1996 PLP 50 (PTD)

A similar view has been taken by the Karnataka High Court in CWT v Vidyavathi Kapur (1984) 150 ITR 319; the Madhya Pradesh High Court in CWT v Lachmandas Bhatia (1987) 163 ITR 586; the Delhi High Court in CWT v. O.P. Tandon (1992) 195 ITR 688; the Calcutta High Court in Smt. Manjushree Biswas v. CWT (1988) 171 ITR 348 and Dilip Kumar Mitra v. CWT (1993) 200 ITR

336. The basis of distinction between statutes affecting rights and those affecting merely procedure is well-recognised. Dixon C.J. in Maxwell v. Murphy (1957) 96 CLR 261 at 267 drawing upon the following words of Lord Justice Mellish in Republic of Costa Rica v. Erlanger (1876) 3 Ch. D. 62 (CA) at 69, said: "No suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done." It is true that if one traces any substantive right back far enough it will be found secreted in the intricacies of procedure. In W.H. Cocker line & Co. v IRC (1930) 16 TC 1 (CA) at 19, Lord Hanworth quoted with approval the following passage from the judgment of Sargant L.J.: "The liability is imposed by the charging section, namely, section 38, the words of which are clear. The subsequent provisions as to assessment and so on are machinery only. They enable the liability to be quantified, and when quantified to be enforced against the subject, but the liability is definitely and finally created by the charging section and all the materials for ascertaining it are available immediately." In Halsbury's Law of England (Fourth Edition, Vol. 23, paragraph 29), referring to the machinery provisions, it is stated:.- "It is important to distinguish between charging provisions, which impose the charge to tax, and machinery provisions, which provide the machinery for the qualification of the charge and the levying and collection of the tax in respect of the charge so imposed. Machinery provisions do not impose a charge or extend or restrict a charge elsewhere clearly imposed." The distinction between substantive law and procedural provisions has been indicated in Black's Law Dictionary (Sixth edition, page 1203) as follows:-- "As a general rule, laws which fix duties, establish rights and responsibilities among and for persons, natural or otherwise, are `substantive laws' in character, while those which merely prescribe the manner in which such rights and responsibilities may be exercised and enforced in a Court are `Procedural laws'." In Salmond's Jurisprudence (Twelfth edition, page 461), the distinction between substantive law and law of procedure is indicated in the following words:-- "What, then, is the true nature of the distinction? The law of procedure may be defined as-that branch of the law, which governs the process of litigation. It is the law of actions- jus quod ad actions pertinet--using the term action in a wide sense to include all legal proceedings, civil or criminal. All the residue is substantive law, and relates, not to the process of litigation, but to its purposes and subject matter. 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 relations 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.... "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." In Izhar Ahmad Khan v. Union of India, AIR 1962 SC 1052; (1962) Suppl. 3 SCR 235 at 251, it is observed (at page 1059 of AIR 1962 SC):-- "The division of law into two broad categories of substantive law and procedural law is Well-known. Broadly stated, whereas substantive law defines and provides for rights, duties and liabilities, it is the function of the procedural law to deal with the application of substantive law to particular cases and it goes without saying that the law of evidence is a part of the law of procedure." In Kesoram Industries and Cotton Mills Ltd. v. CWT (1966) 59 ITR 767 (SC) at 793, Justice Shah observed: "Section 7(2) merely provides machinery in certain special cases for valuation of assets, and it is from the aggregate valuation of assets that the net wealth chargeable to tax may be ascertained.... This is an artificial rule adopted with a view to avoid investigation of a mass of evidence which it would be difficult to secure or, if secured, may require prolonged investigation." Though this was part of the minority opinion, there is, however, nothing said to the contra in the majority view. In Murarilal Mahabir Prasad v. B.R. Vad (1976) 37 STC 77, at 111, this Court laid down as follows:-- "We are concerned in this case to determine whether a particular turnover can be brought to sales tax but whether if the turnover was liable to be charged to sales tax, the firm can be assessed to tax after its dissolution. In other words, we are concerned with a provision which prescribes the machinery for the computation of tax and not with a charging provision of the Sales Tax Act." Procedural law, generally speaking, is applicable to pending cases. No suitor can be said to have a vested right in procedure. It must, however, be noted that a provision can be partly substantive and partly procedural. In Associated Cement Co. Ltd. v. CTO (1981) 48 STC 466 (SC) at 476 this Court laid down:-- "It is settled law that a distinction has to be made by Courts while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the qualification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous construction. The Courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated." Bennion's Statutory Interpretation (First Edition page 446, paragraph 191) lays down as follows:-- "Because a change made by the Legislator in procedural provisions is expected to be for the general benefit of litigants and others, it is presumed that it applies to pending as well as future proceedings." At page 447, it is stated:-- "Procedure and practice is the mere machinery of law enforcement. As Ormrod, L. J. said:-- "The object of all procedural rules is to enable justice to be done between the parties consistently with the public interest." In Jose Da Costa v. Bascora Sadashiva Sinai Narcornin, AIR 1975 SC 1843; (1976) 2 SCC 917 at 925, this Court laid down as follows (at page 1849 of AIR 1975 SC):-- "Before ascertaining the effect of the enactments aforesaid passed by the Central Legislature on pending suits or appeals, it would be appropriate to bear in mind two well-established principles. The first is that `while provisions of a statute dealing merely with matters of procedure, may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment' (See Delhi Cloth and General Mills Co. Ltd. v. ITC AIR 1927 PC 242). The second is that a right of appeal being a substantive right the institution of a suit carries with it the implication that all successive appeals available under the law then in force would be preserved to the parties to the suit throughout the rest of the career of the suit. There are two exceptions to the application of this rule, viz. (i) when by competent enactment such right of appeal is taken away expressly or impliedly with retrospective effect; and (ii) when the Court to which appeal lay at the commencement of the suit stands abolished (see Garikapati Veeraya v. N. Subbiah Choudhry (1957) SCR 488; AIR 1957-SC 540, and Colonial Sugar Refining Co. Ltd. v. Irving (1905) AC 369 (PC)." Halsbury's Laws of England (Fourth Edition Vol. 44, paragraph 925) states:-- "The presumption against retrospection does not apply to legislation concerned merely with matters of procedure or of evidence; on the contrary, provisions of that nature are to be construed as retrospective unless there is a clear indication that such was not the intention of Parliament." We may now turn to the scope and content of Rule 1-BB. The said rule merely provides a choice amongst well-known and well-settled modes of valuation. Even in the absence of Rule 1-BB it would not have been objectionable, nor would there be any legal impediment, to adopt the mode of valuation embodied in Rule 1-BB, namely, the method of capitalisation of income on a number of years' purchase value. The rule was intended to impart uniformity in valuations and to avoid vagaries and disparities resulting from application of different modes of valuation in different cases where the nature of the property is similar. Rule 1-BB thus partakes of the character of a rule of evidence. It deems the market value to be the one arrived at on the application of a particular method of valuation, which is also one of the recognised and accepted methods. Even if a law raises a presumption and renders the presumption irrebuttable it is yet in the domain of the law of evidence. In Izhar Ahmad Khan's case, AIR 1962 SC 1052, it was pointed out by this Court (at page 1062):-- "It would be noticed that as in the case of a rebuttable presumption, so in the case of an irrebuttable presumption, the rule purports to assist the judicial mind in appreciating the existence of facts. In one case, the probative value is statutory strengthened but yet left open to rebuttal, in the other case, it is statutorily strengthened and placed beyond the pale of rebuttal. Considered from this point of view, it seems rather difficult to accept the theory that whereas a rebuttable presumption is within the domain of the law of evidence, an irrebuttable presumption is outside the domain of that law and forms part of the' substantive law." On a consideration of the matter, we are persuaded to the view that Rule 1-BB is essentially a rule of evidence as to the choice of one of the well accepted methods of valuation in respect of certain kinds of properties with a view to achieving uniformity in valuation and avoiding disparate valuations resulting from application of different methods of valuation respecting properties of a similar nature and character. The view taken by the High Courts, in our opinion, cannot be said to be erroneous. The appeals are accordingly dismissed. There will, however, be no orders as to costs. M.B.A./819/F.T. Appeals dismissed.