The Court has made it clear that though there are no hard and fast rules regarding grant of stay, prudence, discretion and circumspection are called for and stay should not be granted as a matter of course. Considerations about balance of convenience, question of irreparable injury and implications to public interest have to be borne in mind;
The Supreme Court’s observations in Dunlop cannot be interpreted to mean that the Tribunal is denuded of the powers to grant stay until case for financial stringency is successfully made out by the applicant. There is no conflict in holding this view as also adhering to the settled principles governing grant of stay which lay down that financial constraints of the applicant are important, even if not sole of qualifying, consideration in entertaining a stay application, besides considerations like existence of strong prima facie case, balance of convenience and possibilities of Revenue’s rights of recovery being prejudiced by waiting till the outcome of appeals.
Per Pramod Kumar A.M.
By this stay petition, the assessee seeks grant of stay against the recovery of Rs. 13,82,64,134/-. The Assessing Officer has issued demand for recovery of Rs. 20,00,21,794/- on account of Tax and Surcharge, Rs. 5,36,22,242/- on account of interest under sections 234-B, 234-C and 234D and Rs. 1,21,50,250/- u/s 220(2) of the Act aggregating to the total demand of Rs. 26,57,94,286/-. Out of this total demand of Rs. 26,57,94,286/- the assessee has already paid Rs. 12,75,30,152/- and the balance outstanding demand is Rs. 13,82,64,134/- against which the present stay petition has been filed by the assessee.
2. Learned Counsel for the assessee contends before us that, originally, the assessee claimed depreciation of Rs.60.00 crores on the brand name. The authorities below declined to allow the claim and as a result of which, the assessee filed appeal before this Tribunal challenging the order passed by the learned CIT(A) which is pending final adjudication. Learned Counsel for the assessee contends that he has a strong prima facie case and reasonable hope to succeed. He has addressed us on merits to demonstrate that he has a strong case but at this stage, we are not inclined to go into those arguments. Learned Counsel for the assessee further contends that the assessee is not in a position to pay the huge demand, which is likely to be deleted. We are thus urged to grant stay on the recovery of Rs. 13,82,64,134/- till final disposal of the original appeal filed before this Tribunal. It is further submitted that the assessee’s financial position does not permit such huge demand and that considering the overall facts, the balance of convenience is in favour of the keeping collection / recovery of demands in abeyance till the final disposal of the appeal. Alternatively, he has requested for early hearing. Learned Departmental Representative, on the other hand, vehemently opposed the request of the assessee. He relied upon the Honourable Supreme Court’s judgement in the case of C.C.E. Vs Dunlop India Ltd., 154 ITR 172 (SC).
3. We have heard the rival contentions, perused the material on record and duly considered the applicable legal position as also the factual matrix of the case. While we are not inclined to go into merits of the case, suffice to say that the assessee has an arguable case and it is not a frivolous appeal. In our opinion, considering the facts and circumstances of the case, we find that this is a fit case for grant of stay and the interest of justice would be met by granting stay against payment of Rs. 13,82,64,134/-, subject to the following conditions:-
• That the assessee shall not seek adjournment till the date of final hearing of the original appeal on merit.
• That the assessee shall not, in any manner, dispose off or otherwise alienate it’s fixed assets and fully cooperate in expeditious disposal of the appeal.
• The Registry is directed to fix the appeal out of turn on 22nd April 2010 for final disposal of the appeal on merit. The requirement of sending notice by registered post with acknowledgement to both the parties is hereby dispensed with.
4. As regards learned Departmental Representative’s reliance on the Honourable Supreme Court’s judgement in the case of Dunlup India Ltd. (supra), we may only refer to the following observations made by a co-ordinate bench in the case of B.N. Nobis & Co. Vs JCIT, 71 TTJ 153:-
“5. Before parting with the matter, we may make some observations on Revenue’s objection, relying on Honourable Supreme Court’s observations in Dunlop’s case (supra), to the stay petition on the ground that paucity of funds has not been sufficiently demonstrated and that for this reason alone stay should not be granted. Honourable Supreme Court has indeed decried ‘the practice of granting interim orders merely because assessee is able to show a good prima facie case’, but to appreciate true import of Honourable Supreme Court’s censure, one has to understand the context in which Their Lordships expressed such feelings. Their Lordships started with the observation that ” It is indeed a great pity and we wish we did not have to say it but we are signally failing in our duty if we do not do so that some Courts, of late, appear to have developed an unwarranted tendency to grant interim orders— interim orders with a grant potential for public mischief—for the mere asking. We find it more distressing that such interim orders, often ex parte and non-speaking, are made by the High Courts by entertaining writ petitions under Art. 226 of the Constitution.” Their Lordships, a little later in this order, further observed that “There cannot be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from existence of prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of public interest. There are many such factors worthy of consideration. We often wonder why in the case of indirect taxation where the burden has already been passed on to the consumer, any interim relief should be given to the manufacturer, dealer and the like.” It will, therefore, be clear that the context in which Honourable Supreme Court disapproved the practice of granting interim orders, solely on the ground that a prima facie case is made out, was relevant to the cases in which High Courts were entertaining writ petitions under Art. 226 of the Constitution of India as also the cases in which disputed demands related to indirect taxes where burden has already been passed to the consumer. We cannot be oblivious to the distinction between nature of writ jurisdiction of the Honourable High Courts, and the nature of appellate jurisdiction of this Tribunal. In writ proceedings, Honourable High Courts step in only when fundamental rights of the petitioner are violated and therefore, they have to resist interfering in the matter until a clear case is made out that not only that an assessee has a strong prima facie case but also that there is a serious threat of infringement to petitioner’s rights guaranteed under Chapter III of the Constitution. On the other hand, Tribunal’s jurisdiction is akin to that of an appellate Court under the CPC, as observed in CIT vs. Hajarimal Nagji & Co. (1962) 46 ITR 1168 (Bom) and in New Indian Assurance Co. Ltd. vs. CIT (1957) 31 ITR 844 (Bom), and right to appeal before the Tribunal is provided in the statute itself. Therefore, observations of Honourable Supreme Court in the context of grant of stay in writ proceedings do not have the binding force on, or even direct relevance to, the principles governing grant of stay during these appellate proceedings. In this context, we are reminded of the observations of Honourable Supreme Court, in Mumbai Kamgar Sabha vs. Abdulbhai Faizullbhai AIR 1976 SC 1455, that………
“It is trite, going by Anglophonic principles, that a ruling of superior Court is binding in law. It is not of spiritual sanctity but is of ratio-wise luminosity within the edifice of facts where the judicial lamps plays the legal flame. Beyond those walls and de hors the milleu we cannot impart the eternal vernal value to the decision, exalting the doctrine of precedents into prison house of bigotry, regardless of varying circumstances and myriad developments, Realism dictates that a judgement has to be read, subject to the facts directly presented for consideration and not affecting those matters which may lurk in the dark”.
6. We are, therefore, of the view Honourable Supreme Court’s obiter dicta should not be perceived as a blind man’s walking stick, but as luminosity of a judicial lamp in the light of which we have to perform our obligations of imparting justice. On principles governing the decision to grant stay, we undoubtedly find guidance from. Their Lordships’ observations that though there are no hard and fast rules regarding grant of stay, but prudence, discretion and circumspection are called for and that stay should not be granted as a matter of course. Considerations about balance of convenience, question of irreparable injury and implications to public interest are to be borne in mind. We are also conscious to the apprehension that “if the Tribunal proceeds to stay recovery of taxes or penalties payable by or imposed on the assessee as a matter of course, the Revenue will be put to great loss because of the inordinate delay in disposal of appeals by the Tribunal, [ITO vs. M.K. Mohd Kunhi (1969) 71 ITR 815 (SC) at p. 822], and therefore, the grant of stay by this Tribunal is always coupled with grant of an out of turn hearing which, in the present case, is to take place within three weeks from today. In the present case since the appeals are scheduled to be disposed of within next few weeks, and since admittedly there is no serious apprehension to the Revenue’s rights of recovery being prejudiced by further waiting till the outcome of the appeals, the balance of convenience is in favour of not collecting the demand immediately. We are, therefore, of the considered view that Honourable Supreme Court’s observations in Dunlop’s case (supra) cannot be interpreted to mean that this Tribunal is denuded of the powers to grant stay until case for financial stringency is successfully made out by the applicant. However, we see no conflict in holding this view as also adhering to the settled principles governing grant of stay which lay down that financial constraints of the applicant are important, even if not sole of qualifying, consideration in entertaining a stay application, besides considerations like existence of strong prima facie case, balance of convenience and possibilities of Revenue’s rights of recovery being prejudiced by waiting till the outcome of appeals. In this view of the matter, we are unable to sustain the objection raised by the Revenue.”
6. This stay petition stands allowed subject to the aforesaid conditions. Pronounced in the open court today On 12th day of February 2010.