M/S Ricoh India Ltd. vs Commercial Tax Tribunal Bench-2 Commercial Tax and Others

Rajiv Sharma, J.—Heard Sri S.M.K. Chaudhary, Senior Advocate, assisted by Sri Kunal Srivastava, learned Counsel for the Petitioner and learned Standing Counsel.

Brief facts, giving rise to the instant petition, are that Petitioner-M/s Ricoh India Ltd. is engaged in trading Photocopiers, Printers, Catridges, Toners and Spares. He has filed all the provincial monthly returns u/s 24 of the U.P. Vat Act, 2008 for the Assessment Year 2010-2011. He has also filed Annual Return for the Assessment Year 2010-2011 on 29.10.2011.

On treating the ''printer'', which has been trading by the Petitioner, as multifunctional and as an unclassified item under Schedule-V of the Act and on relying upon order of the Commissioner passed u/s 59 of the Act, the opposite party No. 3-Commissioner, Commercial Tax, U.P., Lucknow, has passed three provincial orders dated 23.9.2010 for the months of April, 2010, May, 2010 and June 2010 for the Assessment Year 2010-2011.

Against the order dated 23.9.2010, the Petitioner has filed first appeal along with an application for stay before Additional Commissioner (Appeals)-III-opposite party No. 2, who, after considering the facts of the case, stayed 60% of the disputed tax. Feeling aggrieved, the Petitioner filed an appeal before the Commercial Tax Tribunal, Bench-2, Commercial Tax, Lucknow [hereinafter referred to as ''Tribunal''], who, while considering the material on record, modified the stay order to the tune of 80% of the disputed tax.

Since the Petitioner was unable to deposit 80% of the disputed tax, as such, he approached this Court by filing writ petition No. 7679 (MS) of 2010. This Court, vide order dated 22.12.2010, stayed 100% recovery of the disputed tax till disposal of the first appeal by the opposite party No. 2. Thereafter, the opposite party No. 2-Additional Commissioner, vide order dated 5.5.2011, rejected the appeal.

Against the order dated 5.5.2011, the Petitioner filed a second appeal before the opposite party No. 1 along with an application for waiver of pre-condition to deposit 1/3rd of the disputed amount as well as an application for stay of the disputed demand. The opposite party No. 1, while hearing the application of the Petitioner, vide Order 25.8.2011, allowed the Petitioner''s application and stayed only 70% of the disputed tax. Feeling aggrieved, the Petitioner has again approached this Court by filing writ petition No. 5503 (MS) of 2011. This Court, vide order dated 12.9.2011, allowed the writ petition, set-aside the order dated 25.8.2011 and remitted the matter to the Tribunal for deciding Petitioner''s application for waiver afresh as per provisions of the U.P. VAT Act and judgments of the Court. Thereafter, the Petitioner has filed written submission along with the order dated 12.9.2011 before the Tribunal. The Tribunal, vide order dated 12.10.2011, while observing that the Petitioner''s application for waiver is liable to be rejected, directed the Petitioner to deposit 1/3rd of the disputed tax within fifteen days and thereafter his application for stay shall be considered. Feeling aggrieved, the Petitioner has filed the instant writ petition.

Learned Counsel for the Petitioner submits that the Tribunal decided the matter without considering the financial stringency shown in the affidavit in support of the application for interim relief as well as the Bank account of the Applicant and directed to make payment of 1/3rd of the disputed tax and thereafter, the Petitioner''s application for interim relief shall be considered, in a most arbitrary and illegal manner and without proper application of mind to the facts of the case.

In support of the aforesaid submissions, learned Counsel for the Petitioner has relied upon the judgment of the Apex Court in the case of Income Tax Officer v. M.K. Mohammad Kunhi AIR 1969 SC 430, Mehsana District Cooperative Mill Pvt. Ltd. v. Union of India 2003 (154) E.L.T. 348 (SC) and Shri Kihota Hollohon Vs. Mr. Zachilhu and others, and this Court''s judgment in the case of Moriroku Ut India Pvt. Ltd. Noida v. Union of India and Ors. reported in 2006 UPTC 274.

Relying upon the judgment of this Court in the case of Tata Coffee Ltd. v. Commissioner of Trade Tax reported in 2002 UPTC 156, learned Counsel for the Petitioner submits that while considering the waiver cum stay, the Tribunal ought to have considered the prima facie merit of the case as well as financial condition of the Applicant. He further submits that the Tribunal has not recorded sufficient reasons while considering the prima facie case of the Petitioner nor it has looked into financial hardship faced by the Petitioner, while passing the impugned order.

A Division Bench of this Court in ITC Limited Vs. CC (Appeals) and CE and Others, after referring various judgments of the Hon''ble Apex Court, in para-35 has observed that 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.

From the aforesaid legal position, it is apparently clear that the order passed by the appellate authority itself must indicate that there has been application of mind, so far as the prima facie merits of the appeal are concerned, inasmuch as in a good prima facie case, financial conditions become irrelevant for the purposes of the consideration of stay/waiver application. Even in a case where the Assessee has good financial condition, on prima facie strong case being made out, he is entitled for the grant of suitable interim stay order/waiver with regard to pre-deposit of the adjudged amount. The order impugned in the present writ petition falls short of the said legal requirements.

However, any finding of this Court at this stage of the proceedings with regard to the prima facie merits of the case pleaded by the Assessee and an opposed by the Respondents, would necessarily affect the merits of the appeals filed by the Assessee and therefore, not desirable.

Considering the peculiar facts and circumstances of the case, the writ petition is allowed in part. The order dated 12.10.2011 with regard to deposit the 1/3rd of the disputed tax is hereby set-aside. The Tribunal is directed to consider and decide the stay application, in accordance with law, expeditiously, say, within a month from today and the Petitioner''s appeals within next two months.

Till disposal of the interim relief application by the Tribunal, the realization of 100% of the disputed tax shall be kept in abeyance.

This order shall not be treated to be precedence.