IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 11TH NOVEMBER 2010 / 20TH KARTHIKA 1932 WP(C).No. 34003 of 2010(A) ---------------------------------- PETITIONER(S): ------------------- P.M.ASHRAF, KALPAKA CHICKEN AGENCIES, PUTHANATHANI, P.O.PUNNATHALA, MALAPPURAM DISTRICT. BY ADVS. SRI.N.MURALEEDHARAN NAIR SMT.K.HYMAVATHY RESPONDENT(S): --------------------- 1. ASSISTANT COMMISSIONER (KVAT), SPECIAL CIRCLE, COMMERCIAL TAXES, MALAPPURAM-676505. 2. KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, PALAKKAD-678004. 3. INSPECTING ASSISTANT COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, MALAPPURAM AT MANJERI-676121. BY GOVT.PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11/11/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: svs C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.34003 of 2010 ------------------------------------------- Dated this the 11th day of November, 2010 J U D G M E N T ---------------------- Challenge in this writ petition is against Ext.P5 interim order issued by the 2nd respondent Tribunal. Assessment for the year 2008-09 was completed against the petitioner under the provisions of the Kerala Value Added Tax Act, 2003 (KVAT Act) on a best judgment basis, rejecting the returns submitted by the petitioner, as per Ext.P1 order. In Ext.P2 the first appellate authority had sustained the assessment, dismissing the appeal. Ext.P3 is the second appeal filed by the petitioner before the 2nd respondent Tribunal. Along with the appeal he had filed Ext.P4 stay petition. Through Ext.P5 the Tribunal had granted interim stay subject to the condition insisting payment of 1/3rd of the tax amount in dispute and on furnishing security for the balance sum. 2. It is contended by the petitioner that Ext.P5 order was issued in a mechanical manner, without application of W.P.(C).34003/10 -2- mind. The 2nd respondent had failed to consider merits of the appeal, is the contention. According to the petitioner, the impugned order is issued in violation of principles of law laid by this court in Alok Spices Vs. Deputy Commissioner (1988 (2) KLT 182) and in Hindustan Petroleum Corporation Ltd. Vs. Inspecting Assistant Commissioner (1993 KLJ (TC) 298). 3. On a perusal of Ext.P5 it is evident that the Tribunal had afforded an opportunity for hearing to both sides. It is stated that the affidavit in support of the application and the records were perused. It is further stated that the appellant had a contention that the impugned order of assessment is unsustainable and there is a chance of success in the appeal. It is also mentioned that the appellant had expressed difficulties in meeting the demand. After making such observations the Tribunal found that it is a proper case to grant interim conditional stay, and ordered the appellant to make payment of 1/3rd of the tax amount in dispute. 4. It is settled law by this time that, the statutory appellate authorities are bound to consider merits of the appeal for the purpose of granting interim stay. The appellate W.P.(C).34003/10 -3- authorities are at an obligation to advert to the contentions raised against the impugned assessment and to apply its mind to arrive at a conclusion as to whether the appellant is entitled for a stay, pending disposal of the appeal. It is obligatory under law that the interim orders should reflect proper reasoning based on consideration of merits justifying grant of interim orders or justifying refusal to grant such reliefs. In a recent decision of a Division Bench of this court in Supreme Electrical Engg. (P) Ltd. Vs. Commercial Tax Officer (2008 (3) KLT 805) it is held that while exercising the discretion vested on the appellate authorities such authorities should mention proper reasoning as to why the appellant is not entitled for an absolute stay or in other words as to why the authority is insisting to make payment of a part of the amount due. 5. Going by contents of the impugned order, I am of the considered view that the principles of law laid through various precedents, which are pre-requisites for sustaining an interim order, is totally lacking in Ext.P5. Therefore the impugned order is unsustainable in the eye of law and is liable to be quashed. However, considering the fact that the appeal is pending disposal before the 2nd respondent tribunal and it was posted for W.P.(C).34003/10 -4- hearing on 1.12.2010, as evidenced from Ext.P5, the tribunal is at an option either to pass fresh interim orders or to dispose of the appeal itself, as it thinks fit. 6. In the result, the writ petition is allowed and Ext.P5 order is hereby quashed. The 2nd respondent Tribunal is directed either to dispose of Ext.P3 appeal or to pass fresh interim orders on Ext.P4 stay petition, after affording an opportunity of hearing to the petitioner, at the earliest possible, at any rate within a period of six weeks from the date of receipt of a copy of this judgment. 7. Till such time orders are passed by the tribunal as directed above, recovery of amounts covered under Ext.P1, which is confirmed through Ext.P2, and which is now sought to be recovered on issuing Ext.P6 notice, shall be kept in abeyance. The petitioner will produce a copy of this judgment before the 2nd respondent Tribunal for proper compliance. C.K.ABDUL REHIM, JUDGE. okb