K. Raveendranathan Nair & Anr. v. Commissioner of Income Tax & Ors.
Background
Section 260A of the Income Tax Act, which created a statutory appeal to the High Court against Income Tax Appellate Tribunal orders, originally fixed a Rs. 2,000 court fee, but that fee provision was omitted in 1999, leaving fees governed by State law. Kerala later inserted Section 52A into its Court Fees Act (effective October 26, 2002, later formalized March 6, 2003) prescribing a steeper, income-linked fee, and the Kerala High Court held this new fee applied to any appeal filed on or after that date, regardless of when the underlying assessment or tribunal order was passed. Both taxpayers and the Income Tax Department challenged this, arguing their right of appeal (and the fee payable) vested on the date of assessment or of the tribunal's order, not on the later date of filing in the High Court.
Decision Breakdown
The Supreme Court held that the right to appeal is a substantive vested right that accrues at the commencement of the relevant proceeding (or, for a statutory appeal under Section 260A, from the date that right came into existence on October 1, 1998), and such a vested right cannot be retrospectively taken away or made more onerous unless the amending law says so expressly or by necessary implication, relying on its precedents in Hosein Kasam Dada, State of Bombay v. Supreme General Films, and Hardeodas Jagannath. Since Kerala's Section 52A was not made retrospective, the Court set aside the High Court's ruling and held: for an assessee's appeal, the court fee payable is whatever was applicable on the date of the original assessment order; for a Department appeal, it is whatever was applicable on the date the appellate authority set aside the Assessing Officer's order: in both cases, if that date was before March 6, 2003, the old (lower) fee regime applies, not Section 52A.
Lesson Learnt
A right of appeal, once it accrues under the law in force at the relevant time, is a protected vested right: a later law raising fees or conditions for that appeal cannot be applied retroactively to appeals whose underlying right arose earlier, unless the legislature clearly says so.