2019 (8) TMI 755 - HC - VAT and Sales Tax

Stay of recovery - Penalty u/s 67 of the Kerala Value Added Tax Act - condition precedent for granting stay against the recovery - HELD THAT - We are primafacie convinced that an arguable case has been set up by the petitioner in the appeal pending before the tribunal. But we dissuade ourselves from expressing any opinion on the merits of the appeal, because the same is pending before the statutory authority. We are of the opinion that the insistence for payment of 30% of the amount in dispute, pending disposal of the appeal, would work out in prejudicial to the interest of the petitioner. On the other hand, a direction for an early disposal of the appeal and till then to keep in abeyance the recovery steps, would suffice to meet the ends of justice. Petition disposed off.

Summary

Issues involved:
1. Validity of penalty imposed under Section 67 of the Kerala Value Added Tax Act.
2. Legality of the interim order requiring payment of 30% of the total demand for granting stay against recovery.
3. Jurisdiction of the Intelligence Officer in imposing the penalty.
4. Applicability of the earlier Division Bench judgment in a related case.

Analysis:
1. The petitioner challenged an interim order passed by the Kerala Value Added Tax Appellate Tribunal, Additional Bench, regarding a penalty imposed under Section 67 of the Kerala Value Added Tax Act. The tribunal had required payment of 30% of the total demand as a condition for granting stay against recovery pending appeal.

2. The petitioner argued that the penalty was issued without jurisdiction, alleging that the Intelligence Officer exceeded his powers by imposing the penalty for procedural violations and tax evasion. The petitioner also highlighted a previous Division Bench judgment directing an expeditious consideration of the appeal and keeping recovery proceedings in abeyance.

3. The High Court, while refraining from expressing an opinion on the merits of the appeal pending before the tribunal, acknowledged the arguable case presented by the petitioner. The court found that requiring payment of 30% of the disputed amount would prejudice the petitioner's interests and directed an early disposal of the appeal while deferring recovery steps until the appeal is decided.

4. Consequently, the High Court disposed of the petition by quashing the interim order and directed the tribunal to expedite the appeal proceedings, affording both parties an opportunity to be heard. The tribunal was instructed to resolve the appeal within two months from the date of the judgment, with recovery of the disputed amount deferred until the appeal's disposal.