2015 (10) TMI 2782 - AT - VAT and Sales Tax

Maintainability of appeal - requirement of pre-deposit - input tax credit - levy of tax and interest - HELD THAT - Since the appellant has not pressed his challenge for disallowance of input tax credit and consequent levy of tax and interest, there is no need to decide the said issue. However, so far as the retention of the balance penalty of ₹ 74,573/- is concerned, there are substance in the submission of Mr.Shukla and the authorities below have failed to justify the levy and / or retention of penalty as per the settled legal position and following the consistent practice of this Tribunal to delete the penalty if tax and interest have been paid by the appellant, we deem it fit to delete the entire penalty levied and / or retained by the learned Deputy Commissioner. Appeal allowed in part.

Summary

Issues:
1. Appeal against order reducing demand
2. Admissibility of appeal without pre-deposit
3. Disallowance of input tax credit and penalty

Analysis:
1. The appellant filed an appeal against an order reducing the demand from Rs. 3,07,245 to Rs. 74,573, with the tax demand of Rs. 99,432, interest of Rs. 58,665, and penalty of Rs. 1,49,148. The appellant paid the tax and interest before the assessment order. The penalty was reduced to Rs. 74,574 in the first appeal, leaving the outstanding demand only on account of penalty. The appeal was admitted, and stay was granted against recovery of the outstanding demand without pre-deposit.

2. The case involved the appellant, a dealer under the Gujarat VAT Act, in the business of trading metals. The assessing officer disallowed input tax credit on purchases from certain vendors, leading to the demand. The appellant paid a significant amount before the assessment order and the rest at the first appellate stage. The appellant challenged the remaining penalty amount of Rs. 74,573 in the appeal.

3. The appellant's challenge was limited to the penalty amount, arguing that penalty deletion is customary when tax and interest are paid. The government representative defended the Deputy Commissioner's order, stating the penalty reduction was appropriate. The Tribunal found merit in the appellant's submission, noting the lack of justification for the penalty levy and retention. Following Tribunal practice, the penalty was deleted as tax and interest were paid. The Tribunal partly allowed the appeal, confirming the disallowed input tax credit but deleting the penalty of Rs. 74,573.

This detailed analysis covers the issues raised in the legal judgment, including the appeal against the demand reduction, the admissibility of the appeal without pre-deposit, and the disallowance of input tax credit leading to the penalty issue.