2015 (12) TMI 527 - HC - VAT and Sales Tax

Power of tribunal to grant stay under GVAT - Whether the Tribunal erred in granting stay against recovery till the disposal of appeal by the first appellate authority - Held that - As can be seen from the impugned order passed by the Tribunal, it has considered the merits of the case and has found as a matter of fact that a strong prima facie case has been made out in favour of the assessee. It is in the light of the prima facie view expressed by the Tribunal viz., that its earlier decision in the case of M/s Vardan Petrochemical (P) Ltd. v. State of Gujarat would be applicable in the facts of the present case, that the Tribunal has thought it fit to restore the matter to the file of the Deputy Commissioner for the purpose of deciding the same on merits. - It is well settled that the powers to direct payment of predeposit are discretionary powers and such discretion is required to be exercised by the concerned authority in a reasonable manner. Having regard to the finding recorded by the Tribunal whereby, it has recorded a prima facie view in favour of the assessee, it cannot be said that the discretion exercised by it in refusing the amount of pre-deposit is, in any manner, unreasonable, or arbitrary so as to give rise to any question of law. - it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law, much less, a substantial question of law warranting interference. - Decided against Revenue.

Summary

Issues:
1. Questioning the order granting stay against recovery till the disposal of appeal by the first appellate authority.

Analysis:
1. The appellant, the State of Gujarat, challenged the order passed by the Tribunal granting stay against recovery until the appeal is disposed of by the first appellate authority. The case involved an assessment order for the financial year 2007-2008, which raised a demand of Rs. 69,19,455. The respondent, an assessee, appealed to the Deputy Commissioner of Commercial Tax, who directed a pre-deposit of 10% of the total demand. As the pre-deposit was not made, the appeal was dismissed. The respondent then appealed to the Tribunal, which set aside the Deputy Commissioner's order and sent the matter back for a decision on merits.

2. The Assistant Government Pleader for the appellant argued that the Tribunal's decision was based on considering the merits of the case, referencing a previous decision. The appellant contended that the Tribunal did not establish any financial hardship to warrant a reduction in the pre-deposit amount. The respondent's advocate, on the other hand, argued that the Tribunal's decision was just and legal, citing a previous court decision that financial hardship is not a factor for waiver of pre-deposit under the Act.

3. The High Court analyzed the submissions and reviewed both the Tribunal's order and the first appellate authority's order. It observed that the main issue was whether the Tribunal was justified in granting a total waiver of pre-deposit. The Tribunal had found a strong prima facie case in favor of the assessee, leading to the decision to restore the matter for further consideration on merits.

4. The Court emphasized that the power to direct pre-deposit is discretionary and must be exercised reasonably. Considering the Tribunal's prima facie view favoring the assessee, the Court concluded that the Tribunal's decision was not unreasonable or arbitrary. Additionally, the Court noted that the Act does not include financial hardship as a factor for waiver of pre-deposit, dismissing the argument that the Tribunal failed to consider financial hardship.

5. Ultimately, the Court held that the appeal lacked merit and was dismissed. The judgment highlighted that the Tribunal's decision did not raise any substantial question of law warranting interference.