2021 (10) TMI 807 - HC - VAT and Sales Tax

Refusal to direct stay of collection of remainder of disputed tax - jurisdiction to entertain the stay application pending hearing of appeal before the Tribunal - Section 33 of the Andhra Pradesh Value Added Tax Act, 2005 - HELD THAT - A plain reading of Section 33(6) of the Act would show that such power would be exercised by the 2nd respondent only when an appeal is preferred against an order or proceedings recorded by the Deputy Commissioner under Section 21 or 32 of the Act and not otherwise - In the present case, a second appeal has been preferred against an order passed by the first appellate authority under Section 31 of the Act and therefore, the 2nd respondent did not have jurisdiction to entertain an application for stay of collection of tax pending such appeal. When a litigant has a right to prefer a second appeal against an order passed by the first appellate authority, it would be wholly unjust to say that he would have no right to seek suspension of collection of the remaining tax in dispute pending such appeal in appropriate cases where a strong arguable case is made out in his favour. If so, the second appeal would be rendered infructuous and extreme prejudice would be caused to the appellant - where no order of stay of collection of remaining tax was passed in favour of the appellant under Sub-Section (3)(a) or (3)(b) of Section 31 of the Act and the appellant makes out a strong arguable case in second appeal, this Court in exercise of its extraordinary writ jurisdiction may direct suspension of collection of remaining of the tax in dispute pending disposal of the appeal subject to such terms and conditions as this Court may consider fit and proper. The petitioner has made out a strong arguable case in appeal - in order to balance the equities between the parties, in exercise of our power under Article 226 of the Constitution of India we are inclined to direct that there shall be stay of collection of the remainder of the disputed tax to the tune of ₹ 4,79,010/- till the disposal of the appeal - Petition disposed off.

Summary

Issues involved:
Challenge to refusal of stay of tax collection pending appeal before the Tribunal under the Andhra Pradesh Value Added Tax Act, 2005.

Detailed Analysis:
The petitioner challenged the order refusing to stay the collection of the disputed tax pending appeal before the Andhra Pradesh Value Added Tax Appellate Tribunal. The petitioner argued that the control of the buses in question lay with them, citing relevant clauses in the lease agreement. It was highlighted that 50% of the tax in dispute was already deposited at the time of filing the appeal. However, the Government Pleader for Commercial Tax contended that the 2nd respondent lacked jurisdiction to entertain the stay application under Section 33 of the Act. The power to grant stay pending appeal is provided under Section 33(6) of the Act, specifically when an appeal is preferred against an order by the Deputy Commissioner under Section 21 or 32, not in the case of a second appeal against an order by the first appellate authority under Section 31. Thus, it was held that the 2nd respondent did not have jurisdiction to entertain the application for stay of tax collection in this scenario.

Regarding the stay of the remainder of the tax in dispute pending appeal before the Tribunal, Section 31(3)(c) of the Act was referred to. It was noted that the Act does not expressly prohibit granting stay of collection of remaining tax pending a second appeal, provided the facts justify such relief. The Court emphasized that denying the right to seek suspension of tax collection pending a second appeal in appropriate cases would render the appeal futile and cause extreme prejudice. Therefore, in cases where no stay order was passed during the first appeal and a strong arguable case is made out in the second appeal, the Court, in its extraordinary writ jurisdiction, may direct suspension of tax collection pending appeal, subject to suitable terms and conditions.

The Court examined the lease agreement terms between the assessee and the hirer, emphasizing the need to delve into the interpretation of these terms during the second appeal. It was argued that proper construction of the terms might absolve the petitioner from tax liability under Section 4 of the Act, as they allegedly had control over the buses in question. The Court acknowledged the need to assess whether the tests applied in a previous case were satisfied in the present factual context. Ultimately, considering the strong arguable case made by the petitioner in the appeal, the Court, exercising its power under Article 226 of the Constitution, directed a stay of the remainder of the disputed tax until the appeal's disposal, without expressing any opinion on the case's merits, which would be decided by the Tribunal. The writ petition was disposed of with no order as to costs.

In conclusion, the judgment addressed the challenge to the refusal of stay of tax collection pending appeal, clarified the jurisdictional aspects, interpreted relevant provisions of the Act, and emphasized the need to balance equities between parties while ensuring fairness in legal proceedings.