10% for second appeals on

the total tax or tax and penalty, demanded for

entertaining such appeals.

3. In essence, the contention of the

petitioners is that the requirement of the pre-deposit

is in violation of Articles 14, 19(1)(g) and 265 of the

Constitution of India. Therefore, they have sought a

declaration that Circular No.984/08/2014-CX issued

by the Government of India, Ministry of Finance,

Department of Revenue (Central Board of Excise and

Customs) New Delhi, dated 16/9/2014 is ultra vires

the Constitution of India and a similar Circular

F.No.15/CESTAT/General/2013-14 dated 4/10/2014,

is also assailed. A direction is also sought to enable

the petitioners to file their appeals without monetary

pre-deposit of 7.5%, as the lis in so far as petitioners

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are concerned commenced prior to 6/8/2014, which is

the date on which the amendment has been enforced.

Background facts:

4. Briefly stated, the facts in W.P.Nos.10559-

560/2015, are that petitioner No.1 is a Government of

India Company, registered with the Central Excise

Department, engaged in the business of refining crude

oil and marketing various petroleum products.

Petitioners procure Motor Spirit, High Speed Diesel

and Superior Kerosene Oil as well as Aviation Turbine

Fuel. Petitioners have a terminal at Mangalore, which

is a coordinator for requirements of the other

companies such as, M/s.Mangalore Refineries and

Petro Chemicals Limited, Mangalore (‘MRPL’ for short).

Pursuant to initiation of proceedings, petitioners

received a show-cause notice from the Commissioner

of Central Excise and Service Tax, wherein it was

proposed to demand duty of Rs.56,93,40,593/- from

MRPL. The said show-cause notice further proposed

to impose penalty. The show-cause notice was replied

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to by the petitioners as well as by MRPL.

Subsequently, the Commissioner of Central Excise and

Service Tax passed an order-in-original, confirming

the duty and penalty. The petitioner had not yet filed

any appeal assailing the order-in-original.

5. In W.P.No.54018/2014 C/w. W.P.No.

54017/2014, the petitioner is a company incorporated

under the provisions of the Companies Act, 1956. The

petitioner is an assessee in respect of taxable service

(‘Renting of immovable property’). Petitioner was

engaged in the business of leasing of space for

commercial usage for the period from July 2007 to

March 2011. Petitioner undertook construction of a

project in the name and style of ‘Exora Business Park’.

Petitioner availed credit of service tax paid on various

input services and has also undertaken to comply with

the procedures as stipulated in the Finance Act, 1994

read with the Service Tax Rules, 1994 as well as the

Cenvat Credit Rules, 2004.

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The Audit Wing of the Service Tax

Commissionerate audited the accounts of the

petitioner for the period from April 2008 to March

2013 and a show-cause notice dated 24/10/2013 was

issued demanding service tax amount of

Rs.3,97,52,322/- from the petitioner on the premise

that it was ineligible for availing Cenvat Credit as

well as interest thereon. The Commissioner of Central

Excise passed an order-in-original bearing No.24/2014

on 30/5/2014, holding that the petitioner was liable to

pay the requisite amount. Petitioner has sought to

assail that order passed under Section 35B of the Act.

Petitioner filed an appeal on 6/8/2014. The CESTAT

before whom the appeal has been filed has directed

the petitioner to make pre-deposit of 7.5% of the

demand in terms of the amended provision Section

35F which is assailed in these writ petitions.

6. Petitioner in W.P. No.21492/2015 is a

Private Limited Company engaged in Trading and

Servicing of Computer Systems, CPUs, Servers, Note

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books, printers etc, which provides all services such as

maintenance, repairs of systems and also

commissioning, installation of the same, as and when

required by the customer and is registered with the

Service Tax Department for payment of Service Tax

in the categories of ‘Management, Maintenance and

Repair’, Commercial Training or Coaching, Business

Auxiliary Service, Business Support Service,

Information Technology, Software Service, Transport

of Goods by GTA with STC No.AAACC9862FST002.

Petitioner has opted for registration as a Large

Taxpayers Unit (LTU), in the year 2008.

The audit of the accounts of the petitioner-

company was conducted by the Commissioner of

Large Taxpayers Unit, Bengaluru for the period from

December 2006 to September 2009. Petitioner was

asked to reverse certain Cenvat credits availed by it.

Subsequently, a show-cause notice was issued on

30/9/2011 and a demand was made which was

confirmed by the order-in-original bearing

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No.37/2013–ST (Commissioner), dated 26.2.2013/

6.3.2013. Being aggrieved by that order, petitioner

filed an appeal before CESTAT, Bengaluru. That

authority after hearing the submissions of the

petitioner has passed an order on 9/6/2014 in Order

No.21335/2014.

In the above background, the Assistant

Commissioner, LTU, had by letter dated 27/3/2012,

sought details of the cost of spares used in the

warranty support service to customers and credit

taken on such spare parts for the period from

1/1/2008 to 31/3/2013 with reference to order dated

26.2.2013/6.3.2013, which is the order-in-original.

Petitioner responded to the said clarification.

Thereafter on 22/10/2013, show-cause notice was

issued by the Commissionerate proposing to demand

duty, interest as well as penalty which was replied to

and order-in-original bearing No.94/14-15 was passed

on 10/11/2014, confirming demand of service tax,

interest and penalty. That order was received by the

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petitioner on 16/3/2015. By then, Section 35F of the

Act had been amended with effect from 6/8/2014.

Petitioner intends to file an appeal before the CESTAT.

Under the amended provision, the mandatory pre-

deposit of 7.5% of the demand of duty, interest and

penalty has to be made by the petitioner, which is

assailed in this writ petition.

7. Sections 35 and 35B of the Act provide for

filing an appeal before the commissioner (Appeals) or

before the Customs, Excise and Service Tax Appellate

Tribunal (CESTAT), Bengaluru, as the case may be.

Section 35F of the Act deals with the deposit to be

made i.e., pre-deposit before an appeal is entertained.

That Section was amended with effect from 6/8/2014

vide Section 105 of the 2014 Act. Prior to 6/8/2014,

appeals could be filed before the commissioner

(Appeals) or CESTAT as the case may be, and the

provision regarding pre-deposit was at the discretion

of the appellate authority which could pass an order

full or partial waiver of pre-deposit with or without

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conditions, keeping in mind the interests of Revenue.

That provision was amended by the 2014 Act, by

which the monetary pre-deposit of 7.5% for first

appeals before the Commissioner (Appeals) and 10%

for second appeals is prescribed. The petitioners

being aggrieved by the amendment have filed these

petitions.

8. Thus, in all these cases, the grievance of

the petitioners is with regard to the validity of the

amendment made to Section 35F of the Act, by which,

discretion vested with the appellate authorities to

waive or reduce the pre-deposit with conditions has

been taken away and instead is substituted by a

provision for a mandatory pre-deposit of 7.5%.

Submissions:

9. The submissions made on behalf of the

petitioners are as follows:

a) Sri. Arun Kumar, along with Sri. Shivadass,

learned counsel appearing for the petitioners,

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contended that amendment to Section 35F of the Act

effected from 6/8/2014 adversely affects a

substantive and vital right of appeal of the petitioners.

Elaborating the said contention, it was submitted that

Section 35F of the said Act as it stood prior to the

amendment, had stipulated that, where an appeal was

filed in respect of the demand made under the Act the

appellant had to deposit with the appellate authority

the duty demanded or the penalty levied. The proviso

stipulated that the Commissioner (Appeals) or the

Appellate Tribunal, as the case may be, could

dispense with such deposit, subject to such conditions

as the authority may deem fit to impose, so as to

safeguard the interests of the revenue. Provided that,

where such an application was filed for dispensing

with the deposit of the duty demanded or penalty

levied the same was to be decided within thirty days

from the date of filing of the appeal. Therefore,

discretion was given to the Appellate authority to

dispense with the deposit of the duty demanded or

penalty levied in case undue hardship would be

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caused to such appellant. But by the amendment

effected from 6/8/2014, Section 35F of the Act

categorically states that the Tribunal or the

Commissioner (Appeals) shall not entertain any

appeal, unless 7.5% of the duty or penalty in dispute

is deposited. The first proviso states that the said

deposit of 7.5% of the duty and penalty shall not

exceed Rs.10.00 crore, which is an upper limit. But

the second proviso states that the amended section

shall not apply to stay applications and appeals

pending before any appellate authority filed prior to

the commencement of the 2014 Act. As a result, the

discretion vested with the appellate authority has

been taken away and in its place, even if the appellant

is not liable to pay any duty or penalty, is forced to

deposit 7.5% of the duty and penalty. As a result of

the said amendment, the right to file an appeal, which

is a vested right of the appellant, particularly where

the cause of action has arisen prior to the amendment

is adversely effected. In other words, it was

submitted that where the lis had commenced prior to

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the impugned amendment, the amended provision

would not apply to such lis and the un-amended

Section 35F would apply, particularly the first proviso

thereof. It was, therefore, contended that in respect

of those cases, where the matter had commenced

long prior to the impugned amendment to Section 35F

of the Act, it is the original and un-amended provision

which would apply, irrespective of the fact as to

whether the appeal was filed prior to 6/8/2014, on

which date the amended provision took effect, or

subsequent to that date.

b) Referring to various decisions of the

Hon’ble Supreme Court, it was contended that insofar

as the petitioners herein are concerned, the lis

commenced long prior to the amendment of Section

35F and irrespective of whether the appeal was filed

prior to 6/8/2014 or subsequently, the un-amended

first proviso to Section 35F would apply. That the

application of the amended section retrospectively

would cause great injustice to those appellants, who

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had the right to file an appeal under the un-amended

provision. In this context, heavy reliance was placed

on the decision of the Hon’ble Supreme Court in

Hoosein Kasam Dada (India) Ltd. v. The State of

Madhya Pradesh and others (AIR 1953 SC 221)

(Hoosein Kasam Dada) to contend that the pre-

existing right of appeal, which was vested with the

petitioners has not destroyed by the amendment

made to Section 35F of the Act. It was contended

that the right of appeal from the decision of an inferior

authority to a superior authority or Tribunal becomes

vested in a party when proceedings are first initiated

in, and before a decision is given by the inferior

authority.

c) With reference to Garikapati Veerayya v.

N.Subbaiah Choudhry and others (AIR 1957 SC

540) (Garikapati Veerayya), it was submitted that the

right of appeal is a vested right and such a right to

enter the superior court or tribunal accrues to the

litigant and exists as on and from the date the lis

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commences and although it may be actually exercised

when the adverse judgment is pronounced. That such

right is to be governed by the law prevailing at the

date of institution of the suit or proceeding and not by

the law that prevails on the date of its decision or on

the date of filing of the appeal.

d) Reliance was placed on State of Bombay

v. Supreme General Films Exchange Ltd. (AIR

1960 SC 980) to contend that an impairment of the

right of appeal by putting a new restriction thereon or

imposing a more onerous condition is not a matter of

procedure only; it impairs or imperils a substantive

right and an enactment which does so is not

retrospective, unless it says so expressly or by

necessary intendment.

e) Reference was made to Ramesh Singh v.

Cinta Devi (AIR 1996 SC 1560) to contend that

unless an amendment expressly or by necessary

implication makes the provision applicable

retrospectively, the right to appeal is crystallized on

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the institution of the application at the first instance

and that vested right of appeal would not be dislodged

by the enactment of a new Act or amendment.

f) Reference was made to other decisions to

contend that, by virtue of the amendment made to

Section 35F of the Act, which stipulates a mandatory

deposit of 7.5% of the duty or penalty in dispute,

discretion granted to the Commissioner (Appeals) or

Appellate Tribunal, as the case may, to relax the

deposit has been taken away, which amendment

would cause undue hardship to the assessees. It was

further contended that the second proviso of amended

Section 35F states that the amended provision would

not apply to appeals filed prior to the commencement

of the 2014 Act which was pending as on that date.

But even if the lis had commenced prior to the

impugned amendment and the appeals have not been

filed as on 6/8/2014, then the amended provision

would apply. This is discriminatory as the amendment

classifies cases into two categories i.e., where the

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appeals have been filed prior to 6/8/2014 and where

the appeals have not been filed prior to that date,

even though the lis had arisen in all cases prior to the

amendment. Thus, there is violation of doctrine of

equality, was the submission.

g) Placing reliance on certain other decisions,

which shall be referred to, later, it was contended that

the amendment to Section 35F of the Act must be

interpreted in such a manner that where the lis had

commenced prior to the amendment of 6/8/2014, the

un-amended provision must be applied, irrespective of

the date of filing the appeal.

10. Per contra the submission made on behalf

of the respondents is as follows:

a) Learned Addl. Solicitor General, Sri.

K.M.Nataraj, along with Sri Neeralgi, appearing for

Union of India and other respondents, contended that

Section 35F does not confer any right of appeal to an

assessee. Section 35B is the provision, which confers

upon an aggrieved assessee a right to file an appeal,

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either before the Commissioner (Appeals) or before

the Tribunal, as the case may be. Section 35B has

not been amended. The right of appeal has remained

intact and it has not been taken away by the

impugned amendment. Section 35F only deals with

the conditions to be complied with by an appellant in

order that his appeal is entertained by the appellate

authority. It is only those conditions which have been

altered by the amendment. The conditions required to

be complied with, by filing an appeal are not part and

parcel of “the right to file an appeal” by an aggrieved

party. It only regulates the filing of an appeal by an

aggrieved party. The right to file an appeal is no

doubt a substantive right, which has not been affected

in the instant case. But the conditions to be complied

with, in order that an appeal is entertained is a matter

of procedure and there is no vested right in matters of

procedure, was the submission.

b) According to the Addl. Solicitor General, all

that has been done by the impugned amendment is

that discretion vested with the appellate authority to

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reduce or waive the mandatory deposit of entire duty

demanded or penalty levied has been taken away and

in its place only 7.5% of the disputed amount has to

be deposited at the time of filing an appeal by the

aggrieved party. This amendment in no way affects

the substantive right of the petitioners herein to prefer

an appeal. It was also contended that under the

earlier provision, in case the appellate authority

rejected the application filed under the un-amended

proviso, then the entire demand of duty or penalty

had to be deposited. But in the instant case, only

7.5% of the amount in dispute has to be deposited

even though the duty or penalty to be paid by an

appellant is much more, of course upto a maximum of

Rs.10.00 crore. Drawing my attention to the first

proviso to amended Section 35F, it was contended

that the Parliament has taken care to ensure that

7.5% of amount required to be deposited shall not

exceed Rs.10.00 crore.

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c) Further, the second proviso prescribes that

the amendment shall not apply to stay applications

and appeals pending before the appellate authority

prior to the commencement of the 2014 Act. By this,

the Parliament has clearly ensured that the

amendment is effective in respect of all those appeals

filed subsequent to 6/8/2014 irrespective as to when

the lis commenced but to those appeals pending as on

that date, original Section 35F would apply. Therefore,

the second proviso saves all those appeals, which are

pending before the Tribunal or the appellate authority

and the amended provision would not apply to them.

The second proviso is in the nature of a saving clause

and as a result, Section 35F would apply to all appeals

to be filed on or after 6/8/2014, irrespective of when

the lis had commenced prior to that date as the

amendment has a retrospective operation and that the

presumption against retrospectivity does not apply in

the instant case, was the submission. In this context,

reliance was placed on Allied Motors Pvt. Ltd. v.

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Commissioner of Income Tax, Delhi [1997(3)

SCC 472].

d) Referring to Section 5 of the General

Clauses Act, 1897, it was contended that the

amendment was assented to by the Hon’ble President

of India on 6/8/2014 and notified on the same day

and therefore, would commence from midnight of 5th

and 6th August of 2014. It was further contended by

the Addl. Solicitor General that the original Section

35F is wiped out from the statute book, except to the

extent that has been saved in the second proviso of

the amended section. It was also contended that the

second proviso is declaratory in nature. That the

presumption against retrospective operation is not

applicable to declaratory statutes. That declaratory

statutes or provisions are inacted for the purpose of

removal of doubts. Also, the presumption against

retrospectivity may be overcome not only by express

words in the provision, but also by circumstances

sufficiently strong to displace it. But for the second

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proviso, the amended Section 35F would not have

applied to the appeals pending before the appellate

authority, though filed prior to the date of

amendment.

e) Referring to Hoosein Kasam Dada, it was

contended, that the said decision turned on its own

facts and the amendment of the relevant provision

considered in that case. The said judgment is not

applicable to the present case as the provisions in the

present case and that case are not in pari materia. It

was submitted that reference made to other decisions

of various High Courts by placing reliance on Hoosein

Kasam Dada by petitioners’ counsel was unnecessary

and not binding and that this Court could come to an

independent decision. It was, therefore, contended

that when the case of Hoosein Kasam Dada does not

apply to the facts of the present case, the decisions of

the Kerala, Madras and Andhra Pradesh High Courts

placing reliance on Hoosein Kasam Dada’s case are

not relevant. It was also contended that in those

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judgments, the legal provisions under consideration

have not been examined thread-bare and hence,

those decisions cannot be followed in these cases. It

was submitted that there is no merit in these petitions

and the same may be dismissed.

11. In reply, learned counsel for the petitioners

contended that the second proviso is not declaratory

in nature and that the judgments of the other High

Courts relied upon by them would squarely apply to

the present case. It was reiterated that the right to

file an appeal would continue to apply to a lis as it

would have accrued to the appellant on the date the

lis commenced before the inferior court or Tribunal

and that the conditions to be complied with while

preferring an appeal cannot, by an amendment be

made onerous, so as to defeat a right to file an

appeal. Reiterating the earlier contentions, learned

counsel for the petitioners submitted that the

petitioners are entitled to reliefs in these writ petitions

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as the impugned Section 35F has no retrospective

operation.

Points for consideration:

12. Having heard learned counsel for the

respective parties, the following points would arise for

my consideration:

1) Whether Section 35F of the Act as

amended, is a piece of substantive or

procedural law, prescribing a

mandatory pre-deposit at the time of

filing an appeal, is an unreasonable

condition?

2) Whether amendment made to Section

35 F of the Act has a retrospective

operation?

3) What order?

Legal Frame work:

13. At this stage, it would be useful to extract

the relevant provisions of the Act, which have a

bearing on the issues raised in these petitions.

-: 29 :-

a) Section 35 of the Act provides the appellate

remedy before commissioner (Appeals) and it reads as

under:

“35. Appeals to Commissioner

(Appeals).- (1)Any person aggrieved by

any decision or order passed under this Act

by a Central Excise Officer lower in rank

than a Commissioner of Central Excise may

appeal to the Commissioner of Central

Excise (Appeals) hereafter in this Chapter

referred to as the Commissioner (Appeals)

within sixty days from the date of the

communication to him of such decision or

order:

Provided that the Commissioner

(Appeals) may, if he is satisfied that the

appellant was prevented by sufficient cause

from presenting the appeal within the

aforesaid period of sixty days, allow it to be

presented within a further period of thirty

days.

(1A) The Commissioner (Appeals)

may, if sufficient cause is shown, at any

stage of hearing of an appeal, grant time,

from time to time, to the parties or any of

-: 30 :-

them and adjourn the hearing of the appeal

for reasons to be recorded in writing:

Provided that no such adjournment

shall be granted more than three times to a

party during hearing of the appeal.

(2) Every appeal under this section

shall be in the prescribed form and shall be

verified in the prescribed manner.”

b) Section 35B of the Act speaks about the

circumstances under which an appeal is maintainable

before an appellate tribunal, which reads as under:

“35B. Appeals to the Appellate

Tribunal.-(1) Any person aggrieved by any

of the following orders may appeal to the

Appellate Tribunal against such order-

(a) a decision or order passed by the

Commissioner of Central Excise as an

adjudicating authority;

(b) an order passed by the Commissioner

(Appeals) under section 35A;

(c) an order passed by the Central Board

of Excise and Customs constituted

-: 31 :-

under the Central Boards of Revenue

Act, 1963 (54 of 1963) (hereafter in

this Chapter referred to as the Board)

or the Appellate Commissioner of

Central Excise under section 35, as it

stood immediately before the

appointed day;

(d) an order passed by the Board or the

Commissioner of Central Excise,

either before or after the appointed

day, under section 35A, as it stood

immediately before that day:

Provided that no appeal shall lie to

the Appellate Tribunal and the Appellate

Tribunal shall not have jurisdiction to

decide any appeal in respect of any order

referred to in clause (b) if such order

relates to,-

(a) a case of loss of goods, where the loss

occurs in transit from a factory to a

warehouse or to another factory, or

from one warehouse to another, or

during the course of processing of

the goods in a warehouse or in

storage, whether in a factory or in a

warehouse;

-: 32 :-

(b) a rebate of duty of excise on goods,

exported to any country or

territory outside India or on excisable

materials used in the manufacture of

goods which are exported to any

country or territory outside India;

(c) goods exported outside India (except

to Nepal or Bhutan) without payment

of duty;

(d) credit of any duty allowed to be

utilised towards payment of excise

duty on final products under the

provisions of this Act or the rules

made thereunder and such order is

passed by the Commissioner

(Appeals) on or after the date

appointed under Section 109 of the

Finance (No.2) Act, 1998:

Provided further that the appellate

Tribunal may, in its discretion, refuse to

admit an appeal in respect of an order

referred to in clause (b) or clause (c) or

clause (d) where-

(i) in any disputed case, other than a

case where the determination of any

-: 33 :-

question having a relation to the rate

of duty of excise or to the value of

goods for purposes of assessment is

in issue or is one of the points in

issue, the difference in duty involved

or the duty involved; or

(ii) the amount of fine or penalty

determined by such order, does not

exceed fifty thousand rupees.

(1A) Every appeal against any order

of the nature referred to in the first proviso

to sub-section (1), which is pending

immediately before the commencement of

Section 47 of the Finance Act, 1984 (21 of

1984), before the Appellate Tribunal and

any matter arising out of, or connected

with, such appeal and which is so pending

shall stand transferred on such

commencement to the Central

Government, and the Central Government

shall deal with such appeal or matter under

Section 35EE as if such appeal or matter

were an application or a matter arising out

of an application made to it under that

section.

-: 34 :-

(1B) (i) The Central Board of Excise

and Customs constituted under the Central

Boards, of Revenue Act, 1963 (54 of 1963)

may by notification in the Official Gazette,

constitute such Committees as may be

necessary for the purposes of this Act.

(ii) Every Committee constituted

under clause (i) shall consist of two Chief

Commissioners of Central Excise or two

Commissioners of Central Excise, as the

case may be.”

c) Section 35F deals with the deposit of duty

demanded or duty and penalty levied at the time of

filing an appeal and during the pendency of the appeal

as it stood prior to the amendment. It reads as

under:

“SECTION 35F. Deposit, pending

appeal, of duty demanded or penalty

levied. – Where in any appeal under this

Chapter, the decision or order appealed

against relates to any duty demanded in

respect of goods which are not under the

control of central excise authorities or any

penalty levied under this Act, the person

desirous of appealing against such decision

-: 35 :-

or order shall, pending the appeal, deposit

with the adjudicating authority the duty

demanded or the penalty levied:

Provided that where in any particular

case, the Commissioner (Appeals) or the

Appellate Tribunal is of opinion that the

deposit of duty demanded or penalty levied

would cause undue hardship to such

person, the Commissioner (Appeals) or, as

the case may be, the Appellate Tribunal,

may dispense with such deposit subject to

such conditions as he or it may deem fit to

impose so as to safeguard the interests of

revenue.

Provided further that where an

application is filed before the Commissioner

(Appeals) for dispensing with the deposit of

duty demanded or penalty levied under the

first proviso, the Commissioner (Appeals)

shall, where it is possible to do so, decide

such application within thirty days from the

date of its filing.

Explanation. – For the purposes of

this section “duty demanded” shall

include.-

-: 36 :-

(i) amount determined under section

11D;

(ii) amount of erroneous CENVAT

credit taken;

(iii) amount payable under rule 57CC of

Central Excise Rules, 1944;

(iv) amount payable under rule 6 of

CENVAT Credit Rules, 2001 or

CENVAT Credit Rules, 2002 or

CENVAT Credit Rules, 2004;

(v) interest payable under the

provisions of this Act or the rules

made thereunder.”

d) The amendment effected from 6/8/2014 to

Section 35F is as follows:

“SECTION 35F. Deposit of certain

percentage of duty demanded or

penalty imposed before filing appeal. –

The Tribunal or the Commissioner

(Appeals), as the case may be, shall not

entertain any appeal-

(i) under sub-section (1) of Section

35, unless the appellant has

-: 37 :-

deposited seven and a half per

cent of the duty, in case where

duty or duty and penalty are in

dispute, or penalty, where such

penalty is in dispute, in pursuance

of a decision or an order passed by

an officer of Central Excise lower in

rank than the Principal

Commissioner of Central Excise or

Commissioner of Central Excise;

(ii) against the decision or order

referred to in clause (a) of sub-

section (1) of Section 35B, unless

the appellant has deposited seven

and a half per cent. of the duty, in

case where duty or duty and

penalty are in dispute, or penalty,

where such penalty is in dispute, in

pursuance of the decision or order

appealed against;

(iii) against the decision or other

referred to in clause (b) of sub-

section (1) of Section 35B, unless

the appellant has deposited ten per

cent. of the duty, in case where

duty or duty and penalty are in

-: 38 :-

dispute, or penalty, where such

penalty is in dispute, in pursuance

or order appealed against:

Provided that the amount required to

be deposited under this section shall not

exceed rupees ten crores:

Provided further that the provisions of

this section shall not apply to the stay

applications and appeals pending before

any appellate authority prior to the

commencement of the Finance (No.2) Act,

2014.

Explanation.- For the purposes of this

section “duty demanded” shall include.-

(i) amount determined under section

11D;

(ii) amount of erroneous Cenvat credit

taken;

(iii) amount payable under rule 6 of the

Cenvat Credit Rules, 2001 or the

Cenvat Credit Rules, 2002 or the

Cenvat Credit Rules, 2004.”

-: 39 :-

e) Subsequent to the amendment dated

6/8/2014, a Circular was issued by the Department

i.e., Circular No.984/8/2014-CX, dated 16/9/2014,

which inter alia deals with the procedure and manner

of making pre-deposit and such other matters. On

14/10/2014, another Circular was issued by the

respondent-department as certain parties had claimed

exemption from the applicability of the amended

provision. It was notified that no exemption has been

provided with regard to appeals filed on or after

6/8/2014.

14. Sections 35 and 35B state the

circumstances under which an appeal could be filed by

an aggrieved party, either before the Commissioner

(Appeals) or the Tribunal, as the case may be. Those

provisions have not been amended by the 2014 Act.

15. By virtue of amendment to Section 35F,

two major changes have been made. Firstly, it is not

mandatory for the appellant to deposit the entire duty

and penalty levied as the case may be, but only 7.5%

-: 40 :-

or 10% thereof as the case may be. Secondly, prior

to the amendment, the appellant could seek

dispensation of deposit of the entire duty demanded

or penalty levied as the case may be, but under the

amended provision, such a discretion granted to the

Commissioner (Appeals) or the Appellate Tribunal has

been taken away. Thirdly, there is a cap on the pre-

deposit amount, as 7.5% or 10% as the case may be,

of the disputed amount cannot exceed Rs.10.00

crores.

16. According to petitioners’ counsel, the

amendment does not apply to the case of the

petitioners as their lis commenced prior to the coming

into force of the amendment i.e., prior to 6/8/2014

and that they are governed under Section 35F as it

stood prior to the amendment as according to them,

the amendment does not have a retrospective effect.

17. What is significant in this case is that the

second proviso of Section 35F as amended

categorically states that the amendment would not

-: 41 :-

apply to the stay applications and appeals pending

before the Appellate Authority prior to the

commencement of 2014 Act. The implication is that

the proviso has distinguished between two categories

of lis namely, a lis which has commenced from

6/8/2014 i.e., on the date, on which 2014 Act

commenced and a lis which had commenced prior to

that date. In respect of the lis which had commenced

prior to 6/8/2014, the second proviso states that if

prior to 6/8/2014, an appeal had been filed or a stay

application had been filed and was pending before the

concerned Appellate Authority, then the amendment

would not apply. That means, where, in respect of a

lis, which has commenced prior to 6/8/2014, an

appeal had been filed or a stay application was filed

prior to the said date and pending before the appellate

authority on 6/8/2014 the earlier provision would

apply and the Appellate Authority would continue to

have the discretion to deal with the application filed

under the first proviso to Section 35F as it stood prior

to 6/8/2014. But in respect of those cases, where the

-: 42 :-

lis though commenced prior to 6/8/2014 and where

the appeals had not been filed prior to that date, the

amendment does not expressly say anything in that

regard and is silent. Thus, the proviso declares that

the amended provision would not apply to stay

applications or appeals pending before the appellate

authority, prior to commencement of the amendment.

The intention of insertion of the second proviso has to

be discerned. Is it the intention of the Parliament that

Section 35F, as it stood prior to the amendment,

would apply to only those cases where the stay

applications and appeals filed prior to 6/8/2014 are

pending and therefore, the second proviso is in the

nature of saving clause? In other words, is it,

irrespective of when the lis has commenced, (even if

prior to the amendment) if an appeal is filed on or

after 6/8/2014, the amended provision would apply?

Right of Appeal:

18. Before venturing to unravel this

conundrum, it is necessary to take note of the concept

-: 43 :-

of right of appeal, as the entire controversy in this

case centers on that right, which according to

petitioners, has been adversely affected on account of

the impugned amendment. It is also necessary to

distinguish between substantive law and procedural

law and the decisions of the Hon'ble Supreme Court in

that regard keeping in mind the same while

considering the principles of statutory interpretation.

This would have to be done in the back-drop of the

decision of Hoosein Kasam Dada relied upon heavily

by the learned counsel for he petitioners.

a) In Garikapati Veeraya, it has been held by

a majority of Judges on the Bench of the Hon’ble

Supreme Court that the legal pursuit of a remedy i.e.,

suit, appeal and second appeal are really steps in a

series of proceedings, all connected by an intrinsic

unity and are to be regarded as one legal proceeding.

The right of appeal is not a mere matter of procedure,

but is a substantive right. The institution of the suit

carries with it the implication that the right of appeal

-: 44 :-

then in force is preserved to the parties thereto till the

rest of the career of the suit. The right of appeal is a

vested right and such a right to enter the superior

court accrues to the litigant and exists as on and from

the date the lis commences, although it may be

actually exercised when the adverse judgment is

pronounced. Such right is to be governed by the law

prevailing at the date of the institution of the suit or

proceeding and not by the law that prevails at the

date of its decision or the date of the filing of the

appeal. Further, this vested right of appeal can be

taken away only by a subsequent enactment, if it so

provides expressly or by necessary intendment and

not otherwise. Thus, the Hon’ble Supreme Court has

recognized that a vested right of appeal can be taken

away by an enactment if it provides so expressly or by

necessary implication. If there is no such amendment

made to the right of appeal, then it shall continue to

be available to a party to a lis.

-: 45 :-

b) But in Ganga Bai v. Vijay Kumar

[(1974) 2 SCC 393] (Ganga Bai), it has been held as

under:-

“There is a basic distinction between

the right of suit and the right of appeal.

There is an inherent right in every person to

bring a suit of civil nature and unless the suit

is barred by statute one may, at one’s peril,

bring a suit of one’s choice. It is no answer

to a suit, howsoever frivolous to claim, that

the law confers no such right to sue. A suit

for its maintainability requires no authority

of law and it is enough that no statute bars

the suit. But the position in regard to

appeals is quite the opposite. The right of

appeal inheres in no one and therefore an

appeal for its maintainability must have the

clear authority of law. That explains why the

right of appeal is described as a creature of

statute.”

c) In this context, reference could also be

made to a later judgment of the Hon’ble Supreme

Court in James Joseph Vs. State of Kerala

[(2010) 9 SCC 642], wherein the Hon’ble Supreme

-: 46 :-

Court has formulated the following principles with

reference to appeals.

“(i) An appeal is a proceeding where

an higher forum reconsiders the decision of

a lower forum, on questions of fact and

questions of law, with jurisdiction to

confirm, reverse, modify the decision or

remand the matter to the lower forum for

fresh decision in terms of its directions.

(ii) The appellate jurisdiction can be

limited or regulated by the legislature and

its extent has to be decided with reference

to the language employed by the statute

conferring the appellate jurisdiction.

(iii) The width of jurisdiction or the

limitations on jurisdiction with reference to

an appeal, does not depend on whether the

appeal is a first appeal or a second appeal,

but depends upon the limitations, if any,

placed by the statute conferring the right of

appeal.

(iv) If the Legislature's intention is to

limit the jurisdiction in an appeal, it may

indicate such limits in the provision

providing for appeal. Alternatively, it may

-: 47 :-

expressly or impliedly incorporate the

provisions of Section 100 of the Code, into

the provision for appeals.

(v) Generally statutory provisions for

appeals against original orders or decrees

(that is, first appeals) will not have any

limitations and therefore rehearing on both

law and fact is contemplated; and statutory

provisions for appeals against appellate

orders (that is, second appeals) will be

restricted to questions of law. But such

restriction is not on account of any legal

principle that all second appeals should

always be with reference to questions of

law, but would depend upon the wording of

the statute placing the restrictions upon the

scope of second appeal.

(vi) Where the statute does not place

any limitations or restrictions in regard to

the scope and width of the appeal, it shall

be construed that the appeal provides a

right of rehearing on law as well as facts. If

the Legislature enacts a self-contained

provision for second appeals, without any

limitation upon the scope of the second

appeal and excludes the possibility of

-: 48 :-

reading the provision of Section 100 of the

Code, into such provision, then, it will not

be permissible to read the limitations of

Section 100 of the Code into the special

provision.”

d) In the instant case, it can be assumed that

the right to file an appeal, which was available to the

petitioners herein prior to 6/8/2014 under Sections 35

and 35B of the Act has been preserved intact, despite

the enforcement of 2014 Act, which has amended,

inter alia, Section 35F of the Act, with which we are

concerned in this case.

e) However, the contention of the learned

counsel for the petitioners was that any change with

regard to the conditions for filing of an appeal, which

would adversely affect a potential appellant, in

substance, affects the vested right to file an appeal.

This contention was countered by learned Addl.

Solicitor General by contending that conditions

stipulated for filing an appeal have no nexus to the

right to file an appeal. That in the instant case, all

-: 49 :-

that has been done is to mandatorily deposit 7.5% of

duty demanded or penalty levied at the time of filing

an appeal and the discretion vested with the Tribunal

or appellate authority with regard to pre-deposit has

been taken away.

Re: Hoosein Kasam Dada:

19. Learned counsel for the petitioners placed

reliance on Hoosein Kasam Dada to buttress the

submission that the pre-existent right to file an appeal

under the earlier provision has not been destroyed by

the amendment as the right of appeal from the

decision of an inferior Tribunal to the superior Tribunal

becomes vested in a party when proceedings are first

initiated in, and before a decision is given by the

inferior court. As the sheet anchor of the petitioners

is the ratio of Hoosein Kasam Dada by various High

Courts while adjudicating on the amendment made to

Section 35F of the Act, it would be necessary to refer

to that decision in detail.

-: 50 :-

a) The aforesaid case arose under the

provisions of the Central Provinces and Berar Sales

Tax Act, 1947 (‘1947 Act’) and the amendment made

to that Act in the year 1950. Sub-section (1) of

Section 22 of the said Act was the bone of contention

between the parties therein. Sub-section (1) of

Section 22 was originally expressed in the following

terms:

“22. (1) Any dealer aggrieved by an order

under this Act may, in the prescribed

manner, appeal to the prescribed authority

against the order:

Provided that no appeal against an order of

assessment, with or without penalty, shall

be entertained by the said authority unless

it is satisfied that such amount of tax or

penalty or both as the appellant may admit

to be due from him, has been paid.”

The relevant portion of Section 22 as amended

i.e., the proviso reads as under:

“Provided that no appeal against an order

of assessment, with or without penalty

-: 51 :-

shall be admitted by the said authority

unless such appeal is accompanied by a

satisfactory proof of the payment of the

tax, with penalty, if any, in respect of

which the appeal has been preferred.”

From the language of the proviso as it stood

prior to the amendment, an aggrieved assessee had

to pay only such amount of tax as he might admit to

be due from him, whereas under the aforesaid

amended proviso before an appeal could be admitted,

it had to be accompanied by satisfactory proof of

payment of tax in respect of which the appeal had

been preferred. The contention of the assessee

therein was, as the amendment had not been made

retrospective, its right of appeal under the original

sub-section (1) of Section 22 had remained unaffected

and that accordingly, as it did not admit anything to

be due, it was not liable to deposit any sum along with

its appeal and the appellate Commissioner was bound

to admit its appeal. That the Commissioner had no

jurisdiction or power to reject it on the ground that

-: 52 :-

the appeal had not been accompanied by any proof of

payment of tax assessed against the appellant therein

as required under the amended proviso. That the

Board of Revenue and the High Court were in error in

not directing the Commissioner to admit the appeal,

was the contention of the appellant therein, before the

Hon’ble Supreme Court.

b) In order to understand that contention, it

would be necessary to narrate the relevant facts of

the said case. The appellant therein had submitted

sales tax return on 28/11/1947. Notice was issued to

the assessee to produce evidence in support of the

said return. Not being satisfied by the inspection of

the account books as per the correctness of the

return, the Sales Tax Officer was of the opinion that

the taxable turnover exceeded Rs.2.00 lakh and

submitted the case to the Assistant Commissioner of

Sales Tax for assessment. The Assistant

Commissioner heard the matter from 9/6/1949 and on

8/4/1950 made a best judgment assessment. Being

-: 53 :-

aggrieved by the order of assessment, the assessee

on 10/5/1950 perferred an appeal to the Sales Tax

Commissioner, Madhya Pradesh, under sub-section

(1) of Section 22 of the aforesaid 1947 Act. The

appeal, not having been accompanied by any proof of

tax in respect of which the appeal had been preferred,

the authorities declined to admit the appeal. The

assessee moved the Board of Revenue, Madhya

Pradesh, by a revision application contending that the

appeal was not governed by the amended proviso to

sub-section (1) of Section 22 of the 1947 Act, but was

governed by the proviso to sub-section (1) of Section

22 of the said Act as it stood when the assessment

proceedings were commenced i.e., prior to the said

amendment. The Board of Revenue took the view

that as the order of assessment was made after the

amendment of the section and the appeal was filed

thereafter, such appeal must be governed by the

provisions of law as it existed at the time the appeal

was actually filed and that the law as it existed before

the filing of the appeal could not be applied to the

-: 54 :-

case. The assessee thereafter moved the High Court

of Madhya Pradesh under Articles 226 and 227 of the

Constitution of India. The High Court dismissed the

writ petition. The assessee thereupon approached the

Hon’ble Supreme Court, which considered the effect of

the amendment made to Section 22 of the 1947 Act

on the lis therein. The Hon’ble Court noted that the

amendment imposed a restriction on the assessee’s

right of appeal. It more specifically raised a question

as to whether the imposition of such a restriction by

amendment of the section affected the assessee’s

right of appeal from a decision, in proceedings which

commenced prior to such amendment and which right

of appeal was free from such restriction under the

section as it stood at the time of commencement of

the proceedings.

c) After referring to Colonial Sugar Refining

Company vs. Irving [(1905) AC 369 (PC)]

(Colonial Sugar Refining Company), it held that a right

of appeal is not merely a matter of procedure, it is a

-: 55 :-

substantive right. The right of appeal from the

decision of an inferior tribunal to a superior tribunal is

vested in a party when the proceedings are first

initiated in, and before a decision is given by, the

inferior court. Such a vested right cannot be taken

away, except by express enactment or necessary

intendment. An intention to interfere with or to impair

or imperil such a vested right cannot be presumed,

unless such intention be clearly manifested by express

words or necessary implication.

d) More specifically the Hon’ble Supreme

Court opined that the pre-existing right of appeal is

not destroyed by the amendment, if the amendment

is not made retrospective by express words or by

necessary intendment. The fact that the pre-existing

right of appeal continued to exist must, in its turn,

necessarily imply that the old law which created that

right of appeal must also exist to support the

continuation of that right. As the old law continued to

exist for the purpose of supporting the pre-existing

-: 56 :-

right of appeal that old law must govern the exercise

and enforcement of that right of appeal and there can

be no question of the amended provision preventing

the exercise of that right.

e) According to the Hon’ble Supreme Court,

the argument that the authority had no option or

jurisdiction to admit the appeal unless it be

accompanied by the deposit of the assessed tax, as

required by the amended proviso to sub-section (1) of

Section 22 of the 1947 Act, overlooked the fact of

existence of the old law for the purpose of supporting

the pre-existing right and really amounted to begging

the question. According to the apex Court, the

amended proviso was wholly inapplicable in such a

situation and the jurisdiction of the authority had to

be exercised under the old law which continued to

exist. It was held that the appeal should not have

been rejected on the ground that it was not

accompanied by satisfactory proof of the payment of

the assessed tax. As the appellant in that case did

-: 57 :-

not admit any amount was due by it, it was held that

under the section as it stood previously, it was entitled

to file its appeal without depositing any sum of

money.

f) In Vithalbhai Naranbhai Patel vs. The

Commissioner of Sales Tax, M.P., Nagpur (AIR

1967 SC 344) (Vithalbhai Naranbhai patel), the

Hon’ble Supreme Court reiterated the decision in

Hoosein Kasam Dada by holding that when a lis

commences, all rights get crystallized and no clog

upon a likely appeal can be there, unless the law was

made retrospective, expressly or by clear implication.

g) Thus, what emerges from the aforesaid two

decisions is the principle that an amendment made to

a provision dealing with right of appeal can only have

a prospective operation. It would not affect any right,

which was crystallized with regard to the filing of an

appeal when the lis commenced. Therefore, such an

amendment is always prospective in nature. But the

amendment can affect the right of appeal of a party if

-: 58 :-

it is made retrospective, by an express provision or by

necessary implication. Thus, what follows is that there

can be an amendment of a provision dealing with right

of appeal at any point of time after a lis has

commenced between the parties concerned, but the

amended provision concerning the right of appeal

must always be applied prospectively i.e., from the

date the amendment comes into effect and it would

not apply to cases pending before various courts,

unless there is a retrospective effect given

to an amendment either expressly or by clear

implication.

h) In Hoosein Kasam Dada, the Hon’ble

Supreme Court accepted the contention of the

appellant therein, that the amendment to sub-section

(1) of Section 22 of 1947 Act had not been made

retrospective by any express provision or by

necessary implication. Therefore, the amendment

took effect from the date of its enforcement and

applied to all lis, which commenced on or subsequent

-: 59 :-

to that date. It saved all lis, which commenced prior

to that date from its applicability. Hence, relief was

granted to the appellants therein. The same view was

reiterated in Vithalbhai Naranbhai Patel. But no relief

was granted in the latter case as the records did not

disclose as to when the lis had commenced and unless

it was proved as to whether the lis had commenced

prior to the amendment, the dictum in Hoosein Kasam

Dada would not apply, was the view of the Hon’ble

Supreme Court.

20. In light of the submissions made by the

respective parties and keeping in mind the

amendment in question, the applicability of the

principle stated in Hoosein Kasam Dada to the present

case shall be considered. But before that, it is

necessary to consider and answer point No.1.

-: 60 :-

Re: Point No.1:

Distinction between substantive law and

procedural law:

21. At this stage, it would be useful to

distinguish between substantive law from the law of

procedure as it has been persistently contended by

the learned counsel for petitioners that the right to file

an appeal is a substantive right and that right cannot

be altered with retrospective effect when it has

already vested with the parties on the date the lis

commenced. Also when conditions with regard to

filing an appeal are altered, it would affect the right to

file an appeal, which is a substantive right. The

aforesaid distinction has been enunciated by the

Hon’ble Supreme Court in its later judgments and

have a bearing on point No.1.

a) The meanings of substantive law and

procedural law as stated in Black’s Law Dictionary –

ninth edition are as under:

-: 61 :-

“Substantive law (seb-sten-tiv).

(18c) The part of the law that creates,

defines, and regulates the rights, duties

and powers of parties.

‘So far as the administration of justice

is concerned with the application of

remedies to violated rights, we may say

that the substantive law defines the

remedy and the right, while the law of

procedure defines the modes and

conditions of the application of the one to

the other.” John Salmond, Jurisprudence

476 (Glanville L. Williams ed., 10th ed.

1947)’.

Procedural law: The rules that

prescribe the steps for having a right or

duty judicially enforced, as opposed to the

law that defines the specific rights or duties

themselves.- Also termed adjective law.”

b) The law of procedure or adjective law may

be defined as that branch of the law, which governs

the process of litigation. It is the law of actions - jus

quod ad actionee pertinet – using the term action in a

wide sense to include all legal proceedings, civil or

-: 62 :-

criminal. All the residue is substantive law, and

relates, not to the process of litigation, but to the

purposes and subject-matter. In other words,

substantive law is concerned with the ends which the

administration of justice seeks; procedural law deals

with the means and instruments by which those ends

are to be attained. The latter regulates the conduct

and relation of courts and litigants in respect of the

litigation itself; the former determines their conduct

and relations in respect of the matters litigated. What

facts constitute a wrong is determined by the

substantive law; what facts constitute proof of a

wrong is a question of procedure. The first relates to

the subject-matter of the litigation, the second relates

to the process merely.

c) So far as the administration of justice is

concerned, with the application of remedies to violated

rights, substantive law defines the remedy and the

right, while the law of procedure defines the modes

and conditions of the application of the one to the

-: 63 :-

other. (source: Salmond on Jurisprudence -

Twelfth Edition)

22. Two decisions of the Hon'ble Supreme

Court distinguishing between substantive law and

procedural law could be referred to herein.

a) In the case of Hitendra Vishnu Thakur

vs. State of Maharashtra [(1994)4 SCC 602]

(Hitendra Vishnu Thakur), the Hon’ble Supreme Court

in the context of substantive and procedural law has

laid down the ambit and scope of an amending Act

and its retrospective operation in the following terms:

“(i) A statute which affects substantive

rights is presumed to be prospective

in operation unless made

retrospective, either expressly or by

necessary intendment, whereas a

statute which merely affects

procedure, unless such a construction

is textually impossible, is presumed to

be retrospective in its application,

should not be given an extended

-: 64 :-

meaning and should be strictly

confined to its clearly-defined limits.

(ii) Law relating to forum and limitation is

procedural in nature, whereas law

relating to right of action and right of

appeal even though remedial is

substantive in nature.

(iii) Every litigant has a vested right in

substantive law but no such right

exists in procedural law.

(iv) A procedural statute should not

generally speaking be applied

retrospectively where the result would

be to create new disabilities or

obligations or to impose new duties in

respect of transactions already

accomplished.

(v) A statute which not only changes the

procedure but also creates new rights

and liabilities shall be construed to be

prospective in operation, unless

otherwise provided, either expressly

or by necessary implication.”

-: 65 :-

b) Referring to the aforesaid decision in

Shyam Sunder vs. Ramkumar [(2001)8 SCC 24]

(Shyam Sunder), it has been held that when a repeal

of an enactment is followed by a fresh legislation,

such legislation does not affect the substantive rights

of the parties on the date of the suit or adjudication of

the suit, unless such a legislation is retrospective and

a court of appeal cannot take into consideration a new

law brought into existence after the judgment

appealed from has been rendered, because the rights

of the parties in an appeal are determined under the

law in force on the date of the suit. However,

according to Hon’ble Supreme Court, the above

position in law would be different in matters which

relate to procedural law, but so far as substantive

rights of parties are concerned, they remain

unaffected by the amendment in the enactment. Thus,

while there is a presumption against retrospective

operation of a statute dealing with substantive rights;

where an amendment affects procedure, it is

presumed to be retrospective, unless the amending

-: 66 :-

Act provides otherwise. In that case, the Hon’ble

Supreme Court was dealing with Panjab Pre-emption

Act, 1913 as substituted by Haryana Act 10 of 1995,

which is substantive law. It held that the amending

Act being prospective in operation, did not affect the

rights of the parties to the litigation on the date of

adjudication of the pre-emption suit and the appellate

court was not required to take into consideration the

substituted provision introduced by Section 15 of the

amended Act.

Thus, the Hon’ble Supreme Court, in the

aforesaid decision has borne in mind the distinction

between substantive law and procedural law in the

context of the operation of an amending statute or

provision. If a piece of substantive law is amended,

then such a law would have prospective operation

unless made retrospective, either expressly or by

necessary intendment. But when it comes to the

procedural law, the position is contrary. In the case

of an amendment of a procedural law, the amendment

-: 67 :-

is always retrospective in operation, unless by a

contra indication it is made only prospective.

23. The aforesaid dicta could be applied to the

provisions of the Act under consideration. Chapter

VIA of the Act deals with appeals. The right to file an

appeal to the Commissioner (Appeals) or to the

Appellate Tribunal against any order of a lower

authority is prescribed in Sections 35 and 35B,

respectively. The procedure to be followed by the

Appellate Tribunal is stipulated in Sections 35C and

35D. Section 35EE provides for revision by the

Central Government in certain cases. The provisions

dealing with the right to file an appeal i.e., Sections

35 and 35B and the right to file a revision under

Section 35EE are, though dealing with the right to

seeking redressal of an impugned decision or order

from the superior authority or forum, is in fact, a piece

of substantive law. Thus, the right to file an appeal

and the forum prescribed to lay an appeal are

substantive rights given to an aggrieved person.

-: 68 :-

24. However, the right to file an appeal must

be distinguished from the procedure necessarily to be

followed while exercising the right to file an appeal.

Sections 35A, 35C and 35D of the Act deal with the

procedures to be followed by the Commissioner

(Appeals) or the Appellate Tribunal while considering

an appeal filed by an aggrieved party. But the

conditions to be complied with by an appellant, while

filing an appeal, cannot, in my view, be construed to

be a piece of substantive law as contended by learned

counsel for petitioners. If the right to file an appeal is

circumscribed by certain conditions to be complied

with by an aggrieved party at the time of filing an

appeal, it would be in the realm of procedural law.

Thus, while Sections 35 and 35B of the Act are

substantive law providing the forum and the

circumstances under which an appeal could be filed by

an aggrieved party, the conditions to be followed for

the purpose of exercising the substantive right as

prescribed in Section 35F is a piece of procedural law.

Section 35F, which is the centre of controversy

-: 69 :-

in this matter, prescribes the pre-deposit to be made

by an aggrieved party while availing an appellate

remedy.

25. Thus, keeping in mind the distinction

between substantive law and procedural law, it is held

that Section 35F is a piece of procedural legislation

and the principles that are applicable with regard to

interpretation of an amendment made to that

provision would have to be considered. Hence, the

principles applicable to interpret an amendment made

to a substantive law are not applicable in the instant

case. Further, a litigant has a vested right in

substantive law, but no such right exists in procedural

law. This aspect becomes clearer on consideration of

the judicial precedents on pre-deposit on preferring

appeals, wherein the Hon’ble Supreme Court has dealt

with the condition of pre-deposit to be made by the

appellant at the time of preferring an appeal.

-: 70 :-

Judicial precedents on pre-deposit at the time of

preferring appeals:

26. The relevant citations on the pre-deposit of

outstanding dues at the time of preferring an appeal

cited at the Bar are as under:

a) In The Anant Mills Co. Ltd. vs. State of

Gujarat and others [(1975) 2 SCC 175], the

Hon’ble Supreme Court had occasion to consider vires

of Section 406 (2) (e) of the Bombay Provincial

Municipal Corporations Act, as amended by Gujarat

Act No.5 of 1970 with regard to the entertainment of

an appeal by a person, who had not deposited the

amount of tax due from him and who had not been

able to show to the appellate Judge that the deposit of

the amount would cause him undue hardship, arising

out of his own omission or default.

While considering the said provision, the Hon’ble

Supreme Court held that the requirement about the

deposit of the amount claimed as a condition

precedent to the entertainment of the appeal which

-: 71 :-

seeks to challenge the imposition or the quantum of

tax, did not have the effect of nullifying the right of

appeal, especially keeping in view the fact that

discretion was vested in the appellate judge to

dispense with compliance of the above requirement.

All that the statutory provision sought to do was to

regulate the exercise of the right of appeal. The

object being, to balance the right of appeal, which is

conferred upon all persons who are aggrieved against

the determination of tax or rateable value and the

right of the corporation to speedy recovery of the tax.

Hence, it was held that such a provision was not

offensive to Article 14 of the Constitution.

It was held that the right of appeal being

creature of a statute without a statutory provision

creating such a right, an aggrieved person is not

entitled to file an appeal. It was also observed that

the legislature while granting the right of appeal could

impose conditions for the exercise of such right. For

example, it was permissible to prescribe a condition in

-: 72 :-

criminal cases that, unless a convicted person is

released on bail, he must surrender to custody, before

his appeal against the sentence of imprisonment

would be entertained. Likewise, it was permissible to

enact a law that no appeal shall lie against an order

relating to an assessment of tax unless a tax, had

been paid. Such conditions merely regulate the

exercise of the right of an appeal, so that the same is

not abused by a recalcitrant party and there is no

difficulty in the enforcement of the order appealed

against, in case the appeal is ultimately dismissed

were the observations of the Supreme Court.

It further held that it is open to the Legislature

to impose an accompanying liability upon a party upon

whom a legal right is conferred or to prescribe

conditions for the exercise of the right. Any

requirement for the discharge of that liability or the

fulfillment of that condition in case the party

concerned seeks to avail of the said right is a valid

piece of legislation.

-: 73 :-

b) In Seth Nand Lal and another vs. State

of Haryana and others [1980 (supp) SCC 574], a

Constitution Bench of the Supreme Court held that the

right of appeal is a creature of statute and there is no

reason why the legislature while granting that right

cannot impose conditions for the exercise of that

right, so long as the conditions are not so onerous as

to amount to unreasonable restrictions, rendering the

right almost illusory.

In this case, the Hon’ble Supreme Court found

that the condition regarding pre-deposit was not

onerous as the amount sought to be deposited was

meager and that too was confined to the landholding

tax payable in respect of the disputed area “i.e., the

area or part thereof which is declared surplus by the

prescribed authority”, (emphasis supplied) after

leaving the permissible area to the appellant.

In the above circumstances, it was also found

that even in the absence of a discretion conferred on

-: 74 :-

the Appellate Authority to waive or reduce the amount

of pre-deposit, it was considered to be valid.

c) In Vijay Prakash D.Mehta and another

vs. Collector of Customs (Preventive), Bombay

[(1988) 4 SCC 402], the Hon’ble Supreme Court

was considering Section 129-A of Customs Act, 1962,

which provides a right of appeal against the duty

demanded or penalty levied. It was held that it was

obligatory on the appellant to deposit the duty or

penalty, pending the appeal, failing which, the

Appellate Tribunal was competent to reject the appeal.

The proviso to Section 129-E of Customs Act, 1962 as

it stood prior to its amendment made under 2014 Act,

gave power to the Appellate Authority to dispense

with such deposit unconditionally or subject to such

conditions, in case of undue hardship as was the

proviso prior to the amendment in the instant case.

The Hon’ble Supreme Court held that the

observations made in Hossen Kasam Dada and Vittal

Bhai Narang Bhai Patel, had no application as the right

-: 75 :-

to file an appeal was granted with a condition in

Section 129-E of the Customs Act, 1962 and the

Parliament in its wisdom had imposed the condition.

The Hon’ble Supreme Court also held that the right to

file an appeal is a statutory right and it can be

circumscribed by the conditions in the grant. It was

also held that the right to file an appeal under Section

129-A of the Customs Act, 1962 was circumscribed or

controlled by Section 129-E of the Act and that right

was with a condition and thus, a conditional right and

not an absolute right. The aforesaid provisions are in

pari materia with the provisions under consideration.

It was also observed that the purpose of

requirement of a pre-deposit was to act in terrorem to

make the people comply with the provisions of law.

On the facts of that case, the Hon’ble Supreme Court

held that the rejection of the appeal for non-

compliance of Section 129-E of the Customs Act, 1962

was proper and justified.

-: 76 :-

d) In Shyam Kishore and others vs.

Municipal Corporation of Delhi and another

[(1993) 1 SCC 22], judicial dicta on right of appeal

was considered in extenso. Reference was made to

Ganga Bai, wherein it was observed that there is a

basic distinction between the right of suit and the

right of appeal.

Reference was also made to Laxmirathan

Engineering works Limited and two decisions of the

Bombay and Calcutta High Court namely, M/s.Elora

Construction Company v. The Municipal

Corporation of Gr. Bombay and others [AIR 1980

Bom. 162] and Chatter Singh Baid and others vs.

Corporation of Calcutta and others [AIR 1984

Cal. 283] (Chattar Singh Baid). In both those cases,

the validity of a provision banning the entertainment

of the appeal altogether, where the tax was not paid

had been upheld. In fact, in the decision of the

Bombay High Court, the validity of Section 217, as

amended by Bombay Municipal Corporation Act, 1988,

-: 77 :-

wherein the right to appeal was similarly restricted,

that too, retrospectively, was upheld.

In Chatter Singh Baid, Section 183(3-A) of the

Calcutta Municipal Act, 1951 was considered. It was

held that merely because that section impairs the

right of appeal by imposing an onerous condition of

deposit of consolidated rate payable up to the date of

presentation of appeal on the valuation determined, it

could not be said that section was unfair, oppressive

and arbitrary. It was held that the condition of deposit

at the time of filing the appeal did not make the right

of appeal under Section 183(1) of the aforesaid Act as

nugatory or illusory.

e) In the case of State of Haryana vs.

Maruti Udyog Limited and Others ((2000) 7 SCC

348) the Hon’ble Supreme Court was considering the

case under Section 39(5) of the Haryana General

Sales Tax Act, 1953. The said section along with the

proviso dealt with payment of the admitted amount

and stay of recovery of the balance amount at the

-: 78 :-

time of filing of appeal. It was held that only when

the conditions specified under Section 39(5) were

complied with, the appeal was born for being disposed

of on merits after hearing both sides.

f) The expression “shall not entertain an

appeal” as inserted Section 35F of the Act is of

significance. In Lakshmi Ratan Engineering works

Limited vs. CST (AIR 1968 SC 488), while

interpreting the word “entertain” under Section 39(5)

of the Haryana General Sales Tax Act, 1953, it was

held that the dictionary meaning of the word

“entertain” was “to deal with or admit to

consideration”. Then the question arose as to at what

stage could the appeal be said to be entertained for

the purpose of the application of Section 39(5) of the

aforesaid Act. Is it entertained when it is filed or it is

‘entertained’ when it is admitted and the date is fixed

for hearing or is it finally ‘entertained’ when it is heard

and disposed of? After distinguishing the word

“entertain” from the words “file” or “receive”, it was

-: 79 :-

held that the correct view of the word “entertain”, was

“admit to consideration.” This would be when the

case is taken up by the court for the first time also or

the first occasion on which the court takes up the

matter for consideration. It may be at the admission

stage or if by the rules of the Tribunal the appeals are

automatically admitted, it would be the time of

hearing the appeal. But on the first occasion the court

accepts the matter for consideration, satisfactory

proof must be presented, that the tax had been paid

within the period of limitation available for the appeal.

Thus, when the proviso to Section 39(5) of the

aforesaid Act used the expression entertainment of

appeal, it meant that the appeal shall not be admitted

for consideration, unless there was satisfactory proof

available of the making of the deposit of admitted tax.

Referring to Section 39(5) of the aforesaid Act, it

was held that it regulated the exercise of right of

appeal conferred upon an assessee, the object being

to keep in balance the right of the aggrieved person

-: 80 :-

and the right of the State to speedy recovery of tax.

Approving the opinion of the Full Bench of the Punjab

and Haryana Court in Emerald International

Limited vs. State of Punjab (STI 1997 P&H 113

(FB) it was held, that the appeal is a creature of a

statute and in case a person wants to avail of the right

of appeal, he has to accept the conditions imposed by

the statute. The right of appeal being a creature of

statute, the legislature could impose conditions for

exercise of such a right. Neither there is a

constitutional nor legal impediment for imposition of

such a condition. The right of appeal is neither

natural nor inherent to litigation and such a right

neither exists nor can be assumed, unless expressly

given by the statute.

g) In Narayan Chandra Ghosh v. UCO

Bank and Others [(2011) 4 SCC 548] the Hon’ble

Supreme Court, while dealing with Section 18 of the

Securitization and Reconstruction of Financial Assets

and Enforcement of Security Interest Act, 2002,

-: 81 :-

which requires making of a deposit in terms of second

proviso of that Section, before entertaining an appeal

against the order passed by the Debts Recovery

Tribunal, it was observed that when a statute confers

a right of appeal, while granting the right, the

legislature can impose conditions for the exercise of

such right, so long as the conditions are not so

onerous as to amount to unreasonable restrictions,

rendering the right almost illusory. It was held

therein that having regard to the object of the

aforesaid Act the conditions hedged in the said proviso

to Section 18(1) of the said Act was not onerous.

h) On an analysis of the amendment of

Section 35F in light of judgments of the Hon’ble

Supreme Court subsequent to Hoosein Kasam Dada, it

is held that Section 35F of the Act is not in the realm

of right to file an appeal and thus, not a piece of

substantive law. It is a condition to be complied with

by an aggrieved party while instituting an appeal,

which is in the realm of procedure. As held by the

-: 82 :-

Hon’ble Supreme Court in subsequent decisions, a

party does not have a vested right in procedural

matters.

27. Thus, what emerges from the aforesaid

judicial dicta is the fact that a requirement regarding

deposit of amount as a condition precedent to the

entertainment of appeal is a means of regulating the

exercise of right of appeal. The Parliament while

granting the right of appeal could also impose

conditions to exercise such a right so long as the

conditions are reasonable. In the instant case,

Section 35F also uses the expression “shall not

entertain any appeal….. unless the appellant has

deposited 7.5% of duty, in case where duty or duty

and penalty are in dispute, or penalty, where such

penalty is in dispute….”. It is held that the

requirement of deposit of 7.5% as stated supra, is not

an onerous condition precedent for the filing of an

appeal by an aggrieved party. This is particularly so,

when there is a cap on the pre-deposit amount, where

-: 83 :-

7.5% of the disputed amount exceeds Rs.10.00 crore.

In which event, only Rs.10.00 crore has to be

deposited as a pre-deposit. The above reasoning also

applies where the section mandates a pre-deposit of

10%. Thus, point No.1 is answered by holding that

the condition of pre-deposit in the instant case does

not adversely affect the right of appeal of an

aggrieved party and the said condition is not

unreasonable.

Re: Point No.2:

28. This point concerns the amendment

made to Section 35F of the Act and

its operation. In other words, whether

the amended Section 35F of the

Act has retrospective operation. The point

to be considered is as to whether

amended Section 35F of the Act is

prospective and thus, the rule against

retrospectivity applies. While answering that question

-: 84 :-

the applicability of the ratio of Hoosein Kasam Dada

and other decisions of the Hon’ble Supreme Court

would have to be considered. In this regard, the

relevant principles of statutory interpretation would

have to be adverted to at this stage.

Relevant principles of Statutory Interpretation:

a) It is noted that in the instant case, Section

35F, which has been amended by the Act of 2014 is

by way of substitution and therefore, the principles of

statutory interpretation dealing with the amendment

of provision by substitution would have to be borne in

mind while ascertaining as to whether, the

amendment in question has a retrospective operation

or not, in light of contention of the learned counsel for

the petitioners that the impugned amendment has no

retrospective operation. For this purpose, it would be

necessary to delineate on certain relevant principles of

statutory interpretation by placing reliance on

“Principles of Statutory Interpretation” by Justice

G.P.Singh - Ninth Edition (Reprint) on which, the

-: 85 :-

Hon’ble Supreme Court has relied upon in the case of

Zile Singh Vs. State of Haryana [(2004)8 SCC 1]

(Zile Singh).

b) In the instant case, Section 35-F as it stood

on the statutory book has been repealed by 2014 Act,

the repeal is by way of substitution of the earlier

provision. Therefore, what has to be considered in the

instant case is the effect of repeal of Section 35-F

and in its place, a new section being substituted.

Power to make a law with respect to subjects

enumerated in the three lists of VII Schedule of the

Constitution carries with it the power to amend or

repeal a law on those subjects. An Act or a provision

in an Act may be repealed by a later, distinct and

repealing enactment or provision as the case may be,

which could be inconsistent with the existing Act or

provision. A repeal of a provision may be by express

words in a later enactment made by way of an

amendment or, may be implied on considerations of

inconsistency or irreconcilability of an earlier provision

-: 86 :-

with those of a later provision. Normally, there is no

real distinction between repeal and amendment. The

legislative practice in India is that when a provision is

omitted from the statute book, it is a case of repeal.

But there can be a repeal by way of an amendment of

the existing provision and the said provision being

replaced by enactment of a new provision.

Substitution of a provision results in repeal of the

earlier provision by a new provision. Substitution

combines both repeal and fresh enactment. Thus,

when an existing provision is substituted by a fresh

enactment, it is a case of express repeal.

c) In Government of India v. Indian

Tobacco Association [(2005)7 SCC 396], the

question that fell for the consideration of the Hon’ble

Supreme Court was as to what would be the effect of

subsequent notification, ‘substituting’ the list of places

specified in the original notification. The Hon’ble

Court in its judgment at paragraph 15, considered the

word substitute and observed thus :

-: 87 :-

“15. The word “substitute” ordinarily would

mean “to put (one) in place of another”, or

“to replace”. In Black’s Law Dictionary, 5th

Edn., at p.1281, the word “substitute” has

been defined to mean “to put in the place

of another person or thing”, or “to

exchange”. In Collins English Dictionary,

the word “substitute” has been defined to

mean “to serve or cause to serve in place

of another person or thing”; “to replace (an

atom or group in a molecule) with (another

atom or group)”; or “a person or thing that

serves in place of another, such as a player

in a game who takes the place of an

injured colleague”.

d) It would be relevant to notice the following

observations made by the Supreme Court in Zile

Singh while dealing with the amendment by way of

substitution in paragraph 25 of the judgment:

“….Substitution of a provision results in

repeal of the earlier provision and its

replacement by the new provision (see

Principles of Statutory Interpretation,

ibid., p.565)………In West U.P.Sugar Mills

Assn. case a three-Judge Bench of this

-: 88 :-

Court held that the State Government by

substituting the new rule in place of the

old one never intended to keep alive the

old rule. Having regard to the totality of

the circumstances centering around the

issue the Court held that the substitution

had the effect of just deleting the old rule

and making the new rule operative…..”

e) In Sham Rao V.Parulekar v. The District

Magistrate Thane, Bombay & two others (AIR

1952 SC 324), the following observation made by

the Hon’ble Supreme Court, in paragraph-7 are

relevant:

“The rule is that when a subsequent Act

amends an earlier one in such a way as to

incorporate itself, or a part of itself, into

the earlier, then the earlier Act must

thereafter be read and construed (except

where that would lead to a repugnancy,

inconsistency or absurdity) as if the altered

words had been written into the earlier Act

with pen and ink and the old words scored

out so that thereafter there is no need to

refer to the amending Act at all.”

-: 89 :-

f) ‘Commencement‘, used with reference to

an Act, means the day on which an Act comes into

force. Unless provided otherwise, a Central Act comes

into operation on the day it receives the Presidential

assent and is construed as coming into operation

immediately on the expiration of the day preceding its

commencement – Section 5 of General Clauses Act,

1897. In Zile Singh the Hon’ble Supreme Court has at

paragraphs 13 and 15 opined as under:

“13. It is a cardinal principle of

construction that every statute is

prima facie prospective unless it is

expressly or by necessary implication

made to have a retrospective

operation. But the rule in general is

applicable where the object of the

statute is to affect vested rights or to

impose new burdens or to impair

existing obligations. Unless there are

words in the statute sufficient to show the

intention of the Legislature to affect

existing rights, it is deemed to be

prospective only ‘nova constitutio futuris

formam imponere debet non praeteritis’ – a

-: 90 :-

new law ought to regulate what is to follow

not the past. (See:Principles of Statutory

Interpretation by Justice G.P.Singh, Ninth

Edition, 2004 at p.438). It is not

necessary that an express provision be

made to make a statute retrospective

and the presumption against

retrospectivity may be rebutted by

necessary implication especially in a

case where the new law is made to cure an

acknowledged evil for the benefit of the

community as a whole (ibid, p.440).

15. Though retrospectivity is not to be

presumed and rather there is presumption

against retrospectivity, according to Craies

(Statute Law, Seventh Edition), it is open

for the legislature to enact laws having

retrospective operation. This can be

achieved by express enactment or by

necessary implication from the language

employed. If it is a necessary

implication from the language

employed that the legislature intended

a particular section to have a

retrospective operation, the Courts will

give it such an operation. In the

absence of a retrospective operation

-: 91 :-

having been expressly given, the

Courts may be called upon to construe

the provisions and answer the

question whether the legislature had

sufficiently expressed that intention

giving the Statute retrospectivity. Four

factors are suggested as relevant: (i)

general scope and purview of the statute;

(ii) the remedy sought to be applied; (iii)

the former state of the law; and (iv) what it

was the legislature contemplated (p.388).

The rule against retrospectivity does not

extend to protect from the effect of a

repeal a privilege which did not amount to

accrued right (p.392)

(emphasis supplied)

g) In contrast to statutes dealing with

substantive rights, statutes dealing with merely

matters of procedure are presumed to be

retrospective unless such a construction is textually

impermissible, Gardner vs. Lucas [(1878) 3 AC

582 (HL)]. According to Lord Denning: “The rule

that an Act of Parliament is not to be given

retrospective effect applies only to statutes which

-: 92 :-

affect vested rights. It does not apply to statues

which only alter the form of procedure or the

admissibility of evidence, or the effect which the

courts give to evidence” - Blyth v. Blyth [(1966)1

All.E.R.524]). If the new Act affects matters of

procedure only, then, prima facie, “it applies to all

actions pending as well as future.” According to

Maxwell: “Interpretation of Statutes”, 11th Edition,

p.216 “No person has a vested right in any course of

procedure. He has only the right of prosecution or

defence in the manner prescribed for the time being

by or for the Court in which the case is pending, and

if, by an Act of Parliament the mode of procedure is

altered, he has no other right than to proceed

according to the altered mode”.

h) Thus, in deciding the question of

applicability of a particular statute to past events, the

language used is a crucial factor to be taken into

account; but it cannot be stated as an inflexible rule.

The real issue in each case is as to the dominant

-: 93 :-

intention of the Legislature to be gathered from the

language used, the object indicated, the nature of

rights affected, and the circumstances under which

the statute is passed.

i) In view of the aforesaid principles

regarding statutory interpretation, the amended

Section 35F would have to be interpreted in light of

the submissions made by learned counsel for the

respective parties. In the earlier part of this order,

the changes brought about by the amendment to

Section 35F have been noted. The contention of

learned counsel for the petitioners is that the said

amendment does not have a retrospective operation

and therefore, cannot be applied to a lis, which has

commenced prior to the date on which the

amendment came into effect i.e., 6/8/2014.

Interpretation of Second proviso of amended

Section 35F:

29. While considering the aforesaid submission,

it is now relevant to take note of the significance of

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second proviso to amended Section 35F. That proviso

categorically states that Section 35F would not apply

to stay applications and appeals pending before any

appellate authority, filed prior to the commencement

of the 2014 Act, which means, that in respect of those

appeals filed and pending as on 6/8/2014, the earlier

provision would apply. Thereby implying, that the

discretion vested with the appellate authority for

dispensing with the deposit of duty or penalty subject

to certain conditions under the first proviso thereof

could be exercised in favour of an appellant. In this

context, the significance and interpretation to be given

to the second proviso of amended Section 35F would

have to be considered in light of the main proviso of

Section 35F of the Act. But prior to that, it would be

necessary to understand the scope of a proviso vis-à-

vis the main provision in a section in the context of

the decisions of the Hon’ble Supreme Court and in

light of the principles of interpretation of proviso.

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a) The normal function of a proviso is to

except something out of the enactment or to qualify

something enacted therein which, but for the proviso,

would be within the purview of the enactment. As a

general rule, a proviso is added to an enactment to

qualify or create an exception to what is in the

enactment and ordinarily, a proviso is not interpreted

as stating a general rule. In other words, a proviso

qualifies the generality of the main enactment by

providing an exception and taking out as it were, from

the main enactment, a portion which, but for the

proviso would fall within the main enactment.

Further, a proviso cannot be construed as nullifying

the enactment or as taking away completely a right

conferred by the enactment.

b) In this regard, learned Author, Justice

G.P.Singh has, in “Principles of Statutory

Interpretation”, enunciated certain rules collated from

judicial precedents. Firstly, a proviso is not to be

construed as excluding or adding something by

-: 96 :-

implication i.e., when on a fair construction, the

principal provision is clear, a proviso cannot expand or

limit it. Secondly, a proviso has to be construed in

relation to which it is appended i.e., normally, a

proviso does not travel beyond the provision to which

it is a proviso. A proviso carves out an exception to

the main provision to which it has been enacted as a

proviso and to no other. However, if a proviso in a

statute does not form part of a section but is itself

enacted as a separate section, then it becomes

necessary to determine as to which section the

proviso is enacted as an exception or qualification.

Sometimes, a proviso is used as a guide to

construction of the main section. Thirdly, when there

are two possible construction of words to be found in

the section, the proviso could be looked into to

interpret the main section. However, when the main

provision is clear, it cannot be watered down by the

proviso. Thus, where the main section is not clear, the

proviso can be looked into to ascertain the meaning

and scope of the main provision.

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c) The proviso should not be so construed as

to make it redundant. In certain cases, “the

legislative device of the exclusion is adopted only to

exclude a part from the whole, which, but for the

exclusion, continues to be a part of it”, and words of

exclusion are presumed to have some meaning and

are not readily recognized as mere surplusage. As a

corollary, it is stated that a proviso must be so

construed that the main enactment and the proviso

should not become redundant or otiose. This is

particularly so, where the object of a proviso

sometimes is only by way of abundant caution,

particularly when the operative words of the

enactment are abundantly clear. In other words, the

purpose of a proviso in such a case is to remove any

doubt. There are also instances where a proviso is in

the nature of an independent enactment and not

merely, an exception or qualifying what has been

stated before. In other words, if the substantive

enactment is worded in the form of a proviso, it would

be an independent legislative provision concerning

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different set of circumstances than what is worded

before or what is stated before. Sometimes, a proviso

is to make a distinction of special cases from the

general enactment and to provide it specially.

d) At this stage, the construction or

interpretation of a proviso could be considered:-

(a) In Ishverlal Thakorelal Almaula v.

Motibhai Nagjibhai [AIR 1966 SC 459], while

dealing with the Bombay Tenancy and Agricultural

Lands Act, 1948, the Hon’ble Supreme Court held,

that a proper function of a proviso is to except or

qualify something enacted in the substantive clause,

which but for the proviso, would be within that clause.

(b) In Kaviraj Pandit Durga Dutt Sharma v.

Navaratna Pharmaceutical Laboratories [AIR

1965 SC 980], while considering proviso to Section 6

of Trade Marks Act, 1940, it was observed that it

would not be a reasonable construction for any

statute, if a proviso which in terms purports to create

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an exception and seeks to confer certain special rights

on a particular class of cases included in it should be

held to be otiose and to have achieved nothing.

(c) In Kedarnath Jute Manufacturing Co.

Ltd., v. The Commercial Tax Officer and Others

[AIR 1966 SC 12], it was observed that “the effect

of an excepting or qualifying proviso, according to the

ordinary rules of construction, is to except out of the

preceding portion of the enactment or to qualify

something enacted therein, which, but for the

proviso, would be within it”. [See “Craies” on Statute

Law – 6th Edition – P.217]. In this case, the Court

was considering Section 5(2) (a) (ii) of Bengal Finance

Sales Tax Act, 1941 and Rule 27-A of Bengal Sales

Tax Rules.

(d) In Dattatraya Govind Mahajan and

Others v. The State of Maharashtra and another

[AIR 1977 SC 915], a Constitution Bench of the

Apex Court, while considering the amendment made

to Maharashtra Agricultural Lands (Ceiling on

-: 100 :-

Holdings) Act, 1961, in the context of Article 31B of

the Constitution and the second proviso thereto,

reiterated what was stated in Ishverlal’s case, supra.

(e) In S.Sundaram Pillai, etc, v.

V.R.Pattabiraman [AIR 1985 SC 582], while

dealing with the scope of a proviso and explanation to

sub-section (2) of Section 10 of Tamil Nadu Buildings

(Lease and Rent Control) Act, 1960, the Hon’ble

Supreme Court held that a proviso may have three

separate functions. Normally, a proviso is meant to

be an exception to something within the main

enactment or qualifying some thing enacted therein

which, but for the proviso, would be within the

purview of the enactment. In other words, a proviso

cannot be torn apart from the main enactment, nor

can it be used to nullify or set at naught the real

object of the main enactment. Sometimes, a proviso

may exceptionally have the effect of a substantive

enactment.

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After referring to several legal treatises and

judgments, the Apex Court held in the above

judgment as under:-

“43. We need not multiply authorities

after authorities on this point because the

legal position seems to be clearly and

manifestly well established. To sum up, a

proviso may serve four different purposes:

(1) qualifying or excepting certain

provisions from the main enactment;

(2) it may entirely change the very

concept of the intendment of the

enactment by insisting on certain

mandatory conditions to be fulfilled in order

to make the enactment workable;

(3) it may be so embedded in the Act

itself as to become an integral part of the

enactment and thus acquire the tenor and

colour of the substantive enactment itself;

and

(4) it may be used merely to act as

an optional addenda to the enactment with

the sole object of explaining the real

intendment of the statutory provision.

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(f) The approach to the construction and

interpretation of a proviso are enunciated in the

following cases:-

(a) In M.Pentiah & others v. Muddala

Veeramallappa & others (AIR 1961 SC 1107), it

was observed that while interpreting a section or a

proviso, as in the instant case, if the choice is between

two interpretations, the narrower of which would fail

to achieve the manifest purpose of the legislation, we

should avoid a construction which would reduce the

legislation to futility and should rather accept the

bolder construction based on the view that Parliament

would legislate only for the purpose of bringing about

an effective result.

(b) In Superintendent & Remembrancer of

Legal Affairs to Govt. of West Bengal v. Abani

Maity (AIR 1979 SC 1029), the Apex Court

observed that the statute is not to be interpreted

merely from the lexicographer’s angle. The Court

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must give effect to the will and inbuilt policy of the

Legislature as discernible from the object and scheme

of the enactment and the language employed therein.

The words in a statute often take their meaning in the

context of a statute as a whole. They are, therefore,

not to be construed in isolation.

30. In light of the aforesaid discussion, what

emerges is that the right to file an appeal envisaged

under Sections 35 and 35B of the Act remains

unaltered and is available to an aggrieved party

despite the amendment made to Section 35F of the

Act. Sections 35 and 35B of the Act are substantive

law, which are not in the realm of procedure. But

Section 35F is a piece of procedural law, as has been

held above. There is no vested right available to any

party in matters of procedure. The changes brought

about by amendment made to Section 35F are noted

in paragraph Nos. 15 and 17 above. The object of

amending Section 35F of the Act is to withdraw the

discretion granted to the appellate authorities in the

matter of making pre-deposit at the time of filing the

-: 104 :-

appeal by an aggrieved party. As submitted by

Additional Solicitor General, there has been

innumerable litigations under the first proviso to

Section 35F as it stood prior to amendment. Any

order passed by the appellate authority regarding the

hardship pleaded by the appellant with regard to pre-

deposit, who sought dispensation of such deposit

would be a subject matter of further litigation and

until that aspect was settled finally, the main appeal

would not be taken up for hearing. As a result, there

would be considerable delay in disposing of the appeal

by the appellate authorities. Parliament must have

thought that discretion vested with the appellate

authorities with regard to dispensation of deposit to

be made by an aggrieved appellant at the time of

filing the appeal was not in the interest of revenue. It

is in order to overcome the aforesaid mischief, that

Parliament thought it fit to amend Section 35F. It is

in the aforesaid background that the object and

intendment of amending Section 35F by the

Parliament has been considered.

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31. While analyzing Section 35F, it becomes

apparent that the said provision has a retrospective

operation, particularly having regard to the second

proviso. In case the second proviso was absent, then

possibly the contention of petitioners’ counsel that the

amendment had only a prospective operation may

have had greater force. But in light of the second

proviso, the real intention of the Parliament can be

discerned. If the contention of the petitioners’ counsel

is to be accepted, it has to be held that the

amendment made to Section 35F does not have a

retrospective operation and is prospective with effect

from 6/8/2014 onwards i.e., the date on which it

received the presidential assent and would not apply

to a lis which had commenced prior to that date.

Then, in that event, second proviso would become

otiose and redundant. No provision of an enactment

can be interpreted so as to make any part of it

redundant or useless. The real intention of the

Parliament is, to insert the second proviso as a saving

clause, thereby applying the provision prior to

-: 106 :-

amendment, only in respect of those appeals pending

before the appellate authority as on 6/8/2014. In all

other cases, the main amended provision would apply.

The reason for such a proviso was necessitated so as

to obviate a situation whereby, applications pending

before the appellate authority or tribunal would

become infructuous on account of the amendment

made to Section 35F as the amendment has a

retrospective effect. Parliament was also conscious of

the fact that as on 6/8/2014, many appeals would be

pending before various appellate authorities

throughout the country where applications for exercise

of discretion of such appellate authorities regarding

pre-deposit of duty or penalty had to be considered

and disposed of. Therefore, Parliament was vigilant to

ensure that the appellate authority or tribunal would

continue to have jurisdiction to exercise discretion in

respect of the applications filed under the proviso to

Section 35F as it stood prior to amendment. Thus, if

prior to 6/8/2014, an appeal had been preferred by an

aggrieved party and the application and appeal were

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pending before the appellate authority, then the

appellate authority could exercise its discretion with

regard to the pre-deposit to be made by such a party

under the provision as it stood prior to amendment.

But if no appeal had been filed prior to 6/8/2014, then

the amended Section 35F would apply although the lis

had commenced prior to 6/8/2014 as the amendment

has a retrospective effect. The amendment, thus, has

no bearing on the date on which the particular lis had

commenced. This is for the obvious reason that in

each case, the lis would commence on a different

date. But the commencement of the amendment

must be certain and from a particular date in respect

of all lis. In order to ensure that object and in order

to have a uniformity in the matter, Parliament has

enacted the second proviso to the amended Section

35F. This would mean that in all cases not covered

under the second proviso, the main amended Section

35F would apply, irrespective as to when the lis has

commenced. Thus, the date on which the lis has

commenced in each case has no bearing on the

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amendment as it has a retrospective effect. Even if

the lis had commenced prior to the date of

amendment and an appeal had not been filed on that

date, even in such a situation, the main amended

Section 35F would apply and a pre-deposit as per

amended provision would have to be made.

32. Having regard to the Hon’ble Supreme

Court noting the fine distinction between substantive

and procedural law in subsequent decisions and, by

also, holding that an amendment made to procedural

law can have a retrospective operation, having regard

to its language and object, it is necessary to take into

consideration the subsequent dicta of the Hon’ble

Supreme Court in that regard in the instant case.

When the same is applied to the instant case, it is

held that the amended Section 35F of the Act has a

retrospective operation having regard to the

significance of the second proviso.

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33. At this stage, the decisions of the Hon’ble

Supreme Court and other High Courts relied upon by

petitioners’ counsel could be distinguished.

a) In Hoosein Kasam Dada, the fine distinction

between substantive and procedural law and

amendment made thereto, as well as the operation of

such an amendment namely, as to whether an

amendment made to a procedural law could have

retrospective operation did not come up for

consideration in the manner the same has been

considered in subsequent decisions of the Hon’ble

Supreme Court. Therefore, reliance placed on the

observations of the Hon'ble Supreme Court in Hoosein

Kasam Dada cannot be of any assistance to the

petitioners. The same cannot be applied to the facts

of the present case, having regard to second proviso

of amended Section 35F of the Act. In Hoosein Kasam

Dada, a proviso such as the second proviso under

consideration was conspicuous by its absence. The

second proviso of Section 35F in the instant case

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clearly distinguishes the provision amended in that

case.

b) In Hoosein Kasam Dada, the Hon’ble

Supreme Court placed reliance on a decision of the

Privy Council in Colonial Sugar Refining Company. It

was held therein that the right to file an appeal was a

substantive right and not a mere matter of procedure.

It is a vested right which inheres in a party from the

commencement of the action in the Court of first

instance and such a right cannot be taken away

except by an express provision or by a necessary

implication. In the aforementioned case, the Privy

Council was considering a situation wherein the right

to file an appeal from a Supreme Court of Australia to

the Privy Council given by the Order in Council of

1860 was taken away and the only appeal therefrom

was directed to lie to the High Court of Australia. In

that case, it was in fact held, to deprive a suitor in a

pending action of an appeal to a superior tribunal,

which belonged to him as of right, is a very different

-: 111 :-

thing, from regulating procedure. It was held that

there was no difference between abolishing an appeal

altogether and transferring the appeal to the new

tribunal. In either case, there is an interference with

existing rights, which was contrary to the well-known

general principle. Also statutes are not to be held to

act retrospectively, unless a clear intention to that

effect is manifested. The matter in the aforesaid case

was in the realm of substantive law concerning the

right to file an appeal and the available forum and not

in the realm of procedural law as in the instant case.

c) Similarly, in Garikapati Veerayya, when a

suit was instituted on 22/4/1949 it was held that the

right of appeal vested in the parties thereto on that

date and was to be governed by the law as it

prevailed on that date. That is, on that date, the

parties acquired the right, if unsuccessful, to go on in

an appeal from the special Court to the High Court

and from the High Court to the Federal Court,

provided the conditions thereof were satisfied in that

-: 112 :-

case. This was so, unless that right had been taken

away only by a subsequent enactment, if it so

provided expressly or by necessary intendment, and

not otherwise. This case was also regarding an

amendment made to a provision concerning the

availability of a forum to file an appeal, which is

related to the right to file an appeal which is a

substantive right, which is not so in the instant case.

As already noted, a right to file an appeal is a

substantive right, but the conditions accompanying

the filing if an appeal is in the realm of procedure and

therefore, Colonial Sugar Refining Company and

Garikapati Veerayya are not applicable to these cases.

On the other hand, the decisions of the Hon’ble

Supreme Court with regard to pre-deposit of disputed

amounts to be made by an aggrieved party before the

appellate authority are squarely applicable to these

cases.

d) Thus, the judgment of the Hon’ble

Supreme Court in Hoosein Kasam Dada does not apply

-: 113 :-

to the present case having regard to the provisions

considered in both these cases being distinct, different

and not being in pari materia. As already noted, the

insertion of the second proviso, being of significance

in the provision under consideration, the ratio in

Hoosein Kasam Dada is distinguished and therefore,

cannot be relied upon in these matters by the

petitioners. Similarly, the observations made by the

Hon’ble Supreme Court in Garikapati Veerayya are not

applicable to the present case. Those observations

are in the context of an amendment made to a

substantive legislation and not to an amendment

made to a procedural law, which is under

consideration in the instant case. Infact, in State of

Bombay v. Supreme General Films Exchange Ltd.,

(Supra) and in Ramesh Singh v. Cintadevi (Supra), it

has been categorically held by the Hon’ble Supreme

Court that where an onerous condition is imposed in

the matter of filing of appeals, it is not retrospective,

unless it says so expressly or by necessary

intendment. This is because the right to file an appeal

-: 114 :-

is crystallized on the institution of the application of

the suit in the first instance. The aforesaid decisions

are not applicable to these cases in view of the second

proviso in Section 35F of the Act. In Allied motors (P)

Ltd. v. Commissioner of Income Tax, Delhi (supra), it

has been held that a proviso, is inserted to remedy

unintended consequences and to make the provision

workable. A proviso has to be read into the section to

give it a reasonable interpretation when the section

requires to be treated as retrospective in operation so

that the reasonable interpretation can be given to the

section as a whole. In M/s. National Traders v.

State of Karnataka [2008 (64) KLJ 225 (SC)], it

was held that the requirement of the assessee to

make prior payment of one half of tax or other

amount disputed and to produce proof of having made

payment while filing appeal was a condition, which

was restrictive and impaired the right of filing an

appeal and in those circumstances, it was held to be

prospective and not retrospective in operation. The

aforesaid decision is also not applicable to the present

-: 115 :-

present case having regard to the nature of Section

35F of the Act amended in the instant case and the

requisite amount to be deposited as a pre-deposit.

e) The judgments of the High Court of

Madras, Kerala and Andhra Pradesh relied upon by

learned counsel for petitioners cannot also apply

although they are rendered on Section 35F or on

similar provisions, which is under consideration in

these matters. The reason being, those judgments

have followed the reasoning in Hoosein Kasam Dada,

which has been distinguished herein and held to be

not applicable to the present cases. Those judgments

were rendered in the cases of Deputy Commercial

Tax Officer, Tirupur v. Cameo Experts

[(2006)147 STC 218(Mad)], and Fifth Avenue

Sourcing (P) Ltd. v. Commissioner of Service Tax

Chennai, (W.P.No.12546/2015 disposed on

12/6/2015); Muthoot Finance Limited v. Union

of India and M/s. K.Rama Mohana Rao and Co. v.

Union of India (Interim Order) respectively.

-: 116 :-

Accordingly, Point No.2 is answered by holding

that amended Section 35F of the Act has a

retrospective operation.

Summary of conclusions:

34. Thus, from the aforesaid discussion the

findings and the conclusions arrived at could be

summarized as under:

(1) It is held that in the instant case, the right

to file an appeal, which is a substantive right granted

under Sections 35 and 35B of the Act has not been

amended and remains intact. That Section 35F of the

Act as amended, consists of a mandatory requirement

of pre-deposit for entertaining an appeal before the

Appellate Authority i.e., before the Commissioner

(Appeals) or the Appellate Tribunal as the case may

be, is a piece of procedural legislation and does not

fall within the realm of substantive law. Thus,

Sections 35 and 35B do not confer an absolute right to

file an appeal, but are subscribed or controlled by

Section 35F of the Act. Hence, in the instant case, the

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right to file an appeal under Section 35 or 35B as the

case may be is not an absolute right, but a conditional

one.

(2) In view of a plethora of decisions of the

Hon'ble Supreme Court, it is held that in the instant

case, the right to file an appeal under Sections 35 and

35B of the Act is in no way affected by the

amendment made to Section 35F of the Act requiring

pre-deposit to be made at the time of preferring the

appeal. Such a condition regarding pre-deposit is

made with a view to regulate the exercise of the right

of appeal so as to enforce the order appealed against

in case the appeal is ultimately dismissed.

(3) Section 35F of the Act has retrospective

operation and is not restricted to only prospective

cases. It applies to all lis which have commenced

prior to or after the enforcement of the amendment,

except to cases covered under the second proviso

thereof.

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(4) That in view of the insertion of second

proviso to amended Section 35F of the Act, it is held

that the same is in the nature of a saving clause,

keeping intact the earlier provision of Section 35F to

be made applicable to circumstances noted under the

second proviso. That in all other cases not covered

under the second proviso, the amended Section 35F is

applicable as it has a retrospective operation. Such a

legislation by amendment having a retrospective

operation is a valid piece of legislation.

(5) It is reiterated that the second

proviso in amended Section 35F is significant,

which was absent in the provisions considered

in Hoosien Kasam Dada and Garikapati Veerayya.

The provisions of law considered by the Hon'ble

Supreme Court in the aforesaid cases being not

in pari materia to Section 35F of the Act under

consideration and in view of the later judgments

of the Hon’ble Supreme Court it is held

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that the ratio of those decisions are not applicable to

the present case.

(6) As the amended Section 35F has a

retrospective operation and none of the petitioners

herein has filed an appeal prior to 6/8/2014 before the

appellate authority or if the appeal has been preferred

subsequently has not deposited the requisite pre-

deposit before the appellate authority, as the case

may be, they are required to comply with the

conditions of the amended Section 35F.

(7) The circulars dated 16/9/2014 and

4/10/2014 are also upheld insofar as they are in

consonance with this order.

In view of the aforesaid findings and conclusions,

writ petitions are dismissed.

Parties to bear their respective costs.

Sd/- JUDGE *mvs/msu/s*