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TMI Blog2022 (2) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Credit. Ultimately, the first Appellate Authority dismissed the first appeal. It is the case of the firm that the first Appellate Authority dismissed the first appeal on the ground which never formed part of the assessment order - the firm, thereafter, preferred a Second Appeal before the Tribunal. The Tribunal passed an order asking the writ applicant firm for a pre-deposit of ₹ 10 Lakh. The appellant is hereby directed to deposit ₹ 10,00,000/- (20% of tax amount of ₹ 49,78,555/-) as a pre-deposit within the period of one month from the date of this order - Amount the appellant has paid as a pre-deposit at the stage of first appeal is adjusted against pre-deposit - application disposed off. - R/Special Civil Application No. 19273 of 2021 - - - Dated:- 9-2-2022 - Honourable Mr. Justice J.B.Pardiwala And Honourable Ms. Justice Nisha M. Thakore For the Petitioner(s) : Mr Uchit N Sheth For the Respondents : Mr Utkarsh Sharma, AGP, Notice Served, Served By Affix(N) ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 By this writ application under Article 226 of the Constitution of India, the writ applicant, a dealer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of reselling laboratory chemicals. It is not in dispute that the firm is registered under the VAT Act. 4 During the year 2011-12, the firm purchased goods from M/s. Nirmal Trading and M/s. I. B. Sulphernator respectively, and thereafter, such goods came to be resold by the firm. The vendor issued tax invoices for the sales to the firm and the firm, in turn, claimed Input Tax Credit under the VAT Act for the tax period pursuant to such tax invoices. 5 It appears from the materials on record that without issuing any show cause notice, the assessing authority straightway proceeded to pass the assessment order disallowing a huge amount of Input Tax Credit on the ground of unreconciled input tax credit . 6 The writ applicant, being dissatisfied and aggrieved by such assessment order, preferred an appeal under Section 73 of the VAT Act before the first Appellate Authority. It appears that the first Appellate Authority, having regard to a strong prima facie case, admitted the appeal and also granted stay against the recovery pursuant to the assessment order subject to pre-deposit of an amount of ₹ 1 Lakh. 7 It is the case of the firm that the first Appellate Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is whether the Tribunal was justified in directing the writ applicant firm to make a pre-deposit of ₹ 10 Lakh as a condition to hear the Second Appeal on merits. 15 Section 73(4) of the VAT Act, 2003 reads thus : 73. Appeal. (4) No appeal against an order of assessment shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of payment of the tax in respect of which an appeal has been preferred: [Provided that an appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order- (a) Without payment of tax with penalty (if any) or, as the case may be, of the penalty, or (b) On proof of payment of such smaller sum as it may consider reasonable, or (c) On the appellant furnishing in the prescribed manner, security for such amount as the appellate authority may direct.] 16 The aforesaid provision would make it clear that no appeal against an order of assessment shall ordinarily be entertained by an Appellate Authority if such an appeal is not accompanied by satisfactory proof of the payment of tax in respect of which an appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand raised in the first petition No.2157 of 2018 in the sum of ₹ 11,15,99,897/- for Assessment Year 2015-2016 by approaching the Commissioner of Income Tax (Appeals). Thus, an Appeal against the Assessment Order raising this demand is filed and is pending. 3. In the meanwhile, the petitioner approached the Assessing Officer/Deputy Commissioner of Income Tax, Circle 15(1) (1), Aayakar Bhavan, Mumbai. He may have made an application and termed it as a request for stay, but what essentially he was worried and concerned about was that since the Appeal is pending and yet to be decided, nor was there any consideration of application for stay by Appellate Authority, this Deputy Commissioner will treat the petitioner/assessee as 'assessee in default'. Thereupon, he will recover the amount by coercive means. It is in these circumstances, this letter was addressed and we have carefully perused that letter. That records that the subject matter of tax is in dispute. The Assessment Order is challenged. The Appeal under Section 246-A of the Income Tax Act 1961 challenging the Assessment Order dated 30th December 2017, received on 1st August 2018 is pending. The request of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se petitions with directions that the Appellate Authority shall conclude the hearing of the Appeals as expeditiously as possible and during pendency of these Appeals, the petitioner/appellant shall not be called upon to make payment of any sum, much less to the extent of 20% under the Assessment Order/Confirmed Demand or claim to be outstanding by the Revenue. 19 The issue of granting stay pending appeal is governed principally by the two circulars issued by the CBDT. The first circular was issued way back on 2nd February 1993 being instructions no.1914. The circular contained guidelines for staying the demand pending appeal. It was stated that the demand would be stayed if there are valid reasons for doing so and mere filing of appeal against the order of assessment would not be sufficient reason to stay the recovery of demand. The instructions issued under the office memorandum dated 29th February 2016 are not in supersession of the instructions no.1914 dated 2nd February 1993 but are in partial modification thereof. The preamble of these instructions provide that in order to streamline the process of grant of stay of standardization of quantum of lump-sum payment to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee under para 4 A (C) above, the same shall also be disposed of by the Pr. CIT/CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be. (E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia - (i) require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled; (ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; (iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245. 20 This circular thus lays down 15% of the disputed demand to be deposited for stay, by way of a general condition. The circular does not prohibit or envisage that there can be no deviation from this standard formula. In other words, it is i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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