2023 (2) TMI 603 - HC - VAT and Sales Tax

High Court Quashes Rs. 7.12 Crore VAT Pre-Deposit Order; Directs State to Secure Petitioner's Property, Expedite Appeal.

The HC quashed the VAT Tribunal's order requiring a pre-deposit of Rs. 7.12 Crore, retaining the Rs. 30,75,000 already deposited with the First Appellate ... Demand of pre-deposit - petitioner is aggrieved by the fact that it has a good case on merit and the orders of the Assessing Officer and the First Appellate Authority are based on assumption and presumption and lacks the factual basis - grievance on the part of the petitioner is that the VAT Tribunal decided the entire Revision Application and the Second Appeal at the pre-deposit stage of hearing - HELD THAT:- Here, as can be noticed from the order of the First Appellate Authority it has while quantifying the amount of Rs.30.75 Lakh already given the reasoning for such an amount to be paid by the petitioner. However, when it came to the Tribunal in the Second Appeal, it has directed the petitioner to deposit Rs.7.12 Crore which is the sum on higher side. The petitioner has pleaded his limitation to pay the amount and the pandemic due to Covid-19 virus is also another reason for him to show his inability to deposit the amount of pre-deposit. Noticing the fact that the base order has been passed exparte and thereafter, the challenge had been made to the First Appellate Authority and then there is a pendency of Second Appeal before the Second Appellate Authority, the matter would require adjudication at the hands of the Appellate Forum and at the same time the requirement of deposit of predeposits in accordance with the law as quantified by the First Appellate Authority is already deposited before the Authority concerned. Without endorsing to the action of the Tribunal the amount of Rs.7.12 Crore directed to be deposited as predeposit may not be insisted upon in wake of these glaring facts, the property which is attached is valued at Rs.61 Crore and therefore also, the revenue’s interest is protected aptly. Petition allowed. Issues:Challenge to order of Gujarat Value Added Tax Tribunal for pre-deposit of tax of Rs. 7,12,00,000 based on Revision Application and Second Appeal.Analysis:1. The petitioner contested the order of the Gujarat Value Added Tax Tribunal dated 17.01.2022, which mandated a pre-deposit of Rs. 7,12,00,000. The petitioner argued that the Assessment Officer and the First Appellate Authority's decisions were unfounded and lacked factual basis. The petitioner, a registered dealer under the VAT Act and CST Act, engaged in reselling motor vehicles and parts, challenged the ex-parte Assessment Order for the Financial Year 2015-16 issued by the Assistant Commissioner of State Tax. The Assessment Order disputed the sales figures and imposed tax, interest, and penalty. 2. The petitioner sought relief from the High Court, requesting the quashing of the Tribunal's order and a direction for a merit-based hearing without the pre-deposit. The petitioner highlighted that the Tribunal's decision at the pre-deposit stage hindered access to legal remedies and imposed onerous conditions. The petitioner's property worth approximately Rs. 61 Crore was attached by the authorities, leading to the dispute over the pre-deposit amount.3. The valuation report of the petitioner's property revealed a total value of Rs. 61,55,29,000, with the property under a bank lien. The outstanding dues to the bank significantly decreased, indicating a reduced liability. The petitioner argued against the excessive pre-deposit amount of Rs. 7.12 Crore, citing financial constraints exacerbated by the COVID-19 pandemic.4. The Court examined the legal provisions regarding pre-deposit requirements for appeals and revisions under Section 73 of the relevant statutes. The Court noted the discrepancy between the First Appellate Authority's pre-deposit amount of Rs. 30,75,000 and the Tribunal's demand for Rs. 7.12 Crore. Considering the ex-parte nature of the base order and the pending Second Appeal, the Court decided to quash the Tribunal's order, retaining the amount deposited with the First Appellate Authority.5. The Court directed the State to create a charge on the property under the bank lien and instructed the petitioner to refrain from incurring additional liabilities on the same property. The Court emphasized the completion of the pending Second Appeal within three months and the creation of the charge by the State within two weeks.6. In conclusion, the Court allowed the petition, setting aside the excessive pre-deposit requirement and ensuring a fair adjudication process for the pending appeal, while safeguarding the interests of both parties involved.