Natural justice in tax recovery: non-speaking refusal of stay set aside, with bank-account attachment lifted subject to conditions.

ITAT Madras-A held that recovery powers affecting tax enforcement must be exercised fairly and with reasons, and that the assessee had a legitimate expectation of a speaking order on its stay request. The Commissioner's refusal to grant stay, made without proper consideration, was arbitrary and contrary to natural justice. On the facts, the assessee showed a prima facie case and the bank-account attachment was hampering business, while the Revenue could still be safeguarded by conditions. Interim stay was granted, the bank attachment was lifted, and recovery was kept in abeyance subject to stipulated payment.

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Issues: Whether the assessee was entitled to interim stay of recovery of disputed tax and revocation of attachment of bank accounts, and whether the Commissioner's refusal to grant stay was vitiated for breach of natural justice and arbitrariness.

Analysis: The assessee had sought stay of recovery pending appeal, but the Commissioner rejected the request without reasons and later declined to treat it as requiring a speaking order. The Tribunal held that administrative powers affecting recovery of tax must be exercised fairly, that the assessee had a legitimate expectation of a reasoned decision, and that the refusal without proper consideration was arbitrary and contrary to natural justice. It also found that the assessee had a prima facie case, that attachment of the bank accounts hampered the business, and that the revenue could still be protected by conditions attached to the stay.

Conclusion: The assessee was entitled to interim stay, the attachment of the bank accounts was directed to be lifted, and the recovery proceedings were kept in abeyance on payment of a stipulated amount.

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