The Bombay High Court allowed a writ petition challenging the order dated 30 September 2019 passed by the Maharashtra Sales Tax Tribunal, vide which the petitioner’s second appeal was partly allowed, and the stay was refused on the order qua the interest amount of Rs. 3,60,932/-, as demanded under Section 30(2) of the Maharashtra Value Added Tax Act, 2002.
The Court observed that both the orders namely the direction to pay tax and the direction to pay the interest, are interconnected and become part of a common order, which is an appealable order.
Brief Facts:
The Assistant Commissioner, Sales Tax passed an assessment order inter alia holding that the petitioner is liable to pay tax. In pursuance of such order passed by the Assessing Officer, the petitioner deposited an amount of Rs.56,00,000/-. The balance amount included interest amount and penalty. In the first appeal preferred by the petitioner, the appellate authority partly allowed the petitioner’s appeal, thereby modifying the assessment order.
The petitioner, being aggrieved by the order, approached the tribunal in a second appeal in which the stay application in question was filed by the petitioner, on which the impugned order has been passed. The grievance of the petitioner is in regard to the tribunal holding that the petitioner’s appeal qua the challenge to the demand of interest as ordered by the first appellate authority, in terms of what Section 30(2) of the Act would provide, itself is not maintainable, and hence, the petitioner’s stay application qua the order on interest would stand rejected.
Contentions of the Petitioner:
The Learned Counsel for the Petitioner contended that once the nature of the order passed by the first appellate authority itself was a composite order, it was not correct for the tribunal to dissect such composite order by bifurcating/ separating the order as to the interest component and to reject the petitioner’s stay application qua the interest amount as demanded under Section 30(2) of the Act. This more particularly as the subject matter of assail and consideration before the tribunal was a composite order passed by the first appellate authority in the petitioner’s second appeal.
Contentions of the Respondent:
The Learned Counsel for the Respondent submitted that Section 85(2)(b-3) clearly creates a bar to the maintainability of any appeal against an order passed under sub-section (2) or (4) of Section 30 directing payment of interest. He submits that once such a specific provision is incorporated, no fault can be found in the view as taken by the tribunal in paragraph 6 of the impugned order. It was his submission that there was no question of any stay to an order directing payment of interest under Section 30(2) of the Act.
Observations of the Court:
The Court remarked that on a plain reading of the provisions of sub-section (6A) and (6B) of Section 26, it is seen that when it provides for a remedy of an appeal against the orders passed either by the assessing authority or by the first appellate authority, it does not make any distinction, to carve out any non-appealability of an order regarding the interest component.
The Court observed that both the orders namely the direction to pay tax and the direction to pay the interest, are interconnected and become part of a common order, which is an appealable order. An appeal against such composite order would necessarily include within its ambit the appealability of the orders pertaining to the interest. As a corollary, the provisions of sub-section (6C) would become applicable in so far as such appeals as provided under sub-sections (6A) and (6B) are concerned, namely an entitlement of the assessee to seek a stay of the recovery of the disputed dues including on interest.
Further, the Court said that the bar under sub-section 2(b-3) of Section 85 would be applicable in regard to the proceedings where the issue is only in regard to an independent order on interest passed under Section 30(2) or (4) of the Act. It would not be appropriate to read the bar under sub-section (2)(b-3) of Section 85 of the Act, to the appealability of composite order.
The decision of the Court:
The Bombay High Court, allowing the petition, held that the tribunal would consider the petitioner’s stay application qua the challenge to the interest component.
Case Title: S. K. Trading Co. vs The State of Maharashtra & Ors.
Coram: Hon’ble Justice G. S. Kulkarni and Hon’ble Justice Rajesh S. Patil
Case no.: WRIT PETITION NO. 319 OF 2020
Advocate for the Petitioner: Mr. Rahul C. Thakar
Advocate for the Respondents: Mr. V. A. Sonapal
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