GUJARAT MARITIME BOARD vs. ASSTT. COMMISSIONER OF INCOME-TAX

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SCA/10945/2008HC GujaratGJHC24017982200802 September 2008Author: HONOURABLE MR. JUSTICE K.A.PUJ,HONOURABLE MR. JUSTICE BANKIM.N.MEHTA5 pages
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What did the High Court hold?

The High Court granted a stay against the outstanding demand until the ITAT decides the stay application. The Court was of the prima facie view that the petitioner deserved a stay in light of the peculiar facts and circumstances, including the rejection of their stay application by the CIT(A) and the subsequent filing of the application before the ITAT. The Court relied on the order of the CIT(A) in the assessee's own case, CBDT Circular No. 1914, and the judgments in "Madhu Silica Pvt. Ltd." and "Programme For Community Organisation". The Court also addressed the revenue's preliminary objection regarding the maintainability of the petition, citing the Andhra Pradesh High Court's decision in "Andhra Pradesh Power Generation Corporation Ltd.". The stay was granted on the condition that the petitioner furnishes a Bank Guarantee or a letter from the State Government to the tune of Rs. 20 crores within one week. The High Court clarified that its order would not impede the ITAT's decision on the stay application or the appeal, and expected the ITAT to decide the stay application expeditiously, preferably within one month.

What were the facts?

The Gujarat Maritime Board (the petitioner) filed a Special Civil Application under Article 226 of the Constitution of India before the Gujarat High Court. The petition sought to quash an order dated August 28, 2008, and sought directions to the Assistant Commissioner of Income-Tax (the respondent) not to recover the demand until the stay petition filed by the petitioner before the Income-Tax Appellate Tribunal (ITAT) was disposed of. The petitioner argued that the Commissioner of Income-Tax (Appeals) had rejected their stay application on August 28, 2008, and they had filed a stay application before the ITAT on September 1, 2008, but were asked to pay the demand immediately. The High Court noted the urgency and the pendency of the appeal and stay application before the ITAT.

What were the issues?

1. Whether the petitioner is entitled to a stay against the outstanding demand until the ITAT decides their stay application, considering the pendency of their appeal before the ITAT? Assessee's contentions: The petitioner argued that they deserved a stay against the outstanding demand until the ITAT heard and decided their stay application. They relied on the order passed by the CIT(A) in their own case for assessment year 2004-05, CBDT Circular No. 1914 dated December 2, 1993, and judgments of the Gujarat High Court in "Madhu Silica Pvt. Ltd. Vs. Commissioner of Income-Tax and Another" (1997) 227 ITR 350 and the Supreme Court in "Commissioner of Income-Tax Vs. Programme For Community Organisation" (2001) 248 ITR 1. They also contended that a preliminary objection by the Revenue regarding the maintainability of the petition due to lack of approval from a committee was addressed by the Andhra Pradesh High Court in "Andhra Pradesh Power Generation Corporation Ltd. Vs. Assistant Commissioner of Income-Tax and Another" (2006) 280 ITR 389, which held that for State Government undertakings, no such approval is required. Revenue's contentions: The revenue raised a preliminary objection that the petition was not maintainable unless the petitioner sought approval from the committee on disputes.

Which sections of the Income-tax Act were involved?

Article 226

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Cause title — parties, addresses and appearances
SCA/1094520/2008 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 10945 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ HONOURABLE MR.JUSTICE BANKIM.N.MEHTA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? Yes. 2 To be referred to the Reporter or not ? No. 3 Whether their Lordships wish to see the fair copy of the judgment ? No. 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? No. 5 Whether it is to be circulated to the civil judge ? No. ========================================================= GUJARAT MARITIME BOARD - Petitioner(s) Versus ASSTT. COMMISSIONER OF INCOME-TAX - Respondent(s) ========================================================= Appearance : MR. S.N. SOPARKAR WITH MRS SWATI SOPARKAR for Petitioner(s) : 1, MR. M.R. BHATT WITH MRS. MAUNA M. BHATT, for the department. ========================================================= CORAM : HONOURABLE MR.JUSTICE K.A.PUJ and HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Date : 02/09/2008

ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE K.A.PUJ)

1.

Rule. Mrs. Mauna R. Bhatt, learned Standing

SCA/1094520/2008 2/5 Counsel waives service of notice of Rule on behalf of the Revenue.

2.

This petition is filed under Article 226 of the Constitution of India praying for quashing and setting aside the order dated 28-8-2008 Annexure-A and also praying for directions to the respondent not to recover the demand till the stay petition filed by the petitioner is disposed of by the ITAT, Ahmedabad.

3.

Heard Mr. S.N. Soparkar, learned Sr. Counsel for the petitioner and Mr. M.R. Bhatt, learned Sr. Standing Counsel with Mrs. Mauna M. Bhatt, learned Standing Counsel appearing on caveat on behalf of the revenue and perused the memo of the petition as well as the affidavit-in-reply filed by Mr. D.C. Mishra, Assistant Commissioner of Income-Tax, Gandhinagar circle, Gandhinagar.

4.

In view of the urgency and limited indulged sought for, the matter is taken up for hearing today itself.

5.

Since the appeal and stay application are pending before the Income-Tax Appellate Tribunal, Ahmedabad, this Court has not gone into the merits of the matter. Both the learned counsels have made their submissions on the issue as to SCA/1094520/2008 3/5 whether any stay can be granted in the present case. The Court has considered their submissions.

6.

In view of the order passed by the CIT(A) for the assessment year 2004-05 in assessee's own case and in view of the Circular/ Instruction No.1914 dated 2/12/93 issued by the Central Board of Direct Tax and in view of the judgment of this Court in the case of Madhu Silica Pvt. Ltd. Vs. Commissioner of Income-Tax and Another, reported in (1997) 227 ITR 350 as well as the judgment of the Hon'ble Supreme Court in the case of Commissioner of Income-Tax Vs. Programme For Community Organisation, reported in (2001) 248 ITR 1, this Court is of the prima-facie view that Commissioner of Income-Tax and Another, reported in (2006) 280 ITR 389, so far as the State Government undertaking is concerned and the SCA/1094520/2008 4/5 dispute is between the State Government and the Central Government on their undertakings, no approval of COD is required.

8.

Since, the matter is pending before the Income-Tax Appellate Tribunal, we have not discussed the controversy between the party at length. It is, however, required to be noted that the learned Commissioner of Income Tax has rejected the stay application of the Assessee only on 28-8-2008 and the assessee has preferred the stay application before the Income-Tax Appellate Tribunal on the first available opportunity i.e. on 1-9-2008. It is specifically prayed before the Tribunal to stay the outstanding demand till the decision of appeal and this was communicated to the respondent on 1-9-2008 itself. The petitioner was asked to pay the demand immediately or to face the dire consequences. Since the Tribunal is taking up the matter only on particular day in the week/fortnight, the petitioner has to rush this Court.

9.

Since this court is of the prima facie view that the petitioner deserves stay against the demand in question in view of the peculiar facts and circumstances of the case till the Tribunal decides the stay application, the relief against

SCA/1094520/2008 5/5 stay of outstanding demand as prayed for in the present petition is granted till the Tribunal decides the stay application on the condition that the petitioner shall furnish Bank Guarantee or the letter from the State Government to the tune of Rs.20/- crores (Rupees Twenty Crores), within one week from today. It is made clear that this order would not come in the way of the Income-Tax Appellate Tribunal to decide the stay application and/or the appeal. It is open for the Tribunal to decide stay application and/or appeals on their own merits. It is expected that if disposal of appeals takes some time, stay applications may be decided as expeditiously as possible, preferably within one month from today.

10.

Subject to the aforesaid observations and directions, this petition is disposed of. Rule is made absolute to the aforesaid extent. D.S. is permitted. (K.A. Puj, J.) (Bankim N. Mehta, J.) /JVSatwara/

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