K. RAVEENDRANATHAN NAIR & ANR.versusCOMMISSIONER OF INCOME TAX & OTHERS

                        [2017] 11 S.C.R. 389



            K. RAVEENDRANATHAN NAIR & ANR.                               A
                                 v.
        COMMISSIONER OF INCOME TAX & OTHERS
                  (Civil Appeal No. 3131 of2006)
                         AUGUST 10, 2017                                 B

          [A. K. SIKRI AND ASHOK BHUSHAN, JJ.)
      Income Tax Act. 1961 - s.260A (2)(b) - Kera/a Court Fees
and Suits Valuation Act. 1959 - s.52A, Sch. II - Relevant date for
payment of court fees for appeals flied against the orders passed C
by Income Tax Appellate Tribunal (!TAT) or Wealth Tax Appellate
Tribunal - Determination of - s.260A was inserted in the IT Act
w.efOct. 01, 1998 providing.for appeals against the orders passed
by !TAT - Sub-sec.2(b) thereof. prescribing fixed court fees of
Rs.20001- on such appeals was omitted in I 999 - Law of court fee
in the State of Kera/a governed by the 1959 Act was amended by D
Amendment Act of 2003 which was passed on March 06, 2003 and
s.52A was inserted therein -Date.from which s.52A became effective
- Held: Right of appeal gets vested in the litigants at the
commencement of the !is therefore, such a vested right cannot be
taken away/impaired or made more stringent or onerous by any E
subsequent legislation unless the subsequent legislation said so
either expressly or by necessary intendment - The amendment in
question in the 1959 Act, i.e. s.52A, was made effective from March
06, 2003 and was not made retrospective - Order of High Court is
set aside.
                                                                         F
       Practice and Procedure -Appeal - Right of- Held: Right of
appeal is not a matter of procedure hut a substantive right - This
right gets vested in the litigants at the commencement of the lis,
therefore, an intention to inte1fere with or impair or imperil such a
vested right cannot he presumed.
      Allowing the appeals, the Court                                    G

       HELD: 1.1 When the proceedings originate in the form of
a suit filed in the lowest eonrt, it is easy to ascertain that date of
11ling which becomes governing date for the purpose of payment
of court fee in respect of appeals, as vested right accrues on the
                                                                         H
                                 389
390            SUPREME COURT REPORTS                     [2017] l l S.C.R.


A     date of filing of the initial court proceedings. In tax matters, the
      appeal provisions applicable for assessee would be the one as on
      date of assessment and not the one applicable during the
      assessment period. For revenue appeal, the same would be one
      as on the date disputed demand is negatived by the appellate
      authority and not the one applicable during the period of
B
      assessment or as on the date of assessment.(Para 7][395-E-F)
         l.2 The High Court in the impugned judgment had accepted
  that right of appeal is not a matter of procedure and that it is a
  substantive right. It also recognised that this right gets vested
  in the litigants at the commencement of the tis and, therefore,
c such a vested right cannot be taken away or cannot be impaired
  or imperilled or made more stringent or onerous by any
  subsequent legislation unless the subsequent legislation said so
  either expressly or by necessary intcndment. An intention to
  interfere with or impair or imperil a vested right cannot be
D presumed unless snch intention be clearly manifested by express
  words or by necessary implication. However, the High Court
  had still dismissed the writ petition as it was of the opinion that
  the vested right of appeal conferred under Section 260A of the
  Income Tax Aict, 1961 insofar as payment of court fee is
  concerned, is taken away by necessary implication. In other
E words, the provisions of Section 52A of the Kerala Court Fees
  and Suits Valuation Act, 1959 inserted by the Amendment Act of
  2003, in that sense, have retrospective operation thereby effecting
  the earlier assessment also. This proposition was advanced with
  the logic that prior to introduction of Section 260A in the IT Act
F with effect from October 01, 1998, there was no right of appeal.
  [Para 12][397-D-G]
         l.3 Such a logic given by the High Court is difficult to accept.
   Before October 01, 1998, in the absence of any statutory right of
   appeal to the High Court, there was no such vested right. At the
G. same time, the moment Section 260A was added to the statute,
   right to appeal was recognised statutorily. Therefore, in respect
   of those proceedings where assessment orders were passed after
   October 01, 1998, vested right of appeal in the High Court had
   accrued. Same was the position qua Department in respect of
   those cases where the demand raised by the Department stood
H
   K. RAVEENDRANATHAN NAIR v. COMMISSIONER OF                          391
                  INCOME TAX

negatived by the appellate authority after October 01, 1998.           A
[Para 13)[397-H: 398-A-B]
      1.4 In the present case, when Section 260A of the IT Act
was introduced by way of amendment with effect from October
01, 1998, it contained provision in the form of clause (2) of sub-
section (2) thereof relating to payment of court fee as well. As       B
per that provision, fixed court fee of Rs.2,000/- was provided.
This provision was, however, omitted with effect from June 01,
1999. The court fee became payable as per Section 52 of the
1959 Act. The amendment in question in the 1959 Act, i.e. Section
52A, was made effective from March 06, 2003. This provision
has not been made retrospective. [Para 14)[398-C-D]                    C
      1.5 Therefore, the aforesaid view of the High Court is set
aside. ln fine, it is held as under:
        (i) Wherever assessee is in appeal in the High Conrt which
is filed under Section 260A of the IT Act, if the date of assessment
                                                                       0
is prior to March 06, 2003, Section 52A of the 1959 Act shall not
apply and the court fee payable shall be the one which was payable
on the date of such assessment order.
      (ii) In those cases where the Department files appeal in
the High Court under Section 260A of the IT Act, the date on           E
which the appellate authority set aside the judgment of the
Assessing Officer would be the relevant date for payment of court
fee. If that happens to be before March 06, 2003, then the court
fee shall not be payable as per Section 52A of the 1959 Act on
such appeals. [Para 15)[398-E-GJ
      Hardeodas Jagannath v. State of Assam and Others                 F
      [1969] 2 SCR 261 - followed.
      Hosein Kasam Dada (India) Ltd. v. The State of Madhya
      Pradesh and Others (1953] SCR 987 - explained.
     Slate of Bombay v. Supreme General Films Exchange                 G
     Ltd. (1960] 3 SCR 640 - referred to.
                      Case Law Reference
(1953] SCR 987               explained                Paras
)1960] 3 SCR 640             referred to              Para6
(1969] 2 SCR 261             followed                 Para7            H
392             SUPREME COURT REPORTS                           [2017] I I S.C.R.


A          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3131
      of2006.
            From the impugned final Judgment and Order dated 8'" March,
      2004 passed by the High Court of Kerala at Ernakulam in !TA No.18 of
      2003
B
                                        WITH
             Civil Appeal No. 3130 of2006.
             K. Radlrnkrishnan, Yashank Adhyaru, Pallav Sishodia,
      Sr. Ad vs., S. Udaya Kumar Sagar, Ms. Bina Madhavan, Ms. Ramandeep
c     Kaur, Mis Lawyers. Knit & Co., Ritin Rai, Jayant Malik, Ms. Meenakshi
      Grover, Ms. Rekha Pandey, Ms. Anil Katiyar, Mukesh Kumar Maroria,
      G Prakash, Jishnu M.L., Ms. Priyanka Prakash and Ms. Beena· Prakash
      with them for the appearing parties.
            The Judgment of the Court was de live.red by
D             A. K. SIKRI, J. I. By amcndme.nt in the Income Tax Act, 1961
      (hereinafter referred to as the 'IT Act') in the year 1998, Section 260A
      was inserted providing for statutory appeal against the orders passed by
      the Income Tax Appellate Tribunal. In this very Section. under sub-section
      (2)(b), court fees on such appeals was also prescribed which was fixed
E     at Rs.2,000/-. However, sub-section (2)(b) of Section 260A prescribing
      the aforesaid fee was omitted by amendment carried out in the said Act,
      with effect from J unc 0 I, 1999. It was presumably for the reason that
      insofar as court fee payable on such appeals are concerned, which are
      to be filed in the High Court, it is the State Legislature which is competent
      to legislate in this behalf.
F
             2. In the State of Kera la, the law of court fee is governed by the
      Kerala Court Fees and Suits Valuation Act, 1959 (hereinafter referred
      to as the '1959 Act'). Section 52 thereof relates to the fee payable in
      appeals. Thus, with the omission of clause (b) of sub-section (2) of
      Section 260A of the IT Act, fee became payable on such appeals as per
G     Section 52. The State Legislature thereafter amended the 1959 Act by
      Amendment Act of 2003 and inserted Section 52A therein, which was
      passed on March 06, 2003. In fact, before that an Ordinance was
      promulgated on October 25, 2002 which was replaced by the aforesaid
      Amendment Act, the Act categorically provided that Section 52A is
      deemed to have come into force on October 26, 2002. As per the
H
          K. RAVEENDRANATHAN NAIR v. COMMISSIONER OF                                 393
                    INCOME TAX [A. K. SIKRI, J.]

      amended provision, viz. Section 52A of the 1959 Act. the fee on                A
     1memorandum of appeals against the order of the Income Tax Appellate
      Tribunal or Wealth Tax Appellate Tribunal is to be paid at the rates
      specified in sub-item (c) of item (iii) of Article 3 of Schedule II. This
      sub-item (c) reads as under:
                                                                                     B
     , (c) Where such income exceeds One percent of the assessed
       two lakh rupees               income, subject to a maximum of
                                     ten thousand rupees.

            It is clear from the above that fee is now payable, where such
       income exceeds two lakh rupees, at the rate of 1% of the 'assessed            c
       income', subject to a maximum often thousand rupees.
               3. The question that arose for consideration before the High Court
       in the impugned judgment, against which these appeals arise, was payment
       of fee as per the aforesaid schedule on the appeals that are filed on or
       after October 26, 2002. As per the State of Kerala, on all appeals            D
       which arc filed against the order of Income Tax Appellate Tribunal or
       the Wealth Tax Appellate Tribunal on or after October 26, 2002, fee is
       payable as per the aforesaid amended provisions. The appellants herein,
       however, contend that in all those cases which were even pending before
       the lower authorities, i.e. the Assessing Officer, Commissioner oflncome
    I Tax (Appeals) or Income Tax Appellate Tribunal and orders were passed          E
    1
    \ even before October 0 I, 1998, the right to appeal had accrued with
       effect from October 01, 1998 and, therefore, such cases would be
    1· governed as on the date when the orders were passed by the lower
       authorities and the court fee would be payable as per the unamended
       provisions. Thelligh Court has not accepted this plea of the appellants
                                                                                     F
        and has held that any appeal 'filed' on or after October 26, 2002 shall be
        governed by Section 52A of the 1959 Act.
              4. The appeals are filed both by the writ petitioner, whose writ
       has been dismissed, as well as the Income Tax Department. The
       Commissioner oflncome Tax (Appeals) has hot accepted the decision             G
       of the High Court and the reason for that is obvious. Numerous appeals
       under Section 260A of the IT Act are filed by the Department as well
       and the Department also gets hit by the aforesaid Section 52A of the
       1959 Act, as interpreted by the High Court.


'                                                                                    H

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394             SUPREME COURT REPORTS                          (2017] I I S.C.R.


A            5. Learned counsels appearing for the assessee as well as Income
      Tax Department submitted that the right of appeal is a matter of
      substantive right and not merely a matter of procedure. Therefore, this
      right becomes vested in a party when the proceedings are first initiated
      and before a decision is given, by the inferior court. Therefore, the
      relevant date for paying the court fee would be when the proceedings
B
      arc initiated in thp lowest court and not when the appeal is filed in the
      High Court. In support of this proposition, reliance is placed on the
      judgment of this Court in Hosei11 Ka.\·am Dada (b1dia) Ltd. v. The
      State of Madhya Pradesh A11d Others' wherein the Court held as
      w1der:
c           (i) that the appellant had a vested right to appeal when the
                proceedings were initiated, i.e., in 1947, and his right to appeal
                was governed by the law as it existed on that date;
            (ii) that the amendment of 1950 cannot be regarded as a mere
                alteration in procedure or an alteration regulating the exercise
D               of the right of appeal, but whittled down the right itself, and it
                had no retrospective effect as the Amendment Act of 1950 did
                not expressly or by necessary intcndment give it retrospective
                effect, and the appeal could not therefore be rejected for non-
                payment of the tax in respect of which the appeal was
E               preferred.
             6. In that case, Section 22( l) of the Central Provinces and Berar
      Sales Tax Act, 1947, provided that no appeal against an order of
      assessment should be ente1tained by the prescribed authority unless it
      was satisfied that such amoWlt of tax as the appellant might admit to be
F     due from his had been paid. This Act was amended on November 25,
      1949 and Section 22( 1), as amended, provided that no appeal should be
      admitted by the said authority unless such appeal was accompanied by
      satisfactory proof of the payment of the tax in respect of which the
      appeal had been preferred. On November 28, 1947, the appellant
      submitted a return to the Sales Tax Officer, who, finding that the turnover
G     exceeded two lakh rupees, submitted the case to the Assistant
      Commissioner for disposal and the latter made an assessment on April
      08, 1950. The appellant preferred an appeal on May 10, 1950 without
      depositing the amount of tax in respect of which he had appealed. The
      Board of Revenue was of the opinion that Section 22( I), as amended,
H     ' [ 1953] SCR 987
    K. RAVEENDRANATHAN NAIR v. COMMISSIONER OF                                    395
              INCOME TAX [A. K. SIKRI, J.]

applied to the case as the assessment was made, and the appeal was                A
preferred, after the amendment came into force, and rejected the appeal.
      The appellant in that case lost till the High Court. However, this
Court allowed the appeal on the ground that the vested right had accrued
to the appellant to file the appeal in the year 1947 itself when the
proceedings were initiated. Therefore, amendment carried out in Section           B
22(1) of the Central Provinces and Berar Sales Tax Act, 1947 in the
year 1949 would not apply in the case of the appellant.
       Reference was also made to another judgment of this Court in
St11te of Bo111h11y v. Supreme Ge11ernl Films Exclt1111ge Ltd. 2 In that
case the issue was whether in the absence of provision giving retrospective
effect to certain amendments to court fee payable with effect from
                                                                                  c
April 01, 1954, the court fee payable on appeal was payable according
to the law in force at the time of the filing of the suit prior to this date or
the law in force at the time of the filing of the appeal. This Court held
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         D
only; it impairs or imperils a substantive right and an enactment which
docs so is not retrospective unless it says so expressly or by necessary
intcndmcnt.
      7. When the proceedings originate in the form ofa suit filed in the
lowest court. it is easy to ascertain that date of filing which becomes           E
governing date for the purpose of payment of court fee in respect of
appeals, as vested right accrues on the date of filing of the initial court
proceedings. How it is to be translated in tax matters'! This was
explained in H11rdeod11s Jag11m111tlt v. St11te ofAssm11 mid Others' by
holding that the appeal provisions applicable in a tax matter for assessee
would be the one as on date of assessment and not the one applicable              F
during the assessment period. For revenue appeal, the same would be
one as on the date disputed demand is negative by the appellate authority
and not the one applicable during the period of assessment or as on the
date of assessment.
      8. On the aforesaid basis, it was argued by the counsel for both            G
the assessecs in these appeals that in all those cases where appeals
were preferred by the asscssee against the assessment orders, the
provision relating to the payment of court fee which was prevailing on
2
   ( 1960) 3 SCR 640

·' (1969)2 SCR 261                                                                H
396            SUPREME COURT REPORTS                        [2017] ll S.C.R.


A     the date of assessment would be applicable. On the other hand, in those
      cases where Revenue preferred the appeals, the concerned date would
      be the date on which disputed demand was negatived by the appellate
      authority. It was, thus, submitted that the High Court was not right in
      holding that in all those cases where the appeals are filed in the High
      Cowt, whether by the assessee or the Income Tax Department, after
B
      the insertion of Section 52A, i.e. after October 26, 2002, fee is payable
      as provided under Section 52Aofthe 1959 Act. In this hue, it was also
      pointed out that Section 260A of the IT Act was inserted with effect
      from October 0 I, 1998 and, therefore, from this date right to file the
      appeal in the High Court accrued as a vested right. Thus, all those
c     proceedings where the assessment orders were passed after October
      0 I, 1998 by the Assessing Officer and the assessee had approached the
      High Court by filing appeal under Section260Aofthe IT Act, fee as per
      the unamended provision was payable and not under Section 52A of the
      1959 Act. Likewise, it was argued, in those cases where the Revenue
      filed the appeal in the High Court where the disputed demand was negative
D
      by the appellate authority after October 0 I, 1998 and before October
      26, 2002, court fee was payable as per the unamended provision.
            9. Mr. Pallav Sishodia, learned senior counsel appearing for the
      State of Kcrala, submitted that though there was no quarrel about the
      proposition laid down in the judgments cited by the learned counsel for
E     the appellants, these judgments arc premised on two postulates, namely:
            (i) there exists a vested right of appeal and it accrued prior to
                coming into force of Section 52Aof the 1959 Act: and
            (ii) such a vested right stands impaired and/or made conditional
 F              retrospectively 'expressly or by necessary intendment'.
            He, thus, submitted that it was imperative to have requisite
      foundational facts to demonstrate the aforesaid two conditions. According
      to him, however, the issue appears academic as no assessee has come
      forward as aggrieved by levy of court fee under Section 52A of the
      1959 Act in a case in which appeal is filed where assessment is made
G
      and/or disputed demand in appeal is raised prior to October 26, 2002.
      Nor the details are available of the appeals filed by the Income Tax or
      Wealth Tax Departments where assessments are reversed in part of full
      and/or disputed demand is quashed by the Commissioner (Appeals) or
      Income Tax Appellate Tribunal prior to October 26, 2002, particularly
H
    K. RAVEENDRANATHAN NAIR v. COMMISSIONER OF                                 397
              INCOME TAX (A. K. SIKRI, J.].

number of such appeals pending before the High Court of Kerala, if at A
all. In any case, in the other appeals filed, if any, for the tax demands
negatived by the appellate authorities prior to October 26, 2002, this
issue of court fees does not appear to have been kept alive for grant of
any effective relief. He cited few judgments in support ofhis submission
that this Cowt should restrain itself from undertaking academic exercise
                                                                          B
and deciding the issue in question.
       I 0. We are not inclined to accept the aforesaid plea inasmuch as
the High Court has decided the issue in categorical terms. Therefore, it
would be appropriate to reflect on the said decision and to find out as to
whether this decision is correct in law. It is a different matter that after
the legal position is clarified, the same can be applied in respect of those   c
appeals which are covered thereby.
      11. Hence, we proceed to decide the legal issue involved in these
appeals.
         12. We may mention at the outset that after referring to the D
judgments noted above even the High Court in the impugned judgment
has accepted that right of appeal is not a matter of procedure and that it
is a substantive right. It is also recognised that this right gets vested in
the litigants at the commencement of the /is and, therefore, such a vested
right cannot be taken away or cannot be impaired or imperilled or made
                                                                                E.
 more stringent or onerous by any subsequent legislation unless the
 subsequent legislation said so either expressly or by necessary
 intcndmcnt. An intention to interfere with or impair or imperil a vested
 right cannot be presumed unless such intention be clearly manifested by
 express words or by necessary implication. However, the High Court
 has still dismissed the writ petition as it was of the opinion that the vested F
 right of appeal conferred under Section 260A of the IT Act. insofar as
 payment of court fee is concerned, is taken away by necessary
 implication. In other words, the provisions of Section 52A of the 1959
 Act inserted by the Amendment Act of 2003, in that sense, have
 retrospective operation thereby effecting the earlier assessment also.
 This proposition is advanced with the logic that prior to introduction of G
 Section 260A in the IT Act with effect from October 0 I, 1998, there
 was no right of appeal.
      13. It is difficult to accept such a logic given by the High Court.
No doubt, before October 01, 1998, in the absence ofany statutmy right
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398             SUPREME COURT REPORTS                          [2017] l l S.C.R


A     of appeal to the High Court, there was no such vested right. At the
      same time, the moment Section 260A was added to the statute, right to
      appeal was recognised statutorily. Therefore, as already pointed out, in
      respect of those proceedings where assessment orders were passed
      after October 0 I, 1998, vested right of appeal in the High Court had
      accrued. Same was the position qua Department in respect of those
B
      cases where the demand raised by the Department stood negatived by
      the appellate authority after October 0 l. 1998.
             14. In the present case, as noted above. when Section 260A of
      the IT Act was introduced by way of amendment with effect from
      October 0 l. l 998, it contained provision in the form of clause (2) of sub-
c     section (2) thereofrelating to payment of court fee as well. As per that
      provision, fixed court fee of Rs.2,000/- was provided. This provision
      was, however, omitted with effect from J unc 0 l, 1999. The court fee
      became payable as per Section 52 of the 1959 Act. The amendment in
      question in the l 959 Act, i.e. Section 52A, was made effective from
D     March 06, 2003. This provision has not been made retrospective.
             I5. We, therefore, are not able to subscribe to the aforesaid view
      of the High Com1 and set aside the same. In fine, we hold as under:
             (i) Wherever assessee is in appeal in the High Court which is
                 filed under Section 260Aofthe IT Act, if the date of assessment
 E               is prior tp March 06, 2003. Section 52A of the 1959 Act shall
                 not apply and the coui1 fee payable shall be the one which was
                 payable on the date of such assessment order.
             (ii) In those cases where the Department files appeal in the High
                 Court under Section 260A of the IT Act, the date on which the
 F.              appellate authority set aside the judgment of the Assessing
                 Otlicer would be the relevant date for payment of court fee.
                 If that happens to be before March 06, 2003, then the court
                 fee shall not be payable as per Section 52A of the 1959 Act on
                 such appeals.
G            16. These appeals stand allowed in the aforesaid terms.


      Divya Pandey                                                  Appt'als allowed.