R.P. Products vs Commissioner of Commercial Tax U.P. and Others

Shabihul Hasnain, J.

C.M. Application No. 90447 of 2011.

Heard. Cause shown is sufficient.

The application is allowed. The order dated 2.8.2011 is corrected in the following manner:

Heard learned Counsel for the Petitioner and learned Standing Counsel.

Through this writ petition, the Petitioner has assailed the order dated 27.06.2011 passed by Member, Commercial Tax, Tribunal Bench-I, Lucknow-opposite party No. 2 in Second Appeal No. 280 of 2011 as contained in Annexure No. 6 to this petition.

Revisionist - M/s R. P. Products, engaged in a business of Pan Mashala and Gutka, sells his products in the name and style of Pukar Gutkha. For the Assessment Year 2009-10, the Respondent imposed a penalty of Rs. 94,5,00,00/-under Section 25 (1) (3) of U.P. Vat Tax Act. Feeling aggrieved, the Petitioner filed an appeal along with an application for stay before the Respondent No. 3, which was registered as First Appeal No. 354 of 2011. The Additional Commissioner Grade-II, vide order dated 30.5.2011, stayed 70% of the disputed tax, till disposal of the first appeal.

Against the order dated 30.5.2011, the Petitioner preferred second appeal before the Trade Tax Tribunal Bench-I, Lucknow, which was numbered as Second Appeal No. 280 of 2011. The Tribunal, vide order dated 27.6.2011, partly allowed the appeal and modified the order dated 27.06.2011 passed by the Additional Commissioner to the effect that 90% of the disputed tax shall remain stayed during the pendency of the first appeal. Feeling aggrieved, the Petitioner preferred the instant writ petition inter alia on the grounds that the Tribunal did not consider the relevant facts and the financial stringency. Further, in a number of decisions, this Court has held that undue hardship as well as the entire relevant factors are to be considered and if the financial hardship is not considered, then, the purposes of filing the appeal itself becomes nugatory and illusory.

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 Petitioner and directed to make payment of 10% of the disputed tax in a most arbitrary and illegal manner and without proper application of mind to the facts of the case. He submits that the power of stay should be judicially exercised and the order should be passed after proper application of sound principles for exercising discretion and the application of stay should be treated casually and the authority should not pass the routine order.

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 M/s 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.

During the pendency of the statutory appeal, the Tribunal is required to look into the prima facie merit of the case as well as financial condition of the applicant. Further, the appellate authority is required to consider the relevant factor like financial hardship and other relevant facts because the condition of deposit will make the purpose of filing of appeal itself nugatory.

Considering the peculiar facts and circumstances of the case, the writ petition is partly allowed. The order 27.06.2011 passed by the Tribunal is modified to the extent that 90% of the disputed tax shall remain stayed till disposal of the first appeal and the revisionist shall deposit 10% of the disputed tax within a month and also furnish the security for the remaining amount to the subjective satisfaction of the assessing authority.

The First Appellate Authority is directed to decide the first appeal within a period of one month in accordance of law after affording opportunity of hearing to the parties.