MUHAMMAD JAWED ZAKARIA (JUDICIAL MEMBER).---Above captioned Miscellaneous Application has been filed requesting therein for stay of recovery of tax demand raised by the Department. The averments made by the Applicant in his application are reproduced as under:- "1. That the above appeal was filed against Commissioner Appeals' Order No,07/2014 dated February 18, 2014 read with Sales Tax Order No,2/69/2013 dated December 11, 2013.
2. That the appeal involves significant sales tax demand of Rs,10,032,479 in addition to default surcharge and penalty levied thereon.
3. That the tax authorities are likely to recover above demand by taking coercive measures.
4. That the above demand is totally unlawful and has been raised ignoring the factual position and legal provisions of law. Hence, the demand is not likely to be maintained by this Tribunal.
5. That the huge amount of refunds of the Appellant has already been held by the tax authorities, which has created serious liquidity problems for the Appellant.
6. That the Appellant has a strong prima facie case and serious injustice shall be caused to the Appellant if stay on recovery of impugned demand is not granted.
7. That full facts, contentions and grounds are stated in the Memo of Appeal (enclosed) which may kindly be treated as a part of this application and for the sake of brevity are not being repeated."
2. Mr. Arshad Mehmood, FCA, the learned counsel for the applicant submitted that the above appeal was filed against Commissioner Appeals' Order No,07/2014 dated February 18, 2014 read with Sales Tax Order No,2/69/2013 dated December 11, 2013. He further submitted that the appeal involves significant sales tax demand of Rs,10,032,479 in addition to default surcharge and penalty levied thereon. According to him, the tax authorities are likely to recover above demand by taking coercive measures. Learned counsel for the applicant stated that the above demand is totally unlawful and has been raised ignoring the factual position and legal provisions of law, hence, the demand is not likely to be maintained by this Tribunal. He further stated that the huge amount of refunds of the applicant has already been held by the tax authorities, which' has created serious liquidity problems for the applicant. According to him, the applicant has a strong prima facie case and serious injustice shall be caused to the applicant if stay on recovery of impugned demand is not granted. Learned AR of the taxpayer while concluding his arguments submitted that full facts, contentions and grounds are stated in the Memo of Appeal which may kindly be treated as a part of this application and for the sake of brevity are not being repeated. Accordingly, he prayed that if the stay is not granted by the Tribunal, the applicant may suffer irreparable loss.
3. On the other hand, Mr. Chaudhry Anwar, the :earned D.R. LTU on the other hand, strongly opposed the stay application.
We have given due consideration to the arguments of both the learned representatives. We are of the considered opinion that the stay of recovery demand by this Tribunal can be granted until and unless it is proved that there is hardships or financial constraints. In the case in hand, it is not proved by the Applicant that the department has initiated any coercive measure for recovery of the demand. It may be observed by us that the stay ought not to be granted on the basis of general routine. The applicant has to prove its case for grant of stay. The principles, on which stay orders are issued, are well established, namely party seeking it must have a prima facie case, that the said party may suffer irreparable loss if the Stay prayed for is not granted and on which side lies the balance of convenience or inconvenience if the stay is or is not allowed. It is not necessary at this stage to discuss whether the Taxpayer has a prima facie case, as this matter will be considered when the main appeal is heard. From the contents of stay Application reproduced supra, it is contended that the department has withheld huge amount of refund, therefore, it is clear to us that the taxpayer will not suffer irreparable loss if the stay is not granted. It may further be observed by us that section 131(5) of the Income Tax Ordinance, 2001 unequivocally provides that the Tribunal may stay the recovery proceedings, if the recovery proceedings cause undue hardships to the taxpayer. The said subsection is reproduced as under:-- "[(5) Notwithstanding that an appeal has been filed under this section tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case: [Provided that f on filing of application in a particular case, the Appellate Tribunal is of the opinion that the recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals), shall cause undue hardship to the taxpayer, the Tribunal, after affording opportunity of being heard to the Commissioner, may stay the recovery of such tax for a period not exceeding one hundred and eighty days in aggregate: ' Provided further that in computing the aforesaid period of one hundred and eighty days, the period, if any, for which the recovery of tax was stayed by a High Court, shall be excluded."
5. Keeping in view the above section in mind we are of the considered opinion that the applicant has failed to make out a case for grant of stay as no hardship is seen to have been caused to the Applicant. It is, therefore, evident that the Applicant has filed vexatious and frivolous application. By filing frivolous and vexatious application before this Tribunal, the counsel of the applicant has not only wasted the precious time of the court but also dragged unnecessary the Revenue as well as Taxpayer to the Court and the taxpayer too suffered due to act of the counsel.
6. At this moment, we may observe that the powers of the Tribunal are of the widest amplitude in dealing with appeals before it. It is trite law that the Tribunal have the powers of granting stay as well as during the pendency of the appeal before it. As per provisions of law cited supra, the stay may be granted for a limited and specified period as in-built in the said provision. There is no automatic stay. Mere filing and pending of appeal shall not operate as suspension or stay. That is no provision in the Ordinance in support of the contention that an assessment becomes provisional or non-existent with the filing of an appeal again it or during the pendency of such appeal. It is a recognized principle of law that the mere fact of pendency of an appeal does not operate as stay of execution, nor does it affect the executability of the decision appealed against.
An order by this Tribunal staying recovery of tax created by Assessing Officer OIR and upheld by the CIR (Appeals). This matter is one of discretion of the Appellate Tribunal, no doubt, which is to be exercised judicially. The Primary consideration should be "undue hardship shall cause to the taxpayer" and for that reason it has been made obligatory that the Appellate Tribunal is of the opinion that the recovery of tax levied under Income Tax Ordinance, 2001 and upheld by the Commissioner (Appeals), shall cause undue hardships to the taxpayer.
7. The other main consideration ought to be the balance of convenience in relation to the interest of the both (Taxpayer as well as Tax Revenue Department) and to save injury accruing to any one of them. The applicant seeking a stay should show that there is likelihood of substantial loss to it, if the stay is not granted. For that matter/ reason the applicant shall satisfy the Tribunal by reasonable grounds and it will be for the applicant/ appellant to satisfy the Tribunal for forming an honest opinion that the substantial loss/ undue hardship that would be caused in not granting the stay. Mere reference of the word of "Substantial loss will accrue if stay is not granted" is not sufficient compliance of the duty cast on the applicant seeking stay of recovery of tax levied without elaborating ground or grounds for "shall cause undue hardship". It, however, does not mean that Tribunal would withhold stay of tax demand without keeping in view or without applying mind to or without examining or prima facie attending to facts and circumstances of each case.
However, the Tribunal seized with application for stay should have regard to facts and circumstances of case in order to determine whether or not there is sufficient cause of undue hardship for stay of tax recovery.
8. If we look at the general practice of the higher appellate for the following points/principles are considered before grant of stay/Injunction:-- a. Discretionary relief. The granting of any injunction under the rule is purely within the discretion of the Court. This discretion should be exercised in favour of only that party who comes to Court with clean hands. Even if the conditions as laid down for the grant of temporary injunction/stay are fulfilled it may be refused as it is a matter of discretion of the Court. b. General principles for grant of injunction. An injunction is a form of equitable relief and it is to be issued in aid of equity and justice. But not to aid injustice. In order to obtain an interim relief, the applicant has not only to establish that he has a strong prima facie case, but he has also to show that the balance of convenience is on his side and that he would suffer irreparable injury unless he was protected during the pendency of his appeal. Last but not the least, the applicant has to prove categorically that the applicant shall cause undue hardship if recovery proceedings are not stayed. c. No serious controversy rose. Where no serious controversy was raised in the application, mere allegation without producing any prima facie material to substantiate it or pointing out circumstances to justify it can hardly lead to the conclusion that there is a prima facie case justifying grant of injunction.
9. Further, on merit of the case, the applicant has not shown that any coercive measures are being initiated by the department neither any notice of hardship was issued nor any recovery proceedings are seen to have been initiated by the department against the taxpayer.
10. Resultantly, the Application of the taxpayer's company stands rejected.