Kerala HC Orders Income Tax Authority to Decide Stay Petition Within Two Months, Puts Recovery on Hold [Read Order]

The Kerala High Court has intervened in a dispute between Metro Aggregates and Sand India Private Limited and the Income Tax Department, staying the recovery proceedings of a tax demand pending the disposal of the company's appeal.

A single bench of Justice Ziyad Rahman A.A. passed the order, providing relief to the company which was facing recovery action while its statutory appeal and stay petition were still pending.

Metro Aggregates and Sand India Private Limited, the petitioner, was aggrieved by an assessment order for the assessment year 2015-16 and had filed a statutory appeal against it. Along with the appeal, they also submitted a stay petition. The company's grievance arose because the department was pursuing recovery of the tax demand while both the appeal and the stay petition were still pending consideration, which prompted them to file the present writ petition.

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After hearing the counsel for the petitioner and the standing counsel for the respondents, the court found merit in the petitioner's contention that recovery proceedings should not be pursued while the statutory appeal and its accompanying stay petition were undecided. The court was inclined to dispose of the writ petition to provide a clear direction to the authorities and prevent undue hardship to the assessee.

Accordingly, the court disposed of the writ petition with specific directions. It ordered the Commissioner of Income Tax (Appeals)-III, the 2nd respondent, to hear and decide on the stay petition within a period of two months from the date of the judgment. Crucially, the court ordered that all recovery proceedings initiated based on the impugned assessment order shall remain in abeyance until a final decision is made on the stay petition.

This interim stay provides immediate relief to Metro Aggregates and Sand India Private Limited, preventing the tax authorities from taking any further steps to recover the tax amount until the appellate authority has had the opportunity to consider and decide on the stay application. The court's intervention ensures that the assessee is not subjected to coercive measures while its statutory appeal remains pending.

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