Court Strikes Down Section 62(5) VAT Act, Orders Reconsideration

M/s Nanak Rice and Gen. Mills Versus The State of Punjab and others

M/s Nanak Rice and Gen. Mills Versus The State of Punjab and others - TMI Issues:
Challenge to the constitutionality of Section 62(5) of the Punjab Value Added Tax Act, 2005; Quashing of specific orders dated 19.12.2012, 29.11.2013, and 12.2.2015.

Analysis:
The petitioner sought a declaration that Section 62(5) of the PVAT Act is unconstitutional for mandating a 25% deposit of tax, interest, and penalty without allowing the appellate authority discretion to waive this requirement. Additionally, the petitioner aimed to annul specific orders issued on 19.12.2012, 29.11.2013, and 12.2.2015. The petitioner, a registered dealer operating a rice mill, had an unutilized exemption as of 1.4.2005. Following an assessment for the year 2008-09, the Assessing authority demanded payment due to the petitioner's failure to export 25% of its turnover. Appeals were filed, but were dismissed for not complying with the 25% deposit requirement under Section 62(5) of the PVAT Act.

The Court considered the precedents and legal principles established in previous cases, particularly CWP No.26920 of 2013, to determine the applicability of Section 62(5) of the PVAT Act. It was concluded that the appellate authority has the power to waive the pre-deposit condition in deserving cases to prevent the appeal's purpose from being frustrated. The provision was deemed directory, granting authority to partially or completely waive the pre-deposit requirement based on the circumstances. The power to grant interim protection/injunction by the first appellate authority in cases of undue hardship was upheld as legal and valid. The Court emphasized that such discretion should not be exercised routinely, but only when a strong prima facie case justifies it.

In alignment with the principles established in previous cases, the Court disposed of the writ petition in a manner consistent with the decision in Punjab State Power Corporation Limited's case. The orders dismissing appeals due to non-compliance with the pre-deposit condition were set aside, and the matters were remitted to the first appellate authority for reconsideration. The appellate authority was directed to adjudicate applications for interim protection/injunction in light of the legal principles outlined, ensuring that the purpose of the appeals is not frustrated by the pre-deposit requirement.