2016 (4) TMI 318 - HC - VAT and Sales Tax

Waiver of payment of tax - Imposed for the purpose of entertaining the appeal - Held that - as per the provision of sub-section (4) of Section 73 of the GVAT Act which provides that no appeal against an order of assessment shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of payment of the tax in respect of which an appeal has been preferred; provided that an appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order (a) without payment of tax with penalty (if any) or, as the case may be, of the penalty, or (b) on proof of payment of such smaller sum as it may consider reasonable, or (c) on the appellant furnishing in the prescribed manner, security for such amount as the appellate authority may direct. In the present case, the petitioner invoked jurisdiction of the appellate authority under the proviso to sub-section (4) of section 73 of the GVAT Act seeking waiver of payment of tax and penalty as contemplated under clause (a) of sub-section (4) of section 73 of the GVAT Act. The first appellate authority was, therefore, duty bound to consider the application and give its reasons, either for allowing or rejecting the same. However, in the facts of the present case, the first appellate authority has completely disregarded the application made by the petitioner seeking waiver of payment of tax, and has dismissed the appeal on the ground of non-production of proof of payment of pre-deposit as contemplated in the main part of sub-section (4) of section 73 of the GVAT Act. Having regard to the decision of this court in the case of Nestle India Limited v. Deputy Commissioner of Commercial Tax 2015 (7) TMI 387 - GUJARAT HIGH COURT , the petitioner had made out a prima facie case for grant of total waiver of the payment of tax and penalty as contemplated under clause (a) of the proviso to sub-section (4) of section 73 of the GVAT Act. Under the circumstances, the first appellate authority was not justified in dismissing the appeal on the ground of non-production of proof of payment of tax. The impugned order, therefore, cannot be sustained. - Waiver granted

Summary

Issues Involved:

1. Dismissal of the appeal by the Joint Commercial Tax Commissioner.
2. Non-consideration of the petitioner's application for waiver of payment of tax.
3. Applicability of the decision in the case of Nestle India Limited v. Deputy Commissioner of Commercial Tax.

Detailed Analysis:

1. Dismissal of the Appeal by the Joint Commercial Tax Commissioner:

The petitioner challenged the order dated 30.11.2015 by the Joint Commercial Tax Commissioner, which dismissed the appeal against the assessment order dated 23.03.2015. The assessment order assessed the petitioner's VAT liability for the sale of Maggi Noodles at Rs. 32,17,740/- plus interest and penalty amounting to Rs. 61,78,061/-. The petitioner's appeal was dismissed due to non-production of proof of payment and non-appearance during the last adjournment. The court found that the first appellate authority dismissed the appeal without considering the petitioner's application for waiver of the pre-deposit.

2. Non-consideration of the Petitioner's Application for Waiver of Payment of Tax:

The petitioner sought a waiver of the pre-deposit under section 73 of the Gujarat Value Added Tax Act (GVAT Act), citing a precedent where Maggi Noodles were classified as "Sev" and hence, tax-exempt. Despite the petitioner bringing this to the attention of the first appellate authority, the application for waiver was ignored, and the appeal was dismissed solely on the grounds of non-payment and non-appearance. The court highlighted that the first appellate authority was obligated to consider the waiver application and provide reasons for its decision, which it failed to do.

3. Applicability of the Decision in the Case of Nestle India Limited v. Deputy Commissioner of Commercial Tax:

The petitioner relied on the judgment dated 07.05.2015 in the case of Nestle India Limited, where the court held that Maggi Noodles are tax-exempt. The petitioner argued that this decision should apply to their case, thus warranting a waiver of the pre-deposit. The court noted that the first appellate authority disregarded this precedent and failed to consider it while deciding on the waiver application. The court concluded that the petitioner had made a prima facie case for a total waiver based on this precedent.

Conclusion:

The court allowed the petition, quashing the impugned orders dated 30.11.2015 and 23.03.2015. The appeal was restored, and the application for waiver of the pre-deposit was granted. The court ordered that the appeal be entertained without the payment of tax and penalty.