2012 (7) TMI 894 - HC - VAT and Sales Tax

Furnishing of bank guarantee - short paid tax - stay on recovery was granted - whether the petitioner is required to furnish bank guarantee pending the appeal when stay was granted on recovery? - Held that - respondent could not controvert the factual aspect of the submissions made by the petitioner detailing the gross arbitrariness and discriminatory treatment by the Tax Board in dealing with the interim application of the petitioner and requiring bank guarantee vis-a-vis the approach of the Board in other similar matter wherein the Board required only solvent security u/r 77 of Rules 2006 to cover the interest of the Revenue in the event the appeals were dismissed by the Tribunal - petitioner to furnish a solvent security instead of bank guarantee - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Quashing of condition in the order passed by Rajasthan Tax Board regarding furnishing a bank guarantee.
2. Comparison of treatment by Tax Board in similar matters.
3. Maintainability of the writ petition challenging the Tax Board's order.
4. Rectification application and subsequent order by the Tax Board.
5. Arbitrariness and discriminatory treatment by the Tax Board.
6. Direction regarding furnishing a solvent security instead of a bank guarantee.
7. Early disposal of the appeal pending before the Tax Board.

Analysis:

1. The writ petition sought to quash the condition in the order of Rajasthan Tax Board directing the petitioner to furnish a bank guarantee for an amount under stay of recovery during the pendency of the appeal. The petitioner argued that in similar matters, the Court had directed the submission of a security bond instead of a bank guarantee, citing specific cases and provisions of Rule 77 of the Rajasthan Value Added Tax Rules, 2006.

2. The petitioner highlighted the inconsistent treatment by the Tax Board in different cases, where only a solvent security was required, not a bank guarantee as in the present case. The petitioner argued that there was no justification for the Tax Board to deviate from the standard practice of accepting a security bond as per Rule 77 of the Rules, 2006. The petitioner emphasized the need for uniformity in decisions and application of rules.

3. The Court addressed the issue of the maintainability of the writ petition challenging the Tax Board's order. The Court found the objections raised by the respondent regarding maintainability to be unsubstantiated. It clarified that the challenge was primarily against the order passed by the Tax Board, which was not revisable under the Rajasthan Value Added Tax Act, 2003. The Court deemed the challenge to a subsequent order as redundant.

4. The Court discussed the rectification application filed by the petitioner and the subsequent order of the Tax Board dismissing the application. The Court noted that the dismissal of the rectification application did not provide a separate cause of action as it upheld the original order. The Court deemed the challenge to the subsequent order unnecessary, as it merely affirmed the earlier decision.

5. The Court acknowledged the arguments presented by the petitioner regarding the arbitrary and discriminatory treatment by the Tax Board in requiring a bank guarantee instead of a solvent security. The Court found merit in the petitioner's contentions and decided to allow the writ petition. The Court directed the petitioner to furnish a solvent security instead of a bank guarantee, in line with the provisions of Rule 77 of the Rules, 2006.

6. In light of the decision, the Court directed the early disposal of the appeal pending before the Rajasthan Tax Board. Both parties expressed no objection to this directive. The Court ordered the appeal to be resolved within four weeks and, if necessary, expedited after notifying the concerned parties. The Court disposed of the writ petition and the stay application accordingly, providing clarity on the security requirement and expediting the appeal process.