2017 (6) TMI 1217 - HC - VAT and Sales Tax

Stay order - power to extend stay beyond 365 days - Held that - The power to grant stay is an incidental power of the Appellate Authority and if the said Tribunal or Authority cannot dispose of the appeal on merits on account of the heavy work burden or otherwise, for no fault of assessee or the Appellate Tribunal, its stay order should not be allowed to lapse merely by lapse of time on account of such limited powers as are contained in Section 63(7)(b) of the KVAT Act, 2003. Petitions are disposed of with a request to the Karnataka Appellate Tribunal who is seized of the appeal filed by the petitioner to decide the same expeditiously preferably within six months.

Summary

Issues:
1. Grievance regarding the stay order duration under KVAT Act, 2003.
2. Tribunal's inability to decide appeals within the stipulated time frame.
3. Need for legislative amendments to empower the Tribunal effectively.

Analysis:

Issue 1: Grievance regarding the stay order duration under KVAT Act, 2003
The petitioner, an assessee, raised a concern about the stay order granted by the Karnataka Appellate Tribunal under the KVAT Act, 2003, which could not extend beyond 365 days as per Section 63(7)(b) of the Act. Despite the stay order being in place, the Tribunal had not disposed of the appeal on merits within the stipulated period. The petitioner sought a resolution to this issue.

Issue 2: Tribunal's inability to decide appeals within the stipulated time frame
The Court acknowledged the limited power given to the Tribunal under the law, preventing it from extending its own stay order beyond the prescribed duration. Due to this legislative lacuna and the Tribunal's inability to decide pending appeals within the mandated timeframe, the Court was burdened with numerous petitions on similar grounds. The Court emphasized the need for efficient disposal of appeals to avoid unnecessary litigation.

Issue 3: Need for legislative amendments to empower the Tribunal effectively
The Court highlighted the incidental power of the Appellate Authority to grant stay orders and emphasized that the inability to dispose of appeals on merits should not result in the lapse of the stay order due to limited powers specified in the law. It suggested that the State should consider amending Section 63(7)(b) of the KVAT Act, 2003 to empower the Tribunal effectively in dealing with pending appeals, thereby preventing the generation of unnecessary litigation in the Constitutional Courts. The Court directed the Tribunal to decide the pending appeal expeditiously and extended the interim order until the appeal's disposal, urging the State to undertake suitable amendments in the law.

In conclusion, the judgment addressed the grievances raised by the petitioner regarding the stay order duration, highlighted the Tribunal's challenges in deciding appeals within the stipulated time frame, and emphasized the need for legislative amendments to empower the Tribunal effectively in handling pending appeals to reduce unnecessary litigation.