2016 (6) TMI 1064 - HC - VAT and Sales Tax

Pre-deposit - petition against the direction of pre-deposit of 25% of the disputed tax and to furnish bank guarantee for the remaining amount - Held that - the Writ Petitions filed by petitioners are partly allowed and the first condition requiring the petitioners to pay 25% of the disputed tax in each of the cases are set aside and the second condition requiring the petitioners to furnish bank stands modified and the petitioners are hereby directed to furnish personal bond for the entire disputed tax before the Assessing Officer. It is made clear that this order is passed considering the peculiar facts and circumstances of the case and not be treated as precedent.

Summary

Issues:
1. Validity of orders passed by the Appellate Authority regarding stay of tax collection.
2. Application of the decision in the case of Bharat Petroleum Corporation Ltd. by the High Court.
3. Modification of conditions for stay granted to the petitioners.
4. Direction to the petitioners to furnish personal bond for the disputed tax amount.
5. Conclusion of proceedings by the Appellate Authority and passing a speaking order.

Analysis:

1. The Writ Petitions were filed by M/s.Indian Oil Corporation Ltd. and Chennai Petroleum Corporation Limited, seeking a writ of certiorari to quash the orders passed by the Appellate Authority related to the stay of tax collection. The High Court decided to hear these petitions together due to the similarity of the issues involved.

2. The High Court, without delving into the factual aspects of the cases, focused on the discretion exercised by the Appellate Authority in granting the stay order. Referring to a Supreme Court case involving Bharat Petroleum Corporation Ltd., the High Court emphasized the need to consider the financial position and nature of the petitioners, who are state-owned corporations, in determining the conditions for the stay of tax collection.

3. The Appellate Authority had imposed conditions for granting stay, including payment of 25% of the disputed tax and furnishing a bank guarantee. The High Court, considering the petitioners' status as public sector companies, modified the conditions. It set aside the requirement to pay 25% of the disputed tax and directed the petitioners to furnish a personal bond for the entire disputed tax amount before the Assessing Officer.

4. The High Court directed the petitioners to furnish a personal bond for the entire disputed tax amount, emphasizing that the order was based on the specific facts of the case and should not be considered a precedent. It also urged the Appellate Authority to expedite the proceedings and issue a detailed order promptly.

5. Acknowledging that the petitioners, being public sector companies, could meet their liabilities at a later date if necessary, the High Court partially allowed the Writ Petitions. It highlighted the need for compliance with conditions in case of an unfavorable outcome in the appeal process before the Tribunal. The High Court concluded by partially allowing the Writ Petitions and closing the connected Miscellaneous Petitions without costs.