2016 (6) TMI 1191 - HC - VAT and Sales Tax

Whether Tribunal is justified in fixing part payment amount equal to basic tax amount and not granting stay without any part payment or at token amount? Held that - The Tribunal should be aware that the First Appeal is still pending before the Deputy Commissioner of Sales Tax (Appeals). He has yet to apply his mind to the merits. All that was under consideration of the Tribunal was a direction of pre-deposit. There, the pre-deposit amount was determined as ₹ 68,95,367/-. If this was the position and the request was to bring it down to appropriate and reasonable sum, we do not see any justification for the Tribunal to then go into the merits and express such opinion as would influence the outcome of the Appeal. The Tribunal could have imposed a reasonable condition or a right of appeal ought to be preserved and not rendered illusory by an arbitrary and excessive direction - appeal will be considered on merits on payment of revised sum. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Admissibility of appeals based on substantial question of law.
2. Justification of fixing part payment amount by the Tribunal.
3. Consideration of basic tax liability by the Tribunal.
4. Influence of Tribunal's opinion on the outcome of the appeal.
5. Reduction of the sum to be deposited in VAT Appeal Nos. 918 and 919 of 2014.

Analysis:
1. The High Court reviewed the impugned order passed by the Maharashtra Sales Tax Tribunal and found that the appeals deserved admission based on a substantial question of law regarding the justification of fixing part payment amount by the Tribunal.

2. The Court examined the interim order passed by the Tribunal, which directed the appellant to deposit a specific sum. It noted that the Tribunal reduced the amount to be deposited from the original directive of the first Appellate Authority. However, the Court expressed concern over the Tribunal's calculation method, which included interest, penalty, and determined a higher amount payable than the basic tax liability, emphasizing the importance of considering the basic tax liability as the foundation for any deposit direction.

3. The Court criticized the Tribunal for delving into the merits of the case prematurely, especially considering that the first Appellate Authority was yet to apply its mind to the merits. The Court highlighted that the Tribunal's observations on hawala transactions could unduly influence the outcome of the appeal and jeopardize the appellant's opportunity to present their case effectively before the Appellate Authority.

4. In light of the above issues, the High Court allowed the appeals and reduced the sum to be deposited in VAT Appeal Nos. 918 and 919 of 2014 to ?25 Lacs. The Court provided a deadline for the deposit and instructed the first Appellate Authority to proceed with the appeals based on merits and in accordance with the law. Failure to comply with the Court's direction would result in legal consequences, and the time for depositing the amount was extended by four weeks from the judgment date.