Godrej Saralee Limited vs Commissioner of Commercial Tax

Arun Tandon, J.—Assessee has filed this revision against the order of the Tribunal passed in Second Appeal No. 492 of 2011 (Assessment Year 2007-08). Under the order impugned the Tribunal has stayed 80% of the demand subject matter of challenge before the first appellate authority. The Assessee is not satisfied with the interim stay so granted. According to the Assessee he is entitled to stay of the entire disputed amount.

On behalf of the Assessee it is contended before this Court that the goods subject matter of adjudication before the first appellate authority were mosquito coils.

A full Bench of the Tribunal in the case of M/s Neha Trading Company v. Commissioner of Trade Tax U.P., being Second Appeal No. 44 of 2009, has itself held that mosquito coils are insecticides and therefore chargeable at the rate of 4% only under the U.P. VAT Act, 2008. The Assessee, therefore, submits that it had strong prima facie case supported by Full Bench judgment of the Tribunal.

Division Bench of this Court in the case of ITC Limited Vs. CC (Appeals) and CE and Others, has held that if the Assessee has strong prima facie case covered by an earlier judgment of the Tribunal or of the High Court/Apex Court then the issue of financial difficulties is of not much relevance.

Standing Counsel submitted that there had been an increase in the turnover vis-a-vis that disclosed by the Assessee because of certain undisclosed transactions having been entered into. Therefore, in the facts of the case irrespective of the rate of tax applicable on mosquito coils, there are other issues involved. Therefore, this Court may not interfere. In rejoinder Assessee points out that because of alleged not disclosed transactions there has been hardly an increase of Rs. 81,000/-in the total turnover, which is less than point five per cent of the total turnover. I have heard learned Counsel for the parties and have gone through the records of the revision.

The legal position with regard to consideration of the interim stay application, where the Assessee has a strong prima facie case supported by an earlier judgment of the Tribunal/High Court or of the Apex Court, has been explained by the Division Bench of this Court in the case of I.T.C. (supra). It has been specifically laid down that if the Assessee has strong prima facie case then the issue of financial hardship is of no relevance. The Tribunal appears to have lost sight of the aforesaid law, as explained by this Court, while passing the impugned order.

It could not be disputed before this Court that the Full Bench of the Tribunal itself in the case of M/s Neha Trading Company (supra) has held that Mosquito coils are chargeable at the rate of 4% being insecticides and not at the rate of 12.5% under Entry No. 22 Schedule-II of the U.P. VAT Act, 2008.

The increase in the turnover by the assessing authority in the facts of the case is also nominal.

In the totality of the circumstances on record, this Court is of the confirm opinion that the interest of substantial justice would be served by substituting the direction issued by the Tribunal, granting the stay to the Assessee to the extent of 80%, by providing as follows:

There shall be an stay of 80% of the disputed amount during the pendency of the proceedings before the first appellate authority with a further condition that the Assessee may deposit a sum of Rs. 3,00,000/-(Three Lac) in cash as against remaining 20% and for the balance he shall furnish security other than cash or bank guarantee to the satisfaction of the assessing authority within two months from today along with certified copy of this order.

In case of default he shall not be entitled to the benefits of this order.

Revision is disposed of subject to the observation made.