2017 (5) TMI 78 - HC - VAT and Sales Tax

Payment of tax before the disposal of the appeal - vacation of stay order after prescribed period - case of appellant is that there was no Chairman of the Tribunal at Thiruvananthapuram and hence the matter was not disposed of within 180 days. In any event, it is to be noticed that the third proviso is harsh insofar it prejudices the assessees insofar as they being directed to satisfy the demand, even when the appeal filed by them is pending - Held that - merely for the reason of the Tribunal having not disposed of the appeal, there can be no automatic recovery proceeded with. With respect to the petitioner s case, it is directed that the recovery shall be kept in abeyance, till the disposal of the appeal before the Tribunal - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Interpretation of Section 60 of the Kerala Value Added Tax Act, 2003 regarding recovery initiation when appeal not disposed of within 180 days.

Analysis:
The judgment in question deals with the interpretation of Section 60 of the Kerala Value Added Tax Act, 2003, specifically focusing on the implications when an appeal is not disposed of within 180 days. The petitioner challenged the recovery initiation due to the Tribunal's delay in disposing of the appeal, despite a stay being granted. The first proviso allows the Tribunal to decide on tax payment before appeal disposal upon sufficient security, while the second proviso mandates the Tribunal to dispose of the appeal within 180 days. However, the contentious issue arises from the third proviso, which automatically vacates the stay order if the appeal is not disposed of within the specified period.

In this case, it was argued that the absence of the Tribunal Chairman in Thiruvananthapuram led to the delay in disposing of the appeal within 180 days. The petitioner contended that the automatic recovery initiation due to non-disposal of the appeal unfairly prejudices the assessee, especially when the Tribunal had already given directions on tax payment during the appeal process. The court acknowledged the harshness of the third proviso and ruled in favor of the petitioner, directing the recovery to be put on hold until the appeal is resolved.

The judgment emphasizes the importance of expeditious appeal disposal by the Tribunal to prevent undue hardship to the assessee. It highlights that delays not caused by the assessee should not result in adverse consequences for them. The court recommended forwarding the judgment to the Commissioner for necessary actions, including considering the removal of provisions causing unnecessary hardship and prejudice to the assessee. Ultimately, the writ petition was disposed of in favor of the petitioner, providing relief from automatic recovery due to appeal delay.