Tata Motors Limited vs Commissioner Commercial Taxes

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Dr. Devendra Kumar Arora, J.—Heard Sri Bharat Ji Agrawal and Sri S.M.K. Chaudhary, learned senior advocates, assisted by Sri Vaibhav Pandey for the applicant and Sri H.P. Srivastava, learned counsel appearing for the opposite party. The instant trade tax revision has been preferred by the applicant against the order dated April 28, 2014 passed by the learned Commercial Tax Tribunal, Lucknow Bench II, Lucknow, in Appeal No. 107/2014 for the assessment year 2010-11, by which revisionist has been directed to deposit 20 per cent of the total amount for the year 2010-11 and stayed 80 per cent of the VAT tax by allowing the appeal partly.

The submission of the learned counsel for the applicant is that the applicant is a public limited company incorporated under the Indian Companies Act, having its registered office at Delhi and the applicant is engaged in the business of manufacturing motor vehicles/motor chassis at its factory situate at Chinhat Deva Road, Lucknow. The applicant exports complete buses outside India. It manufactures chassis at Lucknow according to the specifications of the export order, gets bus assembled outside U.P. and dispatches the complete bus directly after assembly from the Mumbai port and also makes Central sales directly from Lucknow to various registered dealers of outside State of U.P. against stipulated form C under the Central Sales Tax Act. The submission of learned counsel for the applicant is that form F are obtained from respective branch offices and forms C are obtained from the purchasers located outside the State of U.P. from their assessing authorities situated outside the State of U.P. and then handed over to the applicant for furnishing to its assessing authority within the State of U.P. It is also submitted by the learned counsel for the applicant that the Commissioner of Trade Tax vide circulars dated August 26, 2000 and November 25, 2009 has specifically directed the concerned assessing authorities to extend the time for filing forms if there are reasonable grounds for failure to file the same within time. It is again submitted by the learned counsel for the applicant that the applicant had not received various forms C from its outside State purchases and forms F from its branch offices/consignment agents within time of three months as contemplated in rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules and it kept following up with them regarding the supply of these forms.

Further submission of learned counsel for the applicant is that the assessing authority has treated the transaction between the applicant and the persons by whom the bus body has been mounted to be a transaction exigible to tax under the Central Sales Tax Act and the assessing authority has also treated the office of the applicant at Mumbai to be a separate firm and the office of the applicant at Lucknow to be a separate firm. It is submitted by the learned counsel for the applicant that the finding of the assessing authority is directly contrary to the Supreme Court decision in Sahney Steel and Press Works Limited and Another Vs. Commercial Tax Officer and Others, , wherein it has been held that branch office and head office of the firm do not constitute separate legal entities and they are part and parcel of the same juristic entity. It is also submitted that vide assessment order dated February 28, 2014, for the assessment year 2010-11 (Central) was passed and a demand of Rs. 65,98,09,496 created and out of this tax liability, the applicant has already deposited a sum of Rs. 31,56,07,942, accordingly the balance tax liability was calculated at Rs. 34,42,08,554, which is treated to be an admitted tax payable by the applicant on which a further sum of Rs. 17,76,76,371 was payable as interest and the total outstanding amount comes to the tune of Rs. 52,18,77,925.

The applicant aggrieved by the aforesaid assessment order, filed an appeal before the Additional Commissioner (Appeals), Commercial Taxes, Lucknow, along with an application for stay, who vide order dated April 22, 2014, has granted stay of 60 per cent of the disputed amount of tax. The submission of learned counsel for the applicant is that the assessing authority as well as the Additional Commissioner (Appeals) has committed an error of law in completely overlooking the fact that even if the forms have not been filled as contemplated under rule 12A(7) of the Central Sales Tax (Registration and Turnover) Rules, the said forms can be filed even after the assessment order has been completed.

The learned counsel for the applicant placed reliance upon the case of I.T.C. Ltd. v. Commissioner (Appeals), Cus. & C. Ex. Meerut-I reported in [2005] 184 ELT 347 (All), wherein the Division Bench of this court held that the court should examine whether party has shown strong prima facie case on merits then deposit of any disputed amount of tax will cause undue hardship specially when the assessee is likely to be exonerated from the said liability.

The further submission is that the said decision has been followed in Honda Siel Cars v. Commissioner of Commercial Taxes, Lucknow reported in [2010] UPTC 1152 and hence the Tribunal was not justified in not granting complete relief.

The learned counsel for the applicant also submitted that in the case of Pennar Industries Ltd. Vs. State of A.P. and Others, it has been held that if on cursory glance it appears that the demand raised has no legs to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. The petitions for stay should not be disposed of in a routine manner on unmindful of the consequences flowing from the order requiring the assessee to deposit additional or part of the demand.

Learned counsel also relied upon the case of Kribhco Shyam Fertilizers Ltd. Vs. Commissioner of Commercial Taxes, , wherein 75 per cent stay was granted by the Tribunal and this honourable court was pleased to stay the balance 25 per cent tax and direction was issued for early disposal of appeal. Learned counsel appearing for the applicant submits that by means of the impugned order dated April 28, 2014 the appeal has been partly allowed by granting stay of a further 20 per cent of the disputed amount of tax. It also submits that the applicant earlier filed an appeal against the order for the year 2007-08 and the first appellate authority granted stay of 50 per cent which was increased by 10 per cent by the Commercial Tax Tribunal. Against the said order of the Tribunal, a Commercial Tax Revision No. 57 of 2011 was filed which was partly allowed and the order of the Tribunal was modified granting stay of 90 per cent of the demanded amount of tax and the applicant was directed to deposit 10 per cent.

The argument of learned counsel for the applicant is that Tribunal has erred in passing the impugned order in a cursory manner without considering the various grounds raised by the applicant, whereas entire disputed tax deserves to be exempted till disposal of appeal.

On the other hand, learned Standing Counsel submits that the assessee has already got the stay of the demand of 80 per cent. Now, there is no justification to grant further stay in the matter. Learned standing counsel also placed reliance on the judgment in the case of Tata Motors Limited Vs. Commissioner, Commercial Taxes, U.P., Lucknow, . In this case of the revisionist, which pertains to the assessment year 2007-08, this court modified the order of the Tribunal to the extent that if the revisionist deposits 10 per cent of the total demanded tax within a specified period, 90 per cent of the demanded tax shall be kept in abeyance till disposal of the appeal and the revisionist was further directed to furnish security of the stayed amount within 30 days to the satisfaction of the assessing authority. Relevant paragraphs 9 and 10 of the said order are reproduced as under (page 494 in 50 VST):

"9. Considering the peculiar facts and circumstances of the case, the impugned order passed by the Tribunal dated March 4, 2011 is modified to the extent that if the revisionist deposits 10 per cent of the total demanded tax for the assessment year 2007-08 latest by March 31, 2011, ninety per cent of the demanded tax shall be kept in abeyance till disposal of the appeal. The revisionist shall furnish security of the stayed amount within 30 days to the satisfaction of the assessing authority. It is further provided that the deposited amount shall not be adjusted against any other head.

In view of the above, the trade tax revision is partly allowed. The first appellate authority is directed to decide the appeal, in accordance with law, latest by April 30, 2011."

I have considered the submissions of learned counsel for the applicant and gone through the record.

In the appeal, the Additional Commissioner has granted stay up to 60 per cent of the disputed tax. The applicant not being satisfied with the said order of the Additional Commissioner (Appeals) preferred second appeal before the Commercial Tax Tribunal, Lucknow, and the same was partly allowed thereby staying 80 per cent of the disputed tax. Now, by the present revision, learned counsel for the revisionist prays for stay of full amount of the disputed tax.

In the case of Mool Chand Yadav and Another Vs. Raza Buland Sugar Company Limited, Rampur and Others, , it has been held that where a statutory appeal has been entertained or admitted for consideration and the order impugned is likely to visit the party with civil consequences judicial approach requires that during the pendency of appeal the operation of such order must be suspended in order to avoid undue hardship to the party concerned and to preserve the rights of the parties pending adjudication of the lis.

Further, in the case of ITC Limited Vs. CC (Appeals) and CE and Others, , it has been held that it was incumbent upon the Tribunal to examine the prima facie case and the appellate orders and ought to have stayed the disputed amount of tax. The relevant para. 35 reads 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 the 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..."

After hearing both the parties, the instant trade tax revision is being disposed of by modifying the impugned order dated April 28, 2014 to the extent that if the revisionist deposits 10 per cent of the total demanded tax within a period of one month, the 90 per cent of the demanded tax shall be kept in abeyance till disposal of the appeal. The revisionist is further directed to furnish security of the stayed amount within one month to the satisfaction of the assessing authority. The first appellate authority is further directed to decide the first appeal within a period of three months from the date of receipt of a certified copy of this order. With the above direction, the trade tax revision is disposed of finally.