2022 (12) TMI 716 - HC - VAT and Sales Tax

Court upholds Additional Commissioner's condition on tax deposit. Discretionary power under AP VAT Act cited.

The court upheld the condition imposed by the Additional Commissioner (CT) for the petitioners to deposit an additional 25% of the disputed tax, finding ... Seeking deposit of 50% of the disputed tax by giving credit to the tax already deposited - grant of stay of collection of disputed tax pending appeal filed by petitioners before the VAT Appellate Tribunal - it is alleged that the petitioners have not produced the Foreign Buyer Purchase Agreements to claim exemption under export sales - HELD THAT:- As can be seen, under Section 33 of the AP VAT Act, 2005, a dealer aggrieved by the order passed by the revisional authority under Section 32 of the AP VAT Act, 2005 can file an appeal before the VAT Appellate Tribunal. Then the second proviso to Section 33(2) of the AP VAT Act, 2005 says that no appeal against the order passed under sub-section (2) of Section 32 shall be admitted unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due and 25% of the difference of the tax. Thus, it is mandatory that while preferring appeal a dealer shall make a pre-deposit of admitted tax plus 25% of the differential tax to admit the appeal. In the instant case, the petitioners have admittedly fulfilled the said condition. An appeal can be filed before the Appellate Tribunal under Section 33(1)(a) or (b). In the instant case, appeal is preferred under Section 33(1)(b) as against the order of the revisional authority. Then following Section 33(6) of the AP VAT Act the petitioners prayed the 3rd respondent for stay. As per Section 33(6)(a), the said authority is vested with the discretionary power of granting stay subject to such terms and conditions as he may deem fit. As has been observed by the Division Bench in ACT Digital Home [2021 (9) TMI 1149 - ANDHRA PRADESH HIGH COURT], if the mandatory deposit of 25% of the disputed tax as prescribed under the second proviso of Section 33(2) of the AP VAT Act, 2005 is sufficient to obtain stay of payment of the differential tax pending appeal, certainly the provision under Section 33(6) will become nugatory and otiose. Therefore, following the ratio in the ACT Digital Home, it can be said that the initial pre-deposit of 25% made under Section 33(2) of the AP VAT Act, 2005 will not automatically entitle any dealer to claim stay of collection of the differential tax pending his appeal as a matter of right. Petition dismissed. Issues Involved:1. Legality of the condition imposed by the Additional Commissioner (CT) for the petitioners to deposit 50% of the disputed tax pending appeal.2. Validity of the revision order denying exemption on export sales due to lack of Foreign Buyer Purchase Agreements.3. Adequacy of the mandatory pre-deposit of 25% of the disputed tax for granting stay.Detailed Analysis:1. Legality of the Condition Imposed for Additional Deposit:The petitioners challenged the condition imposed by the Additional Commissioner (CT) requiring them to deposit 50% of the disputed tax, arguing that the mandatory pre-deposit of 25% should suffice for granting stay. The court analyzed Section 33 of the AP VAT Act, 2005, which mandates a pre-deposit of 25% of the differential tax for admitting an appeal. However, Section 33(6)(a) grants discretionary power to the authority to impose terms and conditions for stay. The court referred to the judgment in ACT Digital Home Entertainment Pvt. Ltd. v. The State of Andhra Pradesh, which clarified that the pre-deposit does not automatically entitle a dealer to a stay. The court found no legal flaw in the impugned order and upheld the condition imposed by the Additional Commissioner (CT).2. Validity of the Revision Order Denying Exemption on Export Sales:The petitioners argued that the revision order denying exemption on export sales was erroneous as they had already submitted H forms and bill of lading, and the submission of Foreign Buyer Purchase Agreements was not mandatory. The court noted that the revision order was based on the absence of Foreign Buyer Purchase Agreements, which the 2nd respondent deemed necessary. The court acknowledged the petitioners' inability to participate in the revision proceedings due to the COVID-19 pandemic but did not find this sufficient to invalidate the revision order. The court emphasized that the grounds projected by the petitioners required thorough verification with reference to the records during the appeal hearing.3. Adequacy of the Mandatory Pre-Deposit for Granting Stay:The petitioners contended that the initial deposit of 25% of the disputed tax should be sufficient for granting stay without additional conditions. The court referred to the judgments in Sri Dedeepriya Paints and the High Court of Telangana, which suggested that pre-deposit of 12.5% or more should suffice for stay. However, the court distinguished these judgments based on the ruling in ACT Digital Home Entertainment Pvt. Ltd., which stated that pre-deposit does not automatically suspend the realization of the remainder tax liability. The court concluded that the discretionary power under Section 33(6)(a) allows the authority to impose additional conditions for stay, and the initial pre-deposit does not entitle the petitioners to a stay as a matter of right.Conclusion:The court dismissed the writ petition, upholding the condition imposed by the Additional Commissioner (CT) for the petitioners to deposit an additional 25% of the disputed tax. The court found no legal flaw in the order and emphasized that the discretionary power granted under Section 33(6)(a) of the AP VAT Act, 2005, allows the authority to impose such conditions for granting stay. The court also noted that the grounds projected by the petitioners required thorough verification during the appeal hearing.