IMPORTANT POINT
The court emphasized the need for reasoned consideration, reasonable opportunity of hearing, and judicious exercise of discretion by the Appellate Authority when granting stay of recovery.

JUDGMENT :

K. Vinod Chandran, J.

The petitioner was an assessee under the Bihar Value Added Tax Act, 2005(for brevity, ‘VAT Act’) and is aggrieved with the orders passed in appeal, for the assessment year 2017-18; both under the VAT Act and the Central Sales Tax Act. In the appeals filed, the assessee moved an application for stay of recovery and under both the enactments, the first Appellate Authority directed payment of 40 % of the total disputed amount.

2. Sri Mrigank Mauli, learned Senior Counsel appeared for the assessee and pointed out that there is absolutely no consideration, while mulcting the assessee with the liability of 40%, while the appeal was pending. It is also pointed out that the assessee has more input tax credit than the tax liability imposed on the assessee. The total dues include the interest and penalty which is not computed for the purpose of the deposit under the appeal provision; which speaks only of the tax liability.

3. The learned Government Advocate Shri Vikash Kumar, on the other hand, points out that despite the pre-deposit insisted under Section 72, the assessee has been enabled to file an application for stay of recovery under Rule 46 of the Bihar Value Added Tax Rules, 2005 (for brevity, ‘the Rules). The pre-deposit does not necessarily absolve the assessee from the recovery, hence. The consideration made by the first Appellate Authority at the interim stage cannot be faulted going by the provision under Rule 46 and the authoritative pronouncement dated 06.12.2021 by a Division Bench of this Court in C.W.J.C. No.8562 of 2021, titled as McNally Bharat Engineering Co. Ltd. v. The State of Bihar & Ors.

4. Looking at the facts of the case under the VAT Act, the impugned order of stay is produced at Annexure-P/1 in C.W.J.C. No. 8895 of 2023 and assessment order is at Annexure-P/2, which was pursuant to the notice dated 14.03.2023 at Annexure-P/4. The petitioner filed a reply, Annexure-P/5 dated 30.03.2023 to the notice issued by Annexure-P/4 and Annexure-P/2 order was passed.

5. As far as the CST Act is concerned, the stay order is produced as Annexure-P/1 dated 02.06.2003 and the notices and orders issued are also of the same dates as in the case of the VAT Act; produced in C.W.J.C. No. 9205 of 2023.

6. Both the interim orders notice that the assessee has paid 20% of the tax determined by the Assessing Officer at the time of filing the appeal. The further direction is to pay an amount of 40% of the total demand, including the interest and penalty, upon which alone the stay of recovery of balance amounts were ordered.

7. We have looked at the provisions of appeal under the VAT Act and Rule 46 of the Rules, which is applicable also for the CST Act. Section 72 has the nominal heading of ‘Appeal to Deputy Commissioner and Joint Commissioner’, which is the provision for first appeal. Sub-section (1) provides an appeal to be filed inter-alia from an order of assessment or an order levying interest or penalty passed by the prescribed authority, subject to the rules as may be made by the State Government. As a condition for maintaining an appeal, under sub-section(2), there is a requirement for paying 20 % of the tax assessed or full amount of the admitted tax, whichever is higher. Sub-section (3) is with reference to the delay in filing the appeal and sub-section(4) prescribes the manner in which an appeal can be disposed of, which are not relevant to the issue agitated herein. Sub-section(5) of Section 72 mandates that no order under the provision shall be passed without giving a reasonable opportunity of hearing to the assessee and the authority whose order is impugned.

8. Rule 46 deals with disposal of appeal or application for revision. Sub-rule(1) provides for summary dismissal of appeal or revision if it does not comply with the requirements of Rule 45, with the proviso again mandating a hearing before summary dismissal. Sub-rule(2) permits such summary dismissal on any other reasonable grounds a