Part Payment Orders Can Be Challenged in Second Appeal, Sales Tax Tribunal Empowered to Modify u/s 55: Bombay HC [Read Order]

In a recent ruling, the Bombay High Court held that part payment orders passed by the first appellate authority under the Bombay Sales Tax Act, 1959 can be challenged in a second appeal, and that the Tribunal has the power under Section 55 to modify such orders while deciding the appeal.

Superphone India Ltd, the respondent, had filed first appeals against six assessment orders for the period from 1 April 1989 to 31 March 1992. On 11 July 1995, the appellate authority directed the assessee to make part payments by 8 August 1995. Since the assessee did not comply, the appeals were summarily dismissed on 28 August 1995.

The assessee filed second appeals before the Maharashtra Sales Tax Tribunal. By its order dated 22 November 1996, the Tribunal set aside the summary dismissal, reduced the part payment to Rs. 22,000 in each case, and remanded the appeals for disposal on merits.

The Revenue challenged this order by reference before the High Court, arguing that the assessee had not appealed against the part payment order dated 11 July 1995, and that it had therefore attained finality. The counsel also argued that in a second appeal against dismissal, the assessee could not question the part payment order.

The Division Bench of Justice M.S. Sonak and Justice Advait M. Sethna observed that the order fixing part payment was only an interlocutory or procedural step in the appeal, and such orders could be questioned when appealing the final dismissal order.

The court explained that principles similar to Section 105 of the Code of Civil Procedure apply, meaning interlocutory orders can be challenged when appealing against the final decision. The Court further pointed out that the Tribunal, acting under Section 55(6), had wide powers to modify the part payment order while deciding the second appeal.

The court held that the Tribunal was correct in entertaining the challenge to the part payment order and in modifying it under Section 55. It answered the reference substantially in favour of the assessee, upheld the Tribunal’s 1996 order, and disposed of the matter without costs.

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