2013 (8) TMI 220 - HC - VAT and Sales Tax

Imposition of penalty - Notice u/s 15-A(1)(qq) issued - Tribunal stayed 70% of tax - Held that - During the pendency of the statutory appeal, the Tribunal is required to look into the prima facie merit of the case as well as financial condition of the petitioner. Further, the appellate authority is required to consider the relevant factor like financial hardship and other relevant facts because the condition of deposit will make the purpose of filing of appeal itself nugatory - Order of Tribunal modified - Decided in favour of assessee.

Summary

Issues involved: Petitioner challenging order of U.P. Commercial Tax Tribunal regarding penalty imposition and stay of disputed tax during appeals.

Analysis:

The petitioner, a company registered under the Indian Companies Act, challenged the order of the U.P. Commercial Tax Tribunal in two appeals related to the Assessment Years 2006-2007 and 2007-2008. The Tribunal had partly allowed the appeals and modified the stay order issued by the Additional Commissioner, directing the petitioner to deposit a certain percentage of the disputed tax. The petitioner contended that the Tribunal did not adequately consider the financial stringency and relevant facts, which are crucial in determining the imposition of penalties and stays during appeals.

The petitioner argued that the Tribunal's decision lacked proper consideration of financial constraints as presented in the affidavit for interim relief. It was emphasized that the power of stay should be exercised judiciously, applying sound principles and not in a routine or arbitrary manner. The petitioner relied on various legal precedents, including judgments from the Apex Court and previous decisions of the High Court, to support the contention that financial hardship and prima facie merit of the case should be taken into account when deciding on stays during appeals.

In light of the submissions made by the petitioner and considering the peculiar facts of the case, the High Court partly allowed both petitions. The Tribunal's order was modified to stay 95% of the disputed tax until the disposal of the first appeal, with the petitioner required to deposit the remaining 5% within six weeks and provide security for the outstanding amount to the satisfaction of the assessing authority. Additionally, the first appellate authority was directed to expedite the decision on the first appeal within two months from the date of receipt of the modified order.

This comprehensive analysis highlights the legal arguments, precedents cited, and the final decision of the High Court in addressing the issues raised by the petitioner regarding penalty imposition and stay of disputed tax during the appeal process.