2013 (3) TMI 472 - HC - VAT and Sales Tax

Input tax credit was denied - stay granted on condition that the petitioner remits 50% of the tax due and furnish security for the balance - KVAT Act - assessee placed reliance on the the sixth proviso to Section 6(5) of the KVAT Act, which was given retrospective effect from 01/04/2005 by virtue of the provisions of the Kerala Finance Act, 2012 against conditional stay orders - Held that - A reading of this order shows that the appellate authority has not dealt with any one of the contentions raised by the petitioner. It is on that basis that the conditional order has been passed thus it discloses total non application of mind & need to be set aside. Directing the 2nd respondent to pass fresh orders on stay petition within four weeks from today. In the meanwhile, proceedings for collecting 50% of the tax due will stand deferred.

Summary

Issues:
Challenge to conditional order of stay based on remittance of tax and security, denial of input tax credit in assessment orders, retrospective effect of proviso to Section 6(5) of KVAT Act, non-application of mind by appellate authority in passing order.

Analysis:
The petitioner contested Ext.P8 conditional order of stay issued by the appellate authority, which required remittance of 50% of tax due under Exts.P1 and P2 assessments for the years 2009-10 and 2010-11, along with providing security for the balance. The assessments had initially denied input tax credit. The petitioner relied on the sixth proviso to Section 6(5) of the KVAT Act, made retrospective from 01/04/2005 by the Kerala Finance Act, 2012, in their appeals (Exts.P3 and P4) and stay petitions (Exts.P5 and P6). However, the appellate authority's Ext.P8 order of stay was found lacking as it did not address any of the petitioner's contentions, indicating a total non-application of mind. Consequently, the court set aside Ext.P8, directing the 2nd respondent to reevaluate the appeals and stay petitions within four weeks, halting further proceedings related to Exts.P1 and P2 assessments and keeping Ext.P9 notice in abeyance.

The judgment highlighted the importance of proper consideration and reasoning in legal orders, emphasizing the need for the appellate authority to address raised contentions adequately. By annulling Ext.P8 due to the failure to engage with the petitioner's arguments, the court underscored the significance of a judicious and thorough decision-making process. The directive for the 2nd respondent to revisit the stay petitions and appeals underscored the principle of due process and fair adjudication in tax matters, ensuring that all relevant aspects are duly examined and reasoned upon. Additionally, the requirement for the petitioner to furnish a copy of the judgment and writ petition to the 2nd respondent for compliance reinforced transparency and accountability in the legal proceedings, promoting adherence to the court's directives and facilitating effective communication between the parties involved.