1962 (9) TMI 45 - HC - VAT and Sales Tax

Summary

Issues:
Petitioner aggrieved by order rejecting stay of tax and penalty collection. Praying for writ to quash order. Dispute over tax and penalty levy. Application for stay rejected by Appellate Assistant Commissioner. No reason provided for rejection. Petitioner approached higher authorities. Statutory duties of Appellate Assistant Commissioner questioned. Discretionary power to grant stay examined. Comparison with Income-tax Act provisions. Proper exercise of jurisdiction by Appellate Assistant Commissioner in rejecting stay analyzed. Mandamus sought to reconsider application for stay.

Analysis:

The petitioner, a dealer in fried grams, challenged the order of the Appellate Assistant Commissioner rejecting his application for stay of tax and penalty collection. The tax and penalty levied by the Deputy Commercial Tax Officer were disputed by the petitioner, leading to an appeal. The Appellate Assistant Commissioner summarily rejected the stay application without providing any reasons, prompting the petitioner to approach higher authorities, including the Deputy Commissioner and the Commissioner of Commercial Taxes. The petitioner contended that the rejection of the stay application was arbitrary and that the Appellate Assistant Commissioner failed to fulfill his statutory duties.

The statutory framework under section 31 of the Madras General Sales Tax Act, 1959, grants the Appellate Assistant Commissioner the discretion to grant stay of tax and penalty collection pending an appeal if sufficient security is furnished. The comparison with section 45 of the Indian Income-tax Act highlights the duty of the authority to exercise this discretion objectively and not arbitrarily. The discretion to grant stay is not an unfettered power but must be exercised after due consideration of the grounds presented by the appellant.

The court emphasized that the Appellate Assistant Commissioner must scrutinize the grounds for stay and cannot reject the application arbitrarily. The duty to examine the security tendered and assess the appellant's financial situation is crucial in determining whether a stay should be granted. The court held that the Appellate Assistant Commissioner failed to properly exercise his jurisdiction by rejecting the stay application without valid reasons, leading to the issuance of a mandamus directing him to reconsider the application.

In conclusion, the court allowed the petition and directed the Appellate Assistant Commissioner to review the petitioner's application for stay. The judgment underscores the importance of proper exercise of statutory duties and discretion by authorities in matters of tax and penalty collection, ensuring fairness and adherence to legal principles.