2011 (3) TMI 786 - HC - Central Excise

Recovering the tax arrears - attachment of property - ownership of property - The plot in question stands in the name of Harish Chandra Gupta, father-in-law of the appellants. When the plot in question was attached, the appellants contended that for recovering the tax arrears of the company the flat belonging to their father-in-law who was the erstwhile director of the company could not be attached. - Held that - it would be just and proper to stay the operation of the order-in-original till the disposal of the appeals. The Tribunal is directed to hear the above Appeals on merits expeditiously. - It is made clear that during the pendency of the Appeal, attachment levied on 22-7-2005 shall continue to be in enforce.

Summary

Issues:
1. Whether the Tribunal was justified in declining to stay the operation of the order-in-original dated 11-8-2009 during the pendency of the Appeal?

Analysis:
The High Court of Bombay heard two appeals concerning the refusal of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to stay the order-in-original dated 11th August, 2009. The order had determined that a plot in the Government Industrial Estate belonged to a tax defaulter company rather than the father-in-law of the appellants. The appellants argued that the property could not be attached for recovering tax arrears. The CESTAT, in the impugned order, found that the plot belonged to the tax defaulter company and declined to grant a stay during the appeal process, leading to the filing of the present appeals challenging this decision.

The High Court noted that the appellants were in possession of the plot in question, and if it were auctioned during the appeal process, causing third party rights to be created, it would result in grave prejudice to the appellants if the appeals were eventually allowed. Therefore, the Court held that the Tribunal was not justified in refusing to stay the order-in-original. Considering the circumstances of the case, the Court deemed it just and proper to stay the operation of the order-in-original until the appeals were disposed of. The Tribunal was directed to expedite the hearing of the appeals on their merits.

During the pendency of the appeals, the attachment imposed on 22-7-2005 was ordered to remain in force. The respondents were prohibited from enforcing the demand while the appeals were ongoing, and the appellants were restrained from dealing with the plot in question without written permission from the respondents. The Court disposed of both appeals with no order as to costs, providing clarity on the proceedings and restrictions during the appeal process.