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2018 (8) TMI 451 - HC - VAT and Sales TaxWhether in the facts and under the circumstances of the case the impugned order staying the realization of disputed amount of penalty/demand to the tune of 65% stands justified even though the demand prima- facie reflects the arbitrary, illegal and conjectural approach? Held that - In view of law laid down in the case of Tata Motors Limited 2016 (7) TMI 1300 - ALLAHABAD HIGH COURT , the order of the Tribunal dated 6.7.2018 insofar as it relates to grant of interim protection of only 65% of the penalty to the revisionist is concerned does not meet the requirement of law and accordingly the order of the Tribunal is set aside - The order dated 1.6.2018 passed by the first appellate authority insofar as it relates to grant of interim protection to the revisionist is concerned, which does not meet the requirement of law is also set aside. The instant revision is disposed of with the direction to the First Appellate Authority to consider the issue with regard to grant of interim protection to the revisionist afresh by means of reasoned and speaking order.
Issues Involved:
1. Arbitrariness and legality of the impugned order (Annexure 7). 2. Justification of staying 65% of the disputed penalty/demand. 3. Validity of the penalty order without a finding of commission of offense or mens rea. 4. Entitlement of the revisionist to a 100% stay of the disputed penalty. Issue-wise Detailed Analysis: 1. Arbitrariness and Legality of the Impugned Order: The revisionist argued that the impugned order, Annexure 7, was arbitrary and illegal, passed in a casual manner without considering the specific facts and circumstances of the case. The court noted that the First Appellate Authority and the Commercial Tax Tribunal did not provide adequate reasons for their decisions to stay only 50% and 65% of the penalty, respectively. This lack of reasoning was deemed insufficient to meet the legal requirements, as highlighted in the Tata Motors Limited case, where it was emphasized that such cryptic recitals do not satisfy the requirement of law. 2. Justification of Staying 65% of the Disputed Penalty/Demand: The revisionist contended that the stay of only 65% of the penalty was unjustified, especially given the prima facie case and the revisionist's poor financial condition. The court referenced the Tata Motors Limited judgment, which criticized the practice of granting interim orders without proper consideration of factors such as prima facie case, balance of convenience, and irreparable injury. The court found that the appellate authorities failed to justify why the remaining 35% of the penalty was not stayed, thereby not exercising the power vested in them properly. 3. Validity of the Penalty Order Without a Finding of Commission of Offense or Mens Rea: The revisionist argued that the penalty order was invalid as it was passed without any finding of the commission of an offense or mens rea, making the penalty order nonest. The court acknowledged this argument but focused more on the procedural inadequacies of the appellate authorities in granting interim relief. The court emphasized the need for a reasoned and speaking order, as per the principles laid down in previous judgments, to ensure that the penalty order's validity is thoroughly examined. 4. Entitlement of the Revisionist to a 100% Stay of the Disputed Penalty: The revisionist claimed entitlement to a 100% stay of the penalty, citing poor financial condition and the prima facie case in their favor. The court reiterated the importance of considering financial hardship and other relevant factors, as discussed in the Tata Motors Limited case and other precedents. The court found that the appellate authorities did not adequately address these factors, thus failing to exercise judicial discretion properly. Conclusion: The court set aside the orders of the Tribunal dated 6.7.2018 and the First Appellate Authority dated 1.6.2018, as they did not meet the legal requirements. The court directed the First Appellate Authority to reconsider the issue of interim protection for the revisionist by issuing a reasoned and speaking order. Additionally, the court provided interim relief by prohibiting coercive action against the revisionist for 30 days or until the disposal of the application for interim protection.
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