2016 (8) TMI 136 - HC - VAT and Sales Tax

High Court Orders Pre-Deposit Payment for VAT Appeal

The High Court directed the petitioner, a registered dealer under the Gujarat Value Added Tax Act, to pay the remaining balance of around Rs. 75 lakhs as ... Waiver of pre-deposit - Input tax credit - AO arrived at a conclusion that though the petitioner had not entered into the sales and purchases transactions, the tax was collected illegally. - The case of the petitioner is that though the outstanding tax liability as per the reassessment order had already been paid, still however the first appellate authority directed the petitioner to deposit an amount of ₹ 1 crore which, according to the authority, amount to equal to undisputed liability of the petitioner. - Held that:- it appears to this Court that ultimately the orders impugned reflect the payment of total demand of tax and interest which comes to ₹ 39,38,927/- and ₹ 35,45,034/- totaling around approximately ₹ 75 lacs. Therefore, keeping all the rights open of the petitioner, if the petitioner has already paid an amount of ₹ 49,66,903/-, we deem it proper to direct the petitioner to pay the balance amount. Meaning thereby an amount (-) ₹ 49,66,903/-, so that ultimately total amount of ₹ 75 lacs be paid by the petitioner by way of pre-deposit. - stay granted partly. Issues:Challenge to order of Gujarat Value Added Tax Tribunal and Deputy Commissioner of Commercial Tax.Analysis:The petitioner, a private limited registered dealer under the Gujarat Value Added Tax Act and the Central Tax Act, challenged orders passed by the Gujarat Value Added Tax Tribunal and the Deputy Commissioner of Commercial Tax. The petitioner contended that it had genuine sales and purchases transactions, had paid outstanding tax liabilities, and deposited differential tax amounts into the Government treasury. However, a reassessment notice was issued alleging circular transactions, leading to a huge demand and penalties under various sections of the VAT Act. The petitioner appealed before the Deputy Commissioner of Commercial Tax, arguing that the outstanding tax had been paid before the reassessment order, but the authority directed a deposit of Rs. 1 crore for the first appeal. The first appeal was dismissed for nonpayment, prompting the petitioner to file a second appeal before the VAT Tribunal.The petitioner argued before the VAT Tribunal that the outstanding tax amount had been paid, but the Tribunal directed further deposits based on incorrect observations. The petitioner filed a rectification application and approached the High Court challenging the orders of the VAT Tribunal and the Deputy Commissioner of Commercial Tax. The petitioner's counsel contended that the orders were arbitrary, misdirected on payment considerations, and violated the provisions of the VAT Act regarding pre-deposits. The respondent, representing the Commercial Tax Department, justified the orders citing a huge demand and lack of proof of payment by the petitioner.During the proceedings, the VAT Tribunal rectified its earlier observations regarding the petitioner's willingness to pay further amounts. The High Court, after hearing both parties and reviewing the orders, noted a total demand of around Rs. 75 lakhs comprising tax and interest. Considering that the petitioner had already paid a significant amount, the Court directed the petitioner to pay the remaining balance as a pre-deposit. The Court instructed the Tribunal to verify the payment and remand the appeal if the payment was confirmed, allowing the first appellate authority to hear the appeal on merits promptly.The High Court disposed of the petition, emphasizing that the directions were focused on the pre-deposit issue, leaving the merits of the case open for the petitioner to address before the appellate forum.