TaxTMI 
TaxTMI 
2024 (2) TMI 662
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce tax was discharged by it on the said usage charges. 2. Heard learned Senior counsel for the petitioner and learned HCGP for the respondents. 3. The petitioner contend that respondent No. 2 passed orders under Section 39(1) of the Karnataka Value Added Tax Act (for short, 'KVAT Act') erroneously holding that the sub-stations / switchyards are movable in nature and therefore, the petitioner ought to have discharged tax at applicable rates under the provisions of the KVAT Act as the said transaction amounted to a 'transfer of right to use goods'. The First Appellate Authority having upheld the orders, petitioner has preferred appeals before the Karnataka Appellate Tribunal, Bengaluru. 4. The sole grievance of the petitioner before this Court in the present petition is that usage/lease rental charges are not being paid by the aforesaid holding company i.e., WWIL, which is now before the National Company Law Appellate Tribunal (for short, 'NCLAT'), in respect of which corporate insolvency resolution proceedings have been initiated and moratorium has been declared and the same is still pending adjudication. It is contended that in view of the aforesaid CIRP proceedings and re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....C) - W.P.(C) 1242/2022 & CM APPL. 3625/2022 dated 28.04.2023; iii. Bharat Earth Movers Limited, Bangalore Vs. State of Karnataka and Others - 2016 (84) Kar. L.J. 332 (HC); iv. Hare Krishna Enterprises Vs. State of Karnataka & ors - WP No. 7918/2022 (T-RES) dated 02.03.2023; v. M/s. Vega Auto Accessories (Pvt.) Ltd. Vs. Registrar, CESTAT and another - 2018 SCC Online Del 9219; vi. M/s. Shiva Tex Fabs Ltd. Vs. State of Punjab and ors. - CWP- 2650-2022 dated 03.10.2023; vii. Nagrath Paints (P) Ltd. Vs. Union of India - 1997 SCC Online All 1518; viii. Reliance Cellulose Products Ltd. Vs. CCE & C. & S.T., Hyderabad - 2014 SCC Online Hyd 1496. 7. Per contra, learned HCGP for the respondents would submit that the provisions being mandatory in nature, the petitioner has no option but to deposit 30% of the tax amount failing which, he would not be entitled to prosecute the appeal and as such, there is no merit in the petition and the same is liable to be dismissed. 8. I have given my anxious consideration to the rival submissions. 9. Before adverting to the rival contentions, it would be profitable to extract Section 63(4) of KV....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ls in STA Nos. 74, 75 and 76 of 2021 must stand rejected because the petitioner has not made the necessary pre-deposit. However, on 21.04.2022 this Court has granted stay of dismissal of the petitioner's appeals. 2. The petitioner, apart from calling in question the Tribunal's common order dated 03.03.2022, had challenged the validity of the provisions of Section 63(4) of the KVAT Act as arbitrary and unconstitutional, but consequent to this Court's orders dated 13.04.2022 and 20.04.2022, the prayers in this regard stand deleted. As such, the question that remains for consideration is whether there must be interference with the Tribunal's common order refusing to grant waiver of pre-deposit. The Tribunal has opined that waiver of pre-deposit cannot be granted, and Tribunal's opinion is in the light of this Court's decision in Holeyappa C Nayak V/s. The Karnataka Appellate Tribunal, Bengaluru and others This petition is disposed of by the order dated 07.03.2009. The Tribunal has finally concluded thus while rejecting the petitioner's application: "In view of aforesaid reasons, in the light of clear provision of law u/s.. 63(4) of the KVAT Act, 2003 and decision/s o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Appeal No. 4936/2016. The petitioner, who has placed on record bonafide circumstances to show just cause against delay, cannot be denied the benefit of ITC, and ultimately the petitioner's grievance would be addressed with the decision of the Hon'ble Supreme Court and consideration of the circumstances that could justifiably explain the delay. 6. Sri Sandeep Huilgol argues that this Court, in deciding on the petitioner's request for waiver of pre-deposit under Section 63(4) of the KVAT Act, must consider the afore circumstances and decide on the petitioner's further request for deferring the proceedings in STA Nos. 74, 75 and 76 of 2021 under Section 63(5) of the KVAT Act. In comparable circumstances, this Court has granted certain waiver and in this regard, he places reliance upon the decision of this Court in W.P. No. 16323/2016 [This petition is disposed of on 24.03.2016.] and W.P. No. 9511/2021 [This petition is disposed of on 23.06.2021.] with caveat that this Court, while considering the question of waiver of pre-deposit for stay under Section 62 of the KVAT Act in these cases, has granted such waiver in the light of the fact that the petitioners in such cases were p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and admitted by the Tribunal. Redoubtably, the appeals would be registered and admitted only when there is pre-deposit in compliance with the provisions of Section 63(4) of the KVAT Act. As such, this Court must consider, as first mentioned, whether there must be interference with the Tribunal's impugned common order refusing to grant waiver of pre-deposit. 10. It is seen from the different decisions relied upon by Sri. Sandeep Huilgol, including the decision in Bharat Earth Movers Limited, Bangalore v. State of Karnataka and Others (2016) 84 Kar.L.J. 332 and in writ petition No. 16323/2016 that in the cases of public undertakings the requirement of pre-deposit is modulated providing for lesser percentage with further directions to furnish bank guarantee. These decisions have prevailed without challenge, and it follows from this that this Court in exercise of jurisdiction under Article 226 of the Constitution of India has modulated the requirement of pre-deposit depending on the facts and circumstances of the case. The modulation is in due deference to the statutory provisions and also to ensure that the appellate remedy is adequately exhausted. In fact, in the decision o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....consideration of these circumstances, and this Court's opinion on modulating the requirement of pre-deposit under Section 63(4) of the KVAT Act in the light of the earlier decision of this Court, this Court is of the considered view that the petitioner, which cannot be granted complete waiver, must deposit 50% (15% of the amount in demand) of the requirement of pre-deposit under Section 63(4) of the KVAT Act with reasonable time. Hence, the following: ORDER [a] The petition is allowed in part, and the Tribunal's order dated 03.03.2022 in STA Nos. 74, 75 and 76 of 2021 is modified. The petitioner is permitted to deposit 50% (that is 15% of the amount in demand) as required under Section 63(4) of the KVAT Act and the petitioner shall be at liberty to make this deposit within six (6) weeks from the date of receipt of a certified copy of this order. [b] If the petitioner makes deposit as now permitted within the time allowed, the Tribunal shall consider, in accordance with law, the petitioner's application, if filed, under Section 63(5) of the KVAT Act for deferring the proceedings in STA Nos. 74, 75 and 76 of 2021 until the decision of the Hon'ble Supreme Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eal before the appellate authority. He therefore contended that in the instant case, the outstanding dues claimed by the department is Rs. 33,90,93,440-00 and that 30% of that amount would be around Rs. 10 crores and odd. When the petitioner is not liable to pay any amount of tax, insisting for payment of 30% of the tax in terms of clause (c) of sub-Section 4 of Section 62 of the Act would be a huge liability on a public sector undertaking. It was therefore contended that relief be granted to the petitioner by waiving the deposit of even 30% of the tax amount. 5. Per contra, learned AGA appearing for the respondents expressed apprehension on any such waiver being granted to the petitioner as it could become precedent in respect of other assesses and it would be by passing the provision of sub-Section 4 of Section 62 of the Act. He also contended that the petitioner is a company which is in comfortable financial condition and that no hardship whatsoever would be caused to the petitioner, if the statutory deposit is to be made. He also contended that the Hon'ble Supreme Court granted relief to Bharath Petroleum Corporation Limited having regard to the fact that it was a publ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2014. With the aforesaid directions and observations, these Writ Petitions stand disposed. It is made clear that this order has been made keeping in mind the fact that the petitioner is a public sector undertaking and cannot be treated as precedent of in respect of other assesses." The other judgments relied upon by the petitioner also reiterate the same principle. 13. The aforesaid judgments will clearly indicate that it cannot be said that this Court while exercising its power under Article 226 of the Constitution of India is powerless either to reduce the quantity of pre-deposit or to waive it completely depending on the facts obtaining in the specific cases. 14. Insofar as the judgments relied upon by learned HCGP is concerned, the same were rendered in the facts and circumstances obtaining in the said case and no ratio, much less any principle of law is laid down to the effect that this Court does not have powers / jurisdiction under Article 226 of the Constitution of India to waive / reduce the pre-deposit. 15. Under these circumstances, I am of the considered opinion that depending on the peculiar / special facts and circumstances of a case, it is always....