2016 (3) TMI 377 - HC - VAT and Sales Tax

Stay of demand - Power of commissioner to grant interim injunction/protection - Denial of input tax credit (ITC) - ferrous and non-ferrous metals and metal scrap - Held that - the issue involved in this appeal stands concluded by the decision of this Court in Punjab State Power Corporation Limited v. The State of Punjab and others 2016 (2) TMI 245 - PUNJAB AND HARYANA HIGH COURT - the power to grant interim protection/injunction by the first appellate authority in appropriate cases in case of undue hardship is legal and valid. - Matter remanded back.

Summary

Issues:
Appeal under Section 68 of Punjab Value Added Tax Act, 2005 against Tribunal's order - Substantial question of law regarding subsequent judgment - Assessment year 2006-07 - Rejection of Input Tax Credit (ITC) - Additional tax liability - Penalties imposed under Sections 56 and 60 of the Act - Interest charged under Section 32 - Appeal dismissed for non-deposit of additional demand - Complaint filed against officials - Closure report filed - Appeal before Tribunal - Tribunal upholds order - Application for waiver of pre-deposit under Section 62(5) - Power of first appellate authority to grant interim protection/injunction - Pre-deposit condition - Remand of the matter.

Analysis:
The appeal was filed under Section 68 of the Punjab Value Added Tax Act, 2005 against the Punjab Value Added Tax Tribunal's order dated 27.11.2015, raising a substantial question of law related to a subsequent judgment of the Hon'ble Court. The appellant, a dealer engaged in import and trading of metals, filed returns for the assessment year 2006-07, claiming Input Tax Credit (ITC). An additional demand was created due to the rejection of ITC on purchases, leading to penalties under Sections 56 and 60 of the Act, along with interest under Section 32. The appellant's appeal was dismissed for non-deposit of 25% of the additional demand, resulting in a complaint filed against officials and a closure report subsequently filed. The Tribunal upheld the order, prompting the present appeal.

The issue involved was concluded by a previous decision of the Court in another case, establishing the power of the first appellate authority to grant interim protection/injunction under Section 62(5) of the Act. The Court emphasized that the power to waive the pre-deposit condition is essential in deserving cases to prevent the appeal's purpose from being frustrated. The provision of Section 62(5) was deemed directory, allowing the first appellate authority to decide on interim protection based on the circumstances of each case. The Court set aside previous orders and remanded the matter to the Deputy Excise and Taxation Commissioner (Appeals) in line with the principles outlined in the previous judgment.

In light of the above analysis, the orders passed by the Deputy Excise and Taxation Commissioner (Appeals) and the Tribunal were set aside, and the matter was remanded for further proceedings. The judgment in the previous case regarding the power of the first appellate authority to grant interim protection/injunction was applied, emphasizing the importance of considering each case's merits in deciding on pre-deposit conditions.