2024 (11) TMI 662 - HC - VAT / Sales Tax

Tribunal must hear appeal on merits after assessee files undertaking not to utilize Rs. 18 lakh input tax credit

Messrs Optiemus Infracon Ltd. Versus Gujarat Value Added Tax Tribunal & Ors.

Gujarat HC held that the Tribunal erred in dismissing the appeal for non-compliance with pre-deposit order without considering merits. Since the First ... Dismissal of appeal for want of compliance of pre-deposit order passed by it without considering the merits of the assessee’s case on the issue of pre-deposit - failure to appreciate that in view of the approval of input tax credit by the First Appellate Authority the entire tax demand become otiose - insistence for further payment towards pre-deposit and grant of any stay against recovery - HELD THAT:- It appears that the Tribunal ought to have taken into consideration the appellate order whereby, the brought forward towards Input Tax Credit of Rs. 1,12,01,251/- was permitted for the period under consideration i.e. 2014-15 and the appellant ought to have been directed to block such credit of Rs. 18,00,000/- out the said brought forward Input Tax Credit for consideration of the appeals on merits. The appellant shall file an undertaking on affidavit before the Tribunal that the appellant shall not utilize the block Input Tax Credit amounting to Rs. 18,00,000/- from the input tax amounting to Rs. 1,12,01,251/- duly carried forward from Financial Year 2013-14 to 2014-15 which is available for utilization and shall not utilize such credit amount till the time the appeal is decided by the Tribunal - Upon filing such undertaking by the appellant before the Tribunal, the Tribunal shall hear the Second Appeal No. 813/2019 on merits. In view of the disposal of the appeal, Civil Application as well Special Civil Application would not survive and the same are accordingly disposed of. Issues:Challenge to order of Gujarat Value Added Tax Tribunal for want of compliance of pre-deposit order, consideration of merits of assessee's case on pre-deposit issue, approval of input tax credit by First Appellate Authority, necessity of further payment towards pre-deposit and grant of stay against recovery.Analysis:The appellant, a trader/reseller of Tablets, Mobiles, and accessories, challenged an assessment order by the Assistant Commissioner of State Tax, which raised a demand of Rs. 1,85,36,738/- due to curtailment of brought forward tax credit. The appellant filed appeals, contending that classification issues could lead to tax credit adjustment. The First Appellate Authority approved the brought forward tax credit of Rs. 1,12,01,251/-. The appellant's second appeal was dismissed by the Tribunal for non-compliance with the pre-deposit order, despite the input tax credit approval.The appellant sought various reliefs through a Special Civil Application, including quashing the orders of the Tribunal, Deputy Commissioner of State Tax, and the Assessment Order. The appellant also requested a stay on recovery proceedings and a direction to hear the appeal on merits without a pre-deposit condition. The appellant offered to block Rs. 18,00,000/- of the input tax credit and filed an undertaking not to utilize it until the appeal's decision.The Court noted the availability of Input Tax Credit of Rs. 1,12,01,251/- in the appellant's Electronic Credit Ledger. It directed the appellant to file an undertaking to block Rs. 18,00,000/- from the input tax credit until the appeal's decision, allowing the Tribunal to hear the appeal on merits. Consequently, the impugned order of the Tribunal was quashed to enable compliance with the directions and the order for pre-deposit. The Civil Application and Special Civil Application were disposed of due to the appeal's disposal.