2015 (8) TMI 1308 - HC - VAT and Sales Tax

Waiver of pre-deposit - appellate authority granted interim stay of 60% of the tax during the pendency of the appeal rest is to be deposited by assessee in pursuance of the assessment/penalty order. - Held that - Keeping in view the settled position of law on the point in issue and from the perusal of the appellate order passed by the appellate authority/appellate tribunal thereby passing the impugned orders, the said authorities have not indicated its mind so far as the existence of the prima facie case on merits on appeal as well as the financial condition which are to be considered by them (appellate authority/tribunal) while passing the impugned orders on an application for stay pending in the first appeal. The said mandatory condition is to be taken into consideration while disposing of an application for interim relief moved by the assessee by the appellate authority as well as tribunal during the pendency of appeal. For the foregoing reasons, the present revision is disposed of with a direction to the first appellate authority to decide the appeal filed by the assessee expeditiously say within a period of three months from the date of receiving a certified copy of this order.

Issues:
1. Stay of recovery during pendency of appeal.
2. Prima facie merits of the case.
3. Financial condition of the appellant.
4. Compliance with mandatory conditions by appellate authorities.

Stay of Recovery during Pendency of Appeal:
The judgment discussed the issue of granting interim stay of recovery during the pendency of an appeal. It highlighted the importance of maintaining a balance between the rights of the individual and the state in cases involving recovery of sovereign dues. The court emphasized that the appellant must have a strong prima facie case on merit to be considered for stay of recovery. It was noted that undue hardship to the appellant should be avoided, even if the appellant is financially stable. The judgment emphasized that the appellate authority must apply its mind to the issues raised by the appellant and consider them in accordance with the law. The court also mentioned that the interest of the revenue cannot jeopardize the rights and interests of the individual.

Prima Facie Merits of the Case:
The judgment cited previous cases to establish the importance of considering the prima facie merits of the case when deciding on granting interim stay of recovery. It referred to a case where the court granted full stay as there was clear evidence that the disputed tax was not to be charged or paid. The judgment emphasized that if the demand raised has no legal basis, requiring the assessee to pay the full amount would be undesirable. It highlighted the need for a thorough examination of the case to avoid disposing of stay applications routinely without considering the consequences.

Financial Condition of the Appellant:
The judgment underlined that the financial condition of the appellant should be taken into account while deciding on granting stay of recovery. It was mentioned that even if the appellant is capable of paying, undue hardship should be avoided if the appellant has a strong prima facie case. The court emphasized that the financial condition of the appellant should not be the sole consideration for deciding on the application for stay.

Compliance with Mandatory Conditions by Appellate Authorities:
The judgment concluded by directing the first appellate authority to decide the appeal expeditiously within three months. It specified that for two months or until the decision is made by the appellate authority, no coercive measures should be taken against the assessee. The judgment highlighted the importance of appellate authorities considering the existence of a prima facie case on merits and the financial condition of the appellant while deciding on applications for stay during the pendency of appeals.

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