A. K. Saraf, learned Senior counsel, appearing on behalf of th e v. Income Tax Officer & Ors.

Heard Dr. A. K. Saraf, learned Senior counsel, appearing on behalf of th e petitioner, and Mr. D. Saikia, learned Standing counsel, Department of Finance , Government of Assam, appearing on behalf of the respondents.

#2. By order, dated 26.02.2008 (Annexure-A to the writ petition), an assessm ent of tax, payable by the petitioner, under the Assam Value Added Tax, 2003, wa s made by respondent No. 3, namely, Superintendent of Taxes, Unit-’B’, Guwahati, the assessment being to the tune of 50 lakhs. Besides direction to make paymen t of the said assessed amount of tax, the petitioner was, vide letter, dated 26. 02.2008, also directed to show cause as to why penalty of an amount of Rs. 1.50 crore should not be imposed on the petitioner. Following the said notice to sho w cause, an order was passed, on 19.03.2008, by respondent No. 3, imposing penal ty of the said amount of Rs. 1.50 crore. The petitioner was, then, served with a Notice of Demand for payment of Rs. 50 lakhs, as tax, and a sum of Rs. 1.50 cr ore as penalty. Aggrieved by the Notice of Demand, the petitioner filed a revis ion petition before the respondent No. 2, namely, the Commissioner of Taxes, Uni t-’B’, Guwahati. While filing the revision, the petitioner also prayed for stay of realization of the amounts, which had been demanded by way of tax and also p enalty. An order was, then, passed, on 01.07.2008, by respondent No. 2, stating to the effect that in order to admit the revision, it is necessary that the pet itioner shall deposit 25% of the disputed liability. The petitioner was accordi ngly directed to deposit 25% of the disputed liability. Since the total demand, raised against the petitioner, was to the tune of Rs. 2 crores, 25% of the disp uted liability would have obviously amounted to Rs. 50 lakhs. On the ground tha t the petitioner had not deposited 25% of the disputed liability, the revision w as dismissed on 01.01.2009. The petitioner, then, applied, on 08.04.2009, for r eview of the order, dated 01.01.2009, aforementioned. This application was foll owed by another application made by the petitioner, addressed to the respondent No. 2, requesting the latter to allow the petitioner to deposit Rs. 25 lakhs and furnish bank guarantee for the remaining amount of Rs. 25 lakhs. Pursuant to t he review application, so made, respondent No. 2 passed an order, 09.04.2009, di recting the petitioner to deposit Rs. 25 lakhs, by way of Treasury Challan and, against the remaining amount of Rs. 25 lakhs, the petitioner was directed to fur nish a bank guarantee. Thus, the petitioner was required to deposit Rs. 25 lakh s by way of treasury challan and also furnish bank guarantee for Rs. 25 lakhs fo r admission of the revision petition. The petitioner, then, filed a petition, o n 08.05.2009, informing the respondent No. 2 that the petitioner had already dep osited Rs. 4 lakhs and that a period of two months be allowed to the petitioner to deposit the balance amount of Rs. 21 lakhs and also to furnish bank guarantee of Rs. 25 lakhs. As the petitioner had not deposited the balance amount of Rs. 21 lakhs, nor had the petitioner furnished the requisite bank guarantee, an ord er was passed by the respondent No. 2, on 08.05.2009, dismissing the revision pe tition. The order, passed by respondent No. 2, reads, inter alia, as under: (cid:28)The petitioner is absent. The petitioner has submitted a petition reque sting for 2 months time to deposit Rs.21 lakhs and submit bank guarantee for ano ther Rs.25 lakhs, the petitioner has submitted copies Treasury Challans for paym ent of Rs.4 (four) lakhs. The revision petition was filed on 21-06-2008 and it was dropped on 01-0 1-2009 because the petitioner did not deposit 25% of disputed amount. On request of the petitioner the petition was revised on 09-04-2009 and petitioner was ask ed to deposit Rs.25 lakhs and submit bank guarantee for another Rs.25 lakhs befo re the next date fixed i.e.today. But the petitioner failed to do so. Enough opportunity has been given to the petitioner in this regard. No further opportunity can be given. Hence the p etition is not admitted. Inform all concerned. (cid:29)

#3. It has, now, been submitted, on behalf of the petitioner, that the respo ndent No. 2 dealt with the petitioner’s prayer for stay of the Notice of Demand arbitrarily and, without assigning any reason, insisted that the petitioner shal l deposit 25% of the disputed amount before the revision is admitted. It is subm itted, by Dr. Saraf, learned Senior counsel, that the manner, in which the respo ndent No. 2 has dealt with the matter, is against all canals of justice and repe ated judicial pronouncements, made in various cases, that any authority, dealing with such a case, as the present one, shall act, with utmost care and attention , have been ignored. In support of his submission, Dr. Saraf places reliance on the decision, in Hardeodas Jagannath v. Income Tax Officer, Shillong and Others , reported in [(I) (1961) 43 I.T.R. 80 (Assam)].

#4. It has, however, been pointed out, on behalf of the respondents, that t he petitioner, vide letter, dated 08.05.2009, informed the respondents that out of the amount of Rs. 25 lakhs, which the petitioner had been directed to deposit , the petitioner had deposited Rs. 4 lakhs and requested the respondents/ author ities concerned to allow a period of two months for depositing the balance amoun t of Rs. 21 lakhs and also for furnishing bank guarantee of Rs. 25 lakhs. It is contended, on behalf of the respondents, that having agreed to deposit the sum of Rs. 25 lakhs, in terms of the directions, issued by the respondent No. 2, and having also agreed to furnish bank guarantee of the requisite amount of Rs. 25 lakhs, the petitioner cannot, now, challenge the directions, given by the respon dent No. 2, to make deposit of Rs. 25 lakhs and, in such circumstances, dismissa l of the petitioner’s revision petition is correct.

#5. Before entering into the merit of the impugned order, dated 08.05.2009, and the orders, passed, on different dates earlier thereto, by respondent No. 2, it needs to be pointed out that the petitioner has, in the meanwhile, deposited a further amount of Rs. 2 lakhs. Thus, the petitioner has deposited, in all, a n amount of Rs. 6 lakhs and an amount of Rs. 19 lakhs has remained as balance.

#6. While considering the present petition, it needs to be pointed out that under Section 82(2A) of the Value Added Tax Act, 2003, an application by a deale r or person shall not be entertained by the Commissioner unless such application is accompanied by the satisfactory proof of payment of minimum twenty-five perc ent of the disputed tax, penalty, if any, imposed and the interest accrued there on, if any. The provisions to Section 82(2A), however, lays down that the Commi ssioner may, if it thinks fit, for reasons to be recorded, in writing, and subje ct to furnishing all such security as the Commissioner may deem fit, admit an ap plication with part payment or without payment of the disputed amount of tax inc luding penalty, if any, required under this sub-section with a view to mitigate undue hardship which is likely to be caused to the dealer or person if the payme nt of such disputed amount is insisted on. The power, so conferred on the Commi ssioner, is momentous power. Greater the power, more careful shall be its exerci se. The power, which the Commissioner has been given, under Section 82(2A), to suspend the realization of the amount of recovery, is required to be exercised w ith utmost care and attention. The Commissioner can neither liberally grant sta y without securing interest of the State, nor must he insist on deposit of dispu ted liability, if the dealer or the person, who was directed to make payment of tax or penalty, places sufficient materials to show that he would suffer such ha rdship, which he should not be made to suffer. The exercise of power, which has been conferred on respondent no. 2, namely, Commissioner of Taxes, cannot, in s hort, be arbitrarily exercised.

#7. I may also point out that though the Commissioner of Taxes has the discr etion to allow, or not to allow, a revision application, without payment of the disputed liability, such exercise of discretion has to be judicious and not arbi trary. In an order, admitting a revision application, without insisting that th e assessee shall deposit the assessed amount, or, in an order, refusing to admit a revision application, until payment of the assessed amount and/or penalty, th e Commissioner must assign cogent reasons. There can be no uniform yardstick an d each case would depend on it own facts. The ground(s) on which an order of as sessment or demand is raised, is, indeed, an important factor. If the Commissio ner feels that stay, sought for, would put the realization of amount in jeopardy , this can be a reasonable factor for refusal to grant stay. The order of refus al or acceptance must, however, assign reasons. Even the amount payable by the assessee is a relevant factor. If the amount is heavy and the revision applicat ion prima facie discloses the possibility of the revision being allowed, it may be treated as a case, which would constitute hardship and, may, therefore, enti tle the Commissioner to grant a stay on such condition(s) as may be necessary fo r the purpose of securing the interest of the revenue. Though quick realization of tax may be an ideal administrative necessity, this fact cannot alone be suff icient to refuse stay. To put it in simpler words, the order, granting stay, or refusing to grant stay, must disclose the reason(s) and must reflect that the C ommissioner has applied his mind dispassionately and has exercised his discretio n judiciously and not arbitrarily. The reference, made by Dr. Saraf, to the cas e Hardeodas Jagannath (supra), is not entirely misplaced inasmuch a Division Ben ch of this Court, in Hardeodas Jagannath (supra), while dealing with the questio n of stay, as regards realization of assessed amount under the Income Tax Act pe nding disposal of appeal, observed and held as under: (cid:28)If, in particular case the question of exercise of discretion has not b een considered properly by the Income-tax Officer, that might be a good ground f or issuing a writ directing him to treat the assessee to be not in default. In t he case of Aliminum Corporation of India Ltd v. Balakrishnan this interpretation of the law was accepted by Sinha J. There an appeal had been preferred under se ction 23 of the Wealth Tax Act and thereafter an application had been made to th e Wealth Tax Officer for stay under section 31(3) of the Act corresponding to se ction 45 of the Income-tax Act. An application was made to the Commissioner of W ealth Tax praying for a direction not to treat the assessee to be in default til l the disposal of the appeal which was rejected by him. A similar application wa s then made before the Wealth Tax Officer which was also rejected by him. The pe tition under under section 226 of the Constitution was filed in the High Court a gainst that order which was allowed and the matter was sent back to the Wealth T ax Officer directing him to consider the matter on merits. It was observed by Si nha J. that the matter was no doubt in the discretion of the Wealth Tax Officer, but the discretion had to be exercised judicially and a judicial exercise of th e discretion involved a consideration of the facts and circumstances of the case in all its aspects. The difficulties involved in the issues raised in the case and the prospects of the appeal being successful in one such aspect. The positio n and economic circumstances of the assessee is another. If the officer feels th at the stay would put the realization of the amount in jeopardy that would be a cogent factor to be taken into consideration. The amount involved is also a rele vant factor. If it is a heavy amount, it should be presumed that immediate payme nt, pending an appeal in which there may be a reasonable chance of success, woul d constitute a hardship. Quick realization of tax may be an administrative exped iency, but by itself it constitutes no ground for refusing a stay. While determi ning such an application the authority exercing discretion should not act in the role of a mere tax gatherer. After having considered all the authorities, in my opinion, each case will depen d upon its own circumstances. The extreme proposition that section 45 confers a power on the Income-tax Officer to stay realization of the tax dues when an appe al has been filed is a power coupled with the duty to grant such a stay whenever such an occasion arises, cannot be accepted. Since section 45 gives discretion to the Income-tax Officer not to treat the assessee as a defaulter. It may be th at it casts a duty upon the Income-tax Officer to consider a prayer if made by t he assessee on its own merits and to exercise his discretion judicially. It is v ery difficult to exhaustively lay down the circumstances under which the exercis e of discretion can be said to be a judicial exercise. But there are certain rel evant considerations which go to point out if the exercise of the discretion has or has not been judicial. It will really be a non-exercise of the discretion, i f the Income-tax Officer has not considered the application at all or in conside ring the application has taken into consideration the matters which are extraneo us to the object of the Act, or has failed to apply his mind to the relevant con siderations. In such cases the exercise of his discretion may be considered to b e no exercise of discretion at all and the High Court can issue a mandamus direc ting him to consider the application or to exercise his discretion according to law. The exercise of discretion in such case is capricious, arbitrary and unreas onable. The extreme proposition contended for by the Advocate-General that once an assessee has failed to pay up the tax demand, he is a defaulter and the Incom e-tax Officer is bound to proceed with the realization of the tax, and if he has acted within the ambit of his jurisdiction, this court cannot interfere with th e excersise of his discretion and issue a mandamus directing him to stay the rea lization, can also not be accepted. (cid:29)

#8. In the present case, though respondent No. 2 may be correct in insisting on deposit of the tax as well as the penalty, but the manner, in which the matt er has been dealt with, is not at all satisfactory. As a matter of fact, the or der, directing payment of tax as well as penalty, which was initially passed, di d not even indicate that the Commissioner had considered the grounds on which th e prayer for suspension or stay as regards the demand notice had made by the pet itioner. Be that as it may, it has, now, been submitted, on behalf of the petitio 9. ner, that the petitioner agrees to pay the remaining amount of Rs. 19 lakhs with in a period of two months from today. The petitioner also agrees to furnish ban k guarantee of Rs. 25 lakhs within a period of two months from today. In the fa cts and circumstances of the present case, this Court is of the view that it wou ld be in the interest of justice to set aside the impugned order, dated 08.05.20 09, aforementioned and direct the petitioner to deposit the balance amount of Rs . 19 lakhs as well as the requisite bank guarantee of Rs. 25 lakhs within a peri od of two months from today. On the deposit of the said amount of Rs. 19 lakhs and also the bank guarantee, as directed hereinbefore, respondent No. 2 shall he ar the revision petition and dispose of the same, in accordance with law, within a period of two months from the date, on which the petitioner complies with the directions, which have been given hereinbefore. It is also made clear that the petitioner shall cooperate with the respondents/authorities concerned in the ea rly disposal of the revision proceedings.

#10. d disposed of. With the above observations and directions this writ petition shall stan

#11. No order as to costs.