Ravi Gupta Vs.
Commissioner Sales Tax, Delhi & ANR.  INSC 641 (27 March 2009)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1965 OF 2009 (Arising
out of SLP (C) No. 10029 of 2006) Ravi Gupta ....Appellant Versus Commissioner
Sales Tax, Delhi and Anr. ....Respondents
Dr. ARIJIT PASAYAT,
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.
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.83 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 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
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
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."
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.
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.
counsel for the respondents supported the judgment of the High Court stating
that in spite of several opportunities the appellant has failed to produce the
declaration forms and no further opportunity was necessary to be granted.
43 so far as it is relevant reads as follows:
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."
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 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.
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.
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 Assistant Collector of
Central Excise v. Dunlop India Ltd. (AIR 1985 SC 330).
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.
the instant case the only plea which the appellant was pressing into service
was that if declaration forms are produced the ultimate demand 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
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.
appeal is disposed of with no order as to costs.
(Dr. ARIJIT PASAYAT)