JUDGMENT
K.S. Paripoornan, J.
1. The petitioner in 0. P. No. 4607 of 1988 is the appellant in this writ appeal. The Revenue is the respondent. The appellant was provisionally assessed for the month of January, 1988, as per exhibit P6 order dated 26th March, 1988. An appeal was filed from the said order, before the first respondent. It is exhibit P7. A petition for stay was also filed. The first respondent, by exhibit P9 order dated 20th May, 1988, directed the appellant to remit 50 per cent of the tax and also directed to furnish security for the remaining amount. In the original petition, the petitioner/appellant attacked exhibit P9 as illegal. He also prayed for the issue of a writ of mandamus directing the first respondent to consider and dispose of exhibit P7 appeal on merits and also for a direction to the second respondent not to initiate proceedings for recovery of amounts till the disposal of exhibit P7 appeal. A learned single Judge of this Court, by judgment dated 10th June, 1988, dismissed the original petition. It was held that “in exercise of the power under Article 226 of the Constitution it will not be proper for this Court to interfere with the discretion exercised by the department”. The petitioner in the 0. P. has come up in appeal.
2. We heard counsel for the appellant as also the learned Government Pleader, Mr. N. N. Divakaran Pillai. Exhibit P9 order is to the following effect:
Order Nos. STA 163, 164 and 163A/88 dated 20th May, 1988.
Pending disposal of the appeal, collection of the balance tax and surcharge for the year 1987-88 will stand stayed if the appellant pays 50 per cent and furnishes security for the balance amount to the satisfaction of the assessing authority in any one of the methods prescribed under Rule 6(2) of the Kerala General Sales Tax Rules within 2 weeks of receipt of this order. If they fail to comply with the above conditions the stay order will automatically be vacated.
Sd/- Deputy Commissioner (Appeals),
Ernakulam.
The first respondent-appellate authority is exercising a quasi-judicial function. As an appellate authority, before whom the appeal is pending, he has got the power to pass appropriate orders in the stay petition. Section 34(5) of the Kerala General Sales Tax Act, along with the proviso, specifies the power of the appellate authority in this regard.
3. The main thrust of the argument by the appellant’s counsel was that the first respondent has failed to exercise the discretion vested in him under Section 34(5) of the Sales Tax Act in accordance with law. It was argued that in passing exhibit P9 order the first respondent has totally ignored the basic principles to be borne in mind in disposing of the stay petition. It was stated that by passing exhibit P9 order the first respondent has failed to exercise the discretion vested in him under law as enjoined by the decisions of courts. It amounts to exercise of “no discretion” in the eye of law. On the other hand, counsel for the Revenue tried to persuade us to hold that on a totality of the facts and circumstances of the case the first respondent has acted in accordance with law.
4. There are a number of decisions of this Court which lay down the guidelines to be followed by the assessing or the appellate authority in disposing of the stay petitions pending appeals. One of the earliest decisions is reported in Yusuf Jan Sahib v. Additional Income-tax Officer [1961] 42 ITR 637 (Ker). One of us (Paripoornan, J.) had occasion to deal with the principles governing the exercise of the discretion by the concerned authority in the light of the decisions of the Supreme Court, the decisions of this Court and of other High Courts. The said case is reported in Purushothaman v. Agricultural Income-tax Officer [1984] 149 ITR 120 (Ker). More recently, in dealing with the provisions of the Income-tax Act, Viswanatha Iyer, J. had occasion to deal with the matter at length in Rajan Nair v. Income-tax Officer [1987] 165 ITR 650 (Ker). The aforesaid decisions have referred to relevant decisions of Calcutta, Andhra Pradesh and other courts and the principles laid down in the above decisions of this Court have our concurrence. In the light of the principles laid down in the decisions aforesaid, a mere look at exhibit P9 (relevant portions have been extracted hereinabove) will show that the first respondent has totally failed to view the matter objectively and has also failed to exercise the discretion vested in him in accordance with law. He has totally ignored the guidelines laid down in the aforesaid decisions of this Court and other courts. In this view of the matter, exhibit P9 is illegal and unauthorised. We hold so.
5. If a statutory authority fails to exercise the discretion or exercises the discretion vested in it arbitrarily or capriciously or totally in an unreasonable manner, as to amount to the exercise of “no discretion” in the eye of law, this Court can, in exercise of the jurisdiction vested in it under Article 226 of the Constitution, issue a writ of mandamus directing the concerned authority to exercise the discretion in accordance with law.
In this case, we are satisfied that the first respondent in passing exhibit P9 order has acted mechanically and without applying his mind. There is nothing in the order to show that the first respondent had borne in mind the principles laid down by the decisions mentioned in para 4 supra in passing exhibit P9 order. We are of the view that the first respondent has failed to exercise the discretion vested in him in a proper or legal manner and it amounts to the exercise of “no discretion” in the eye of law. In such circumstances, this Court has jurisdiction to direct the first respondent to reconsider the matter and exercise the discretion vested in him under Section 34(5) of the Kerala General Sales Tax Act in accordance with law and in the light of the principles laid down in the decisions of courts, referred to hereinabove. We hereby do so.
6. Before closing, we are constrained to observe that it is not for the first time that the assessees have approached this Court, under Article 226 of the Constitution, for a direction to compel the appellate or the assessing authorities functioning under the Sales Tax Act or under the Agricultural Income-tax Act, as the case may be, to exercise the discretion vested in them in accordance with law. In our experience, in almost all the cases which have come up before us, stereotyped orders as the one in this case (exhibit P9) are alone passed. On more than one occasion, this Court had reminded the statutory authorities functioning under the various Acts of their obligations under the statute to pass a speaking order and to exercise the discretion vested in them in accordance with law and in the light of the guidelines laid down by the decisions of courts. The Board of Revenue (Taxes) should have been aware of the matter. But, it is regrettable to note that there is no adherence to the norms laid down by this Court in the exercise of the discretion by the concerned authorities. The appeals preferred before the appellate authorities under the various taxing statutes may involve many questions–from simple estimated additions to complicated questions of law. It is only after an evaluation and appraisal of the facts and circumstances in each case, the appellate or the assessing authority should decide as to the nature of the order that should be passed in the stay petitions. If without an independent evaluation and appraisal of facts, a mechanical order like exhibit P9 is issued, it will cause irreparable injury to the Revenue also and public interest is likely to suffer. For example, if a particular aspect or issue taken in appeal is covered by a decision of the Supreme Court or a decision of this Court in favour of the Revenue, the questions raised in the appeal may not disclose a prima facie case for stay of recovery proceedings. By the same token, if the question that is posed in the appeal is prima facie governed by the decision of the Supreme Court or the High Court in favour of the assessee, it may disclose a prima facie case for the stay of recovery proceedings. Then, plea raised in the appeal is not frivolous. In order to decide as to whether the appellant has made out a prima facie case, as against a frivolous one, the appellate or the assessing authority should look into the questions that are involved in the appeal. If it is not done and a mechanical order like exhibit P9 is passed, the exercise of discretion will cause hardship and irreparable injury to the parties, to the assessee or the Revenue, as the case may be. The serious repercussion that is likely to ensue as a result of the illegal or unreasonable exercise of the discretionary power, has not at all been borne in mind by the concerned authorities, in spite of clear guidelines laid down in a series of decisions.
7. We are of the view that this is a matter of public importance and it has not so far received proper and due attention of the concerned authorities. We directed the learned Government Pleader to request the Member of the Board of Revenue (Taxes) to be present in Court, so that he may be appraised of the seriousness of the matter. Accordingly, Mr. Gopalakrishna Pillai, Member, Board of Revenue (Taxes) was present in Court. We explained to him about the mechanical, casual and careless manner on which the authorities functioning under the Kerala General Sales Tax Act or the Agricultural Income-tax Act are passing orders in stay petitions, unmindful of their statutory duties and obligations and the irreparable injury and hardship that will ensue as a consequence thereof. Taking into account the submissions made by the Member, Board of Revenue (Taxes) in Court, it does not appear that the Board of Revenue which is the highest authority invested with powers to administer this branch is properly or fully in the know of things–a deplorable situation indeed. The Member (Board of Revenue) assured us that he will look into the matter personally and also take all effective steps to see that the statutory authorities function independently and in accordance with law. The learned Government Pleader also assured us in that behalf. In view of the above assurances, as at present advised, we do not propose to proceed further in the matter.
8. The judgment of the learned single Judge is unsustainable. It is set aside. The writ appeal is allowed. Exhibit P9 order is quashed. The first respondent is directed to dispose of the stay petition, pending before him, in accordance with law. Till then no recovery proceedings shall be taken.
A copy of this judgment will be sent to the Chief Secretary to Government, for information and appropriate action. Issue carbon copy of this judgment to counsel for the parties, on usual terms.