A two-judge bench of the Supreme Court recently ruled that Section 52A of the Kerala Court Fee and suit Valuation Act, 1959 inserted w.e.f October 26, 2002, has no retrospective effect and therefore, section 260A of the Income Tax Act, 1961 imposing court fee on appeals to High Court is applicable to such cases where assessment orders were passed after October 01, 1998.
The decision was pronounced by a bench of Justices A.K. Sikri and Ashok Bhushan, while reversing an order of the Kerala High Court wherein it was held that Court fee under Section 52A of the Kerala Court Fee Act is applicable to any appeal ‘filed’ on or after October 26, 2002.
Reversing the order of the High Court, the bench clarified that the relevant date for paying court fee is the date of initiation of proceedings and not the date of filing.
Coming to the legislative history of the dispute, Section 260A was inserted in the Income Tax Act in the year 1998 providing for statutory appeals against the ITAT orders. Under sub-section (2)(b) of the said provision, the amount of Court fee payable was Rs. 2,000 rupees. The provision was later omitted for the reason that the power to prescribe the Court fee payable on appeals to High Court lies with the concerned State Governments.
Consequently, the fee payable on appeals to High Court under the Income Tax Act became subject to s. 52 of the Kerala Court Fees and Suits Valuation Act, 1959 in the State of Kerala. The Government, through an amendment, inserted section 52A to the said Act prescribing the rate of fee on memorandum of appeals against the order of the Income Tax Appellate Tribunal or Wealth Tax Appellate Tribunal. As per the provision, one per cent of the assessed income, subject to a maximum of ten thousand rupees is payable as Court fee where such income exceeds two lakh rupees. The provision was applicable w.e.f 26th October 2002.
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 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 High Court had rejected the contention that in all those cases which were even pending before the lower authorities, i.e. the Assessing Officer, Commissioner of Income Tax (Appeals) or Income Tax Appellate Tribunal and orders were passed even before October 01, 1998, the right to appeal had accrued with effect from October 01, 1998 and, therefore, such cases would be governed as on the date when the orders were passed by the lower authorities and the court fee would be payable as per the un‑amended provisions. The appellants contended that appeals ‘filed’ on or after October 26, 2002 shall not be governed by s. 52A of the said Act.
The decision has an impact on numerous appeals under Section 260A of the IT Act, including the appeals filed by the Department as well. Both the petitioners and the department challenged the decision before the Apex Court contending 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.
The bench accepted the above contentions and held that s. 260A of the IT Act was inserted with effect from October 01, 1998 when the right to file the appeal in the High Court accrued as a vested right. Before this date, there was no such vested right. “Thus, all those proceedings where the assessment orders were passed after October 01, 1998 by the Assessing Officer and the assessee had approached the High Court by filing appeal under Section 260A of the IT Act, fee as per the unamended provision was payable and not under Section 52A of the 1959 Act.”
The amendment in question in the 1959 Act, i.e. Section 52A, was made effective from March 06, 2003. The bench noted that the provision has no retrospective effect and therefore, given the following directions.
Firstly, wherever assesse is in appeal in the High Court which is filed under Section 260A of the IT Act, if the date of assessment 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.
Secondly, in cases where the Department files appeal in the High Court under Section 260A of the IT Act, the date on 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 260A of the IT Act on such appeals.
Read the full text of the Judgment below.
