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K.G. Developers Versus Deputy Commissioner of Income Tax

2018 (2) TMI 879 - GUJARAT HIGH COURT

Power of High court to grant interim relief to the appellant - Held that: It is an undisputed fact that the demands in relation to the above referred two assessment years are outstanding. The applicant, however, has shown willingness to deposit the entire amount on such terms and conditions as may be deemed fit by this court. Moreover, under the relevant provisions of the Act, the revenue is entitled to statutory rate of interest on any delay in making such payment. Therefore, some delay in maki .....

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posit a sum of ₹ 10,00,000 (Rupees ten lakh) within a period of one week from today and the balance amount shall be paid on or before 25th February, 2018; the second installment shall be paid on or before 25th March, 2018; the third installment shall be paid on or before 25th April, 2018 and the fourth and last installment shall be paid on or before 25th May, 2018. - (c) A partner of the applicant shall file an undertaking before this court, undertaking to abide by the terms and condit .....

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he Applicant : MR SN SOPARKAR, SR. ADVOCATE, with MR BS SOPARKAR, ADVOCATE For The Respondent : MR MR BHATT, SR. ADVOCATE, with MRS MAUNA BHATT, ADVOCATE COMMON ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. By these applications, the applicant seeks stay of the implementation, operation and execution of the common order dated 13.06.2017 passed by the Income Tax Appellate Tribunal, D Bench, Ahmedabad (hereinafter referred to as the Tribunal ) in ITA No.3289/AHD/2015 for assessment yea .....

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n attached by the revenue, was sought to be auctioned on 02.02.2018. Accordingly, the matters were listed for hearing today. 3. Mr. S.N. Soparkar, Senior Advocate, learned counsel for the applicant submitted that the applicant is ready and willing to pay the entire tax dues in installments within such time as the court may deem fit. As regards the powers of this court to grant interim relief to the appellant, the learned counsel drew the attention of the court to the provisions of subsection (7) .....

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since the appeals have been admitted on a substantial question of law, the applicant has made out a prima facie case. According to the learned counsel the balance of convenience lies in favour of the applicant, inasmuch as, the property in question is already attached by the revenue and the applicant is ready and willing to pay the entire amount within the time frame stipulated by the court, and irreparable injury would be likely to be caused to the appellant if the property is sold in the aucti .....

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the Commissioner of Income Tax (Appeals) as well as before the Income Tax Appellate Tribunal, all of whom have confirmed the demand against the applicant. It was submitted that the applicant had made an application for grant of installments for payment of outstanding tax demand, which came to be rejected on 15.12.2017 and the applicant was requested to pay the outstanding demand at the earliest. However, till date, the demand has not been satisfied. It was submitted that the subject property is .....

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he Government. It was submitted that it is by now well settled that this court would be reluctant to grant stay against recovery of taxes and hence, the interim relief as prayed for may not be granted. 4.1 In support of such submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd. & Ors., (1985) 154 I.T.R. 172, wherein the court has observed that it has come across cases whe .....

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e appropriate interim relief. In cases where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen's faith in the impartiality of public administration, a court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, the court must be circumspect in granting interim orders of far reaching dimensions o .....

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of the public interest. There are many such factors worthy of consideration. No governmental business or for that matter no business of any kind can be run on mere bank guarantees. Liquid cash is necessary for the running of a Government as indeed any other enterprise. The court observed that where matters of public revenue are concerned, it is of the utmost important to realise that interim orders ought not to be granted merely because a prima facie case has been shown. The balance of convenie .....

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f universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because that court has indicated the principles, that does not give a licence 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 citizen's faith in the impartiality of public administration, .....

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special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. The attention of the court was invited to the averments made in the application of stay to submit that there are no specific averments with regard to the undue hardship that may be caused to the applicant, if the interim relief as prayed is not granted. 4.4 Reliance was also placed upon the decision of this court in the case of R. Laxmichand and Co. & .....

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or decision of a particular officer effecting certain individuals or class of individuals. But the cases in which the Government itself has to protect the interests of the community and in which the Government has to plead the case of community stand on a different footing. This difference is vital and courts cannot be oblivious of this difference. The court held that the cases pertaining to taxation and particularly questions with regard to recovery of amounts of tax, and that too at interim s .....

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standing tax demand, but failed to do so. Under the circumstances the interim relief as prayed for may not be granted and the applications, being devoid of merits, deserve to be dismissed. 5. In rejoinder, the learned counsel for the applicant submitted that the decision of the Supreme Court in the case of Assistant Collector of Central Excise, Chandan Nagar v. Dunlop India Ltd. & Ors. (supra) would not be applicable to the facts of the present case inasmuch as the applicant is not even sugg .....

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It was submitted that insofar as the delay in payment of the tax dues is concerned, the revenue would be entitled to recover interest from the applicant under the relevant provisions of the Act and hence, no injury is caused to the public exchequer. It was submitted that insofar as the decisions of the Supreme Court in the cases of Indu Nissan Oxo Chemicals Industries Limited (supra) and Ketan V. Parekh (supra) are concerned, they have been rendered in the context of indirect taxes and relate to .....

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case, and the balance of convenience being in favour of the applicant and has shown that irreparable injury would be caused to it if the interim relief as prayed for is not granted, the applications deserve to be allowed by staying the implementation and operation of the impugned order subject to such terms and conditions as the court may deem fit. 6. In the backdrop of the above referred rival contentions, the question as to whether or not the applicant is entitled to the grant of any interim r .....

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f the implementation, operation and execution of the order impugned in the appeals. Prior to the order dated 15.12.2017 having been passed, it appears that on 11.12.2017, an order of attachment of the applicant s immovable property came to be made under rule 48 of the Second Schedule to the Act. Subsequently, a notice for settling the sale proclamation came to be issued on 02.01.2018 fixing 10.01.2018 for drawing up the proclamation of sale and settling the terms thereof. Thereafter, the proclam .....

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It may be noted that while the proclamation of sale refers to a sum of ₹ 1,08,44,505/, including costs and interest, it appears that the exact amount due and payable by the applicant towards the outstanding demand is not certain at the moment. The learned counsel appearing on behalf of the applicant has submitted that the applicant is ready and willing to pay whatever be the outstanding demand under the orders impugned in the appeals on such terms and conditions that the court may deem fi .....

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iz. irreparable injury is concerned, the property, which is sought to be put to auction, is land belonging to the firm. In case the property is auctioned and the applicant ultimately succeeds in the appeals, it would be impossible to restore the land to the applicant. Evidently, therefore, irreparable injury would be caused to the applicant in case the property is sold. 9. As regards the decisions on which the reliance has been placed by the learned counsel for the revenue, the Supreme Court in .....

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public authority. The court has referred to its earlier decision in the case of Siliguri Municipality v. Amalendu Das, [1984] 146 ITR 624 (S.C.) wherein the court had observed that the main purpose of passing an interim order is to evolve a workable formula or a workable arrangement to the extent called for by the demands of the situation keeping in mind the presumption regarding the constitutionality of the legislation and the vulnerability of the challenge, only in order that an irreparable in .....

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n V. Parekh (supra) are concerned, as rightly submitted by the learned counsel for the applicant, the same were rendered in the context of indirect tax laws wherein the concept of undue hardship is required to be kept in view and would, therefore, not be applicable to the facts of the present case. 11. Examining the facts of this case in the light of the above decision, it is an undisputed fact that the demands in relation to the above referred two assessment years are outstanding. The applicant .....

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