Ravi Gupta vs Commissioner Sales Tax , Delhi & Anrs

Ravi Gupta ....Appellant

Versus

Commissioner Sales Tax, Delhi and Anr. ....Respondents

JUDGMENT

Dr. ARIJIT PASAYAT, J.

1. Leave granted.

2. Challenge in this appeal is to the order passed by a Division Bench of

the Delhi High Court dismissing the Writ Petition (C) No. 9446 of 2006

filed by the appellant.

3. The factual position is almost undisputed and needs to be noted in

brief.

The appellant is a dealer registered under the Delhi Sales Tax Act,

1975 (in short the `Act') and Central Sales Tax Act, 1956 (in short the `CST

Act'). Assessments were completed by the Assessing Officer for the

assessment years 1999-2000, 2000-2001 and 2001-2002 under the Act and

CST Act. The total demand raised was in the neighbourhood of Rs.8.3

crores. The major portion of the demand was raised on the ground that the

assessee did not furnish the requisite declaration forms i.e. Form No.ST-1

under the Act and Form C and Form E-1 under the CST Act. The Assessing

Officer was of the view that ample opportunity was granted to the appellant

to produce the declaration forms which it failed to furnish. Therefore, the

demands were raised. Before the First Appellate Authority, the appellant

prayed for further time to produce the declaration forms which was

declined. There was no appearance when the matter was fixed before the

first Appellate Authority. Since the appellant failed to get any relief from

the first Appellate Authority, it moved the Appellate Tribunal, Value Added

Tax, Delhi (in short the `Tribunal') in six appeals. Alongwith the appeal an

2 application in terms of Section 43(5) of the Act was filed to dispense with

the pre-deposit which is condition precedent for entertaining the appeal.

At the first instance, the Tribunal after considering the rival stands,

more particularly, that the declaration forms would be produced directed the

payment of Rupees three crores in respect of the demands raised on the Act

and the CST Act. Questioning the correctness of the order, appellant filed a

Writ Petition before the Delhi High Court which was numbered as WP (C)

No.11822 of 2005. The High Court by order dated 26.9.2005 disposed of

the writ petition with the following directions:

"Considering the facts and circumstances of the case, we allow the petitioner a final opportunity of six weeks to place all such documents and the statutory forms before the appellate authority to satisfy that the petitioner is entitled to such benefit in the rate of tax. In case the petitioner is able to produce such evidence before the appellate authority, in terms of this order, it will be considered by the appellate authority and appropriate orders shall be passed by the appellate authority in terms of sub clause (5) of Section 43 of the Act by making a review of the order which is under challenge in this writ petition. The petitioner shall produce the aforesaid evidence before the appellate authority within six weeks. In case the petitioner is not able to produce such evidence, they shall be liable to make the pre-deposit in terms of this order. As and when an order under Section 43 sub-section (5) is passed by the appellate authority the petitioner shall abide by same."

3 As the appellant did not produce the records, the Tribunal held that

the appellant was required to deposit Rupees three crores as directed earlier.

Therefore, it was held that because of such non-production and non-deposit

of a sum of Rs.3 crores as directed earlier, the appeals were not

entertainable. Questioning the correctness of the order, Writ Petition (C)

No.9446 of 2006 was filed which was dismissed by the impugned order on

the ground that the appellant had not complied with the earlier order and,

therefore, the Tribunal was left with no option but to dismiss the appeals as

not entertainable.

4. In support of the appeal, learned counsel for the appellant submitted

that the Tribunal and the High Court failed to appreciate that large number

of declaration forms from various parties were to be collected and because

of situation beyond control of the appellant, the forms could not be

produced and if the forms are taken into account the ultimate liability would

be not more than Rupees 15 lakhs.

5. Learned counsel for the respondents supported the judgment of the

High Court stating that in spite of several opportunities the appellant has

4 failed to produce the declaration forms and no further opportunity was

necessary to be granted.

6. Section 43 so far as it is relevant reads as follows:

"......43(5)- No appeal against an order of assessment with or without penalty or against an order imposing the penalty shall be entertained by an appellate authority unless such appeal is accompanied by a satisfactory proof of the payment of tax with or without penalty or, as the case may be, of the payment of the penalty in respect of which the appeal has been preferred:

Provided that the appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order-

(a) without payment of the tax and penalty, if any, or as the case may be, of the penalty, on the appellant furnishing in the prescribed manner security for such amount as it may direct; or

(b) on proof of payment of such smaller sum, with or without security for such amount of tax or penalty which remains unpaid, as it may direct:

Provided further that no appeal shall be entertained by the appellate authority unless it is satisfied that such amount of tax as the appellant may admit to be due from him has been paid."

7. The first proviso consists of two parts. In a given case the appeals can

be entertained by the Tribunal, for reasons to be recorded in writing,

without insisting on payment of tax and penalty as the case may be, of the

5 penalty on the appellant furnishing security in the prescribed manner for

such amount as it may direct. The other category which is applicable to the

present case relates to direction for deposit of smaller sum with or without

security for such amount of tax or penalty which remains unpaid, as it may

direct. In other words, the appellate authority has a discretion not to insist

on payment as a condition precedent to entertain the appeal, for which the

reasons have to be recorded in writing. The order in terms of Section 43(5)

is essentially an order of stay. Three things are to be considered by the

Tribunal while dealing with the application for dispensing with the pre

deposit. They are: the prima facie case, balance of convenience and

irreparable loss.

8. Principles relating to grant of stay pending disposal of the matters

before the concerned forums have been considered in several cases. It is to

be noted that in such matters though discretion is available, the same has to

be exercised judicially.

9. The applicable principles have been set out succinctly in Silliguri

Municipality and Ors. v. Amalendu Das and Ors. (AIR 1984 SC 653), M/s

Samarias Trading Co. Pvt. Ltd. v. S. Samuel and Ors. (AIR 1985 SC 61) and

6 Assistant Collector of Central Excise v. Dunlop India Ltd. (AIR 1985 SC

330).

10. It is true that on merely establishing a prima facie case, interim order

of protection should not be passed. But if on a cursory glance it appears

that the demand raised has no leg to stand, it would be undesirable to

require the assessee to pay full or substantive part of the demand. Petitions

for stay should not be disposed of in a routine matter unmindful of the

consequences flowing from the order requiring the assessee to deposit full

or part of the demand. There can be no rule of universal application in such

matters and the order has to be passed keeping in view the factual scenario

involved. Merely because this Court has indicated the principles that does

not give a license to the forum/authority to pass an order which cannot be

sustained on the touchstone of fairness, legality and public interest. Where

denial of interim relief may lead to public mischief, grave irreparable

private injury or shake a citizens' faith in the impartiality of public

administration, interim relief can be given.

11. In the instant case the only plea which the appellant was pressing into

service was that if declaration forms are produced the ultimate demand

7 would not exceed Rs.15 lakhs. As is rightly contended by learned counsel

for the respondents, ample opportunity has been granted to the appellant to

produce the declaration forms. That apparently has not been done. The

appellant has produced certain records to submit that the declaration forms

can be produced at the present juncture. While issuing notice on Special

Leave Petition on 13.6.2006 it was directed that on payment of

Rs.1,00,00,000/- realization of the balance payment shall be stayed until

further orders. It is accepted that the amount has been deposited.

12. Considering the facts of the case, we direct that the Tribunal shall

hear the appeal on merits without insisting on any further deposit in terms of

Section 43(5). It is made clear that we have expressed no opinion on the

merits of the case. It is for the appellant to satisfy the Tribunal the reason for

which the declaration forms could not be produced earlier and if the

Tribunal is satisfied with the genuineness of the stand it shall dispose of the

appeals in accordance with law.

13. The appeal is disposed of with no order as to costs.

..........................................J. (Dr. ARIJIT PASAYAT)

8 ..........................................J. (ASOK KUMAR GANGULY) New Delhi, March, 27 2009

9