2017 (11) TMI 329 - HC - VAT and Sales Tax

Application of Stay - request for waiver - huge liability as per review orders - Held that - It is true that at the stage of considering application for stay it is not necessary to record any concluded findings or to finally deal with serious issues. However, the order must reflect application of mind, on the issue whether the issues raised in the pending Appeal are debatable or arguable. Prima facie consideration of the submissions made on merits is necessary to decide, whether stay should be granted by complete waiver or whether stay should be granted on conditions. In the facts of the present case, even the Tribunal has declined to go into the question of existence of a prima facie case - The Petitioner has deposited a sum of ₹ 10 lakhs on 13th September 2017 without prejudice to its rights and contentions in the pending Appeal. In view of this deposit and considering the nature of the impugned order, we find that interference with the impugned order is warranted. The order dated 17th July 2017 passed by the Maharashtra Sales Tax Tribunal at Mumbai is set aside and stay applications in VAT Appeal Nos. 208 to 212 of 2016 are restored to the file of the Maharashtra Sales Tax Tribunal.

Summary

Issues:
Appeal against order of Joint Commissioner of Sales Tax, application for stay, consideration of legal submissions by Tribunal, applicability of previous judgments on stay applications, refusal to consider submissions, deposit made by Petitioner, interference with impugned order, setting aside Tribunal's order, priority for disposal of stay applications, consideration of deposit in deciding stay applications, coercive steps against Petitioner.

Analysis:
The judgment by the Bombay High Court involved an appeal against an order passed by the Joint Commissioner of Sales Tax. The Petitioner had filed an application for stay in the statutory appeal, which was disposed of by the Maharashtra Sales Tax Tribunal at Mumbai, requiring the Petitioner to deposit 25% of the basic tax due for each period specified in the order. The Petitioner contended that the Tribunal did not consider the legal submissions made in support of the stay application, citing previous judgments emphasizing the Tribunal's duty to apply its mind to the issues raised by the parties.

The High Court referred to the case law set by previous judgments, highlighting the necessity for the Tribunal to at least prima facie consider the submissions on merits before deciding on granting stay. The Tribunal's order in the present case indicated a refusal to delve into the merits of the case, citing the huge liability arising from disallowance of set-off due to alleged bogus/inflated purchases. The State, represented by the AGP, relied on a previous Division Bench order in a similar case where the Court declined to interfere with the Tribunal's decision on part deposit.

The High Court reiterated the importance of the Tribunal applying its mind to the debatable or arguable issues raised in the appeal before deciding on granting stay. The Court noted that the Tribunal in this case did not even consider the existence of a prima facie case. The Petitioner had made a deposit of a certain amount without prejudice to its rights, prompting the High Court to set aside the Tribunal's order and restore the stay applications for fresh consideration, emphasizing the need for priority in disposal of the applications.

In its final order, the High Court directed the Tribunal to hear the applications afresh, taking into account the observations made in the judgment. The deposit made by the Petitioner was to be considered in deciding the stay applications, and no coercive steps were to be taken against the Petitioner until the disposal of the applications. The High Court partially allowed the rule on the specified terms, without imposing any costs on the parties involved.