2022 (7) TMI 651 - HC - VAT and Sales Tax

Validity of assessment order - seeking extension of stay - request for extension of stay rejected on the ground that there is no provision under the TNVAT Act for considering such extension - HELD THAT - The provisions of Section 51(4) state that, notwithstanding the preferring of the appeal under sub-Section (1) of Section 51, tax shall be paid in accordance with the order of assessment, as against which appeal is preferred - the first proviso states that the appellate authority may, in his discretion, issue such directions as he thinks fit in regard to the payment of tax before disposal of the appeal subject to the appellant furnishing sufficient security to his satisfaction in the form and manner as he may stipulate. In a situation where the hearing of the appeal exceeds the period of 180 days from date of grant of stay, then the stay granted stands automatically vacated. The purpose of insertion of the second proviso is to ensure speedy disposal of appeals, since where interim protection is once obtained there is a tendency to stretch the benefit inordinately with the appeals stagnating inordinately. This causes accumulation of the substantial arrears of tax and penalty demands. It is to protect against such a situation that the second proviso has been inserted - the rigour of the second proviso would not be applicable to a case such as the present one, where the petitioner has cooperated in full in the disposal of the appeals and there is admittedly no delay on its part or any attempt to protract the appeal proceedings. The stay granted originally is extended, by concurrence of the respondent as well and a direction issued to R2 to dispose the appeals within a period of three (3) months from today, subject to the petitioner extending the validity of the bank guarantee for an another period of three (3) months - Petition allowed.

Summary

Issues:
Challenging assessment orders under CST Act for 2004-05 and 2005-06, Seeking stay of impugned demands, Extension of stay beyond 6 months under TNVAT Act, Interpretation of Section 51(4) of TNVAT Act, Applicability of second proviso, Comparison with provisions of CE Act, Precedent from Supreme Court case, Disposal of appeals within stipulated time, Extension of validity of bank guarantee.

Analysis:
The petitioner challenged assessment orders under the Central Sales Tax Act for 2004-05 and 2005-06 and sought a stay of the impugned demands pending appeals. The appellate authority granted a stay directing the petitioner to remit 25% of disputed tax and provide a bank guarantee for the balance demand, valid until a specified date. The petitioner complied with this order, and the appeals were heard with submissions made by both parties. The petitioner requested an extension of stay beyond the 6-month limit set by the TNVAT Act, which was rejected by the authority, leading to the filing of Writ Petitions.

The authority's decision to reject the extension of stay was based on the provisions of Section 51(4) of the TNVAT Act, which require tax payment as per the assessment order unless directed otherwise by the appellate authority. The first proviso allows the appellate authority to issue directions regarding tax payment subject to sufficient security, while the second proviso states that the directions stand vacated if no order is passed within 180 days. This provision aims to ensure timely disposal of appeals to prevent undue delays and accumulation of tax arrears.

The court noted that the petitioner cooperated in the appeal process without causing delays and compared the situation to provisions under the Central Excise Act. Citing a Supreme Court case, it emphasized curbing dilatory tactics by assessees and the need for timely disposal of proceedings. The court extended the stay with the respondent's agreement and directed the disposal of appeals within three months, subject to extending the bank guarantee validity.

In conclusion, the Writ Petitions were allowed with no costs, emphasizing the importance of focusing energies on appeal disposal rather than miscellaneous petitions. The judgment highlighted the need for efficient resolution of appeals and compliance with statutory provisions governing stay extensions to prevent undue delays in tax matters.