2011 (1) TMI 1256 - HC - VAT and Sales Tax

Whether the Tribunal has already granted stay to the extent of 90 per cent, therefore, no further interference is called for? Held that - Having regard to the facts that no assessment order has been passed and present is the case of penalty and considering the entire facts and circumstances and financial hardship, the order of the Tribunal requires little modification. As per order of the Tribunal, the applicant is required to deposit ₹ 29,45,129. In case if the applicant deposits ₹ 15 lacs within a period of one week, the recovery proceeding for the balance amount shall remain stayed till the disposal of appeal. The appellate authority is further directed to decide the appeal expeditiously preferably within a period of four weeks from the date of presentation of a certified copy of this order.

Issues involved:
Levy of penalty under U.P. Trade Tax Act, 1948 without passing an assessment order; Interpretation of section 12(3) of the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007; Stay of penalty amount by appellate authorities; Financial hardship and prima facie case for stay of recovery; Modification of Tribunal's order for depositing a partial amount.

Levy of Penalty without Assessment Order:
The revision pertains to the levy of penalty under the U.P. Trade Tax Act, 1948 without the passing of an assessment order. The applicant, a sugar manufacturer, was penalized for allegedly selling sugar to an agent within the State of U.P. The penalty was imposed under section 12(3) of the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007. The applicant argued that the penalty was illegal as no assessment order was passed. The goods were sold to parties outside U.P. based on pre-existing orders, constituting inter-State sales. The assessing authority admitted that goods were in the factory and not delivered. The applicant contended that similar transactions occurred previously without penalty or provisional assessment.

Interpretation of Section 12(3) of the Act:
The dispute revolves around the interpretation of section 12(3) of the Act, which deems the applicant liable for entry tax for selling goods to an agent within U.P. The applicant maintained that the actual delivery of goods was not necessary to trigger section 12A, as the intention to bring goods into the local area sufficed. The Tribunal had already granted a stay on 90% of the penalty amount, considering the circumstances. The revision sought further modification of the Tribunal's order based on financial hardship and lack of assessment order.

Stay of Penalty Amount and Financial Hardship:
The applicant filed appeals against the penalty order, leading to stay applications before the Additional Commissioner and the Tribunal. The Additional Commissioner partially stayed the penalty realization, and the Tribunal further reduced the demand realization by 90%. The applicant argued financial hardship, presenting balance sheets showing substantial losses and outstanding demands. The revision emphasized the need for a stay on the recovery of the disputed tax amount until the appeal's disposal, citing financial difficulties and a strong prima facie case.

Modification of Tribunal's Order for Deposit:
After hearing both parties, the Court modified the Tribunal's order, directing the applicant to deposit a specified amount within a week to stay the recovery of the balance. The appellate authority was instructed to expedite the appeal's decision within four weeks from the order's certification. The revision was disposed of with these directions, emphasizing financial considerations and the absence of an assessment order.

This detailed analysis covers the issues of penalty levy, statutory interpretation, stay applications, financial hardship, and modification of the Tribunal's order, providing a comprehensive understanding of the judgment.

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