THE HON'BLE THE CHIEF JUSTICE & T.S.SIVAGNANAM, J.
This writ appeal has been preferred by the Income Tax Department against the order passed in W.P.No.18563 of 2010, dated 16.08.2010.
2. The matter arises under the Income Tax Act, 1961, hereinafter referred to as the "Act". The first respondent in this appeal is the writ petitioner, a corporation wholly owned and controlled by Government of Tamil Nadu engaged in the business of wholesale and retail vending in liquor. Along with the said writ petition, another writ petition in W.P.No.16448 of 2010, contempt petition Nos.999 & 1002 of 2010 were also disposed of by a common order. However, the present appeal is only against W.P.No.18563 of 2010.
3. The prayer in the writ petition in W.P.No.18563 of 2010 was for issuance of writ of Certiorarified Mandamus to quash the order passed by the Income Tax Appellate Tribunal, hereinafter referred to as the "Tribunal", in SA.No.37/Mds/2010 in ITA No.962/Mds/2010, for the assessment year 2007-08 dated 30.07.2010 and to direct the Tribunal to dispose of the stay petition and appeal without insisting of clearance from COD for the assessment year 2007-08.
4. The facts which are necessary for the disposal of the appeal are that the respondent/writ petitioner being aggrieved by an order of assessment under the Act filed an appeal before the Commissioner of Income Tax (Appeals) III, along with petition for stay. The stay petition came to be disposed of by order dated 17.02.2010 directing the respondent/writ petitioner to pay 50% of the demand immediately. Against such order, the respondent/writ petitioner filed writ petition in W.P.No.6081 of 2010 and the interim stay of such order was granted. The writ petition came to be finally disposed of by order dated 20.04.2010 with a direction to dispose of the appeal and during the pendency of the appeal, stay of recovery of the tax was ordered. The Commissioner (Appeals) passed final orders on 24.03.2010 and allowed the appeal in part and directed the first appellant herein to recompute the tax liability. Being aggrieved by such order, the respondent/writ petitioner filed an appeal before the Tribunal and in the mean time in deference to the order passed by the Commissioner (Appeals), the first appellant by proceedings dated 01.07.2010 recomputed the tax and issued a revised demand, demanding Rs.50,27,35,568/- as total tax and interest payable as opposed to original demand of Rs.104,77,06,561/-.
5. It is the case of the writ petitioner that despite a request being made to the Assistant Commissioner of Income Tax not to initiate any coersive step during the pendency of the appeal before the Tribunal, the Department initiated garnishee proceedings by issuing notice under
Section 226 (3) of the Act, directing the bank to pay the said amount. Simultaneously, the respondent/writ petitioner also filed the writ petition in W.P.No.15054 to 15057 of 2010 and this Court by order dated 14.07.2010, directed the Tribunal to consider the stay application on merits and pass orders within a period of two weeks and till the orders were passed in the stay petition by the Tribunal, the impugned order of attachment shall be kept in abeyance. It is the case of the respondent/writ petitioner that despite such order, monies were recovered from the first respondent's bank account.
6. As per the direction of this Court in the earlier writ petition, noted above, the Tribunal took up the stay application and by order dated 30.07.2010, dismissed the stay application on the ground that the respondent/writ petitioner does not have the COD clearance for filing the appeal before the Tribunal and therefore, it cannot be treated as a valid appeal and therefore, the stay application was dismissed. Challenging the said order, the respondent/writ petitioner filed a writ petition in W.P.No.18563 of 2010, which was heard and disposed of along with the connected writ petition and contempt petitions. The learned Judge by order dated 16.08.2010, disposed of the writ petition by directing the appellant department to refund the amount of tax, before stay petition is taken up for hearing by the Tribunal for disposal on merits holding that it was always open to the appellant department to realise the amount from the respondent/writ petitioner as it is wholly owned by the Government of Tamil Nadu. The Tribunal was directed to dispose of the stay petition on merits and the learned Judge relied on the Division Bench of the Bombay High Court, which took note of the fact that in the case relating to the adjudication of dispute under the Income Tax Act, it would not be necessary for COD approval and accordingly, the learned Judge directed the stay petition to be heard and disposed of on merits. Aggrieved by such order, the Department has filed the present appeal.
7. The learned Senior counsel appearing for the department would strenuously contend that the respondent/writ petitioner ought to have been directed to go before the Committee on Disputes (COD) and seek their approval before filing the appeal before the Tribunal and this is mandatorily required to be done as has been held in several decision of the Hon'ble Supreme Court and this Court. Therefore, the learned Senior counsel would contend that when, there are binding decision of the Hon'ble Supreme Court as well as the Division bench Judgments of this Court, the Tribunal should not have been directed to decide the stay petition on merits without obtaining of COD approval.
8. Per contra, the learned Advocate General appearing for the respondent/writ petitioner would submit that the Hon'ble Supreme Court in a recent decision in Commissioner of Central Excise Vs. Bharat Petroleum Corporation Limited, 2010 (253) E.L.T.355 (S.C) has gone into aspect, as regards the requirement for obtaining permission from the Committee on Disputes (COD) and the Hon'ble Supreme Court has observed that the earlier decisions in the case of Oil and Natural Gas Commission Vs. City Industrial Development Corporation, Maharashtra Ltd. & Ors. reported in (2007) 7 SCC 39, needs reconsideration and directed the registry of the Supreme Court to place the matters before the Hon'ble the Chief Justice of India for appropriate directions. Therefore, the learned Advocate General would submit that no error can be stated to have been committed by the learned Judge in directing the stay petition to be disposed of on merits without insisting on the COD approval.
9. We have considered the submissions on either side and perused the materials available on record.
10. Though elaborate submissions have been made on facts, the issue involved in this appeal lies in a narrow campus. The issue to be decided is as to whether the Tribunal could be directed to dispose of the stay petition on merits and in accordance with law without the respondent/writ petitioner obtaining an approval from the committee on dispute for preferring an appeal to the Tribunal against the order passed by the Commissioner (Appeals). The Hon'ble Supreme Court in the case of Oil and Natural Gas Commission Vs. Collector of Central Excise, reported in 1995 Supp (4) SCC 541, directed the Government of India to set up the committee to monitor disputes between Ministry and Ministry of Government of India, Ministry and public sector undertakings of the Government of India and public sector undertakings in between themselves, to ensure that no litigation comes to Court or to a Tribunal without the matter having been first examined by the Committee and its clearance for litigation. The Hon'ble Supreme Court further ordered that it shall be the obligation of every Court and every Tribunal where such a dispute is raised to demand a clearance from the committee and in the absence of the clearance, the proceedings would not be proceeded with. By a subsequent order, the Hon'ble Supreme Court clarified that a statutory appeal could be filed without clearance of the committee, but thereafter an application should be made to the clearance before the committee.
11. This order of the Hon'ble Supreme Court came to be passed during 1991, it appears that various assessees as well as Government department had been facing numerous difficulties in securing approval of the committee and this fact was taken note by the Hon'ble Supreme Court in the recent decision in Commissioner of Central Excise Vs. Bharat Petroleum Corporation Limited. The Hon'ble Supreme Court observed that the working of COD has failed and numerous difficulties are experienced by the COD which, was expressed in the letter of the Cabinet Secretary, dated 09.03.2010 and the Supreme Court also held that it not only results in delay in filing of matters but also results into further litigation.
12. Thus, accepting the submission made by the Learned Attorney General, the Hon'ble Supreme Court held that it is time to review the orders passed in the ONGC case, and since, the decision in the case of ONGC was rendered by a bench consisting a three Hon'ble Judges, the matter was directed to be placed before the Hon'ble The Chief Justice of India for appropriate directions. Thus, it is to be noted that the order of reference is not only based upon the various difficulties experienced by the parties to a litigation but also taking note of the letter written by the Cabinet secretary, dated 09.03.2010 and the submission of the learned Attorney General.
13. Thus, it appears that the Hon'ble Supreme Court in the case of Bharat Petroleum Corporation Limited, referred supra, has prima facie expressed opinion that the working of the COD has failed. It is brought to our notice that the Division Bench of the Bombay High Court in Shivshahi Punarvasan Prakalp Ltd Vs. Union of India & Ors. in W.P.No.2270 of 2009 was considering a similar issue, wherein the Income Tax Appellate Tribunal dismissed the appeal filed by the assessee, on the ground that no approval was obtained from the Committee on Disputes (COD), by placing reliance on the decision of the Supreme Court in ONGC, referred supra. The Division Bench took note of the submission of the learned Additional Solicitor General of India appearing for the Union of India that in the matter relating to adjudication of dispute under the Income Tax Act, such approval would not be necessary. Thus, the Division Bench concluded that the basis on which the appeal was dismissed by the Tribunal was erroneous and directed the Tribunal to decide the matter on merits.
14. In that view of the matter, we are of the opinion that the Tribunal ought to have decide the matter on merits instead of dismissing the stay petition, on the ground that approval was not obtained from the committee. However, taking note of the fact that substantial amount of the recovery is involved in the matter and that the parties are hotly contesting their respective claims and in order to give as a quietus to the issue relating to the grant of stay pending hearing of the appeal before the Tribunal, we deem it appropriate that the respondent/writ petitioner shall be put on some condition so as to be entitled for interim orders, accordingly, we exercise our discretion in the matter.
15. It has been stated that an amount of Rs.50,27,35,568/- has already been recovered by the Department and the same is in the hands of the appellant department. It is seen that upon redetermination of the tax liable as per the revised order dated 01.07.2010, a sum of Rs.50,27,35,568/- has already been recovered of which the tax component alone excluding interest works out to Rs.37,79,96,668/-. Therefore, we are of the view that ends of justice would be met, if the respondent/writ petitioner is directed to deposit a sum of Rs.25,00,00,000/- as condition preceded for a grant of stay pending disposal of the appeal. Since the entire sum of Rs.50,27,35,568/- has already been recovered by the appellant department, they are directed to return the balance amount, after retaining a sum of Rs.25,00,00,000/- within a period of two weeks from the date of receipt of a copy of this order. We further direct that the Tribunal shall consider and dispose of the appeal on merits and in accordance with law as expeditiously as possible.
16. In the result, the writ appeal stands disposed of on the above terms. Consequently, connected miscellaneous petition is closed. No costs.