2000 (11) TMI 1209 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Quashing of orders denying tax exemption.
2. Application of Section 39(5) of the Haryana General Sales Tax Act, 1973.
3. Evaluation of financial inability to pay tax.
4. Consideration of merits at the stage of exemption application.
5. Jurisdiction of High Court under Article 226 of the Constitution of India.

Detailed Analysis:

1. Quashing of Orders Denying Tax Exemption:
The petitioner sought quashing of orders dated August 10, 1999, and May 25, 2000, passed by the Joint Excise and Taxation Commissioner (Appeals), Ambala, and the Sales Tax Tribunal-II, Haryana, respectively. These orders declined the petitioner's request for exemption from payment of tax, which is a condition precedent for entertaining an appeal under Section 39(1) of the Haryana General Sales Tax Act, 1973.

2. Application of Section 39(5) of the Haryana General Sales Tax Act, 1973:
Section 39(5) stipulates that no appeal shall be entertained unless the tax assessed, penalty, and interest are paid. The first proviso allows the appellate authority to entertain the appeal without full payment if the appellant is unable to pay due to financial inability. The court emphasized that the inability to pay refers to financial incapacity, not legal or procedural complications.

3. Evaluation of Financial Inability to Pay Tax:
The petitioner argued that due to legal complications with the Railway Department, it could not pay the tax. The appellate authority and the Tribunal rejected this, stating that the petitioner did not establish financial inability. The court upheld this, noting that the petitioner, being a government department, did not prove financial difficulty but rather cited legal hurdles, which do not qualify for exemption under Section 39(5).

4. Consideration of Merits at the Stage of Exemption Application:
The petitioner contended that the assessment order was contrary to law, and thus, it should not be burdened with the tax payment. The court reiterated that at the stage of considering an exemption application, the merits of the case are irrelevant. The focus should solely be on the appellant's financial ability to pay the tax.

5. Jurisdiction of High Court under Article 226 of the Constitution of India:
The petitioner's counsel argued that the High Court should exercise its jurisdiction under Article 226 to grant exemption. The court rejected this, citing the Supreme Court's reversal of a similar direction in the Maruti Udyog Ltd. case, and found no extraordinary reason to deviate from the statutory provisions.

Conclusion:
The court dismissed the writ petition, affirming that the petitioner failed to demonstrate financial inability to pay the tax. The petitioner was advised to seek appropriate legal remedies against the dismissal of the appeal due to non-deposit of tax, and it was clarified that the petitioner could still pay the tax and request the revival of the appeal.