2008 (11) TMI 619 - HC - VAT and Sales Tax

Vires of section 33(8) of the Haryana Value Added Tax Act, 2003 challenged - Held that - Without going into the merits of the issue of the vires of the provisions of section 33(8) of the VAT Act but considering the conduct of the appellate authority and the Assessing Authority in the present case where though the deposit of tax is not a condition precedent for entertainment or hearing of appeal on merits but still the appeals even for earlier years and for the year in question have been kept pending, which could very well be decided without waiting for result of stay application or where the demand is huge the same could be disposed of at the earliest, in view of the peculiar facts and circumstances of the case, in our considered opinion, the ends of justice in the present case will be met in case the recovery of the amount of disputed tax remains stayed during the pendency of the appeals before the appellate authority. We order accordingly

Summary

Issues:
Challenge to the vires of section 33(8) of the Haryana Value Added Tax Act, 2003 and quashing of order passed by the Joint Excise and Taxation Commissioner (Appeals).

Analysis:
The petition challenged the vires of section 33(8) of the VAT Act and the order passed by the Joint Excise and Taxation Commissioner (Appeals). The petitioner, a public limited company, filed returns under the VAT Act for the assessment year 2003-04, including inter-State and intra-State sales. The dispute arose regarding the nature of stock transfers from Ambala Terminal to Parwanoo depot, with the Assessing Authority considering it as inter-State sales. This led to a demand of Rs. 170,80,55,315, later reduced to Rs. 64,26,44,426. The petitioner filed appeals, seeking stay of recovery during the appeal process. However, the appellate authority dismissed the stay application citing section 33(8) of the Act.

The petitioner contended that section 33(8) of the VAT Act was unconstitutional and confiscatory, depriving the appellate authority of the power to grant interim relief. The petitioner argued that the right of appeal should be effective and not illusory, emphasizing the need for the appellate authority to have the discretion to grant interim relief based on settled principles. The petitioner highlighted the impact of the provision on business operations, stating that depriving the appellate authority of the power to grant stay under any circumstances was arbitrary and unreasonable.

Moreover, the petitioner raised concerns about the lack of a prescribed period for deciding appeals under the VAT Act, potentially leading to prolonged pendency and arbitrary demands by taxing authorities. The petitioner provided examples of pending appeals from previous years, illustrating the prolonged nature of tax disputes. The petitioner argued that the provisions violated constitutional rights and hindered the fair and effective redressal of grievances through the appeal process.

Considering the conduct of the appellate authority and Assessing Authority in the case, the court found that the recovery of disputed tax should be stayed during the pendency of the appeals before the appellate authority to serve the ends of justice. Consequently, the writ petitions were disposed of in favor of staying the recovery of the disputed tax amount during the appeal process, based on the peculiar facts and circumstances of the case.