Prakash Ply Centre PVT LTD vs. Dept Commissione Directorate Of Revenue Intelligence And Enforcement And Ors
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These intra-Court appeals were filed by Imax Infrastructure Pvt. Ltd., Prakash Ply Centre Pvt. Ltd., and Ascan Plyboard India Pvt. Ltd. against interim orders passed by a learned Single Bench. The Single Bench had entertained the writ petitions, directing the respondents to file affidavits-in-opposition, and granted a conditional stay of the impugned adjudication. This stay was conditional upon the appellants depositing 10% of the demand in question within a specified time, failing which coercive action could be initiated. The appellants were aggrieved by the condition of depositing 10% of the demand, arguing that if they had filed a statutory appeal under Section 107 of the West Bengal Goods and Services Tax Act, 2017, only 10% of the tax in dispute would have been required as a pre-condition.
Held
The Court held that the learned Writ Court was correct in protecting the interest of the appellants by entertaining the writ petitions and directing the filing of affidavits, as a prima facie case was made out. The direction to deposit 10% of the demand was considered a compliance with Rule 51 of the High Court at Calcutta Rules, which allows for security to be furnished for the due payment of the tax assessed. However, the Court found the direction to deposit 10% of the *entire demand* to be onerous. It reasoned that if the appellants had filed a statutory appeal under Section 107 of the West Bengal Goods and Services Tax Act, 2017, they would have been required to deposit only 10% of the *tax in dispute*. Therefore, a slight modification to the order was deemed necessary. The Court modified the direction to deposit 10% of the entire demand to a deposit of 10% of the tax in dispute. The appellants were granted 30 days from the receipt of the order to make this deposit, and upon compliance, no coercive action would be taken for the balance amount. The respondents were directed to file their affidavits-in-opposition within ten days, and the appellants were given seven days thereafter to file their reply.
Key Issues
1. Whether the learned Writ Court, having found the writ petitions maintainable despite the availability of an alternative remedy, erred in not granting an unconditional stay of the impugned orders and instead imposing a condition of depositing 10% of the demand? Petitioner/Appellant's Contention: The appellants argued that since the writ petitions were deemed maintainable, the learned Writ Court should have granted a stay of the impugned orders without imposing any deposit. They contended that several grounds raised in the writ petitions, including jurisdictional issues and procedural infractions, rendered the impugned orders a nullity. Without prejudice, they submitted that even if a statutory appeal under Section 107 of the West Bengal Goods and Services Tax Act, 2017, were preferred, the deposit requirement would only be 10% of the tax in dispute. Revenue/State's Contention: The learned Government Advocate referred to Rule 51 of the High Court at Calcutta Rules, which states that no order staying the realization of assessed tax shall be made unless the assessee provides adequate security. They argued that the learned Single Bench exercised its discretion in directing the deposit of 10% of the demand, and this Court, in an intra-Court appeal, should not disturb such an order. Alternatively, they suggested the appellants should be directed to prefer an appeal under Section 107 of the Act.
Sections Cited
Section 107, Rule 51
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT (Judgment of the Court was delivered by T.S. SIVAGNANAM, J.)
The year of instituting these appeals in the order dated 22nd July, 2022 shall be read as “2022” instead of “2021”. Let the same be corrected accordingly.
These intra-Court appeals are directed against the order dated 10th June, 2022 passed in W.P.A. No.9766 of 2022, W.P.A. No.9789 of 2022 and W.P.A. No.9752 of 2022 respectively. The orders impugned before us are interim orders passed by the learned Single Bench whereunder the learned Single Bench was of the prima facie view that the writ petitions cannot be thrown out at the motion stage on the ground of availability of 2
alternative remedy and that the writ petitions have to be heard and decided on merits. With such observation, the respondents were directed to file their affidavit-in-opposition within a time frame giving liberty to the appellants / writ petitioners to file their reply thereto. The appellants are not aggrieved by such an order nor the respondents have preferred any appeal against such an order. The appellants are aggrieved by the penultimate portion of the order whereunder and by which the learned Writ Court was prima facie satisfied that the appellants / writ petitioners have been able to make out a case for an interim order and considering the said aspect, there will be a conditional stay of the impugned adjudication subject to deposit of 10% of the demand in question within a time frame and if the appellants comply with the same, the respondents were directed not to initiate any coercive action against the appellants.
The learned Advocate appearing for the appellants would contend that the learned Writ Court having prima facie found that the writ petitions are maintainable even though an alternative remedy is available, ought to have granted stay of the impugned orders in the writ petitions and ought not to have directed deposit of 10% of the demand. Further it is submitted 3
that several grounds have been raised in the writ petitions touching upon the juri iction of the matters and as to how there has been procedural infraction and such other grounds, which will render the order impugned in the writ petitions as a nullity. Without prejudice to the said submission, the learned Advocate for the appellants would also submit that assuming an appeal was preferred under Section 107 of the West Bengal Goods and Services Tax Act, 2017, 10% of the tax alone is required to be deposited as a condition precedent for filing a statutory appeal before the concerned Joint Commissioner.
The learned Government Advocate by referring to the application made under Article 226 of the Constitution of India, rules framed by the High Court at Calcutta and in particular, Rule 51 of the Rules submitted that in all applications involving revenue where an assessment has already been made or upheld, no order shall be made staying the realisation thereof, unless the assessee making the application, gives security as may be deemed adequate by the Court, for the due payment of the amount assessed to tax. The amount of security, the time within which it shall be furnished and the manner of furnishing, shall be at the discretion of the Court making the order. Where such 4
security has been ordered ex parte, any party to the application upon being served with the Writ may apply to the Court for enhancing or reducing the same. Therefore, it is submitted that the learned Single Bench has exercised discretion and this Court in an intra Court appeal may not disturb such an order and the appellants should be directed to comply with the direction or in the alternative, the appellants should be directed to prefer an appeal under Section 107 of the Act.
After we have elaborately heard the learned Advocates for the parties, we are of the considered view that the learned Writ Court was right in protecting the interest of the appellants till the disposal of the writ petitions as the appellants were able to make out a prima facie case to the satisfaction of the learned Single Bench pursuant to which the writ petitions have been entertained and affidavits-in-opposition have been directed to be filed by the respondents. The direction issued by the learned Writ Court by directing the deposit of 10% of the demand in question should be construed to be in compliance of Rule 51 of the aforementioned Rules.However, we have a small reservation
as regards whether deposit of 10% of the entire demand has to be 5
directed or only deposit of 10% of the tax in dispute has to be directed to be made.
Rule 51 of the Rules gives power to the Court to grant stay of realisation of any amount assessed as tax subject to the condition that the aggrieved party gives security and such security must be in satisfaction of the Court that it will be adequate and protecting the interest of the revenue. Therefore, the learned Single Bench rightly exercised its discretion and bearing in mind the mandate in Rule 51 has issued a direction.
However, we find that the direction to deposit 10% of the entire demand would be onerous as had the appellants file appeals before the Joint Commissioner under Section 107 of the Act, the appellants were required to deposit only 10% of the tax in dispute. Therefore, we are of the view that a slight modification requires to be made to the orders impugned in these appeals.
Accordingly, the appeals are partly allowed and the directions issued by the learned Single Bench directing deposit of 10% of the demand in question stands modified as deposit of 6
10% of the tax in dispute. The appellants are granted 30 days’ time from the date of receipt of the server copy of this order to make the deposit before the appropriate authority and if the same is complied with, no coercive action shall be taken against the appellants for recovery of the balance amount as demanded.
The respondents are directed to file their affidavits-in- opposition to the writ petitions within ten days from date; reply thereto, if any, be filed by the appellants within a period of seven days therefrom.
Since the appeals are partly allowed, all connected applications are deemed to have been disposed of accordingly.
No costs.
Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.
(T. S. SIVAGNANAM, J) I agree, 7
(HIRANMAY BHATTACHARYYA, J.)
NAREN/PALLAB(AR.C) 8
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.