2018 (8) TMI 451

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....ircumstances of the case, the penalty order passed without any finding as to the commission of offence or mens reas is bad in the eyes of law and thereby making the penalty order nonest? (iv) Whether in the facts and under the circumstances of the case the revisionist is not entitled for 100% stay of realization of disputed penalty? The present revision has been preferred under Section 58 of U.P. Value Added Tax Act 2008 against the judgment and order dated 6.7.2018 passed in Second Appeal No. 117 of 2018 for the assessment year 2014-15 under Section 10(A) of Central Sales Tax Act 1956 passed by the Commercial Tax Tribunal, Lucknow Bench-III, Lucknow. The case set forth by the revisionist is that he is registered before the respondent No.1 under the U.P. Value Added Tax Act 2008 (hereinafter referred to as "Act 2008") for carrying on the business of manufacture and supply of Ready Mix Concrete (R.M.C.). The revisionist is also registered under the Central Sales Tax Act 1956 (hereinafter referred to as "Act 1956") with the respondents in respect of machinery and spare parts of the machinery used in the business of the revisionist. The assessing authority vide order....

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.... and order dated 6.7.2018 although granted a stay of 65% of the penalty yet again no reasons were assigned as to why the balance 35% of the penalty was not being stayed. It is thus argued that this amounts to non exercise of power vested with the authority concerned. The further argument of the learned counsel for the revisionist is that once his precarious financial condition was a factor, which has been considered by both the appellate courts then there was no reason to not stay the entire amount of penalty, more particularly when his appeal has already been entertained. In this regard, learned counsel for revisionist has placed reliance upon the judgment of this court in the case of Tata Motors Limited versus Commissioner Commercial Tax reported in 2016(8) ADJ 224 to contend that in the facts and circumstances of the present case, the order impugned is not sustainable. The relevant observations of Tata Motors Limited (supra) read as under:- "A bare perusal of the order passed by the learned Tribunal shows that it has merely made a cryptic observation that it has heard the parties and perused the impugned interim order passed by the First Appellate Authority, groun....

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....rima facie case has been made out by the plaintiff including on the question of maintainability of the suit and the balance of convenience is in his favour and refusal of injunction would cause irreparable injury to him." In the case of Dalpat Kumar v. Prahlad Singh reported in (1992) 1 SCC 719, a Bench of two Hon'ble Judges observed in paragraph 6 as under:- "...... "prima facie case", "balance of convenience" and "irreparable loss" are not rhetoric phrases for incantation, but words of width and elasticity, to meet myriad situations presented by men's ingenuity in given facts and circumstances, but always is hedged with sound exercise of judicial discretion to meet the ends of justice. "......the court would be circumspect before granting the injunction and look to the conduct of the party, the probable injury to either party and whether the plaintiff could be adequately compensated if junction is refused." The aforesaid decisions were considered and followed by the Supreme Court in a subsequent decision in the case of Mahadeo Savlaram Shelke and others vs. Pune Municipal Corporation and another, reported in (1995) 3 SCC 33, wherein it ....

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.... there is no dispute in this regard. These observations of the Supreme Court should have been kept in mind by the Tribunal and the First Appellate Authority while passing the impugned order. A Bench of three Hon'ble Judges of the Supreme Court in the case of Assistant Collector of Central Excise vs. Dunlop India Ltd. And others reported in (1905) 1 SCC 260, also reiterated the aforesaid principles with reference to the earlier decisions rendered in Sri Samarias Trading Company Pvt. Ltd. v. S. Samuel and others reported in (1985) 2 SCR 24, Titagarh Paper Mills Co. Ltd. v. State of Orissa reported in (19983) 2 SCC 433, Union of India v. Oswal Woolen Mills Ltd. reported in (1984) 2 SCC 646 and Siliguri Municipality vs. Amlendu Das reported in (1981) 2 SCC 436. In the case of Siliguri Municipality (supra) the Calcutta High court had passed orders restraining the Siliguri Municipality from recovering a graduated consolidated rate on the annual value of buildings in terms of the amended provisions of the Bengal Municipal Act, which compelled the Supreme Court to observe that it was dismayed at the tendency of the some of the High Courts to grant interlocutory order ....

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....eopardized and institutional embarrassment is eschewed". The court further went on to observe as under:- "Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by High Court. There was no question of any balance of convenience being in favour of the respondent-company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere Bank Guarantees. We notice that very often some courts act as if furnishing a Bank Guarantee would meet the ends of justice. No governmental business or for that matter no business of any kind can be run on mere Bank Guarantees. Liquid cash is necessary for the running of a Government as indeed any other enterprise. We consider that where matters of public revenue are concerned, it is of utmost importance to realise that interim orders ought not to be granted merely because prima facie case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest in....

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....rreparable injury and other relevant factors discussed hereinabove. The order should disclose such application of mind. Cryptic observations as have been made in the present case, which have been noted in the earlier part of the judgment, do not satisfy these requirements. The passing of interim order in such a manner is highly objectionable. In Benara Valves Ltd. (supra) though, the Supreme Court was considering the language used in Section 35-F of the Central Excise Act wherein the word 'undue hardship to such person' and 'safeguard the interests of the Revenue' had been used but the observations made by it regarding 'undue hardship' should be kept in mind in other tax matters also. It opined that in Indian condition the expression 'undue hardship' is normally related to economic hardship. 'Undue hardship' means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. 'Undue hardship' is caused when the hardship is not warranted by the circumstances. For a hardship to be 'undue' it must be shown that the particular burden to observe or perform the requirement is out of p....