Anand Motors Agencies Ltd. vs Commissioner of Commercial Tax

Anil Kumar, J.—Heard Shri P. Agrawal, learned counsel for the revisionist Shri Abhinav Narain Trivedi, learned Additional Chief Standing Counsel and perused the record. With the consent of learned counsel for the parties, the present revision is being disposed of at the admission stage.

Facts in brief of the present case are that initially assessment order dated December 15, 2012 has been passed against the revisionist by assessing authority for the month of June, 2010 (assessment year 2010-11).

Aggrieved by the said order, the revisionist filed first appeal along with an application for stay. By order dated February 23, 2013 (annexure No. 5), the appellate authority granted interim stay of 60 per cent of the tax during the pendency of the appeal rest is to be deposited by assessee in pursuance of the assessment/penalty order.

Aggrieved by the aforesaid first appellate order, the revisionist filed Second Appeal No. 75/2013 for the month of June, 2010 (assessment year 2010-11). By order dated March 5, 2013, learned Commercial Tax Tribunal, Bench-I, Lucknow granted the interim stay only to the extent of 80 per cent tax directing the appellant to deposit 20 per cent tax/penalty during the pendency of first appeal filed before the first appellate authority.

In view of the abovesaid factual background, the present revision has been filed.

I have heard learned counsel for the parties and gone through the records.

A Division Bench of this court in the case of ITC Limited Vs. CC (Appeals) and CE and Others, , (paragraph No. 35) held as under:

In view of the above, the aforesaid authorities make it clear that the court should not grant interim relief/stay of the recovery merely by asking of a party. It has to maintain a balance between the rights of an individual and the State so far as the recovery of sovereign dues is concerned. While considering the application for stay/waiver of a pre-deposit, as required under the law, the court must apply its mind as to whether the appellant has a strong prima facie case on merit. In case it is covered by the judgment of a court/Tribunal binding upon the appellate authority, it should apply its mind as to whether in view of the said judgment, the appellant is likely to succeed on merit. If an appellant having strong prima facie case, is asked to deposit the amount of assessment so made or penalty so levied, it would cause undue hardship to him, though there may be no financial restrain on the appellant running in a good financial condition. The arguments that appellant is in a position to deposit or if he succeeds in appeal, he will be entitled to get the refund, are not the considerations for deciding the application. The order of the appellate authority itself must show that it had applied its mind to the issue raised by the appellant and it has been considered in accordance with the law. The expression ''undue hardship'' has a wider connotation as it takes within its ambit the case where the assessee is asked to deposit the amount even if he is likely to exonerate from the total liability on disposal of his appeal. Dispensation of deposit should also be allowed where two views are possible. While considering 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.

In Kribhco Shyam Fertilizers Ltd. Vs. Commissioner of Commercial Taxes, , this court while dealing with the prima facie merits of the case under the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 where the Tribunal had granted interim stay only to the extent of 80 per cent of disputed tax, granted full stay as there was clear evidence to establish that disputed tax was not to be charged or paid. In the said case the Tribunal had granted stay to the extent of 80 per cent and the balance of 20 per cent was stayed by this court with the direction for early disposal of the appeal.

Even the Supreme Court in Pennar Industries Ltd. Vs. State of A.P. and Others, observed that if on cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or even substantive part of the demand and the stay application should not be disposed of in a routine manner unmindful of the consequences.

Keeping in view the settled position of law on the point in issue and from the perusal of the appellate order passed by the appellate authority/appellate Tribunal thereby passing the impugned orders, the said authorities have not indicated its mind so far as the existence of the prima facie case on merits on appeal as well as the financial condition which are to be considered by them (appellate authority/Tribunal) while passing the impugned orders on an application for stay pending in the first appeal. The said mandatory condition is to be taken into consideration while disposing of an application for interim relief moved by the assessee by the appellate authority as well as Tribunal during the pendency of appeal.

For the foregoing reasons, the present revision is disposed of with a direction to the first appellate authority to decide the appeal filed by the assessee expeditiously say within a period of two months from the date of receiving a certified copy of this order. For a period of two months or till the decision is taken by the appellate authority in first appeal whichever is earlier, no coercive measure shall be taken against the assessee in the matter in question.