2023 (8) TMI 1129 - HC - VAT and Sales Tax

AP High Court: Tribunal lacks jurisdiction for stay applications; Court stays tax collection pending appeal

The Court held that the AP VAT Appellate Tribunal lacked jurisdiction to entertain stay applications directly unless initially sought before the Appellate ... Incidental or ancillary power to grant interlocutory orders including stay - stay of collection of tax pending disposal of appeal - express embargo on stay power under a statute - continuance of earlier stay by higher authority - exercise of writ jurisdiction under Article 226 for interim reliefIncidental or ancillary power to grant interlocutory orders including stay - express embargo on stay power under a statute - stay of collection of tax pending disposal of appeal - Whether the AP VAT Appellate Tribunal has jurisdiction to entertain and decide a stay application filed directly before it in the circumstances of this case. - HELD THAT: - The court held that an appellate tribunal ordinarily possesses incidental power to pass interlocutory orders, including stays, as an adjunct of its substantive appellate jurisdiction. That principle, however, yields where the legislature has expressly or by necessary implication taken away such ancillary power. Examination of the AP VAT Act shows Section 33(6)(b) expressly provides that payment of tax and penalty shall not be stayed pending disposal of the appeal before the Appellate Tribunal. Given this clear statutory embargo, the incidental power to grant stay cannot be exercised by the VAT Appellate Tribunal in the present situation where the petitioner sought stay for the first time before that Tribunal and there was no earlier stay granted under Section 31(3)(a) or by revision under Section 31(3)(b). Consequently, the Tribunal is not vested with jurisdiction to entertain or grant the stay application in the facts of this case. [Paras 16]Tribunal has no power to entertain or grant the stay application filed directly before it in the present circumstances; point answered accordingly.Continuance of earlier stay by higher authority - Rule 40 - continuance of stay by Additional/Joint Commissioner - exercise of writ jurisdiction under Article 226 for interim relief - Whether the High Court could, by exercise of its writ jurisdiction, grant interim relief restraining recovery pending the appeal and on what terms. - HELD THAT: - Although the statutory scheme did not permit the Appellate Tribunal to grant the stay sought by the petitioner, the court observed that the petitioner had not availed the routes under Section 31(3)(a)/(b) and Rule 40 for obtaining or continuing a stay. Notwithstanding the statutory bar on the Tribunal, the High Court retained plenary powers under Article 226 to mould interim relief to meet the ends of justice. Applying that jurisdiction, the court directed a stay of collection of the tax demanded by the assessment order pending disposal of the appeal before the Appellate Tribunal, imposing the condition that the petitioner deposit 75% of the demanded tax (inclusive of any earlier deposits) within four weeks of receipt of the order. [Paras 17, 18]High Court granted stay of collection of the demanded tax pending disposal of the appeal subject to the petitioner depositing 75% of the demanded tax within four weeks.Final Conclusion: The AP VAT Appellate Tribunal lacks jurisdiction to entertain the petitioner's stay application filed for the first time before it because Section 33(6)(b) of the AP VAT Act expressly bars staying payment pending such appeals; however, exercising its Article 226 powers, the High Court stayed recovery of the demanded tax pending the appeal on the condition that the petitioner deposits 75% of the demanded tax within four weeks. Issues Involved:1. Jurisdiction of AP VAT Appellate Tribunal to entertain stay applications.2. Legality of recovery actions by the respondents during the pendency of the appeal.Summary:Jurisdiction of AP VAT Appellate Tribunal to entertain stay applications:The petitioner contested the assessment order dated 14.03.2019 and filed an appeal before the Appellate Deputy Commissioner, which was rejected due to a delay of 128 days. Subsequently, the petitioner filed an appeal (TA No.1/2022) and a stay application (TMP No.29/2022) before the AP VAT Appellate Tribunal. The petitioner argued that the Tribunal has inherent jurisdiction to grant stay orders as an ancillary power. However, the respondent contended that under Section 31(3)(c) of the AP VAT Act and Rule 40 of the AP VAT Rules, the Tribunal lacks jurisdiction to entertain stay applications.The Court examined relevant provisions, highlighting that Section 31(3)(c) and Rule 40 govern the continuation of stay orders initially granted by the Appellate Deputy Commissioner. Since the petitioner did not apply for a stay before the Appellate Deputy Commissioner, these provisions were inapplicable. The Court also referred to judicial precedents affirming that appellate bodies have implied powers to grant stay unless expressly restricted. However, Section 33(6)(b) of the AP VAT Act explicitly prohibits the Tribunal from granting stay orders pending appeal.Legality of recovery actions by the respondents during the pendency of the appeal:The petitioner sought to declare the recovery actions by the respondents, including garnishee notices, as illegal pending the appeal. The Court acknowledged that the Tribunal could not grant stay but utilized its plenary power under Article 226 of the Constitution to stay the collection of the demanded tax, conditional upon the petitioner depositing 75% of the demanded amount within four weeks.Conclusion:The writ petition was disposed of with the Court granting a conditional stay of tax collection pending the appeal before the AP VAT Appellate Tribunal. The petitioner is required to deposit 75% of the demanded tax within four weeks. No costs were awarded, and any pending interlocutory applications were closed.