2012 (4) TMI 546 - HC - VAT and Sales Tax

Conditional stay of recovery that appellant to deposit 25 per cent of the demand on or before March 30, 2012 challenged - Held that - The condition imposed directing the appellant to pay 25 per cent of the demand cannot be said to be unreasonable. Even as per the second proviso to section 52 of the Act, for preferring appeal, 25 per cent of the dues between the amount of tax assessed and the tax admitted by the dealer to be due is required to be paid and the proof thereafter to be furnished before the appeal was entertained. W.P. dismissed.

Summary

Issues:
1. Assessment of tax on machinery manufactured by the appellant.
2. Validity of the order imposing a condition to deposit 25% of the demand for granting stay.

Analysis:
1. The appellant purchased goods from various sources, assembled them into grain color sorter and paddy moisture machines, and claimed input tax credit. The tax authority issued a pre-revision notice proposing VAT at 12.5% on the turnover. The appellant contended that the machines were capital goods and challenged the notice in writ petitions. The court directed the appellant to explain their position. Subsequently, the Assistant Commissioner assessed the sales as machines, not capital goods, and demanded additional tax. The appellant filed further petitions, and after a personal hearing, the assessment was upheld, requiring a total balance tax payment of Rs. 1,04,18,510 for three years, along with penal interest. The appellant challenged this order in writ petitions.

2. The appellant contested the order imposing a condition to deposit 25% of the demand for granting a stay, arguing that the machines should be classified as capital goods and taxed at a lower rate. The appellant relied on a Supreme Court judgment to support their position. The court noted that the Assistant Commissioner's order was subject to appeal before the Deputy Commissioner as per statutory provisions. The key issue in the writ appeals was whether the condition to deposit 25% of the demand was justified. The court found that the condition was not unreasonable, as it aligned with statutory requirements for filing an appeal. Therefore, the court upheld the condition and dismissed the writ appeals, directing the appellant to deposit the demanded amount in installments by specified dates.

In conclusion, the judgment addressed the classification and taxation of machinery manufactured by the appellant and the validity of the condition to deposit 25% of the demand for granting stay. The court upheld the tax assessment on the machines and deemed the deposit condition reasonable, leading to the dismissal of the writ appeals.