2023 (11) TMI 717 - HC - VAT and Sales Tax

Punjab and Haryana HC reduces pre-deposit requirement from 25% to 10% under Section 62(5) PVAT Act citing financial hardship

M/s. Shiva TexFabs Ltd. Versus State of Punjab and ors.

M/s. Shiva TexFabs Ltd. Versus State of Punjab and ors. - TMI Issues involved:The judgment involves challenges to assessment orders for the assessment year 2015-16, focusing on financial difficulties faced by the petitioner in complying with pre-deposit conditions under Section 62(5) of Act 2005.Assessment Order Challenge:The petitioner, engaged in the business of manufacturing and selling yarn, challenged assessment orders due to financial constraints in complying with pre-deposit conditions. The assessment order disallowed input tax credit claimed on certain purchases, leading to financial burden on the petitioner.Appeals and Tribunal Proceedings:The petitioner filed appeals against the assessment orders, but due to financial constraints, was unable to fulfill pre-deposit requirements leading to rejection of appeals. The Punjab VAT Tribunal dismissed the appeal, granting a limited time for pre-deposit.Legal Precedents and Arguments:The petitioner relied on legal precedents, including the judgment in M/s Tecnimont Pvt. Ltd's case, to support the argument of financial hardship. The petitioner's financial difficulties were highlighted, including heavy debts and inability to pay due to market conditions.Court's Decision:The Court considered the financial hardship faced by the petitioner, noting the petitioner's regular payment of GST and debt obligations. In light of the petitioner's financial situation and willingness to deposit 10% as pre-deposit, the Court directed the authorities to entertain the appeal and decide on merits by accepting the reduced pre-deposit amount, exercising inherent powers under Article 226 of the Constitution of India.