HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

W.P.No.37753 of 2022

Between:

M/s. RNK Agro & Chemicals Pvt Ltd.,

Rep. by its Accounts Manager,

Sri M. Kalyan Chakravarthy,

Plot No.16/7/51, 1

st

lane, Rama Murthy Nagar,

Nellore – 524 002.

Registered Office at 3-6-665/3, Street No.10,

Himayatnagar, Hyderabad - 500029. .. Petitioner

And

The Deputy Commercial Tax Officer-II,

O/o the Commercial Tax Officer, Nellore-III Circle,

Nellore, Andhra Pradesh and eight others.

.. Respondents

DATE OF JUDGMENT PRONOUNCED: 11.08.2023

SUBMITTED FOR APPROVAL:

HON’BLE SRI JUSTICE U. DURGA PRASAD RAO

HON’BLE SRI JUSTICE T. MALLIKARJUNA RAO

1. Whether Reporters of Local newspapers Yes/No

may be allowed to see the Judgments?

2. Whether the copies of judgment may be Yes/No

marked to Law Reporters/Journals?

3. Whether Their Ladyship/Lordship wish to Yes/No

see the fair copy of the Judgment?

_________________________

U. DURGA PRASAD RAO, J

__________________________

T. MALLIKARJUNA RAO, J

::2::

*HON'BLE SRI JUSTICE U.DURGA PRASAD RAO

AND

HON’BLE SRI JUSTICE T. MALLIKARJUNA RAO

+ W.P.No.37753 of 2022

%11.08.2023

# M/s. RNK Agro & Chemicals Pvt Ltd.,

Rep. by its Accounts Manager,

Sri M. Kalyan Chakravarthy,

Plot No.16/7/51, 1

st

lane, Rama Murthy Nagar,

Nellore – 524 002.

Registered Office at 3-6-665/3, Street No.10,

Himayatnagar, Hyderabad - 500029.

.. Petitioner

Vs.

$ The Deputy Commercial Tax Officer-II,

O/o the Commercial Tax Officer, Nellore-III Circle,

Nellore, Andhra Pradesh and eight others..

.. Respondents

<GIST:

>HEAD NOTE:

! Counsel for petitioner: Sri A. Sarveswar Row.

Counsel for respondents: Sri Y. Vivekananda, Learned Government Pleader for

Commercial Taxes-II

? CASES REFERRED:

1. 1998 68 STC 220 AP

2. 1999 SCC OnLine AP 558

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HON’BLE SRI JUSTICE U. DURGA PRASAD RAO

AND

HON’BLE SRI JUSTICE T. MALLIKARJUNA RAO

W.P.No.37753 of 2022

ORDER: (Per Hon’ble Sri Justice U. Durga Prasad Rao)

Heard learned counsel for the petitioner Sri A. Sarsweswar Row

and Sri Y. Vivekananda, learned Government Pleader for Commercial

Taxes-II representing the respondents.

2. In essence, the submission of learned counsel for the petitioner is

that aggrieved by the assessment order dated 14.03.2019 passed by the 2

nd

respondent, the petitioner filed appeal before the Appellate Deputy

Commissioner, Tirupathi/3

rd

respondent and the 3

rd

respondent vide his

order in ADC Order No.ZL370620OD34741, dated 11.06.2020 rejected

the appeal on the main ground that the petitioner filed appeal after 128

days from the date of receipt of original Assessment Order. Aggrieved,

the petitioner filed appeal TA No.1/2022 on the file of AP VAT

Appellate Tribunal, Visakhapatnam/5

th

respondent and the same is

pending for hearing. Along with appeal, the petitioner also filed a stay

application in TMP No.29/2022 in TA NO.1/2022 and the same is posted

for hearing on 17.11.2022. However, for non-appointment of chairperson

of the AP VAT Tribunal, the matter could not be taken up and in the

meanwhile respondent No.1 issued notice dated 03.11.2022 for recovery

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of disputed tax and also issued garnishee notices 05.11.2022 to the

respondents 6 to 8 banks with which the petitioner maintains his accounts

for recovery of the disputed tax which is illegal. Learned counsel for the

petitioner thus prays to declare the action of respondent No.1 as illegal

and direct the respondent No.2 not to take any steps for recovery of the

balance disputed tax till disposal of the appeal in TA No.1/2022 pending

before the respondent No.5.

3. Learned GP opposed the petition contending that in term of Section

31(3)(c) of AP VAT Act, 2005 r/w Rule 40 of AP VAT Rules, 2005, AP

VAT Appellate Tribunal, Visakhapatnam/5

th

respondent has no

jurisdiction to entertain the stay petition and therefore recovery of the tax

need not be stopped on the ground that the petitioner filed stay

application in the appeal filed before the 5

th

respondent. He prayed to

dismiss the writ petition.

4. Per contra, the contention of learned counsel for the petitioner is

that when an appellate tribunal is vested with power and jurisdiction to

hear the appeal, it goes without saying that it has been vested with the

ancillary power of passing interlocutory orders including stay order in the

interest of justice and such a power is inherent in the appellate tribunal.

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5. The point for consideration is whether the AP VAT Appellate

Tribunal/5

th

respondent has no jurisdiction to entertain the stay

application pending appeal before it in the circumstances of the present

case?

6. We gave our anxious consideration to the above respective

arguments. In order to decide whether in terms of Section 31(3)(c) of AP

VAT Act r/w Rule 40 of AP VAT Rules, 2005 stay petition is

maintainable before the AP VAT Appellate Tribunal, Visakhapatnam/5

th

respondent or not, the relevant provisions have to be perused. They read

thus:

Appeals and Revisions

(a) 31. Appeal to Appellate Authority:- (1) Any VAT dealer or TOT

dealer or any other dealer objecting to any order passed or proceeding

recorded by any authority under the provisions of the Act other than an

order passed or proceeding recorded by an Additional Commissioner

or Joint Commissioner or Deputy Commissioner, may within thirty

days from the date on which the order or proceeding was served on

him, appeal to such authority as may be prescribed:

Provided that the appellate authority may within a further period

of thirty days admit the appeal preferred after a period of thirty days if

he is satisfied that the VAT dealer or TOT dealer or any other dealer

had sufficient cause for not preferring the appeal within that period:

“Provided further that the Commissioner may, in general but not

in specific cases and in such circumstances, in which the appellate

authorities are not able to discharge their normal functions due to

natural calamities, public agitations or other similar reasons, notify the

period of time to be excluded for the purpose of computation of the

time limit for filing of appeals prescribed under the sub-section.”

(Inserted by Act No.4 of 2016, dated 12.01.2016)

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Provided further that an appeal so preferred shall not be admitted

by the appellate authority concerned unless the dealer produces proof

of payment of tax, penalty, interest or any other amount admitted to be

due, or of such installments as have been granted, and the proof of

payment of twelve and half percent of the difference of the tax,

penalty, interest or any other amount, assessed by the authority

prescribed and the tax, penalty, interest or any other amount admitted

by the appellant, for the relevant tax period, in respect of which the

appeal is preferred.

(2)The appeal shall be in such form, and verified in such manner, as

may be prescribed and shall be accompanied by a fee which shall not

be less than Rs.50/- (Rupees fifty only) but shall not exceed Rs.1000/-

(Rupees one thousand only) as may be prescribed.

(3) (a) Where an appeal is admitted under sub-section(1), the

appellate authority may, on an application filed by the appellant and

subject to furnishing of such security or on payment of such part

of the disputed tax within such time as may be specified, order stay

of collection of balance of the tax under dispute pending disposal

of the appeal;

(b) Against an order passed by the appellate authority refusing to

order stay under clause(a), the appellant may prefer a revision

petition within thirty days from the date of the order of such

refusal to the Additional Commissioner or the Joint Commissioner

who may subject to such terms and conditions as he may think fit,

order stay of collection of balance of the tax under dispute pending

disposal of the appeal by the appellate authority;

(c) Notwithstanding anything in clauses (a) or (b), where a VAT

dealer or TOT dealer or any other dealer has preferred an appeal

to the Appellate Tribunal under Section 33, the stay, if any,

ordered under clause (b) shall be operative till the disposal of the

appeal by such Tribunal, and, the stay, if any ordered under clause

(a) shall be operative till the disposal of the appeal by such

Tribunal, only in case where the Additional Commissioner or the

Joint Commissioner on an application made to him by the dealer

in the prescribed manner, makes specific order to that effect.

xxxx

(b) Rule 40(1) : Application for Stay when appeal is filed before the

Appellate Tribunal:- (1) In a case where stay of collection of the tax

or penalty under dispute is granted by the Appellate Deputy

Commissioner under clause (a) of sub-section (3) of Section 31 and on

disposal of the appeal by such Appellate Deputy Commissioner under

sub-section (4) of Section 31, the appellant files an appeal to the

Appellate Tribunal, he may apply to the Additional Commissioner

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(Commercial Taxes)(Legal) or Joint Commissioner (Commercial

Taxes)(Legal) for the continuance of the stay granted under clause (a)

of sub-section (3) of Section 31 by the Appellant Deputy

Commissioner until the appeal filed before the Appellate Tribunal is

disposed of.

7. Thus, section 31(3)(c) says that pending the appeal before the AP

VAT Appellate Tribunal U/s 33, the stay earlier granted under section

31(3)(b) shall be operative till disposal of the appeal by the AP VAT

Appellate Tribunal. However, in the present case the facts would show

the petitioner has not applied for stay before the 4

th

respondent as his

appeal was rejected at the threshold as it was filed beyond condonable

period of delay. Therefore, the question of 4

th

respondent refusing to

grant stay and thereupon the petitioner obtaining stay by preferring a

revision before Additional Joint Commissioner or the Joint Commissioner

in terms of Section 31(3)(b) does not arise. Consequently, the question of

continuation of said stay pending the appeal before AP VAT Appellate

Tribunal in terms of Section 31(3)(c) also does not arise.

8. Be that it may, in terms of Rule 40 AP VAT Rules, 2005, the

petitioner, pending his appeal before AP VAT Appellate Tribunal, has to

apply for stay before the Additional Commissioner (Commercial Taxes)

(legal) or Joint Commissioner (Commercial Taxes) (legal) for the

continuation of the stay granted under section 31(3)(a) by the Appellate

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Deputy Commissioner until the appeal filed before AP VAT Appellate

Tribunal is disposed of. This situation also does not arise because the

petitioner did not move any stay application before Appellate Deputy

Commissioner/4

th

respondent inasmuch as, as stated supra, his appeal was

dismissed at the inception and therefore there was no occasion for him to

file any stay application before the Appellate Deputy Commissioner.

Therefore, the question of said authority granting stay and the petitioner

in terms of Rule-40 praying the Additional Commissioner or Joint

Commissioner to continue his stay granted by Appellate Deputy

Commissioner till disposal of his appeal before the AP VAT Appellate

Tribunal also does not arise.

9. Thus briefly stating, the present case projects a situation where the

petitioner had no occasion to file a stay application before Appellate

Deputy Commissioner/4

th

respondent and consequently the question of

the said authority either allowing or dismissing the said stay application

did not occur. In essence, the petitioner for the first time files the stay

application straight away before the AP VAT Appellate Tribunal. Hence

the situations covered by Section 31(3)(c) and Rule 40 have not arisen in

the instant case. In that view, the crucial question is whether AP VAT

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Appellate Tribunal can entertain the stay application and dispose it on

merits.

10. The contention of learned Government Pleader is that whether in a

situation of Appellate Deputy Commissioner himself granting stay while

appeal was pending before him or upon his refusal, stay being granted by

the Joint Commissioner or Additional Commissioner, in both these

occasions, when main appeal is pending before the AP VAT Appellate

Tribunal, the said Tribunal has not been vested with power to grant stay

because the AP VAT Act and its Rules have not conferred stay granting

power on AP VAT Appellate Tribunal. On the other hand, such power is

taken away from AP VAT Appellate Tribunal by virtue of Section

33(6)(b) of the AP VAT Act.

11. We examined the said contention. It is true, as rightly submitted

by learned counsel for the petitioner, when a substantive power of

deciding an appeal is vested with an Appellate Court or Tribunal, the

incidental/ancillary power of passing interlocutory orders including stay

order shall also be deemed to be vested with the aforesaid Appellate

Authority for rendering complete justice as otherwise the appeal will

become otiose and the said Appellate Institution will be redundant. This

will be against the public interest. In State of Andhra Pradesh v.

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Hindustan Shipyard Limited

1

the division bench of Common High

Court of Andhra Pradesh was dealing with the question whether the

Tribunal has the power to grant stay in appeals pertaining to the

Assessment Years fallen prior to 01.07.1985 because w.e.f the said date,

Section 21 of APGST Act, 1956 was amended and sub section 6 and 6(a)

were introduced. Section 6(a) created an express embargo of granting

stay pending disposal of the appeal filed against the order of first

appellate authority or deputy commissioner suo moto or in revision. The

division bench was considering the issue whether the said deprivation of

the power to grant stay has retrospective effect or not. In that context, the

division bench has held

“On a consideration of the rival submissions, we are inclined to

agree with the respondents’ counsel. The approach adopted by the

learned Government Pleader to call the said power a procedural one

and on that basis to say that it is not saved, is, in our opinion, not the

right approach to adopt. The Tribunal was granting stay hitherto in

exercise of its incidental/ancillary power which is an adjunct of, and

flows from the substantive power to entertain and hear the appeal,

conferred upon the Tribunal. We do not find it possible to separate this

incidental/ancillary power from the substantive power. The

substantive power to entertain and hear the appeal remains

undisturbed. May be so, submits the learned Government Pleader, the

said incidental power is clearly taken away with retrospective effect.

We find it difficult to agree. The retrospective affect must be given

either by express language, or must arise by necessary

implications. We are not satisfied that any such intention is

evidenced by the Amendment Act. (emphasis supplied)”

1

1988 68 STC 220 AP

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12. In Penguin Textiles Ltd., Hyderabad v. State of Andhra

Pradesh

2

also, similar view was expressed by full bench of A.P. High

Court. It is stated thus:

“11. As a prelude to the discussion of the core question, we

may recapitulate certain well-settled principles relevant to the remedy

of appeal/revision and the passing of interim orders pending such

appeal/revision. As long back as in the year 1968, the Supreme Court

ruled in ITO v. Mohammed Kunhi, 71 ITR 815, that even though no

express provision exists, the appellate Tribunal must be held to have

power to grant stay as an incident of its appellate jurisdiction. It was

observed:

"It could well be said that when Section 254 confers appellate

jurisdiction, it impliedly grants the power of doing all such acts, or

employing such means, as are essentially necessary to its execution

and that the statutory power carries with it the duty in proper cases to

make such orders for staying proceeding as will prevent the appeal if

successful from being rendered nugatory."

12. Be it noted that the above proposition enunciated by the

Supreme Court will hold good only when there is no express provision

one way or the other. There is no room to apply the doctrine of

incidental or implied powers when the Legislature makes a specific

provision debarring the grant of stay or otherwise placing fetters on the

appellate or revisional authority to grant stay.”

13. Applying the above jurisprudence, it can be said that the incidental

or ancillary power to pass interlocutory orders in the main appeal is

inherent or intrinsic in its substantive power of the Appellate Court or

Tribunal to decide the appeal pending before it unless such ancillary or

incidental power is taken away by an express provision or by necessary

implication. We now therefore have to examine whether such stay

granting power is expressly or impliedly taken away from the AP VAT

2

1999 SCC OnLine AP 558

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Appellate Tribunal. In this regard, it is apposite to peruse Section 33 of

the AP VAT Act.

14. Section 33 reads thus:

33. Appeal to the Appellate Tribunal. – [(1) Any dealer

objecting to an order passed or proceeding recorded:-

(a) by any authority, on appeal under Section 31; or

(b) by the Additional Commissioner or Joint Commissioner or

Deputy Commissioner under sections 21 or 32 or 38; or

(c) By any authority following the ruling or order passed under

Section 67;

may appeal to the Appellate Tribunal within sixty days from

the date of service of the order or proceeding on him.]

xxxxx

(6)(a) Where a VAT dealer or TOT dealer or any other dealer,

objecting to an order passed or proceeding recorded by a Deputy

Commissioner under Section 21 or 32 has preferred an appeal to the

Appellate Tribunal, the Additional Commissioner, or the Joint

Commissioner may, on an application filed by the dealer, subject to

such terms and conditions, as he may think fit, order stay of collection

of the tax under dispute pending disposal of the appeal by the

Appellate Tribunal;

(b) The payment of tax and penalty, if any, due in accordance

with the order of the first appellate authority or of the Deputy

Commissioner under Section 21 or in revision under Section 32, in

respect of which an appeal has been preferred under sub-section (1),

shall not be stayed pending disposal of the appeal.

Thus, as can be seen, while under Section 33(1), a VAT Appellate

Tribunal has been conferred jurisdiction to entertain an appeal against the

orders specified in that sub-section, including against order passed on

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appeal under Section 31 as in the present case, Section 31 (6)(b) creates

an express embargo on the stay granting power of VAT Appellate

Tribunal pending disposal of appeal passed against different orders

including the order of the first appellate authority. Therefore, in view

of the clear manifestation made by the express provision, we agree with

the contention of learned GP that AP VAT Appellate Tribunal is not

vested with the power or jurisdiction to entertain the stay application and

pass orders in the present situation.

15. To sum up our discussion on the aspect of stay granting powers,

(i) As per Section 31(3)(a), pending disposal of the appeal, an appellate

authority may on the application of the appellant and subject to

conditions mentioned therein may order stay of collection of

balance of the tax under dispute. After disposal of the appeal, if the

appellant is aggrieved by the order of appellate authority and files

an appeal under section 33(1) before VAT Appellate Tribunal, he

can file a stay application in terms of Rule 40 of the AP VAT Rules

before the Additional Commissioner (CT)(Legal) or Joint

Commissioner (CT)(Legal) for continuance of the stay earlier

granted under Section 31(3)(a) by the Appellate Deputy

Commissioner until the disposal of appeal before the VAT

Appellate Tribunal and the said authority may pass suitable order

thereon.

(ii) Pending appeal before the appellate authority under Section 31 and

if the said authority refused to grant stay, then in terms of Section

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31(3)(b), the appellant may prefer a revision petition before

Additional Commissioner or the Joint Commissioner and the said

authority subject to such terms and conditions may grant stay of

collection of balance of the tax pending disposal of the appeal

before the appellate authority. Then as per Section 31(3)(c), such

stay granted by Additional Commissioner or Joint Commissioner

shall be operative till disposal of the appeal preferred by the

appellant under Section 33 before the VAT Appellate Tribunal.

(iii) Under Section 33(6)(b), the Appellate Tribunal which entertains an

appeal against an order under Section 31 shall not stay the payment

of tax and penalty pending disposal of appeal, inasmuch as, in the

said provision it is expressly mentioned that the payment of tax

and penalty shall not be stayed pending disposal of the appeal.

16. Thus, the relevant provisions of the AP VAT Act and its Rules

pellucidly state that in none of the above contingencies, the VAT

Appellate Tribunal is vested with the power to grant stay pending the

appeal before it. The present petitioner’s case fall within the category

(iii) above, as he for the first time prays for stay before the AP VAT

Appellate Tribunal, but the said Authority for the above reasons cannot

entertain the stay application. This point is answered accordingly.

17. In the light of the above legal position obtained, the petitioner’s

prayer to declare the action of respondent No.1 in issuing the notice and

Garnishee notice pending the stay petition in TMP No.29/2022 in TA

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No.1/2022 before the AP VAT Appellate Tribunal as illegal, cannot be

considered on that ground. However, in our considered view, this Court

by exercising its plenary power under Article 226 of the Constitution,

pass appropriate order to meet the ends of justice.

18. Accordingly, there shall be stay of collection of the demanded tax

amount as per the Assessment Order dated 14.03.2009 pending disposal

of appeal TA No.1/2022 filed by the petitioner before the AP VAT

Appellate Tribunal, Visakhapatnam, on the condition of the petitioner

depositing 75% of the demanded tax (inclusive of the tax if any deposited

by him pending the successive appeals and otherwise) within four weeks

from the date of receipt of the copy of this order.

The writ petition is accordingly disposed of. No costs. As a

sequel, interlocutory applications, pending if any shall stand closed.

_________________________

U. DURGA PRASAD RAO, J

__________________________

T. MALLIKARJUNA RAO, J

11.08.2023

Krk / mva