2016 (9) TMI 309 - HC - Indian Laws

Grant of stay against recovery of dues - Hel that - After giving our anxious consideration to the submissions canvassed by both parties, we are of the view that instead of this Court going into these issues, for the first time and that too, at the stage of hearing of a stay application, interest of justice would be served if we allow this writ petition by quashing and setting aside the impugned order and restoring to the file of the Tribunal the stay application. Accordingly, the writ petition is allowed. The impugned order is set aside and the stay application is restored to the file for a fresh consideration by the Tribunal. It would be open for the petitioner to contend before the Tribunal that the petitioner is a sick industrial company, the reference is pending and the provisions of the SICA would protect it against any recovery by coercive means. The specific aspect of recovery of sales tax dues and that of this Department from the petitioner is included in the proceedings before the BIFR. The arguments to the contrary of the Revenue and based on the legal provisions as referred above, can also be canvassed. The Tribunal shall consider them and pass an appropriate order in accordance with law, as expeditiously as possible and within a period of two months from the date of receipt of a copy of this order. We clarify that we have not expressed any opinion on the rival contentions

Summary

Issues:
1. Grant of stay against recovery of dues pending disposal of VAT Appeal
2. Consideration of petitioner as a sick industrial company under SICA
3. Interpretation of legal provisions related to recovery of taxes during pendency of appeal

Analysis:
1. The High Court considered an application for a stay against the recovery of dues pending the disposal of a VAT Appeal. The First Appellate Authority had fixed a part payment, which the Tribunal deemed as the basic tax. The petitioner challenged this conclusion under Article 226 of the Constitution of India, arguing that the Tribunal overlooked a crucial point. The petitioner, a registered Public Limited Company, claimed to be a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). It had made a reference to the Board for Industrial and Financial Reconstruction (BIFR) under SICA, which was duly registered and still pending.

2. The petitioner's counsel referred to Sections 15, 16, and 22 of SICA, highlighting that no proceedings for winding up or execution against the company's properties should proceed without the consent of the Board. The petitioner relied on legal precedents, including judgments from the Supreme Court, to support the argument for an unconditional stay of recovery during the pendency of the appeal. The Revenue's counsel, however, maintained that the Supreme Court's decision in a specific case was applicable and not distinguished. After considering both parties' submissions, the High Court decided to quash the impugned order and restore the stay application to the Tribunal for fresh consideration.

3. The High Court refrained from delving into complex legal issues at the stay application stage, emphasizing the need for justice. It directed the Tribunal to reevaluate the stay application, allowing the petitioner to assert its status as a sick industrial company under SICA and the protections it entails against coercive recovery. The Tribunal was instructed to consider all arguments, including those related to the recovery of sales tax dues, and make a decision within two months. The High Court clarified that it did not express any opinion on the conflicting contentions presented, thereby disposing of the writ petition without taking a definitive stance on the legal interpretations involved.