2016 (4) TMI 225 - HC - VAT and Sales Tax

Imposition of onerous condition - Furnishing of bank guarantee for balance tax amount and penalty - in fulfilment of conditions stipulated in Rule 14(15) read with the proviso to section 52(4) of the Tamil Nadu Value Added Tax Act 2006 - Held that - in catena of decisions, the assessee is directed to execute a personal bond in lieu of furnishing bank guarantee. - Petition disposed of

Summary

Issues: Challenge to imposition of condition to furnish bank guarantee for balance tax amount and penalty during appeal proceedings.

Analysis:
1. The petitioner challenged the orders imposing a condition to furnish a bank guarantee for the balance tax amount and penalty during appeal proceedings. The Appellate Authority directed the petitioner to pay 25% of the disputed tax and another 25% before a specified date. The petitioner complied with these payments but objected to the requirement of furnishing a bank guarantee for the remaining amount.

2. The High Court noted that in previous decisions, assessees were directed to execute a personal bond instead of furnishing a bank guarantee. In line with this precedent, the Court disposed of the writ petitions by directing the petitioner to execute a personal bond for the balance tax amount and penalty for each assessment year within two weeks. The order of stay granted by the Appellate Authority would remain in force until the appeals were disposed of.

3. The Court's decision provided relief to the petitioner by allowing them to substitute the bank guarantee requirement with a personal bond. This approach balanced the interests of the tax authorities in securing the disputed amount and the petitioner's concerns regarding the financial burden of providing a bank guarantee. The judgment ensured that the appeal process could continue without undue hardship on the petitioner.

4. By opting for a personal bond over a bank guarantee, the Court effectively addressed the petitioner's grievance while upholding the need for financial security during the appeal proceedings. The judgment reflected a pragmatic and equitable solution to the issue raised in the writ petitions, maintaining a fair balance between the parties involved in the dispute.

5. Overall, the High Court's decision provided a clear directive to the petitioner, ensuring compliance with the conditions set by the Appellate Authority while alleviating the burden of furnishing a bank guarantee. The judgment exemplified the Court's commitment to resolving legal disputes in a manner that upholds principles of justice and fairness, setting a precedent for similar cases in the future.