2024 (10) TMI 1175 - HC - VAT / Sales Tax

Tribunal's pre-deposit waiver refusal quashed for failing to consider appellant's prima facie case merits

Kandla Motors Pvt. Ltd. Versus State of Gujarat

Gujarat HC quashed Tribunal's order declining waiver of pre-deposit without considering appellant's prima facie case. Tribunal failed to assign reasons ... Violation of principles of natural justice - declination to grant waiver of pre-deposit to the appellant without assigning any reasons for such decision - declination to grant waiver of pre-deposit to the appellant even though the entire demand is based upon Section 61 of the VAT Act which is wholly irrelevant to the issue of determination of “sale price” - declination to grant waiver of pre-deposit to the appellant even though adjustment of tax liability is clearly permissible under Section 8 of the VAT Act - declination to grant waiver of pre-deposit to the appellant even though the appellant has a strong prima facie case squarely supported by decision of Hon’ble Supreme Court in the case of Southern Motors [2017 (1) TMI 958 - SUPREME COURT]. HELD THAT:- On perusal of the impugned order passed by the Tribunal dated 16.06.2022 as well as the order dated 18.11.2022 dismissing second appeals on the ground of non-payment of pre-deposit, it is opined that the Tribunal has admittedly not considered the prima facie case of the appellant while determining the amount of pre-deposit which ought to have been considered as per the decision of this Court in case of Kavya Marketing [2022 (4) TMI 1202 - GUJARAT HIGH COURT]. The impugned order passed by the Tribunal is accordingly quashed and set aside. The appeals are therefore allowed by remanding the matter back to the Tribunal to consider the prima facie case of the appellant for deciding the quantum of pre-deposit, if required. Issues:Admission of Tax Appeals on substantial questions of law; Dismissal of appeals by Tribunal for non-payment of pre-deposit; Tribunal's determination of pre-deposit amount; Consideration of prima facie case by Tribunal.Analysis:1. The High Court admitted Tax Appeals based on substantial questions of law regarding the justification of the Gujarat Value Added Tax Tribunal in not granting waiver of pre-deposit to the appellant for various assessment periods. The Tribunal dismissed the appeals for non-payment of pre-deposit, leading to the appellant challenging the orders.2. The Tribunal's common order dated 16.06.2022 in Second Appeal Nos. 373 to 379 of 2020 for certain assessment periods indicated no pre-deposit direction was required based on specific provisions of the Value Added Tax Act. However, for other years, pre-deposit orders were issued. The Tribunal's subsequent order dismissed appeals for non-compliance with pre-deposit requirements.3. The appellant argued that since no pre-deposit direction was given for certain assessment periods, the appeals for those periods should not have been dismissed for non-compliance. The Tribunal's order detailing pre-deposit amounts for subsequent years was based on specific considerations and provisions of the law.4. The High Court observed that the Tribunal failed to consider the appellant's prima facie case while determining the pre-deposit amount. The Court highlighted the importance of examining the merits of the case at the pre-deposit stage and not summarily dismissing appeals based on non-payment of pre-deposit.5. The Court referenced a previous judgment in the case of Kavya Marketing, emphasizing the discretion of the appellate authority to entertain appeals without strict adherence to pre-deposit requirements in certain circumstances. The Tribunal's failure to address the appellant's prima facie case was deemed as a serious error of law.6. The appellant also cited a decision of the Honorable Supreme Court regarding the treatment of trade discounts in tax invoices, arguing that the Tribunal did not consider this aspect in determining the pre-deposit amount. The Court agreed that the Tribunal overlooked the appellant's prima facie case.7. Consequently, the High Court quashed the Tribunal's orders and remanded the matter back for reconsideration, emphasizing the need for the Tribunal to evaluate the appellant's prima facie case while deciding the quantum of pre-deposit. No costs were awarded in this decision.