2013 (5) TMI 427 - HC - VAT and Sales Tax

Condition imposed to satisfy 40% of the disputed liability for availing the benefit of interim stay during the pendency of the appeal. Assessment was finalized by the first respondent as per Ext.P1/P1(a) orders in which tax liability of assesse is enhanced after the finalization of assessment under the presumption of suppression , which according to the petitioner are per se wrong and illegal in all respects and hence under challenge in Ext.P2/P2(a) appeals preferred before the second respondent After consideration appellate authority passed Exts.P3 and P4 order against which this writ petition is filed. Held that - This Court finds that the extent of suppression in relation to the suppressed turn over as revealed from the documents is 50% . Considering the said rate of extent of suppression, the extent of addition stated cannot, prima facie, be said as arbitrary or illegal in any manner. Court taking on notes the relevant facts reduced the extent of liability from 40% to 1/3rd . The same is modified and ordered accordingly and all other conditions remain to be the same. Taking note of the submission made by the learned counsel for the petitioner that the time to satisfy the requirement has already run out, the petitioner is granted a further time of two weeks to comply with the requirements in Ext.P3 and P4, as mentioned above.

Summary

Issues:
1. Condition imposed by the second respondent in granting interim stay.
2. Finalization of assessment for the years 2005-06 and 2006-07.
3. Eligibility for 'special rebate' under Section 12 of KVAT Act.
4. Extent of suppression in assessment orders.
5. Modification of the extent of liability for interim stay.
6. Extension of time for compliance with requirements in Ext.P3 and P4.

Analysis:

1. The petitioner challenged the condition imposed by the second respondent in Ext.P3 and P4 orders, requiring them to satisfy 40% of the disputed liability for interim stay during the pendency of statutory appeals. The petitioner contended that the assessment orders for the years 2005-06 and 2006-07 were wrong and illegal, leading to the appeals before the second respondent.

2. The assessment for the mentioned years was finalized by the first respondent, based on an inspection conducted in a subsequent year. The petitioner argued against the presumption of suppression in previous years and the additional amount added to the turnover for tax liability calculation. The petitioner also claimed eligibility for a 'special rebate' under Section 12 of the KVAT Act, citing relevant case law.

3. The Government Pleader defended the correctness of the facts and figures considered by the appellate authority in granting interim stay, stating that the impugned orders were well-founded 'speaking orders'. The assessing authority had determined a 50% extent of suppression, justifying the addition to the tax liability.

4. The Court acknowledged the suppression extent determined by the assessing authority and found the addition to the liability reasonable. However, considering the petitioner's arguments and the precedent set by a Division Bench, the Court modified the liability extent for interim stay from 40% to '1/3rd', granting the benefit throughout the appeal's pendency.

5. In response to the petitioner's request for an extension of time to comply with the modified requirements, the Court granted an additional 'two weeks'. The writ petition was disposed of with the modified order on the extent of liability for interim stay, while maintaining other conditions unchanged.