2008 (3) TMI 635 - HC - VAT and Sales Tax

Court Upholds 10% Pre-Deposit for Tax Appeal

Hindustan Petroleum Corporation Ltd. Versus State of Haryana and others

The court upheld the order requiring the petitioner-corporation to deposit 10% of the additional tax demand before appealing against an assessment order. ... Pre-deposit 10 per cent of the additional demand as pre-condition for entertaining the appeal filed by it against the order of assessment - Held that:- The authorities below, while taking into consideration the prima facie case, balance of convenience and irreparable loss, have ordered that the petitioner will pay only 10 per cent of the additional demand and furnish surety bond for the balance amount. The requirement to pay 10 per cent of the additional demand will not cause hardship, which can be termed as undue financial hardship, as 10 per cent of the additional demand is very nominal. Appeal dismissed. Issues:Challenge to order requiring deposit before appeal, Financial hardship faced by petitioner-corporation, Discretion exercised by authorities, Pre-deposit amount justified, Interference in writ jurisdiction.Analysis:The petitioner-corporation challenged an order by the Haryana Tax Tribunal, which directed them to deposit 10% of the additional tax demand before entertaining their appeal against an assessment order for the year 1999-2000. The petitioner argued that the financial condition of the corporation, suffering losses due to low government-fixed fuel prices, warranted a waiver of the pre-deposit condition. However, the court, considering precedents like Indu Nissan Oxo Chemicals Ind. Ltd. v. Union of India and Union of India v. Adani Exports Ltd., held that the authorities had rightly exercised discretion in favor of the petitioner by ordering the deposit of only 10% of the additional demand to safeguard revenue interests. The court emphasized that the financial hardship faced by the petitioner was considered, and the pre-deposit amount was not unduly burdensome, being nominal. The court noted that the previous order cited by the petitioner was based on a concession and declined to interfere with the impugned order.The court clarified that while the petitioner had challenged the assessment order, the focus of the petition was on the direction to deposit 10% of the additional demand. The petitioner argued that the authorities had not fully appreciated the challenges faced by the corporation in running its business and that the financial position was not as strong as assessed. The petitioner contended that they had a strong case on merits and that the pre-deposit condition should have been waived off considering the circumstances. However, the court, following established legal principles, held that the authorities had appropriately considered the financial hardship faced by the petitioner and had balanced the interests of the revenue by ordering a reasonable pre-deposit amount. The court highlighted that the discretion exercised by the authorities was within the legal framework and did not warrant interference in the writ jurisdiction of the court.In conclusion, the court dismissed the petition, upholding the order requiring the petitioner-corporation to deposit 10% of the additional tax demand as a pre-condition for entertaining the appeal. The court found that the pre-deposit amount was justified considering the circumstances and the interests of the revenue, and that the financial hardship claimed by the petitioner did not amount to undue hardship. The court, based on legal precedents and the specific facts of the case, declined to interfere with the order passed by the authorities, emphasizing the nominal nature of the pre-deposit amount and the legal discretion exercised in the matter.