2019 (6) TMI 119 - HC - VAT and Sales Tax

High Court Directs Expedited Appeal with Security Requirements, Emphasizes Prima Facie Case in Tax Matters

M/s Ultratech Nathdwara Cement Limited Versus Commissioner of Commercial Taxes

The High Court allowed the revision, directing the first appellate authority to expedite the pending appeal and specifying the security requirements for ... Conditional stay of the disputed amount of tax during pendency of first appeal before the first appellate authority - claim of the applicant is that the applicant is not at all liable to pay any amount in view of overriding provisions of Insolvency & Bankruptcy Code, 2016 - HELD THAT:- An appeal has been filed before the Commercial Tax Tribunal, Bench Ghaziabad under Section 57(4) of the Act. The Tribunal vide impugned order dated 14.05.2019 has allowed the appeal in part by directing the applicant to deposit 20% of the disputed amount within a period of 30 days. Since pure legal issue is involved which is to be considered by the first appellate authority in the pending appeal and admittedly a prima facie case on merit is established by the applicant and further both the appellate authority have not applied their mind to consider the issue raised by the applicant, the orders dated 25.04.2014 and 14.05.2019 are liable to be set aside. Revision allowed. Issues:Challenge to order granting conditional stay during pendency of appeal under U.P. Value Added Tax Act, 2008.Applicability of Insolvency & Bankruptcy Code, 2016 to override tax liability.Validity of assessment order creating tax demand for the assessment year 2015-16.Grant of stay of disputed tax amount by first appellate authority.Appeal against stay order to Commercial Tax Tribunal.Judicial review of orders passed by assessing authority, first appellate authority, and Tribunal.Application of legal principles from Division Bench Judgment and recent Supreme Court decision in similar cases.Analysis:The case involves a challenge to an order granting conditional stay during the pendency of an appeal under the U.P. Value Added Tax Act, 2008. The applicant, a company, contests the tax liability for the assessment year 2015-16, citing the overriding provisions of the Insolvency & Bankruptcy Code, 2016. The company's business closure and subsequent insolvency proceedings are crucial aspects in determining its tax obligations. The applicant asserts that no tax is payable post-business transfer, supported by legal proceedings and resolution plans approved by NCLAT and Supreme Court.The assessing authority issued an assessment order creating a substantial tax demand, contested by the applicant before the first appellate authority. The first appellate authority granted a stay of 50% of the disputed tax amount without providing reasons. Subsequently, the applicant appealed to the Commercial Tax Tribunal seeking further relief. The Tribunal, in its order, directed the applicant to deposit 20% of the disputed tax amount within a specified period.The High Court, upon review of the orders passed by lower authorities and the Tribunal, found merit in the applicant's submissions. Citing legal precedents, including a Division Bench Judgment and a recent Supreme Court decision, the Court emphasized the need for a strong prima facie case on merit to grant relief in tax matters. The Court directed the first appellate authority to decide the pending appeal promptly, requiring the applicant to furnish security equivalent to 20% of the disputed amount to the satisfaction of the assessing authority.In conclusion, the High Court allowed the revision, directing the first appellate authority to expedite the pending appeal and specifying the security requirements for the applicant. The Court's decision was based on the legal principles outlined in relevant judgments and the applicant's arguments regarding tax liability in light of insolvency proceedings and resolution plans.