Pre-Deposit Decision Invalid as Tribunal Did Not Apply Mind to Prima Facie Case: Allahabad HC

Vaibhav Edibles Pvt. Ltd. Vs Commissioner (Allahabad High Court)

The Allahabad High Court considered a revision petition challenging an order of the Tribunal that granted partial interim relief in a tax dispute. The Tribunal had provided interim protection to the assessee by waiving deposit of 85% of the disputed tax amount but required deposit of the remaining 15%. The assessee challenged the order to the extent that full interim relief was not granted.

The revisionist argued that the Tribunal’s order was perverse because it did not examine whether the assessee had a prima facie case before determining the terms of interim relief. It was further submitted that the financial condition of the assessee was poor and that the assessee was willing to furnish security along with the deposit of 15% of the disputed amount.

The Standing Counsel appearing for the revenue supported the Tribunal’s order on the basis of the reasons recorded in it.

Upon examining the Tribunal’s order, the High Court observed that there was no discussion or consideration of the assessee’s prima facie case. Although substantial relief had been granted by waiving 85% of the disputed tax demand, the Court noted that the Tribunal was required to apply its mind to the merits of the case before determining the conditions for interim relief.