2022 (5) TMI 1189 - HC - VAT and Sales Tax

Court confirms rejection of appeals for non-compliance, allows petitioner to pursue with required deposits by April 30, 2022.

The court confirmed the orders rejecting the appeals for non-compliance with pre-deposit requirements but allowed the petitioner to pursue appeals upon ... Requirement of pre-deposit - Whether the revisional authority-Commissioner of Sales Tax is legally justified in sustaining the orders rejecting appeals summarily by the appellate authority-Joint Commissioner of Sales Tax for want of deposit of 10% of the amount of tax in dispute under the OVAT Act and 20% of the amount of tax under the OET Act? - HELD THAT:- In JINDAL STAINLESS LTD. VERSUS STATE OF ORISSA AND OTHERS [2014 (9) TMI 372 - ORISSA HIGH COURT] this Court delved into the question as to whether the condition precedent for pre-deposit of 20% [reduced to 10% vide OVAT (Amendment) Act, 2017] of tax or interest or both in dispute in addition to payment of admitted tax for entertaining an appeal as provided under Section 77(4) of the OVAT Act read with proviso to Rule 87 of the OVAT Rules is unreasonable, oppressive, violative and ultra vires of Article 14 of the Constitution of India - for “entertainment of appeal”, appeal under the OVAT Act is required to be accompanied by satisfactory proof of payment of admitted tax in full and ten per centum of the tax or interest or both, in dispute and that appeal under the OET Act is required to be accompanied by satisfactory proof of payment of admitted tax in full and twenty per centum of the tax or interest or both, in dispute. In THE BENGAL IMMUNITY COMPANY LIMITED VERSUS THE STATE OF BIHAR AND OTHERS [1955 (9) TMI 37 - SUPREME COURT], the Hon’ble Supreme Court has observed that if there is any hardship, it is for the Parliament to amend the law, but the Court cannot be called upon to discard the cardinal rule of interpretation for mitigating a hardship. If the language of an Act is sufficiently clear, the Court has to give effect to it, however, inequitable or unjust the result may be. As is said, ‘dura lex sed lex’ which means ‘the law is hard but it is the law’. Even if the statutory provision causes hardship to some people, it is not for the Court to amend the law. A legal enactment must be interpreted in its plain and literal sense as that is the first principle of interpretation. Since statutory deposits as discussed in the foregoing paragraphs were not made, the appeals were rejected summarily. Summary rejection orders were carried in revision before the Commissioner of Sales Tax, Odisha who has upheld the rejection orders of the appellate authority. It appears the petitioner has been bona fide pursuing its matter before different fora. Since the counsel for the petitioner has prayed for grant of opportunity to make statutory deposit, it is, therefore, pertinent to observe that the appellate authority shall not raise any objection as to limitation in view of the fact that the petitioner has been pursuing its matter diligently - So far as stay of recovery of demand of tax and penalty under the OVAT Act is concerned, in view of Section 77(5) as amended by virtue of the Odisha Value Added Tax (Amendment) Act, 2017, realization of the balance tax and penalty under dispute shall remain stayed till disposal of the appeal. The present writ petition stands disposed of. Issues Involved:1. Propriety of the common Order dated 17.02.2021 by the Commissioner of Sales Tax, Odisha.2. Financial constraints in making statutory deposits under OVAT and OET Acts.3. Summary rejection of appeals by the Joint Commissioner Sales Tax.4. Consideration of financial hardship and COVID-19 impact.5. Legal justification of pre-deposit requirements for appeal under OVAT and OET Acts.Detailed Analysis:1. Propriety of the Common Order Dated 17.02.2021:The petitioner challenged the common order passed by the Commissioner of Sales Tax, Odisha, which upheld the orders of the Joint Commissioner Sales Tax rejecting the appeals summarily for non-compliance with the pre-deposit requirements under Section 77(4) of the OVAT Act and Section 16(4) of the OET Act. The petitioner invoked Article 226 of the Constitution of India, seeking to set aside the impugned orders due to financial constraints.2. Financial Constraints in Making Statutory Deposits:The petitioner, M/s. Sumanshree Decoratives, dealing in construction materials, highlighted financial constraints in meeting the statutory deposit requirements. The petitioner presented evidence of declining business activities and financial statements from 2013-14 to 2017-18 to demonstrate the inability to make the required deposits of Rs. 5,25,859 under the OVAT Act and Rs. 1,53,187 under the OET Act.3. Summary Rejection of Appeals by the Joint Commissioner Sales Tax:The Joint Commissioner Sales Tax rejected the appeals for non-compliance with the deposit requirements. The petitioner argued that the appellate authority failed to consider the financial hardship and the impact of the COVID-19 pandemic, which exacerbated the financial stress. The revisional authority also upheld the summary rejection, citing mandatory compliance with the statutory pre-deposit requirements.4. Consideration of Financial Hardship and COVID-19 Impact:The petitioner contended that the authorities should have considered the financial hardship and the ongoing impact of the COVID-19 pandemic. The petitioner argued that the rigidity of the statutory provisions rendered the alternative remedy illusory and unworkable. The court noted that the financial health of the business and the pandemic's impact should have been considered, but the statutory requirements were clear and mandatory.5. Legal Justification of Pre-Deposit Requirements for Appeal:The court referred to previous judgments, including Jindal Stainless Ltd. Vrs. State of Odisha, which upheld the constitutionality of pre-deposit requirements under the OVAT Act. The court reiterated that the right of appeal is statutory and can be conditioned by the legislature. The provisions of Section 77(4) of the OVAT Act and Section 16(4) of the OET Act were deemed reasonable and within the legislative power.Conclusion:The court confirmed the orders rejecting the appeals summarily for non-compliance with the pre-deposit requirements. However, the court allowed the petitioner to pursue the appeals upon making the required deposits by 30th April 2022, subject to adjustment of any amounts already paid. The appellate authority was directed to restore the appeals and proceed with the hearing on merits, ensuring no objection on the grounds of limitation due to the petitioner's diligent pursuit of the matter. The court also referenced the advisory nature of the Commissioner of Sales Tax's communication, suggesting that no additional payments beyond the mandatory pre-deposit should be insisted upon during the pendency of the appeal. The writ petition was disposed of with no costs.