2015 (12) TMI 1427 - HC - VAT and Sales Tax

Waiver of pre deposit - Whether on the facts and in the circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law in directing payment of pre-deposit of tax as well as interest amount for both the years - Held that - In the first round of litigation, the first appellate authority had dismissed the appeals preferred by the appellant on the ground of non-payment of pre-deposit. The appellant carried the matters in appeal before the Tribunal, which remanded the matters to the first appellate authority, subject to the appellant making a deposit of ₹ 5,00,000/-. It is an admitted position that the amount of ₹ 5,00,000/- had been deposited by the appellant at that stage. However, the proceedings before the first appellate authority lingered on for a period of six years. After a period of six years, notice of hearing came to be issued to the appellant. In the meanwhile, the business premises of the appellant had been sealed. Under the circumstances, the appellant was not aware of the hearing fixed by the first appellate authority as the notice of hearing had been pasted on the closed premises. The first appellate authority, in view of the fact that the appellant had not remained present for personal hearing, confirmed the earlier order passed by it. Tribunal had thought it fit to direct pre-deposit of only ₹ 5,00,000/- for the purpose of hearing of the appeal by the first appellate authority, there was no justification for now directing pre-deposit of the total tax amount together with interest. From the facts as emerging from the record, it is evident that the appellant was not served with the notice of hearing by the first appellate authority and it is on account of this reason that no one could remain present for hearing of the appeals. The learned advocate for the appellant has stated before this court that pursuant to the order dated 8th January, 2015, the appellant has deposited a further amount of ₹ 3,45,000/- so that the total figure comes to 10% of the tax amount under the order of assessment. Gujarat value Added Tax Tribunal was not justified in directing payment of pre-deposit of the entire tax amount together with interest - Decided in favour of Appellant.

Summary

Issues:
- Determination of whether the Gujarat Value Added Tax Tribunal was correct in directing the payment of pre-deposit of tax and interest amount for both years.

Analysis:

Issue 1: Pre-deposit of tax and interest amount
The appellant's assessment proceedings resulted in a demand of Rs. 2,56,15,765, including tax, interest, and penalty for 2002-03 and 2003-04. The first appellate authority dismissed the appeals due to non-payment of pre-deposit. The Tribunal remanded the matters to the first appellate authority, directing the appellant to pay Rs. 5,00,000. Subsequently, due to delays and lack of notice, the first appellate authority dismissed the appeals ex parte. The Tribunal then directed the appellant to pay the entire tax amount and interest, exceeding Rs. 1,25,00,000. The appellant argued that the Tribunal's decision was unjustified as it had earlier directed a much lower pre-deposit amount. The court noted that the appellant was not served the notice of hearing by the first appellate authority, leading to non-appearance. The appellant had already deposited 10% of the tax amount, exceeding the initial pre-deposit requirement. The court concluded that the Tribunal was not justified in demanding the entire tax amount and interest as pre-deposit.

Conclusion:
The court held that the Gujarat Value Added Tax Tribunal was not justified in directing the payment of the entire tax amount and interest as pre-deposit. The appeals were allowed, and the Tribunal's orders were quashed and set aside. The appeals were restored to the Tribunal for a fresh decision after providing a reasonable opportunity of hearing to the appellant. The stay applications were allowed subject to a pre-deposit of Rs. 8,45,000, which had already been paid by the appellant.