2014 (1) TMI 1255 - HC - VAT and Sales Tax

Waiver of pre deposit - conduct of tribunal in handling stay application - Held that - What has been done by Tribunal in the present case is something which is not contemplated in the statute. As a matter of fact, I can understand if Tribunal would have said, passing final order under clause (b) that instead of one-third, some lessor amount must be deposited so as to satisfy requirement of clause (a), but for this purpose also Tribunal is required to record special and adequate reasons since it amounts to partial waiver or relaxation of requirement of clause (a) but statute does not authorise Tribunal that even before considering application of appellant- assessee, for exercise of power of waiver or relaxation, it would require assessee to deposit some amount. This part of the order of Tribunal has resulted in doing something which is not provided in the statute. In my view, to this extent the impugned order need be modified. The Tribunal must pass final order on the stay application of petitioner considering whether appellant is entitled for any waiver or relaxation under second proviso to Section 57(9) of Act, 2008 with regard to compliance of requirement of clause (a) regarding payment of one third of disputed amount or not - Decided partly in favour of assessee.

Summary

Issues:
Challenge to order of Commercial Tax Tribunal regarding pre-deposit requirement under U.P. Value Added Tax Act, 2008 and Central Sales Tax Act, 1956.

Analysis:
The petitioner, engaged in manufacturing and sale of various products, including stock transfers to Delhi Depot and agents, faced a dispute regarding tax assessment for the year 2010-11. The Assessing Officer rejected certain stock transfers and imposed tax liabilities, leading the petitioner to appeal before the Commercial Tax Tribunal under Section 18-A of the Act, 1956. The Tribunal, through an order dated 26.12.2013, required the petitioner to deposit 10% of the disputed tax within 25 days for the stay application to be considered, setting aside the requirement of one-third payment under Section 57(9) of the Act, 2008.

The petitioner contended that the Tribunal should consider the merits of the case before directing any deposit of the disputed tax amount. The Court analyzed Section 57(9) of the Act, 2008, which mandates a one-third payment of the disputed amount for stay of recovery, but allows for waiver or relaxation of this requirement for special reasons. The Court emphasized that the Tribunal's power to relax the one-third deposit condition must be exercised through a reasoned written order, and the statute does not mandate any pre-deposit before considering such relaxation.

The Court found the Tribunal's approach of requiring a 10% deposit before considering the waiver or relaxation under Section 57(9) incorrect. It held that the Tribunal must pass a final order on the stay application after assessing whether the petitioner is entitled to any waiver or relaxation under the statute. Consequently, the Court set aside the Tribunal's order dated 26.12.2013 and directed the Tribunal to pass an appropriate order in accordance with the law and the observations made in the judgment.

In conclusion, the Court disposed of the writ petition, emphasizing the need for the Tribunal to follow the statutory provisions and provide a reasoned decision when considering the waiver or relaxation of the pre-deposit requirement for the stay of recovery of disputed tax amounts under the relevant tax laws.