The Gujarat High Court in the case of Deputy Commissioner of Income Tax, TDS Circle vs. Vodafone Essar Gujarat Limited, held that the Learned Tribunal should make all efforts to dispose of the appeals as fast as possible in the cases where there is stay of demand.
The bench comprising of Hon’ble Mr. Justice M.R. Shah and Hon’ble Mr. Justice S.H.Vora passed the aforesaid judgment.
Pleaders engaged in the case:
Mrs. Mauna M Bhatt – for the Petitioner.
Mr. S.N. Soparkar, Sr. Counsel with Mr. Sandeep Singhi, Mr. Parth Contractor, and Mr. Siddharth Joshi – for the Respondent.
Brief facts of the case:
The appellant filed the instant writ petition under Article 226 of the Constitution of India and prayed to set aside the impugned orders passed by the ld. Income Tax Appellate Tribunal in stay Application Nos.85 & 86/AHD/2011 in ITA Nos.386 & 387/ AHD/2011 for AY 2008-09 and 2009-10, wherein the learned Tribunal extended the order of stay granted earlier beyond the period of 365 days.
Being aggrieved by the orders relating to the assessment years 2008-09 and 2009-10, the assessee had preferred appeals before the ITAT.
As per the assessment order for the financial year 2008-09, the tax liability was of Rs.7,21,19,094/- including interest under section 201(1A) amounting to Rs.1,20,19,849/- and for the assessment year 2009-10, the tax liability was Rs.9,04,43,478/- including interest under section 201(1A) amounting to Rs.1,75,05,189/-.
In the appeals before the learned Tribunal, the assessee filed and moved stay applications.
That out of total tax and the interest liability for the assessment year 2008-09, the assessee had already paid Rs.6,37,50,000/- and Rs.83,69,094/- was due.
Similarly, for the assessment year 2009-10, out of total tax liability including interest, the assessee had already paid Rs.8,13,50,000/- and Rs.90, 93,478/- was due.
The learned Tribunal vide order dated 25.3.2011 in Stay Application Nos.15 and 16 of 2011, stayed the demand for the due amount for a period of 180 days from the date of receipt of the order or till pendency of the appeal.
That the stay of demand granted earlier was extended from time to time and it was extended beyond the period of 365 days which was in fact for more than 1000 days.
For the said reasons, being aggrieved by the extension of stay of demand allowed by the Tribunal beyond 365 days, the Revenue preferred the Special Civil Application under Article 226 of the Constitution of India before the High Court.
Arguments of both the sides:
Mrs. Bhatt, the learned counsel appearing on behalf of the revenue submitted that extension of stay of demand allowed by the learned Tribunal beyond the period of 365 days was totally illegal and beyond jurisdiction. It was also contrary to section 254(2A) of the Income Tax Act.
It was submitted that while extending the order of stay granted earlier, the learned Tribunal was wrong in not appreciating the third proviso to section 254(2A) of the Act. It was contended that as per the legislative mandate which has been provided in section 254(2A) of the Act, the Tribunal has no jurisdiction to extend the stay beyond 365 days and such extension of stay beyond 365 days should be vacated.
It was submitted that in view of section 254(2A) of the Act, any extension of stay beyond the period of 365 days is illegal, beyond jurisdiction, contrary to section 254(2A) of the Act and is barred by law.
It was further submitted that the learned Tribunal being a creation of Statute was bound by the provisions of law. The Statute provides grant of stay of demand during the pendency of the appeal but the same shall be subject to the provisions of the Act and there cannot be any stay beyond the total period of 365 days. It was submitted that the said mandate should be respected by the learned Tribunal.
Mrs. Bhatt pointed out that the object of restricting the period of stay of demand for a maximum period of 365 days is to ensure that appeals are heard expeditiously and the assessee may not get undue advantage of the stay allowed by the Tribunal.
It was submitted that in most cases, the assesses use the stay order to practice delay tactics and such appeals are ordinarily listed at the bottom of the board.
It was submitted that in the present case, there was a huge tax liability pending for a long time and the stay has been extended for nearly 1000 days.
It was submitted that the learned Tribunal has extended the stay of demand without hearing the appeal and the interest of the revenue has been prejudiced.
The learned advocate appearing on behalf of the revenue relied upon the decision of the Division Bench of Delhi High Court in the case of Commissioner of Income Tax vs. Maruti Suzuki (India) Limited dated 2.1.2014 given in Writ Petition (Civil) No.5086 of 2013 and prayed to allow the present petition by setting aside the impugned order and to grant the relief as prayed for.
The prayer was vehemently opposed by the learned senior counsel appearing on behalf of the respondent. He submitted that the issue involved in the petition was now not res judicata as per the decision of the Hon’ble Supreme Court in case of Commissioner of Customs and Central Exercise, Ahmadabad vs. Kumar Cotton Mills Pvt. Ltd reported in (2005) 180 ELT 434(SC). He also relied upon the decision of the Division Bench of Gujarat High Court in the case of Commissioner vs. Small Industries Development Bank of India in Tax Appeal No.341 of 201.
It was pointed that there cannot be any legislative intent to punish a person for no fault on his part. It was submitted by the learned senior counsel that there may be many causes for not disposing of the appeals by the learned Tribunal within the due period such as shortage of Members, non-availability of Assessing Officer to argue the case, non-availability of Transfer pricing Officer for the hearing, non-availability of senior people from Department to argue, late filing paper books by the Assessee Department, the Assessee’s Counsel is busy in some High Court matter, transfer of the Member of the Tribunal, etc .
When a Tribunal grants the stay order, it fixes the appeal for early hearing. However sometimes it is found that it is necessary to adjourn the matter and fix it up with earlier appeal/s which is pending. It requires that the earlier appeal/s must be disposed off first and thereafter the appeal must be heard. In such a situation till the appeals are heard, stay is granted and the matters remain pending due to the fault of nobody.
Despite there being no fault of the assessee, if there is delay in disposing of the appeals by the learned Tribunal, the assessee cannot be punished when the initial stay has been granted after application of mind by the Tribunal. It was submitted that the stay of demand is never granted mechanically by the learned Tribunal.
After hearing the learned advocates appearing on behalf of both the parties it was held that the learned Tribunal should hear appeals as fast as possible. In view of the above the petition was disposed of. The learned Tribunal was directed to make all efforts to dispose of the appeals in the cases where there is stay of demand. The learned Tribunal was also directed to act accordingly.