IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 27TH OCTOBER 2010 / 5TH KARTHIKA 1932 WP(C).No. 32694 of 2010(J) -------------------------------------- PETITIONER(S): ----------------------- MATHA WOOD INDUSTRIES,MULLASSERY.P.O, THRISSUR DISTRICT,REPRESENTED BY ITS MANAGING PARTNER T.D.BABU FRANCO. BY ADV. SRI.P.N.DAMODARAN NAMBOODIRI RESPONDENT(S): -------------------------- 1. THE DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM-682015. 2. THE INTELLIGENCE OFFICER, SQUAD III, DEPARTMENT OF COMMERCIAL TAXES,THRISSUR-680 004. 3. THE INSPECTING ASSISTANT COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, IRINJALAKUDA-680121. 4. COMMERCIAL TAX OFFICER,DEPARTMENT OF COMMERCIAL TAXES,CHAVAKKAD-680 307. R1 TO R4 BY GOVERNMENT PLEADER SRI. C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.32694 of 2010 ------------------------------------------- Dated this the 27th day of October, 2010 J U D G M E N T ---------------------- Against Ext.P1 order imposing penalty under Section 67 of the Kerala Value Added Tax Act, 2003 (KVAT Act) the petitioner had preferred Ext.P2 appeal before the 1st respondent, the statutory appellate authority. Ext.P3 is the stay petition filed along with the appeal. When recovery steps were proceeded against without considering pendency of the appeal and stay petition, the petitioner approached this court and in Ext.P5 judgment this court directed the 1st respondent to consider and pass orders on the stay application within a period of one month. Ext.P6 is the interim order issued by the 1st respondent in compliance with the direction contained in Ext.P5 judgment. The appellate authority had granted a conditional stay till the disposal of the appeal, insisting upon the petitioner for remitting 50% of the amount of penalty and for furnishing adequate security for the balance amount, before the assessing authority, within two weeks from the date of receipt of the order. W.P.(C).32694/10 -2- 2. It is contended that the interim order was issued without affording an opportunity of hearing to the petitioner. It is stated that the condition imposed in Ext.P6 is highly unreasonable and unjustifiable. Contention of the petitioner is that there was no circumstance warranting for imposition of such a stringent condition in view of the grounds raised in the appeal and in view of the findings recorded by the appellate authority with respect to establishment of a prima facie case. According to the petitioner, the condition was imposed quite mechanically, without proper application of mind. Further contention is that the condition imposed is causing onerous liability on the petitioner and considering their financial situation payment of 50% of the amount of penalty is totally unworkable. 3. On a perusal of Ext.P6 order it is revealed that the stay petition was posted for hearing on different dates. Even though counsel appearing for the petitioner has sought adjournment on various dates, he was not made available for hearing of the petition. The main grounds raised in the appeal as well as in the stay petition were illustrated by the appellate authority. On considering such grounds the appellate authority observed that the petitioner had not specifically proved that W.P.(C).32694/10 -3- there was no stock difference. At the same time it was observed that the sustainability or otherwise of the contentions raised can be examined in total, only on verification of connected assessment records at the time of final hearing. Having found that a prima facie case for granting conditional stay was established, the impugned order was issued stipulating payment of 50%. 4. It is evident that, eventhough the grounds raised in the appeal were illustrated in the interim order, the said order does not reflect proper reasoning with respect to the findings arrived by the appellate authority. A prima facie consideration of such grounds on merits is lacking in the interim order. Going by the dictum laid by a Division Bench of this court in Supreme Electrical Engg. (P) Ltd. Vs. Commercial Tax Officer (2008 (3) KLT 805) it is obligatory on the part of the appellate authority to record reasons as to why the appellant is not entitled for an absolute stay. In other words, it is incumbent on the part of the appellate authority to record reasons for imposing conditions. 5. Considering the fact that the order assailed before the appellate authority is one imposing penalty and also considering the huge amount involved in the appeal, I am of W.P.(C).32694/10 -4- the view that the appellate authority ought to have imposed a lesser onerous condition. Under such circumstances I am not proposing to send back the matter for passing fresh orders. On the other hand, the appellate authority can be directed to dispose of the appeal itself at the earliest, and till then the recovery can be stayed subject to imposition of a less rigorous condition. 6. In the result the writ petition is disposed of directing the 1st respondent to consider and pass orders on Ext.P2 appeal, after affording an opportunity of hearing to the petitioner, as early as possible. Ext.P6 order is modified to the extent of granting stay till the disposal of the appeal on condition of the petitioner remitting 1/3rd of the amount of penalty imposed under Ext.P1 order, and on furnishing Security Bond for the balance amount, without sureties. C.K.ABDUL REHIM, JUDGE. okb