2013 (4) TMI 355 - HC - VAT and Sales Tax

Application for interim relief - Stay granted to the extent of 55% of the tax amount - Held that - As decided in I.T.C. Ltd. vs. Commissioner (Appeals), Custom & Central Excise, Meerut-I 2003 (10) TMI 70 - HIGH COURT OF JUDICATURE AT ALLAHABAD while considering the application for stay/waiver of a pre-deposit, as required under the law, the Court must apply its mind as to whether the appellant has a strong prima facie case on merit. 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 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 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 - the present revision is disposed of with a direction to the FAA to decide the appeal filed by the assessee expeditiously say within a period of two months from the date of receiving a certified copy of this order.

Summary

Issues:
1. Stay of recovery of tax amount pending appeal.
2. Consideration of prima facie case on merits and financial condition while granting stay.
3. Failure of appellate authority/tribunal to indicate mind on prima facie case and financial condition.
4. Direction for expeditious disposal of appeal.

Analysis:
1. The case involves the petitioner seeking relief from the recovery of tax amount pending appeal. The appellate court had granted a stay of 55% of the tax amount assessed, leading to the petitioner filing a second appeal before the Tribunal, which was dismissed. Subsequently, the petitioner filed a revision before the High Court seeking relief from the recovery.

2. The High Court referred to established legal principles regarding the grant of stay pending appeal. It emphasized the need for the Court to balance the rights of the individual and the State in matters of recovery of sovereign dues. The Court highlighted that the appellant must demonstrate a strong prima facie case on merit to be eligible for relief from depositing the assessed amount. The financial condition of the appellant should also be considered, and undue hardship should be avoided.

3. The Court noted precedents where full stay was granted when clear evidence existed that the disputed tax was not chargeable. It criticized the appellate authority and tribunal for not indicating their consideration of the prima facie case on merits and financial condition while passing the impugned orders. The Court stressed the mandatory requirement for such considerations during the pendency of an appeal.

4. Consequently, the High Court disposed of the revision by directing the first appellate authority to decide the appeal expeditiously within two months. During this period, the petitioner was not compelled to deposit the tax amount assessed by the assessing authority. The Court's decision aimed to ensure a fair consideration of the appeal while safeguarding the petitioner from undue hardship during the pendency of the proceedings.