1998 (2) TMI 569 - HC - VAT and Sales Tax

Summary

Issues:
1. Jurisdiction of Joint Commissioner to modify stay order of penalty collection.
2. Validity of revocation of stay order based on issuance of a cheque.
3. Disclosure of material facts during the stay application process.
4. Discretion of Joint Commissioner in revoking stay orders.
5. Consideration of circumstances in determining penalty collection.

Analysis:
1. The writ petition challenged the order of the Joint Commissioner modifying the stay order of penalty collection, alleging it to be illegal and without jurisdiction. The petitioner had sought a stay of penalty collection pending appeal before the Sales Tax Appellate Tribunal, which was initially granted on condition of payment. However, the Joint Commissioner later revoked the stay based on new information received after a cheque for the penalty amount was issued by the petitioner.

2. The Joint Commissioner, upon receiving a report that the petitioner had issued a cheque for the penalty amount, withdrew the stay order, stating that the cheque issuance was not disclosed during the initial stay application process. The petitioner contended that the cheque was issued under pressure and with the intention of stopping payment if the stay was granted. The Court acknowledged that the cheque was not issued unconditionally, as indicated in the covering letter, and criticized the Joint Commissioner for not considering this aspect before revoking the stay.

3. The Court highlighted the importance of disclosing all material facts during the stay application process. It noted that the petitioner's failure to disclose the cheque issuance to the Joint Commissioner was a crucial omission. The Court found the petitioner's explanation regarding a communication gap between them and their advocate unconvincing, emphasizing the need for full disclosure of relevant information to the authorities.

4. Regarding the revocation of stay orders, the Court clarified that while there is no absolute bar against revoking a stay order, such power should not be exercised lightly or routinely based on a change of view. The Court criticized the Joint Commissioner for not adequately considering the circumstances surrounding the cheque issuance and the conditions under which it was tendered, leading to an unjust revocation of the stay order.

5. Considering the disputed penalty, which was five times the tax amount, the Court decided to dispose of the writ petition by directing the petitioner to pay a reduced sum towards the penalty within a specified period. The Court ordered that the cheque issued by the petitioner should not be encashed, and no further steps should be taken for penalty recovery pending the appeal before the Sales Tax Appellate Tribunal. This decision aimed to balance the interests of both parties while ensuring fair treatment in the penalty collection process.