2014 (9) TMI 811 - HC - VAT and Sales Tax

Cancellation of the C form - Whether in the circumstances, the direction to pre-deposit 15% of the tax liability and 5% of the penalty liability made by the DVAT Tribunal was justified - Held that - prima facie the appellant s contentions are merited and strong. There is no allegation of wilfulness or culpability on the part of the appellant. In the circumstances, the direction to deposit 15% of the tax amount and interest and 5% of the penalty amount, are hereby set aside. The impugned order is modified to that extent - Decided in favour of assessee.

Summary

Issues: Whether the direction to pre-deposit 15% of the tax liability and 5% of the penalty liability made by the DVAT Tribunal was justified.

Analysis:
The case involved a question of law regarding the justification of the direction to pre-deposit a certain percentage of tax and penalty liability by the DVAT Tribunal. The VAT authorities imposed liabilities on the assessee based on the cancellation of a 'C' form utilized by the assessee. The assessee contended that the cancellation of the 'C' form had not been properly notified by the issuing authority and had not been communicated to other states. The DVAT Tribunal, in its order, considered the waiver of pre-deposit and noted the Revenue's argument that the cancellation was known to the assessing authorities.

During the proceedings, the assessee relied on a legal decision to support the argument that unless the cancellation was duly intimated through publication or notification, third-party dealers would not be attributed with knowledge of it. However, the Tribunal seemed unpersuaded by these submissions and proceeded on the assumption of a presumption of fact regarding the knowledge of cancellation.

Upon considering the submissions of both parties, the Court found merit in the appellant's contentions. The Court observed that there was no allegation of wilfulness or culpability on the part of the appellant. Consequently, the Court set aside the direction to deposit 15% of the tax amount and interest, as well as 5% of the penalty amount. The impugned order was modified accordingly, and the appeals pending before the DVAT Tribunal were directed to be heard on merits. Ultimately, the appeal was allowed in favor of the appellant based on the above considerations.