9911796707
TMI Blog2002 (10) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... lows : The petitioner, a public limited company, is primarily engaged in the manufacturing and selling of textiles, cotton, nylon, synthetic filament yarn, etc. On January 11, 2000, a survey operation under section 133A of the Income-tax Act, 1961 (for short "the Act"), was conducted at the business premises of the petitioner at New Delhi. During the course of survey, it was noticed that to raise funds the petitioner had come out with global depository receipts ("GDR" for short) issue during the financial year 1994-95, through offer circular dated July 29, 1994. The GDR was listed for trading in the Luxembourg stock exchange and the lead managers for the issue were Merrill Lynch International Banking Group ("Merrill Lynch" for short). As per the approval of the Ministry of Finance, the petitioner was allowed to pay selling commission, underwriting commission and management fees to Merrill Lynch to the extent of 3 per cent. of the gross issue proceeds. Apart from this, the petitioner was also allowed to reimburse the expenses less than 0.75 per cent. of the gross issue proceeds. Upon a perusal of the agreement entered into by the petitioner with Merrill Lynch, it was felt by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he annual report 2001, the assessee is having net current assets after deduction of current liabilities and provisions from current assets, loans and advances to the tune of Rs. 207.33 crores. It is not the case that the payment of disputed tax liability would paralyse its functioning. Keeping into consideration the entirety of the case, we grant the stay of demand till the disposal of the appeal or for a period of 180 days from the date of this order, whichever is earlier, subject to the further payment of Rs. 1.15 crores in three instalments as under: Rs. 40 lakhs-on or before 15-6-2002. Rs. 40 lakhs-on or before 15-7-2002. Rs. 40 lakhs-on or before 15-7-2002." Hence the present petition. Since the petitioner had not complied with order dated May 23, 2002, vide its order dated August 28, 2002, the Tribunal has vacated the stay granted earlier and has directed the Registry to list the appeal in routine. We have heard Mr. C. S. Aggarwal, learned counsel for the petitioner, and Mr. R. C. Pandey, learned senior standing counsel for the Revenue. It is vehemently submitted by Mr. Aggarwal that the Tribunal has failed to apply the basic principles governing the grant of stay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to the petitioner as cash and bank balance and, therefore, the directions to pay the aforenoted amounts cannot be said to be onerous. He submitted that even in the absence of any statutory provision, laying down any guidelines for grant of stay, the order passed by the Tribunal is very reasonable and, therefore, it is not a fit case for interference by this court in the exercise of writ jurisdiction. In rejoinder, learned counsel for the petitioner has submitted that although as on March 31, 2001, the balance-sheet does reflect the cash and bank balances at more than Rs. 14 crores, if the cheques issued by the petitioner to various parties towards its liabilities for the year were taken into account, hardly any bank balance would be left. To buttress the stand, learned counsel has referred to the list of 35 bank accounts held by the petitioner-company showing that except for ten accounts, having nominal credit balances, rest of the accounts have heavy debit balances. There are many fiscal statutes like the Central Excise Act, Customs Act, Sales Tax Acts of various States and many other similar statutes, which mandate deposit of even a disputed demand as a condition pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the said time. The principles by which an application for waiver of condition of pre-deposit for entertainment of an appeal under the aforenoted statutes are well settled by a catena of decisions of the Supreme Court and High Courts. These are: (a) whether there is a prima facie case in favour of the assessee; (b) the balance of convenience qua deposit or otherwise; (c) irreparable loss, if any, to be caused in case stay is not granted; and (d) safeguarding of public interest. In Assistant Collector of Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172, the apex court held that normally four factors for grant of a stay order should be kept in view, i.e., prima facie case, which by itself is not enough; balance of convenience; possibility of irreparable injury and safeguarding the public interest. In our view, the same principles need to be kept in view while dealing with an application for stay of realisation of a disputed demand under the Act. At this stage, it may also be useful to notice the following observations of the Supreme Court in M. K. Mohammed Kunhi's case [1969] 71 ITR 815, 822. "...the power of stay by the Tribunal is not likely to be exercised in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that the impugned order lacks proper application of mind by the Tribunal on the facts of the case. The afore-extracted order shows that the Tribunal has not expressed a prima facie view on the merits of the petitioner's case, evidently under the belief that it is premature to do so and it may have impact on the hearing of the appeal. In the light of what we have said above, we feel that it is not a correct approach. Apart from other legal issues of some substance, one of the factual aspects, peculiar to the petitioner's case, highlighted by the petitioner, was that the petitioner had not remitted any amount to Merrill Lynch and whatever amount was payable to them by way of commission or management fee was deducted by Merrill Lynch from the gross proceeds collected by them and, therefore, there was no occasion for them to either pay or credit such amount to the account of Merrill Lynch, within the meaning of section 195 of the Act. The question is not the effect of the aforenoted facts and other abovementioned contentions urged on behalf of the petitioner on the appeal of the petitioner when it is decided on the merits but is about the effect of non-consideration of these f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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