2012 (1) TMI 138 - HC - VAT and Sales Tax

Interpretation of Punjab VAT Act deposit rule: Total tax amount required, not just additional demand

The Punjab and Haryana High Court ruled on the interpretation of section 62(5) of the Punjab Value Added Tax Act, 2005, concerning the deposit requirement ... Pre-deposit demand Held that:- The Tribunal was right in holding that the amount of 25 per cent to be deposited was to be calculated on the total amount of tax, interest and penalty which was imposed. Accordingly, no question of law much less a substantial question of law arises in these appeals. There is no merit in these appeals and the same are hereby dismissed. Issues:1. Interpretation of section 62(5) of the Punjab Value Added Tax Act, 2005 regarding the deposit requirement for hearing an appeal.2. Applicability of the Punjab Value Added Tax (Fourth Amendment) Ordinance, 2011 on the deposit requirement.3. Compliance with statutory provisions for appeal hearing.4. Jurisdiction of the Tribunal in ordering the appeal hearing by the first appellate authority.Analysis:The judgment by the Punjab and Haryana High Court dealt with various substantial questions of law raised by the Revenue against the respondent, focusing on the interpretation of section 62(5) of the Punjab Value Added Tax Act, 2005. The case involved assessment years 2007-08 to 2009-10 and issues related to the deposit requirement for hearing an appeal under the Act. The appeal was filed by the Revenue challenging the order of the Value Added Tax Tribunal, Punjab, regarding the provisional assessment for the assessment year 2009-10. The Tribunal had directed the Deputy Excise and Taxation Commissioner (Appeals) to hear the appeal on merits, leading to the present appeal by the Revenue.The main contention revolved around the interpretation of section 62(5) of the Act, specifically regarding the deposit requirement for the appeal to be heard. The State argued that the respondent was obligated to deposit 25% of the additional demand created, while the respondent contended that the deposit should be based on the total amount of tax, interest, and penalty imposed. The State relied on a previous court decision, emphasizing the wording change in the Punjab Value Added Tax (Fourth Amendment) Ordinance, 2011. However, the respondent argued that the Ordinance was prospective and did not apply to the present case.The High Court, after considering the submissions from both parties, upheld the respondent's argument. It referenced previous judgments to support the interpretation that the 25% deposit should be calculated based on the total demand raised, not just the additional demand created. The Court distinguished a previous case cited by the State, highlighting the factual differences and concluding that the judgment did not support the State's case. Additionally, the Court noted that the Ordinance came into effect after the Tribunal's decision, making it inapplicable to the present appeal.Ultimately, the High Court dismissed the appeals by the Revenue, affirming the Tribunal's decision on the deposit requirement interpretation. It concluded that no substantial question of law arose in the case, leading to the dismissal of the appeals.