2013 (3) TMI 359 - HC - VAT and Sales Tax

Application for interim relief rejected - By order Commercial Tax Tribunal, granted the interim stay only to the extent of 80% tax directing the appellant to deposit 20% tax/penalty during the pendency of first appeal filed before the first appellate authority - Held that - As decided in M/s Pennar Industries Ltd. vs. State of A.P. and others 2009 (2) TMI 457 - SUPREME COURT OF INDIA the stay application should not be disposed of in a routine manner unmindful of the consequences. As in the present case authorities have not indicated its mind so far as the existence of the prima facie case on merits on appeal as well as the financial condition which are to be considered by appellate authority/tribunal while passing the impugned orders on an application for stay pending in the first appeal. The said mandatory condition is to be taken into consideration while disposing of an application for interim relief moved by the assessee by the appellate authority as well as tribunal during the pendency of appeal. Thus the present revision is disposed of with a direction to the first appellate authority to decide the appeal filed by the assessee expeditiously say within a period of two months from the date of receiving a certified copy of this order till then no coercive measure shall be taken against the assessee in the matter in question.

Summary

Issues:
Assessment order, First appeal and application for stay, Second appeal and interim stay, Prima facie case on merits, Financial condition consideration, Disposal of stay application, Expedited appeal decision, Coercive measures during appeal.

Analysis:
The judgment pertains to a case where the revisionist challenged the orders related to assessment and stay applications. Initially, an assessment order was passed against the revisionist for the month of April 2010. Subsequently, the revisionist filed a first appeal along with an application for stay. The appellate authority granted interim stay of 60% of the tax, leading to further appeal. The Commercial Tax Tribunal granted interim stay only to the extent of 80% tax, directing the revisionist to deposit the remaining 20% during the pendency of the first appeal. The revisionist then filed the present revision challenging these orders.

The Court referred to previous judgments to establish the principles governing the grant of interim relief/stay. It emphasized the need to balance the rights of the individual and the State regarding the recovery of dues. The Court highlighted that the appellant must have a strong prima facie case on merit for the grant of stay. The financial condition of the appellant should also be considered, and undue hardship should be avoided. The Court stressed that the appellate authority must apply its mind to the issues raised and consider them in accordance with the law before passing orders on stay applications.

Citing precedents, the Court pointed out instances where full stay was granted due to clear evidence indicating that the disputed tax was not chargeable. The Court also highlighted the Supreme Court's stance that demands without merit should not require full payment from the assessee. In the present case, the appellate authorities failed to indicate their consideration of the prima facie case on merits and the financial condition of the revisionist while passing the impugned orders on stay applications.

Consequently, the Court disposed of the revision with a direction for the first appellate authority to expeditiously decide the appeal within two months. It also ordered a stay on coercive measures against the assessee for two months or until the appeal decision, whichever is earlier. The judgment underscores the importance of considering the merits of the case, financial conditions, and legal requirements when deciding on stay applications during the pendency of appeals.