1984 (6) TMI 210 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the order passed by the second respondent on a stay petition regarding disputed tax amount pending appeal.

Detailed Analysis:

1. The petitioners challenged the order passed by the second respondent on their stay petition regarding the disputed tax amount pending appeal. The petitioners sought a writ of certiorarified mandamus to quash the order and direct the second respondent to reconsider the stay petition. The second respondent had directed the petitioners to pay the disputed tax in monthly instalments and provide additional security in the form of immovable property or a bank guarantee.

2. The petitioners argued that the discretion vested in the second respondent to grant stay must be exercised judiciously and not mechanically. They contended that the second respondent did not consider relevant factors such as the merit of the case, adequacy of security, and necessity of tax payment during the appeal. The petitioners cited various legal precedents to support their argument, emphasizing the need for a reasoned decision in granting or denying a stay.

3. The petitioners' counsel further referenced Supreme Court decisions related to the Income-tax Act and Gift-tax Act, highlighting the incidental power of appellate authorities to grant stays pending appeal. The counsel argued that even in the absence of express statutory provisions, appellate authorities must consider stay applications judiciously. The Supreme Court decisions emphasized the importance of a reasoned decision-making process in such matters.

4. Based on the arguments presented, the Court held that the second respondent's order lacked a proper consideration of relevant factors and was therefore quashed. The Court reiterated the requirement for a judicial exercise of discretion in stay matters and directed the second respondent to reconsider the stay petition within three months. Until the fresh decision is made, the recovery of the disputed tax amount from the petitioners was ordered to be suspended.

5. In conclusion, the Court allowed the writ petition, setting aside the second respondent's order and directing a fresh consideration of the stay petition. No costs were awarded in the matter. The judgment emphasized the need for appellate authorities to exercise their discretionary powers judiciously and in accordance with established legal principles.