2020 (11) TMI 792 - HC - VAT and Sales Tax

Court sets aside Tribunal order, emphasizes importance of financial hardship in stay applications

The court set aside the Tribunal's order directing a deposit of 10% of the disputed tax amount in a tax revision case under the Uttar Pradesh Value Added ... Stay of only 90% of the disputed tax, till the disposal of first appeal, instead of 100% stay - applicant has good case on the merit of the case, and financial condition is not good - HELD THAT:- Perusal of the orders impugned in the revision, make it clear that the appellate court as well as the Tribunal have neither considered prima facie case nor the financial hardship as pleaded by the revisionist before directing the deposit of 10% of the disputed tax. Thus, there are no hesitation in holding that the order passed by the Tribunal deserves to be set aside and is accordingly set aside to the extent that it directs to deposit 10% of the amount as the revisionist has placed on record the financial hardship. Tax revision is allowed. Issues:1. Interpretation of provisions under section 55(6) of the Uttar Pradesh Value Added Tax Act, 2008 regarding interim orders during appeal.2. Consideration of prima facie case and financial hardship in stay applications.3. Justification of the Tribunal's decision to grant stay of only 90% of disputed tax.Analysis:1. The revisionist filed a tax revision under section 58(3) of the Uttar Pradesh Value Added Tax Act, 2008, challenging the Tribunal's order dated 16.7.2020. The Tribunal had granted a stay of 90% of the disputed tax amount, totaling Rs. 20,98,728, out of the total assessed amount of Rs. 23,31,920. The revisionist argued that the assessment was flawed as it included goods purchased outside the State of Uttar Pradesh. The appellate authority had earlier stayed recovery of Rs. 13,99,152 out of the total amount. The revisionist contended that the financial condition of the firm warranted a complete stay of the recovery. The Tribunal's decision was based on the revisionist's financial hardship but did not fully consider it, leading to the filing of the present revision.2. The counsel for the revisionist emphasized the importance of considering both the prima facie case and financial hardship when deciding on stay applications during the pendency of an appeal. It was argued that a mechanical exercise of power without due consideration of these aspects could undermine the statutory right of appeal, especially in cases where the financial condition of the appellant is precarious. The revisionist cited previous judgments but the court found them unconvincing as they did not address the specific legal issues raised in the present case. The court noted that the orders under challenge did not adequately address the revisionist's plea of financial hardship, leading to the conclusion that the Tribunal's decision to direct a deposit of 10% of the disputed tax amount was unjustified.3. The court, after thorough consideration of the arguments presented, held in favor of the revisionist and set aside the Tribunal's order directing the deposit of 10% of the disputed tax amount. The court emphasized the need for a comprehensive assessment of both the prima facie case and financial hardship before deciding on stay applications. The present tax revision was allowed, with a directive for the appellate authority to expedite the hearing and decision on the appeal without requiring any pre-deposit. The judgment was delivered in favor of the assessee, highlighting the importance of due consideration of legal provisions and financial circumstances in such matters.