2023 (8) TMI 1129 - HC - VAT and Sales Tax

Jurisdiction of AP VAT Appellate Tribunal/5th respondent to entertain the stay application pending appeal - recovery of the disputed tax - HELD THAT - It is true, as rightly submitted by learned counsel for the petitioner, when a substantive power of deciding an appeal is vested with an Appellate Court or Tribunal, the incidental/ancillary power of passing interlocutory orders including stay order shall also be deemed to be vested with the aforesaid Appellate Authority for rendering complete justice as otherwise the appeal will become otiose and the said Appellate Institution will be redundant. This will be against the public interest. In STATE OF ANDHRA PRADESH VERSUS HINDUSTAN SHIPYARD LIMITED AND OTHERS 1987 (6) TMI 389 - ANDHRA PRADESH HIGH COURT the division bench of Common High Court of Andhra Pradesh was dealing with the question whether the Tribunal has the power to grant stay in appeals pertaining to the Assessment Years fallen prior to 01.07.1985 because w.e.f the said date, Section 21 of APGST Act, 1956 was amended and sub section 6 and 6(a) were introduced. Section 6(a) created an express embargo of granting stay pending disposal of the appeal filed against the order of first appellate authority or deputy commissioner suo moto or in revision. Thus, it can be said that the incidental or ancillary power to pass interlocutory orders in the main appeal is inherent or intrinsic in its substantive power of the Appellate Court or Tribunal to decide the appeal pending before it unless such ancillary or incidental power is taken away by an express provision or by necessary implication. Whether such stay granting power is expressly or impliedly taken away from the AP VAT Appellate Tribunal? - HELD THAT - While under Section 33(1), a VAT Appellate Tribunal has been conferred jurisdiction to entertain an appeal against the orders specified in that sub-section, including against order passed on appeal under Section 31 as in the present case, Section 31 (6)(b) creates an express embargo on the stay granting power of VAT Appellate Tribunal pending disposal of appeal passed against different orders including the order of the first appellate authority - Therefore, in view of the clear manifestation made by the express provision, the contention of learned GP agreed upon that AP VAT Appellate Tribunal is not vested with the power or jurisdiction to entertain the stay application and pass orders in the present situation. T he petitioner s prayer to declare the action of respondent No. 1 in issuing the notice and Garnishee notice pending the stay petition before the AP VAT Appellate Tribunal as illegal, cannot be considered on that ground - Petition disposed off.

Summary

Issues Involved:
1. Jurisdiction of AP VAT Appellate Tribunal to entertain stay applications.
2. Legality of recovery actions by the respondents during the pendency of the appeal.

Summary:

Jurisdiction of AP VAT Appellate Tribunal to entertain stay applications:
The petitioner contested the assessment order dated 14.03.2019 and filed an appeal before the Appellate Deputy Commissioner, which was rejected due to a delay of 128 days. Subsequently, the petitioner filed an appeal (TA No.1/2022) and a stay application (TMP No.29/2022) before the AP VAT Appellate Tribunal. The petitioner argued that the Tribunal has inherent jurisdiction to grant stay orders as an ancillary power. However, the respondent contended that under Section 31(3)(c) of the AP VAT Act and Rule 40 of the AP VAT Rules, the Tribunal lacks jurisdiction to entertain stay applications.

The Court examined relevant provisions, highlighting that Section 31(3)(c) and Rule 40 govern the continuation of stay orders initially granted by the Appellate Deputy Commissioner. Since the petitioner did not apply for a stay before the Appellate Deputy Commissioner, these provisions were inapplicable. The Court also referred to judicial precedents affirming that appellate bodies have implied powers to grant stay unless expressly restricted. However, Section 33(6)(b) of the AP VAT Act explicitly prohibits the Tribunal from granting stay orders pending appeal.

Legality of recovery actions by the respondents during the pendency of the appeal:
The petitioner sought to declare the recovery actions by the respondents, including garnishee notices, as illegal pending the appeal. The Court acknowledged that the Tribunal could not grant stay but utilized its plenary power under Article 226 of the Constitution to stay the collection of the demanded tax, conditional upon the petitioner depositing 75% of the demanded amount within four weeks.

Conclusion:
The writ petition was disposed of with the Court granting a conditional stay of tax collection pending the appeal before the AP VAT Appellate Tribunal. The petitioner is required to deposit 75% of the demanded tax within four weeks. No costs were awarded, and any pending interlocutory applications were closed.