2014 (9) TMI 177 - HC - VAT and Sales Tax

Waiver of pre deposit - Whether Appellate Tribunal Value Added Tax was justified and correct in directing the appellant-assessee to deposit 10% of the penalty amount as a pre-condition for hearing the appeal - Held that - The total amount of tax and interest due, which already stands adjusted, is to the tune of ₹ 10,73,202/-. The total amount of penalty imposed is ₹ 7,99,340/-, out of which ₹ 4,68,096/- is already available with the Revenue as due and refundable. Revenue is not required to refund the said amount and is entitled to make adjustment. We feel in the facts of the present case that the appellant-assessee has made substantial deposits and there are legal issues and contentions, which require detailed adjudication and decision. Question of penalty itself would be a matter of debate in view of legal submissions. Judgment of the Supreme Court in Andhra Agencies (2008 (11) TMI 379 - SUPREME COURT OF INDIA) is relied upon by the appellant-assessee. Further, in terms of the certificate issued by M/s Hindustan Petroleum Corporation Limited, they have paid full tax without taking any adjustment in respect of incentives and discounts - stay granted.

Summary

Issues:
Whether the Appellate Tribunal Value Added Tax was justified in directing the appellant-assessee to deposit 10% of the penalty amount as a pre-condition for hearing the appeal.

Analysis:
The appellant-assessee, engaged in the business of lubricants, challenged the Tribunal's direction to deposit 10% of the penalty amount for hearing the appeal. The appellant relied on a Supreme Court decision and argued that the Tribunal's directive was unjustified as a significant amount was still available as a refund. The appellant had paid tax and interest by adjusting refunds, satisfying the primary tax liability. The appellant contended that the respondent-Revenue collected tax twice on the same sale price due to incentives and discounts provided by M/s Hindustan Petroleum Corporation Limited.

The respondent-Revenue argued that the appellant must pay the tax, interest, and penalty in full before the appeal could be heard, citing relevant legal provisions and department circulars. The respondent contended that adjustments were necessary for M/s Hindustan Petroleum Corporation Limited due to discounts/incentives, emphasizing that the appellant should pay the entire penalty amount upfront. The respondent proposed that appeals should only proceed after the full payment of tax, interest, and penalty, except in exceptional cases where waivers could be granted.

The Court examined the facts and determined that the appellant had already made substantial deposits, with tax and interest totaling Rs. 10,73,202, and a penalty of Rs. 7,99,340 imposed. Of this penalty, Rs. 4,68,096 was available with the Revenue as refundable. The Court found that the appellant's substantial deposits, legal issues, and contentions warranted detailed adjudication without requiring a 10% penalty deposit. Citing legal submissions and a certificate from M/s Hindustan Petroleum Corporation Limited confirming full tax payment without adjustments for incentives and discounts, the Court ruled in favor of the appellant. The Court held that the appeal should proceed without mandating the appellant to deposit 10% of the penalty amount, emphasizing that the decision was specific to the present appeal and not binding for future proceedings before the tribunal.