2020 (9) TMI 116 - HC - VAT and Sales Tax

Stay of recovery of dues, pending the appeal - Principles of Natural Justice - ex-parte order - suo motu power of revision - exemption on turnover - stock transfers covered by F-Forms - HELD THAT - In XEROX INDIA LTD. VERSUS GOVERNMENT OF AP. AND OTHERS 2007 (8) TMI 697 - ANDHRA PRADESH HIGH COURT , it was held that while deciding the application for stay, the authority was exercising quasi-judicial function, and therefore even though he was not expected to pass a judgment like a regular court, it was his bounden duty to record some reasons indicating the application of mind to the factors which are relevant for passing or refusing an order of stay in the matter of levy and collection of taxes and an order which is silent on consideration of the relevant factors is liable to be set aside. When substantial rights of parties are involved, it is not open to the 1st respondent to (i) mention wrong facts while dealing with stay application filed by the petitioner. (ii) ignore the points urged by the petitioner for seeking stay of collection of tax and (iii) dismiss the say application without giving any valid reasons, why the petitioner is not entitled to grant stay pending appeal before the Telangana State VAT Appellate Tribunal. Petition allowed.

Summary

Issues:
Assailing ACO order rejecting stay application pending disposal of TA.No.289/2018 before Telangana State VAT Appellate Tribunal.

Analysis:
The petitioner, a registered dealer under Telangana VAT Act, challenged an assessment order passed under AP VAT Act, 2005, and CST Act, 1956. The 2nd respondent revised the assessment order under CST Act, withdrawing exemption on stock transfers, treating them as local sales. The petitioner argued that the turnover related to transfers made to branches outside the state, not just Hyderabad. Due to business transfer disputes, objections to the revision were not filed timely. The petitioner appealed the revision order under AP VAT Act, 2005, to the Telangana State VAT Appellate Tribunal and filed a stay application, which was rejected by the 1st respondent.

The petitioner contended that the stay rejection violated natural justice principles, as hearings were adjourned multiple times, and the impugned order was passed without proper verification of records. The petitioner highlighted irregularities in the order, including incorrect facts and disputed tax amounts. The impugned order lacked discussion on the grounds raised and failed to provide reasons for rejecting the stay. The petitioner argued for substantial chances of success in the appeal and balance of convenience for granting stay.

The petitioner had paid a portion of the disputed tax. The Special Counsel for Commercial Taxes could not explain discrepancies in the impugned order. Citing Xerox India Ltd. Vs. Government of A.P., it was emphasized that authorities deciding stay applications must provide reasons indicating consideration of relevant factors. The court held that when substantial rights are at stake, incorrect facts, ignoring petitioner's points, and dismissing the application without valid reasons are unacceptable. The impugned order was set aside, directing the 1st respondent to reconsider the matter, provide a personal hearing, and pass a reasoned order in accordance with the law.

In conclusion, the writ petition was allowed, the impugned order was set aside, and the 1st respondent was instructed to reassess the case, considering petitioner's contentions and providing a reasoned order.