9911796707
TMI Blog2020 (10) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... respectively) along with 5% of disputed penalty (amounting to Rs. 25,57,46,167/-) involved in the appeal pending before it, for the year 2008-09 [hereinafter referred to as the 'disputed period']. Brief facts:- 2. The facts of the case, as narrated by the Appellant company in the pleadings are as follows. The Appellant was engaged in local procurement and export of home furnishing products like carpets, dhurries, fabrics, plastic articles, lamps, soft toys, etc. It was conferred the status of a 4-Star Export House by the Government of India, and had obtained registration under the Delhi VAT Act, 2004 to meet its statutory compliances. During the disputed period, the Appellant purchased products from a number of domestic vendors situated outside the State of Delhi against Form H in terms of Section 5(3) and 5(4) of the Central Sales Tax Act, 1956 and exported the same to its group companies outside India. All such sales and purchases are outside the tax net in terms of Section 6(1) of the Central Sales Tax Act, 1956. However, the Value Added Tax Officer, Export-Import Cell, Department of Trade and Taxes, Govt. of NCT of Delhi, being the Assessing Authority, [hereinafter referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nonproduction of any material document by the objector, I am of the considered view that the findings tendered by the Assessing Authority in the assessment order is self-explanatory and justified and does not require any sort of interference. Hence, the default assessment order passed by the Assessing Authority under section 32 & section 33 of the DVAT Act on account of misutilization of H Form and its turnover such counts is upheld in accordance with law. Order passed accordingly." 5. The Appellant has now preferred an appeal against the aforesaid order of the OHA before the Tribunal, which is still pending. It was accompanied with an application under Section 76(4) of the Act for stay of recovery of the demand during the pendency of the appeal. This stay application came to be decided by way of the impugned order dated 27.01.2020. The relevant portion of the same is extracted below: "4. (...) Appellant has challenged the impugned orders on various grounds which are not being discussed here as we are at present disposing of stay application during pendency of this appeal. ... 7. The Ld. Counsel for the Appellant further submitted that there is no difference of net sales b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redients that are weighed by the courts and the tribunals while deciding a stay application i.e. the existence of a prima facie case. On this basis, Mr. Sahu submits that the impugned order is erroneous, unjust and inequitable. 9. Mr. Sahu vehemently argued that a prima facie peek into the grounds of the appeal would show that the three grounds on which the Central Sales Tax has been demanded are on a non-taxable transactions. His arguments on these points are summarised below: (a) He urged that, firstly, the allegation of mis-utilization of Form H is entirely untenable. The VATO observed that the amount shown in Form H, being the amount utilized by the Appellant for procuring the goods free of tax, is different from the amount shown as received by the vendors in the books of accounts, for the goods sold by them to the Appellant. On this ground, it demanded Rs. 1,02,69,755/- as tax payable on the differential amount arising between turnover mentioned in the original returns and the amount found in the books of accounts. This was explained by the Appellant to have arisen on account of deficiency in some goods exported, for which the foreign importers had issued debit notes, effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad in law and liable to be set aside. 11. Lastly, Mr. Sahu contended that since the Appellant has a strong prima facie case and the demanded amount is ex-facie liable to be set-aside in the appeal, insistence on pre-deposit is unjust and inequitable. He further argued that there is no bar for granting relief of stay in favour of the Appellant to the extent of the full amount of tax demand, till the disposal of the appeal pending before the Appellate Authority. On the basis of the aforesaid, Mr. Sahu submitted that there is a non-application of mind on the part of the OHA, which had already once been disapproved of by this Court. He argued that the only difference between the orders of the OHA dated 24.08.2018 and 24.06.2019 is that, in the former order, the OHA had remanded the matter to the VATO, finding the error on its part for not considering the relevant documents and submissions, and in the order subsequent to this Court's order, the OHA has wholeheartedly upheld the VATO's order. 12. Per contra, Mr. Ramesh Singh, learned, Standing Counsel appearing on behalf of the respondent, assisted by Ms. Bhawna Kataria, Advocate, contended that the impugned order is well-reasoned an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple of single economic activity and cited the judgment in Vodafone International Holdings B.V. v. Union of India and Anr., (2012) 6 SCC 613 and Pankaj Aluminium Industries Ltd. v. Bharat Aluminium Co. Ltd., (2011) 166 SCC 864. 14. Further, Mr. Singh also submitted that, even assuming the assessee has a good prima facie case, the same is not sufficient justification for granting an order of dispensation of pre-deposit, as there is no balance of convenience in favour of the assessee. He submitted, that an order of dispensation can only be passed if there is not even the slightest indication of a likelihood of prejudice being caused to the public interest, and cited the case of Assistant Collector of Central Excise v. Dunlop India, AIR 1985 SC 330. He argued that this Court, while dealing with the present provision in Schneider Electric (supra), has affirmed the principle laid down in the case of Dunlop India (supra). 15. Lastly, Mr. Singh asserted that, before the Tribunal, arguments on the aspect of penalty as well as difference between net sale and misutilisation of Form H were the only arguments. No argument regarding VAT liability of Rs. 10.88 crores viz-a-viz drawback amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inks fit' appearing in the first proviso. This discretion to entertain the appeal has a wide range, and has to be exercised judiciously, in deserving cases, which is evident from the expression 'for reasons to be recorded in writing' used therein. This condition is a safeguard mechanism to ensure that the relaxation of the pre-deposit condition is exercised for reasons that are germane to the scope of the power conferred by the statute. The objective behind the requirement of recording of reasons is that it would disclose the rationale of the authority and ensure that exercise of power is not done arbitrarily or for extraneous reasons. It will also ensure that the superior court, while exercising judicial scrutiny, is able to examine whether the tribunal has applied its mind and also discerned if the satisfaction arrived at has reasonable nexus to the facts and the law involved in the case. 18. The guiding principles for grant of stay order, pending disposal of a matter before the concerned forum, have been well-entrenched by way of several judicial pronouncements. It is a settled principle of law that the Courts must consider the prima facie merits of the case, the balance of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, we would like to point out that, in para 3 of the said judgement, it was stressed upon by this Court, that the OHA passed its order for pre-deposit of amount, after looking into the overall case and the arguments of the Assessee. Thus, as the application of mind on the part of the OHA was easily discernible, this Court was satisfied that the OHA has exercised its discretionary power in a reasonable manner, and decided to not to interfere with its order. The Respondent has misinterpreted this case to contend that the appellate authority is not to go into the prima facie merits of the case at all. Instead, we are inclined to agree with the holding of the Mitsubishi Corporation's case, that for the purpose of deciding the pre-deposit amount and/or its waiver by any Appellate authority, a prima facie case must be considered, and a cursory look at the overall merits of the case would indeed amount to the application of mind by the Appellate Authority. In such a scenario, this court will doubtlessly be circumspect in interfering with the rationale of the Appellate Authority. But, in the present factual matrix, the impugned order is a non-speaking order, and we are therefore unabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enience or orders preventing collection of public revenue for no better reason than that the parties have come to the Court alleging prejudice, inconvenience or harm and that a prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facia case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration. We often wonder why in the case indirect taxation where the burden has already been passed on to the consumer, any interim relief should at all be given to the manufacturer, dealer and the like." 22. The Revenue has next relied upon this Court's judgment in Schneider Electric's case (supra), to urge that even the financial condition of an assessee is not relevant for passing an order under the present proviso, and to place further emphasis on the Dunlop India judgement which has been heavily relied by the Court herein. 23. The Counsel for the Respondent also relies upon the obiter in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Delhi VAT Act, 2004. However, a key distinction in the facts of the case, which the Respondent failed to consider, is that while the present case was filed by the Appellant herein as a Sales Tax Appeal, the assessee in Schneider Electric's case had approached this court under writ jurisdiction, seeking a stay of recovery of demand till the disposal of appeal by Additional Commissioner. In such a scenario, it is a settled principle of law that this court has very limited grounds of enquiry and interference by way of an interim order of stay in a writ petition under Article 226 of the Constitution. It is thus, that reliance has been placed upon Dunlop India's case which too dealt with a similar factual position. However, in the present instance, the facts of the case before us are vastly different and the holding of Schneider Electric's case cannot be applied in the present matter. On the contrary, we are of the opinion that this judgment goes against the revenue on the proposition being advanced before us. Schneider Electric's case nowhere seems to suggest that the prima facie merits of the case advanced by the Appellant are not relevant for arriving at a satisfaction for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned it appears to us that safeguarding the interests of the Revenue is adequately achieved through the requirement of the furnishing of security or a surety." 29. From the above discussion we can easily conclude that the prima facie merits of the case are an important factor to be taken into account at the stage of deciding a stay application. The first proviso of Section 76(4) of the Act gives the discretion to the Appellate Tribunal to dispense with the requirement of a pre-deposit. The provision, to our mind, is widely worded and does not put any fetter or constraint on the Tribunal. The prima facie view of the merits of the matter is one of the cornerstones of any application seeking dispensation of the pre-deposit. No application for dispensation can be decided devoid of an inquiry into the demonstrable merits of the case. Supreme Court, too, has disapproved the approach of deciding the stay application without analysing the factual scenario involved in a particular case. If an Appellant has a strong prima facie case and on a cursory glance it appears that the demand raised completely lacks foundation, this aspect of the matter has to be necessarily considered by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only after an evaluation and appraisal of the facts and circumstances in each case, the appellate or the assessing authority should decide as to the nature of the order that should be passed in the stay petitions. If without an independent evaluation and appraisal of facts a mechanical order is issued, it will cause irreparable injury to the Revenue and public interest is likely to suffer. For example, if a particular aspect or issue taken in appeal is covered by a decision of the Supreme Court or a decision of this Court in favour of the Revenue, the questions raised in the appeal may not disclose a prima facie case for stay of recovery proceedings. By the same token, if the question that is posed in the appeal is prima facie governed by the decision of the Supreme Court or the High Court in favour of the assessee, it may disclose a prima facie case for the stay of recovery proceedings. Then, plea raised in the appeal is not frivolous. In order to decide as to whether the Appellant has made out a Prima facie case, as against a frivolous one, the appellate or the assessing authority should look into the questions that are involved in the appeal. If it is not done and a mechanical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens' faith in the impartiality of public administration, interim relief can be given. 8. It has become an unfortunate trend to casually dispose of stay applications by referring to decisions in Siliguri Municipality and Dunlop India cases (supra) without analysing factual scenario involved in a particular case." 34. Thus, to summarize, we would say that the discretionary power is not to be exercised as a matter of course. It is only in such cases where the Tribunal would find that there is a very strong prima facie case made out in its favour, should the Tribunal consider whether to grant stay and dispense with the pre-deposit in terms of Section 76(4) of the Act. On the face of it, the Tribunal must be satisfied that the entire purpose of the appeal would be frustrated or rendered meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 6(1) of the CST Act. Thus, the entire turnover of the Appellant, regardless of any change in price of export sales, has no taxable consequence); (d) misconceived demand on the amount of duty drawback received by Appellant from the government as export incentive, which has been passed on by the Appellant to the vendor, with respect to the goods procured from them in the course of export, thus amounting to sale in the course of export, which is exempted from tax levy; and (e) Misconceived demand on written off assets being misinterpreted as sale of assets. 38. To our mind, all these aspects enumerated above are pertinent. Unfortunately, the same have not been taken into consideration. While the Tribunal is correct in observing that these questions would have to be examined when the appeals are taken up finally on for disposal, but at the same time, these aspects would also have to be cursorily examined for arriving at the satisfaction about the prima facie on merits, for deciding the stay application. 39. We would also like to observe that the impugned order also does not record any valid or cogent reason which would indicate application of mind on part of the Tribunal. Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
