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TMI Blog1988 (3) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... l attempted to distinguish the said case on facts. In view of this position, the learned Additional Government pleader for taxes was also heard. Before dealing with the applicability of the said decision of the Supreme Court to the facts of the present case, we shall look at the statutory provisions regarding the grant of stay pending disposal of the appeal. Section 31(5) of the Act reads as follows : "(5) Notwithstanding that an appeal has been preferred under subsection (1), the tax shall be paid in accordance with the order of assessment against which the appeal has been preferred : Provided that the Appellate Assistant Commissioner may, in his discretion, give such directions as he thinks fit in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to his statisfaction, in such form and in such manner as may be prescribed." A careful reading of the said provision shows that an assessee is not entitled to an order of stay as a matter of right and that filing of an appeal against assessment by itself is not a ground for granting stay of collection of taxes. Discretion is given to the appellate authority, namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172. On careful consideration of the various decisions cited before me, I find there is an apparent inconsistency between the various decisions. Before dealing with the other cases, it is relevant to take note of the said Supreme Court decision. The Supreme Court went in detail into the question of granting interim stay, especially ex parte interim stay, and came to the conclusion that courts should be slow in granting such orders. The following passage in the said decision is worthy of notice (p. 182) : "Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by the High Court. There was no question of any balance of convenience being in favour of the respondent-company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere bank guarantees. We notice that very often some courts act as if furnishing a bank guarantee would meet the ends of justice. No governmental business or for that matter no business of any kind can be ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The stay will operate till the pendency of the appeal before the Tribunal." Similar orders were passed in several other writ petitions also. This matter was considered by Nainar Sundaram J. in Abdul Guffoor (T. M.) and Co. v. Appellate Assistant Commissioner [1985] Writ L.R. 653: wherein the learned judge passed strictures against the appellate authorities for having failed to accept the bank guarantee and grant stay, following the decision of this court in Dolton Printers Pvt. Ltd. v. State of Tamil Nadu [1985] 58 STC 137 (Mad) in the following words : "When the bank guarantee is there, that will provide ample safeguard for the revenue. In the said circumstances, to call upon the petitioner to pay the very disputed tax is not only harsh but also not a judicial and proper exercise of the power of discretion reserved for the authority like the respondent under the proviso to section 31(5) of the Tamil Nadu General Sales Tax Act, 1959. The present, impugned order only discloses mechanical exercise of power without resorting to the appropriate consideration on the question of stay." The learned judge further observed as follows: "In spite of the pronouncement of this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e power to grant stay. He, therefore, owes a duty to examine and scrutinise the grounds on which the stay is asked for by the appellant. If the duty is ignored or perfunctorily performed, it cannot be said that the power has been properly exercised. Imposition of tax and penalty on the assessees is sometimes heavy and onerous and it is but just and fair that the assessee should get some respite in a proper case until his appeal against the order of assessment is heard and disposed of." In my opinion, this will certainly provide a safeguard for the authorities in the exercise of their discretionary powers in the matter of granting of stay. On a consideration of the above principles enunciated in the various decisions, I feel that the appellate authority is expected to consider the following aspects at the time of passing an order on a stay petition (1) whether there is a prima facie case in favour of the assessee ; (2) the amount of tax and penalty involved in the appeal ; (3) the capacity of the assessee to pay the amount ; (4) undue hardships to the assessee ; and (5) nature of security offered by the assessee. It is made clear that while considering the above aspects, the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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