Automatic vacation of stay order after expiry of 365 days is not permissible

Last updated: 13 April 2021
Quick Summary
The Supreme Court has ruled that the automatic vacation of a stay order on tax assessments after 365 days is unconstitutional if the delay in hearing the appeal is not the assessee's fault. The court found the previous provision arbitrary and discriminatory, violating Article 14 of the Constitution. Consequently, a stay order will only be vacated if the delay in disposing of the appeal is attributable to the assessee.

Court :
Supreme Court of India

Brief :
The Hon'ble Supreme Court in Deputy Commissioner of Income Tax v. Pepsi Foods Ltd. [Civil Appeal Nos. 1106 to 1139 of 2021 decided on April 6, 2021] has upheld the Hon'ble Delhi High Court's verdict of partially striking down third proviso to Section 254(2A)of the Income Tax Act, 1961 ('IT Act') which did not permit extension of a stay on tax assessment beyond 365 days even if the assessee is not responsible for delay in hearing of appeals by terming it as 'arbitrary and discriminatory'.

Citation :
Civil Appeal Nos. 1106 to 1139 of 2021 decided on April 6, 2021

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Bimal Jain
Published in GST
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