REPORTABLE

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

J U D G M E N T

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

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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.”  

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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

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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

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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

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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

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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)

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……………………………………J. (ASOK KUMAR GANGULY)

New Delhi, March, 27 2009

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