2013 (7) TMI 462 - HC - VAT and Sales Tax

Validity of stay proceedings - Additional Commissioner stayed 70% of the disputed tax, till disposal of the appeal - Tribunal confirmed Commissioner s order - Held that - During the pendency of the statutory appeal, the Tribunal is required to look into the prima facie merit of the case as well as financial condition of the applicant. Further, the appellate authority is required to consider the relevant factor like financial hardship and other relevant facts because the condition of deposit will make the purpose of filing of appeal itself nugatory - Order passed by the Tribunal is modified to the extent that disputed tax raised by the Assessing Authority shall remain stayed till disposal of the first appeal - Decided in favour of Assessee.

Summary

Issues involved:
Appeal against order of Commercial Tax Tribunal - Stay of disputed tax - Consideration of financial stringency - Proper application of mind by Tribunal - Judicial exercise of power of stay - Prima facie merit of the case - Financial condition of the applicant - Expeditious disposal of first appeal.

Analysis:

The judgment involves revisions under Section 58(1) of the U.P. Value Added Tax Act, where the applicant challenged the order of the Commercial Tax Tribunal. The applicant, a company engaged in builders and developers' activities, was issued a show cause notice for tax imposition. The Assessing Authority imposed a significant tax liability, leading the applicant to appeal before the Additional Commissioner, who stayed 70% of the disputed tax. The Tribunal then dismissed the appeal, prompting the applicant to file revisions, arguing that the Tribunal failed to consider relevant facts and financial stringency.

The applicant contended that the Tribunal's dismissal was arbitrary and lacked proper application of mind. The applicant emphasized that financial hardship must be considered in such cases, as per various court precedents. The applicant cited judgments like Income Tax Officer v. M.K. Mohammad Kunhi, Mehsana District Cooperative Mill Pvt. Ltd. v. Union of India, and Shri Kihota Hollohon v. Mr. Zachilhu, along with a local judgment in M/s Moriroku Ut India Pvt. Ltd. Noida v. Union of India.

The applicant further argued that the Tribunal should have assessed the prima facie merit of the case and the applicant's financial condition while considering the waiver cum stay. It was highlighted that the Tribunal's decision should not render the purpose of filing the appeal meaningless due to financial constraints. Therefore, the Tribunal's order was modified to stay the disputed tax until the first appeal's disposal, with directions for an expeditious resolution within six months.

In conclusion, the revisions were disposed of, emphasizing the importance of considering financial hardship and ensuring a just exercise of power in tax matters to prevent undue burden on the taxpayer.