1997 (8) TMI 507 - HC - VAT and Sales Tax

Summary

Issues:
- Stay of realization of extra demand raised for the assessment year 1985-86 during pendency of a reference application under section 24(2) of the Orissa Sales Tax Act, 1947.
- Interpretation of section 24(7) of the Act regarding the stay of tax payment pending disposal of application or reference.
- Consideration of the appellate authority's jurisdiction to grant stay of realisation of tax during pendency of reference.
- Application of precedents regarding the grant of stay during pendency of reference.
- Assessment of peculiar features of the case in determining the stay of realization of balance amount pending disposal of reference application.

Analysis:
The petitioner sought a stay of the realisation of extra demand raised for the assessment year 1985-86 during the pendency of a reference application under section 24(2) of the Orissa Sales Tax Act, 1947. The Tribunal had rejected the petitioner's application under section 24(2), leading to the matter being adjudicated in the High Court. The petitioner contended that the Tribunal's restoration of demands was erroneous as it implied the petitioner exceeded its manufacturing capacity. The Tribunal's decision was challenged based on the financial incapacity of the petitioner to make the payment. However, the Revenue argued that section 24(7) of the Act did not allow for the stay of tax payment pending application disposal. The Court referred to Commissioner of Income-tax, Delhi v. Bansi Dhar and Sons to emphasize that the appellate authority retains jurisdiction over granting stays during reference pendency. The Court clarified that the High Court's power to grant stay during a reference lies under article 226 or 227 of the Constitution, not inherent or incidental powers. The Court acknowledged the possibility of granting stays in appropriate cases, as seen in Ion Exchange India Limited v. State of Orissa, subject to satisfying certain criteria.

In this case, the first appellate authority had already reduced the total demand substantially. The petitioner's challenge primarily revolved around the unit's maximum capacity, a matter to be addressed during the section 24(2) application consideration. The Court, without expressing a final opinion on merits, directed the petitioner to pay an additional sum of Rs. 3 lakhs, subject to verifying the previous payment of Rs. 7,91,964 by a specified date. The Court ordered the stay of the balance amount's realization until the reference application's disposal. Any excess payment made would be adjusted against the additional sum. The judgment was delivered by PASAYAT A. and DATTA S.C. JJ., with the latter concurring. The writ petition was disposed of accordingly, with an urgent certified copy of the order to be granted to the petitioner. The judgment was reported in [2000] 117 STC 436 (SC).