2016 (4) TMI 133 - HC - Income Tax

Notice of Motion - seeking stay of recovery of the disputed tax of ₹ 62.69 crores - Held that - Court has been adjourning the present Motion from time to time is because, it appeared that the disposal of the Miscellaneous Application before the Tribunal is imminent. Therefore, this Court was of the view that it may be advisable to not invest time on the appeal and the stay application as in case the Miscellaneous Application is allowed, then the question of entertaining the appeal from the impugned order would not arise. On the other hand, in case the Miscellaneous Application is not allowed and the order dated 6th September, 2013 is left undisturbed then, different considerations would apply as the appeal itself would have to be considered for admission and depending on the view taken thereon, the question of grant of stay of the impugned order and recovery pursuant thereto would have to be considered. The entire exercise of considering the appeal and the stay application may be rendered useless in case, the Tribunal allows the Miscellaneous Application. In view of the fact that Miscellaneous Application is now listed on 1st April, 2016 before the Tribunal, it appears to us from the submission made before us that the disposal of the Miscellaneous Application is likely to take place in the very near future, it would be appropriate to adjourn this Notice of Motion, while granting ad-interim relief in terms of prayer clause (a) to the Motion.

Issues:
1. Stay of recovery of disputed tax till appeal disposal.
2. Consideration of individual contracts in tax dispute.
3. Misreading of judgments by the Tribunal.
4. Adjournment of Notice of Motion due to pending Miscellaneous Application.
5. Request for expeditious disposal of Miscellaneous Application.

Analysis:
1. The appellant sought a stay on the recovery of disputed tax amounting to ?62.69 crores pending the appeal filed against the Income Tax Appellate Tribunal's order dated 6th September, 2013. The appellant contended that the Tribunal's order did not consider crucial issues raised by them, specifically related to individual contracts with equipment suppliers. They argued that each contract should be assessed separately based on its terms. The appellant also cited precedents from a Tribunal decision and a Delhi High Court judgment to support their case.

2. Following the Tribunal's order, the appellant filed a Miscellaneous Application seeking a recall of the decision, emphasizing the need to evaluate each contract separately due to differing terms. They highlighted a perceived misinterpretation of the Delhi High Court judgment by the Tribunal, asserting that the order favored the appellant. The appellant's appeal to the High Court against the Tribunal's decision resulted in the demand for ?62.69 crores, prompting the current motion for a stay on recovery.

3. The High Court adjourned the Notice of Motion multiple times awaiting the outcome of the pending Miscellaneous Application before the Tribunal. The Court aimed to avoid investing time in the appeal and stay application if the Miscellaneous Application was successful. The possibility of the Tribunal allowing the Miscellaneous Application would impact the need for the High Court to entertain the appeal and grant a stay on the Tribunal's order.

4. Considering the imminent listing of the Miscellaneous Application before the Tribunal, the High Court decided to adjourn the Notice of Motion while granting interim relief. The appellant's senior counsel assured no adjournment requests for the Miscellaneous Application and pledged cooperation for its prompt disposal. Given the significant amount at stake and the lengthy pendency of the Miscellaneous Application, the High Court urged the Tribunal to expedite its consideration and disposal.

5. The High Court, acknowledging the substantial sum involved and the extended pendency of the Miscellaneous Application, scheduled the next hearing for the Notice of Motion on 22nd April, 2016, with interim relief granted. The Court emphasized the importance of expeditiously resolving the Miscellaneous Application to address the prolonged uncertainty and facilitate a timely resolution of the tax dispute.

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