SIVASUBRAMANIAM J.

When these batch of writ petitions came up for admission, this court held that the High Court should not normally interfere with the discretionary orders passed by the appellate authority constituted under the Tamil Nadu General Sales Tax Act, which shall hereinafter be referred to as "the Act". Learned counsel appearing for the petitioners in these writ petitions took up the stand that the provisions contained under section 31(5) of the Act confer discretionary powers on the appellate authority and, therefore, it should be exercised judiciously and the authority must pass speaking orders. It is stated that in most of these cases, sufficient security was furnished. But, in spite of that, the appellate authority refused to grant absolute stay without assigning any reasons, following the decision of the Supreme Court in Assistant Collector of Central Excise v. Dunlop India Ltd. 1985 (19) ELT 22, 1985 AIR(SC) 330, 1985 (58) CC 145, 1985 (1) CCC 622, 1985 ECR 4, 1985 (154) ITR 172, 1984 (2) Scale 819, 1985 (1) SCC 260, 1985 (2) SCR 190, 1985 UJ 368, 1984 (2) SCALE 819, 1985 (4) ECC 103, 1985 AIR(SCage) 330, 1985 SCC(Tax) 75 : 1985 (19) ELT 22, 1985 AIR(SC) 330, 1985 (58) CC 145, 1985 (1) CCC 622, 1985 ECR 4, 1985 (154) ITR 172, 1984 (2) Scale 819, 1985 (1) SCC 260, 1985 (2) SCR 190, 1985 UJ 368, 1984 (2) SCALE 819, 1985 (4) ECC 103, 1985 AIR(SCage) 330, 1985 SCC(Tax) 75 (SC.).Leaarned counsel attemted to distinguish the said case on facts. In view of this position, the learned Additional Government pleader for taxes was also heard.

Before dealing with the applicability of the said decision of the Supreme Court to the facts of the present case, we shall look at the statutory provisions regarding the grant of stay pending disposal of the appeal. Section 31(5) of the Act reads as follows :

"(5) Notwithstanding that an appeal has been preferred under sub-section (1), the tax shall be paid in accordance with the order of assessment against which the appeal has been preferred :

Provided that the Appellate Assistant Commissioner may, in his discretion, give such directions as he thinks fit in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to his satisfaction, in such form and in such manner as may be prescribed." *

A careful reading of the said provision shows that an assessee is not entitled to an order of stay as a matter of right and that filing of an appeal against assessment by itself is not a ground for granting stay of collection of taxes. Discretion is given to the appellate authority, namely, the Appellate Assistant Commissioner, to give such directions as he thinks fit in regard to the payment of tax before the disposal of the appeal. The word "stay" has been carefully omitted in this section and what is provided is only a passing of an order which will enable the assessee to pay taxes without much hardship. This does not, however, mean that the power of stay is not available to the appellate authority. This is indicated only to explain the object of the said provision. It is only in this background that we have to approach the problem involved in these cases.

The scheme of the Act and the decisions rendered on the same by several courts undoubtedly show that the Appellate Assistant Commissioner has discretion to pass appropriate orders regarding the payment of tax pending the appeal on such terms as he thinks fit, if the appellant furnishes security to his satisfaction. The courts have also held that such a discretionary power should be exercised judiciously. To put it in other words, the appellate authority cannot exercise his discretion in an arbitrary manner and it is incumbent upon him to apply his mind and pass speaking orders. It must be made clear that if once the appellate authority has exercised his discretion in the manner known to law and passed a speaking orders showing application of his mind to the points involved, then, normally, this court would not interfere with such discretionary orders. My attention was drawn to the decisions rendered in Krishnappa Naicker (E.) v. Deputy Commercial Tax Officer 1963 (14) STC 162 (Mad), R. P. David v. Agricultural Income-tax Officer 1972 (86) ITR 699(Mad), New shanmuga Traders v. Tamil Nadu Sales Tax Appellate Tribunal (Addl. Bench) 1985 15 STL 57 (Mad), Abdul Guffoor (T. M.) and Co. v. Appellate Assistant Commissioner 1985 Writ, L. R. 653, the unreported judgments in W.A.Nos. 1791 and 1792 of 1987 - judgment dated 30-11-1987 (Saroja Arunmugam (T.) v. Deputy Commercial Tax Officer), W.P. No. 1854 of 1988 - order dated 29-2-1988 (T. M. Abdul Guffoor and Co. v. Tamil Nadu Sales Tax Appellate Tribunal, Second Additional Bench, Madras-10), C. A. Akthar and Co. v. Commercial Tax Officer 1987 (64) STC 70 (W. Ps. Nos. 1969 to 1972 of 1986 order dated 17-3-1986.) As against these judgments, the learned Government pleader strongly relied on the decision of the Supreme court in Assistant Collector of Central Excise v. Dunlop India Ltd. 1985 (19) ELT 22, 1985 AIR(SC) 330, 1985 (58) CC 145, 1985 (1) CCC 622, 1985 ECR 4, 1985 (154) ITR 172, 1984 (2) Scale 819, 1985 (1) SCC 260, 1985 (2) SCR 190, 1985 UJ 368, 1984 (2) SCALE 819, 1985 (4) ECC 103, 1985 AIR(SCage) 330, 1985 SCC(Tax) 75. On a careful consideration of the various decisions cited before me, I find there is an apparent inconsistency between the various decisions. Before dealing with the other cases, it is relevant to take note of the said Supreme Court decision. The Supreme Court went in detail into the question of granting interim stay, especially ex parte interim stay, and came to the conclusion that courts should be slow in granting such orders. The following passage in the said decision is worthy of notice (p. 182) :

"Even assuming that the company had established a prima faice case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by the High Court. There was no question of any balance of convenience being in favour of the respondent-company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere bank guarantees. We notice that very often some courts act as if furnishing a bank guarantee would meet the ends of justice. No governmental business or for that matter no business of any kind can be run on mere bank guarantees. Liquid cash is necessary for the running of a Government as indeed any other enterprise. We consider that where matters of public revenue are concerned, it is of the utmost importance to realise that interim orders ought not to be granted merely because a prima faice case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the public interest. We are very sorry to remark that these considerations have not been borne in mind by the High Court and an interim order of this magnitude had been granted for the mere asking." *

This decision is sought to be distinguished by stating that it was rendered under the Excise Act and that it relates to stay granted at the time of payment of excise duty. According to learned counsel for the petitioners, the Supreme Court made the said observations in view of the fact that the tax burden was passed on to the consumers in the said case. I am not able to accept the said contentions, since the Supreme Court did not confine the said observation to the particular facts of that case. It is made clear that it is intended for universal application to matters involving revenue where statutory remedies are available. However, even the Supreme Court has not held that an order of stay can never be granted in cases where a remedy by way of order of stay can never be granted in cases where a remedy by way of appeal is provided under the statute. What has been held is that courts should not normally interfere with the discretion exercised by the appellate authorities in the matter of granting of stay and an order of stay should not be granted for the mere asking. It is also made clear that the interest of public revenue must play an important factor in the matter of exercising discretion by the authorities. Even after the said decision of the Supreme Court, a Bench of this court in W. A. Nos. 1791 and 1792 of 1987 (Saroja Arumugam v. Deputy Commercial Tax Officer) held on the facts of the said case as follows :

"On the facts of this case, having regard to the large amount of security furnished in the shape of deposit of title deeds of immovable property, it appears to us that the appellant is entitled to stay of proceedings for recovery of penalty as well as the order of the Tribunal making the amount of penalty payable in instalments. The stay will operate till the pendency of the appeal before the Tribunal." *

Similar orders were passed in several other writ petitions also. This matter was considered by Nainar Sundaram J. in Abdul Guffoor (T.M.) and Co. v. Appellate Assistant Commissioner 1985 Writ L. R. 653, wherein the learned judge passed strictures against the appellate authorities for having failed to accept the bank guarantee and grant stay, following the decision of this court in Dolton Printers Pvt. Ltd. v. State of Tamil Nadu 1985 (58) STC 137 (Mad) in the following words :

"When the bank guarantee is there, that will provide ample safeguard for the revenue. In the said circumstances, to call upon the petitioner to pay the very disputed tax is not only harsh but also not a judicial and proper exercise of the power of discretion reserved for the authority like the respondent under the proviso to section 31(5) of the Tamil Nadu General Sales Tax Act, 1959. The present impugned order only discloses a mechanical exercise of power without resorting to the appropriate consideration on the question of stay."

The learned judge further observed as follows :

" In spite of the pronouncement of this court referred to above, i find that the authorities like the respondent resort to passing such mechanical orders and this constrains parties like the petitioner to approach this court in writ jurisdiction. It is high time that the highest in the hierarchy to the authorities looked into the matter and gave appropriate instructions to the concerned to adhere to the principles enunciated by this court so as to avoid parties rushing to this court for redress and relief." *

On the other hand, Shanmukham J. took a contrary view in W. P. Nos. 1969 to 1972 of 1986 (Akthar C. K.) and Co. v. Commercial Tax Officer 1987 (64) STC 70 (Mad)). In view of these conflicting decisions, it may be difficult for the parties to follow the said principle. However, it is high time that this position he settled by an authoritative decision by a Bench of this court laying down certain norms for exercising the discretionary power. However, to meet the present situation, the authorities have to evolve a practical solution to pass such discretionary orders taking not of the various decisions of the courts.

A Bench of this court in Krishnappa Naicker (E.) v. Deputy Commercial Tax Officer 1963 (14) STC 162 has indicated certain options open to the appellate authority while passing orders on stay petitions in exercise of the discretionary power conferred under section 31(5) of the Act. The Bench observed as follows (P. 166) :

"The appellate authority may be dissatisfied with the security tendered and furnished. In that event, he can certainly reject the applications for stay. He may not be willing to grant a wholesale and complete stay of collection; he may instead direct payment by instalments. He may consider that the tax payable is a trifling amount and that the assessee has sufficient means to pay and may reach the conclusion that there are no grounds to grant stay of any kind. All these are within the framework of the discretion conferred by the statute. He cannot, however, say that though the security is good and the assessee may not have ready resources, he would not grant the application for stay in whole or in part. Nor can he taken up the position that he need not bother whether the security is good or bad or whether the assessee would be prejudiced or not by being compelled to pay the full levy in the belief that his discretion is unfettered. The statute has conferred upon him the power to grant stay. He, therefore, owes a duty to examine and scrutinise the grounds on which the stay is asked for by the appellant. If the duty is ignored or perfunctorily performed, it cannot be said that the power has been properly exercised. Imposition of tax and penalty on the assessee is sometimes heavy and onerous and it is but just and fair that the assessee should get some respite in a proper case until his appeal against the order of assessment is heard and disposed of." *

In my opinion, this will certainly provide a safeguard for the authorities in the exercise of their discretionary powers in the matter of granting of stay.

On a consideration of the above principles enunciated in the various decisions, I fell that the appellate authority is expected to consider the following aspects at the time of passing an order on a stay petition : (1) whether there is a prima facie case in favour of the assessee; (2) the amount of tax and penalty involved in the appeal; (3) the capacity of the assessee to pay the amount; (4) undue hardships to the assessee; a and (5) nature of security offered by the assessee. It is made clear that while considering the above aspects, the authority must have also in mind the adverse effect that would be caused on the public revenue in case of granting an absolute stay. Of course, this should not be the primary concern. But the other factors should be considered in this background. After having considered the above aspects, the appellate authority, in exercise of his discretion, can grant any one of the following reliefs : (1) absolute stay on security of bank guarantee; (2) conditional stay on payment of a portion of the tax (3) permission to pay in instalments; and (4) refusing to grant stay It is a matter of discretion on the part of the appellate authority to grant

stay or not to grant stay. But, in either case, it should give reasons as, otherwise, there will be no indication about application of its mind to the request made by the assessees. Once a discretion is exercised in the said manner, this court will not normally interfere with such discretion. I find that in all these cases, the Appellate Assistant Commissioner have not chosen to give any reasons for refusing to grant stay or for not accepting the security and, on the other hand, they have mechanically followed the decision of the Supreme Court referred to above. If only the authorities choose to bestwo some more attention while passing such orders, much of the judicial time can be saved. In this view of the matter, I am obliged to allow these writ petitions on this limited ground only and it should not be understood that because of this decision, the appellate authorities are obliged to grant absolute stay in all cases. It is entirely left to their discretion to pass appropriate orders. Accordingly, the impugned orders are set aside and the matter is remitted to the authorities concerned to take up the stay applications on file and pass speaking orders bearing in mind the above principles laid down by the courts, within four weeks from the date of receipt of a copy of this order. Until such orders are passed on the stay applications in all these cases, the collection of tax and penalty shall stand stayed. There will be no order as to costs. Finally, I may add that the best way to safeguard the interests of public revenue is to dispose of the appeals as expeditiously as possible.