2016 (6) TMI 1192 - HC - VAT and Sales Tax

Maintainability of appeal - pre-deposit - the issue in appeal was denial of input tax credit for purchases made by assessee from a dealer whose registration was cancelled - Held that - the assessee desired to file first appeal in order to contend that mere cancellation of the registration of the selling dealer would not result into automatic denial of input tax credit of assessee as a purchaser. The Tribunal has made certain observations in the impugned judgement raising doubt about the very genuineness of the transactions which prima facie did not form part of the original assessment proceedings. The appellant shall deposit 10% of the principal tax demand exclusive of interest and penalty before the Government latest by 31.7.2016 upon which the first appellate authority shall hear the appeals on merits, unmindful of the observations made by the Tribunal in the impugned judgement - appeal allowed.

Summary

Issues:
1. Question of pre-deposit in tax appeals involving the same assessee for the year 2006-2007 regarding Gujarat Value Added Tax Central Sales Tax.

Detailed Analysis:
The judgment by the High Court involved tax appeals concerning the pre-deposit issue for the year 2006-2007 related to Gujarat Value Added Tax Central Sales Tax. The primary matter in question was the denial of input tax credit for purchases made by the assessee from a dealer whose registration was canceled. The Assessing Officer had raised a substantial tax demand, including interest and penalty, totaling to a significant amount. The assessee contended that the purchases were legitimate and that the input tax credit should not be denied due to the cancellation of the selling dealer's registration. Initially, the first appellate authority required a 25% pre-deposit, which the assessee found challenging to fulfill, leading to dismissal of the appeals by the Tribunal.

Further, the appellant relied on a previous court decision to support their argument that unless the cancellation of registration is duly notified, the input tax credit cannot be denied. Conversely, the department's representative cited a different court decision to emphasize the discretionary nature of Tribunal orders and the uniqueness of each case. The High Court observed that the assessee aimed to challenge the denial of input tax credit based on the cancellation of the selling dealer's registration, which was not a part of the original assessment proceedings, raising doubts about the genuineness of the transactions.

In conclusion, the High Court disposed of the appeals by directing the appellant to deposit 10% of the principal tax demand before a specified date. This deposit would enable the first appellate authority to hear the appeals on their merits without considering the Tribunal's observations. The orders of the appellate authority and the Tribunal were set aside for this purpose, providing a new opportunity for the appeals to be reviewed based on the specified deposit and without the previous doubts raised by the Tribunal.