Stay of recovery in disputed tax demand granted pending first appeal under the U.P. VAT Act

Pending disposal of the first appeal, the Court directed complete stay of recovery of the disputed tax demand, finding that partial protection was not sufficient in the circumstances. The assessee had argued that continuation of the assessment proceedings was barred after the assessment year under section 29(6) of the U.P. Value Added Tax Act, 2008, and the assessment had earlier been recalled under section 32. The Court found substance in the questions of law raised and accepted that the disputed recovery should remain stayed while the first appeal was pending, for up to four months or until disposal of the appeal, whichever was earlier.

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Issues: Whether, pending disposal of the first appeal, complete stay of recovery of the disputed tax demand was warranted in view of the assessee's contention that the assessment proceedings could not continue beyond the assessment year under section 29(6) of the U.P. Value Added Tax Act, 2008.

Analysis: The revision arose from an assessment order recalled under section 32 of the U.P. Value Added Tax Act, 2008, after which the assessee contended that continuation of the proceedings was barred by limitation under section 29(6). The Court found substance in the questions of law raised and noted that the assessee's case before the first appellate authority was that no proceedings should have continued. In that background, the Court held that partial protection was insufficient and that the disputed recovery should remain stayed while the first appeal was pending.

Conclusion: Complete stay of recovery was directed during the pendency of the first appeal, up to four months or till disposal of the appeal, whichever was earlier.

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