Frivolous petition costs rejected where the underlying demand was already set aside and no adverse determination survived.

Costs cannot be imposed merely because a petition is thought to be frivolous where the underlying demand has already been set aside and no subsisting adverse determination remains. The High Court's costs order against the petitioner was unsustainable because the challenge related to discharge in a criminal complaint, the merits-based demand had been reversed by the appellate tribunal, and the later departmental appeal had been withdrawn for low tax effect. On those facts, the petition could not properly be treated as frivolous, and the costs were set aside.

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Issues: Whether the costs of Rs. 2 lakhs imposed by the High Court on the ground that the petition was frivolous were liable to be set aside.

Analysis: The petition before the High Court had challenged the discharge of the respondents in the criminal complaint, and the underlying demand on merits had already been set aside by the appellate tribunal. The department's further challenge had also not culminated in any subsisting adverse determination, as the later appeal was withdrawn on account of low tax effect. In these circumstances, the petition filed before the High Court could not be treated as frivolous so as to justify the imposition of costs.

Conclusion: The costs imposed by the High Court were set aside.

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