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TMI Blog2024 (5) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... f the AO in terms of Section 220 (6) of the Act. In our considered opinion, the respondents have clearly erred in proceeding on the assumption that the application for consideration of outstanding demands being placed in abeyance could not have even been entertained without a 20% pre-deposit. The aforesaid stand as taken is thoroughly misconceived and wholly untenable in law. In view of the above, and in our considered opinion, there would appear to be no justification to retain the instant petition on our board. The ends of justice would in fact warrant the matter being remitted to the AO for considering the stay application moved by the writ petitioner afresh. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV For the Petitioner Through: Mr. Arvind P. Datar, Sr. Adv. with Mr. Sachit Jolly, Ms. Soumya Singh, Ms. Disha Jham, Mr. Devansh Jain, Mr. Aditya Rathore Mr. Abhyudaya Bajpai, Advs. For the Respondents Through: Mr. Zoheb Hossain, Spl. Counsel with Mr. Vipul Agarwal, SSC, Mr. Sanjeev Menon, Mr. Gibran Naushad Ms. Sakshi Shairwal, JSCs. O R D E R 1. Allowed subject to all just exceptions. CM APPL. 27687/2024 (Ex.) 2. Application sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961 5. While the challenge to the withdrawal of registration with retrospective effect would have to be independently examined and reserved for consideration in WP(C) 11270/2023, we are in this writ petition called upon to rule solely on the view as expressed by the AO while examining the application for stay of demand. came to be cancelled and withdrawn with retrospective effect, forms subject matter of challenge in WP(C) 11270/2023, which has been entertained and interim orders passed. It was pursuant to the cancellation of the aforesaid registration that assessment order came to be framed on 22 March 2024. 6. As is evident from a reading of the impugned order, it is manifest that the AO has neither considered the prima facie merits of the challenge which stood raised by the writ petitioner and reiterated in its application for stay nor does it deal with the issue of undue hardship. The AO appears to have mechanically proceeded on the premise that since the petitioner had not made a pre-deposit of 20%, the application for stay of demand could not be considered. 7. We note that while dealing with an identical view which was taken, we had in National Association of Softwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal Commissioner of Income Tax Ors. vs LG Electronics India Pvt. Ltd., it had been emphasized that the administrative circular would not operate as a fetter upon the power otherwise conferred on a quasi-judicial authority and that it would be wholly incorrect to view the OM as mandating the deposit of 20%, irrespective of the facts of an individual case. This would also flow from the clear and express language employed in sub-section (6) of Section 220 which speaks of the Assessing Officer being empowered in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case . The discretion thus vested in the hands of the AO is one which cannot possibly be viewed as being cabined by the terms of the OM. 15. The issue of a grant of stay pending appellate remedies being pursued arose for the consideration of a Division Bench of the Court in Dabur India Limited vs Commissioner of Income Tax (TDS) Anr. where it was pertinently observed as under: 6. Having heard learned counsel for the parties and having perused the two Office Memorandums, in question, this Court is of the view that the requirement of payment of twenty percent of disputed tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances where the respondents may be justified in seeking a deposit in excess of the above dependent upon the facts and circumstances that may obtain. This would have to necessarily be left to the sound exercise of discretion by the respondents based upon a consideration of issues such as prima facie, financial hardship and the likelihood of success. This observation we render being conscious of the indisputable position that the OM applies only upto the stage of the appeal pending before the CIT(A) and being of little significance when it comes to the ITAT. 17. As explained in Indian National Congress, the 20% which is spoken of in the OM cannot possibly be viewed as being an inviolate or inflexible condition. The extent of the deposit which an assessee may be called upon to make would have to be examined and answered bearing in mind factors such as prima facie case, undue hardship and likelihood of success. We note that while dealing with the question of the claim of stay as made by an assessee and the competing obligation to protect the interest of the Revenue, the Supreme Court in Benara Valves Ltd. Ors. Vs Commissioner of Central Excise Anr. had elucidated the legal position in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions expression undue hardship is normally related to economic hardship. Undue which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances. 13. For a hardship to be 'undue' it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it. 14. The word undue adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant 15. The other aspect relates to imposition of condition to safeguard the interest of Revenue. This is an aspect which the Tribunal has to bring into focus. It is for the Tribunal to impose such conditions as are deemed proper to safeguard the interests of the Revenue. Therefore, the Tribunal while dealing with the application has to consider materials to be placed by the assessee relating to undue hardship and also to stipulate condition as required to safeguard the interest of the Revenue. The aforesaid principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Narain v. Income-Tax Officer, Bareilly, (1970) 2 SCC 355 : AIR 1971 SC 33, wherein the Court observed as under:- If a statute invests a public officer with authority to do an act in a specified set of circumstances, it is imperative upon him to exercise his authority in a manner appropriate to the case when a party interested and having a right to apply moved in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the statute prima facie enabling, the courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right-public or private-of a citizen. 24. Thus, even where enabling or discretionary power is conferred on a public authority, the words which are permissive in character, require to be constituted, involving a duty to exercise that power, if some legal right or entitlement is conferred or enjoyed, and for the effectuating the such right or entitlement, the exercise of such power is essential. The aforesaid view stands fortified in view of that fact that every power is coupled with a duty to act reasonably and the Court/Tribunal/Authority has to proceed having strict adherence to the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Steel Co. Ltd. v. Commissioner (Appeals), Central Excise, 1998 (98) E.L.T. 50; Hari Fertilizer v. Union of India, 1985 (22) E.L.T. 301 (All.); Re. American Refrigeration Co. Ltd., 1986 (23) E.L.T. 74; and V.I.T. Sea Foods v. Collector of Customs, 1989 (42) E.L.T. 220 (Ker.), wherein the Courts had expressed the similar view. 29. In I.T.C. Ltd. v. Commissioner of Central Excise and Customs (Appeals) ILR 2000 KAR 25 , while examining the issue of pre-deposit under Section 35 of the Act, after considering a large number of judgments of the Apex Court and various High Courts, it was held as under: While considering the case of undue hardship , the authority is required to examine the prima facie on merits of the dispute as well. Pleading of financial disability would not be the only consideration. Where the case is fully covered in favour of the assessee by a biding precedent like that of the judgment of the Supreme Court, jurisdictional High Court or a Special Bench of the Tribunal, then to still insist upon the deposit of duty and penalty levied would certainly cause undue hardship to the assessee. Absence of the financial hardship in such a case would be no ground to decline the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application for interim relief, the Court must examine all pros and cons involved in the case and further examine that in case recovery is not stayed, the right of appeal conferred by the legislature and refusal to exercise the discretionary power by the authority to stay/waive the pre-deposit condition, would be reduced to nugatory/illusory. Undoubtedly, the interest of the Revenue cannot be jeopardized but that does not mean that in order to protect the interest of the Revenue, the Court or authority should exercise its duty under the law to take into consideration the rights and interest of an individual. It is also clear that before any goods could be subjected to duty, it has to be established that it has been manufactured and it is marketable and to prove that it is marketable, the burden is on the Revenue and not on the manufacturer. 19. Though some of the decisions noticed by us hereinabove pertained to pre-deposit prescriptions placed by a statute, the principles enunciated therein would clearly be of relevance while examining the extent of the power that stands placed in the hands of the AO in terms of Section 220 (6) of the Act. In our considered opinion, the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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