2019 (5) TMI 799 - HC - VAT and Sales Tax

Stay on collection of the disputed tax - Entertainment Tax Act, 1939 - rejection for application of stay - HELD THAT - In this case, the petitioner is the Tourism Development Corporation wholly owned by the State of Andhra Pradesh. The period in respect of which tax has been levied, was a period when the State was a combined State. Even if the statutory appeals filed by the petitioner get rejected ultimately, the entire liability may have to be apportioned between the petitioner/Corporation and their counterpart in the State of Telangana. These issues have not been taken into account by the Additional Commissioner before rejecting the prayer for stay. Petitioner submitted that the petitioner/Corporation is running into huge losses. He has produced the Income Tax Returns for the financial years 2016-2017 and 2017-2018. They disclose that the petitioner/Corporation has been consistently incurring huge losses running into several crores of rupees. Therefore, undue hardship may be caused to the petitioner/Corporation, if the collection of the disputed tax is not stayed. Even if the statutory appeals are ultimately dismissed and the Assessment Order confirmed, the liability of the petitioner/Corporation may have to be shared by the Telangana Tourism Development Corporation - considering the due financial straits into which the petitioner is placed, some leniency should be shown to the petitioner. The Writ Petitions are allowed, setting aside the impugned Orders and granting stay of recovery of the disputed tax, subject to the condition that the petitioner deposits a sum of ₹ 10,00,000/-.

Summary

Issues Involved:
Challenge to order rejecting stay of collection of disputed tax under the Entertainment Tax Act, 1939.

Analysis:
The judgment by the High Court of Telangana and Andhra Pradesh involved the challenge by the Andhra Pradesh Tourism Development Corporation Limited against the Additional Commissioner's order rejecting the application for stay of collection of disputed tax under the Entertainment Tax Act, 1939. The petitioner had filed separate statutory appeals against four Assessment Orders from 2010-2011 to 2013-2014. The Additional Commissioner had rejected the stay petitions, leading to the filing of the Writ Petitions. The Court noted that while the issue of prima facie case was considered by the Additional Commissioner, it was not the sole criteria for determining the eligibility of an assessee to stay pending appeal.

The Court highlighted that the petitioner, a Corporation wholly owned by the State of Andhra Pradesh, operated during a period when the State was combined. Even if the appeals were rejected, the liability might need to be shared with the Telangana Tourism Development Corporation. The financial difficulties faced by the petitioner were emphasized, with evidence of consistent losses in the Income Tax Returns for 2016-2017 and 2017-2018. Considering the financial strain on the petitioner, the Court decided to grant leniency and allowed the Writ Petitions, setting aside the impugned orders and granting stay of recovery of the disputed tax. The petitioner was directed to deposit a sum of Rs. 10,00,000 within eight weeks from the date of receipt of the Order.

In conclusion, the High Court's judgment provided relief to the petitioner, emphasizing the need to consider the financial implications and potential shared liability before rejecting a stay application. The decision balanced the interests of the petitioner with the legal requirements under the Entertainment Tax Act, 1939, showcasing the Court's consideration of both legal and practical aspects in rendering justice.