2016 (5) TMI 434 - HC - VAT and Sales Tax

Grant of stay - condition to deposit 30% of the demand amount and furnishing of bank gurantee for the remaining amount - Appellant contended that once the concluded re-assessment was there, it could not be reopened merely because, subsequently, Supreme court has held that charger is not a part of mobile for the purpose of levying VAT. Also that even section 39(2) was not on the statue, which has been invoked since section 39, which is invoked has come into force in the year 2013, whereas reassessment is concluded in the year 2012. Held that - it appears that the learned single Judge while granting the interim relief ought to have considered the aspects. We are conscious of the fact that in normal circumstance, there would not be any stay against the recovery of tax. But in the peculiar circumstances of this case where there was a concluded assessment is based on the subsequent of this case and the reopening of the assessment is based on the subsequent decision of the supreme court and the point as to jurisdiction under section 39 is under consideration, it would be just and proper to modify the interim order passed by the learned single judge and since the matter is pending before the learned single judge, the parties should be relegated to agitate the contentions before the learned single judge who is seized of the matter. Therefore, the interim order passed by the learned single judge shall stand modified to the effect that there shall be stay against recovery of the demanded amount on condition that the appellant furnishes bank guarantee equivalent to 30% of the demand on or before 06-06-2016 and further gives an undertaking also to be given before that date to this court through its managing director for the remaining 70% of the demanded amount declaring that, in the event the appellant fails in the petition and the demand is confirmed, ultimately, the amount equivalent to 70% with accrued interest shall be paid within a period of three months from the date of final order. - Appeal disposed of

Summary

Issues:
Interim order granting stay with conditions - Reopening of concluded reassessment based on subsequent Supreme Court decision - Invocation of Section 39 of KVAT Act - Jurisdiction to reopen assessment - Modification of interim order for justice.

Analysis:
The judgment by the Karnataka High Court, delivered by Mr. Jayant Patel and Mr. B.V. Nagarthna JJ., pertains to appeals against an interim order dated 5-2-2016, in the main writ petition. The learned single judge had granted a stay with a condition to deposit 30% of the demand amount and furnish a bank guarantee for the remaining amount within eight weeks. The main contentions raised were related to a concluded reassessment and the subsequent invocation of Section 39 of the KVAT Act based on a Supreme Court decision. The appellant argued that the reassessment could not be reopened solely due to the change in legal interpretation by the Supreme Court post the concluded assessment. Another contention was that Section 39(2) was not in force at the time of the concluded reassessment in 2012, whereas it came into effect in 2013. The appellant also relied on a Supreme Court decision stating that a change in legal position post the assessment closure does not authorize the Department to reopen the assessment. Additionally, the availability of Section 39 of the KVAT Act was emphasized, citing a previous court decision. The High Court acknowledged the need for consideration on the jurisdiction to reopen the assessment and modified the interim order to allow a stay against recovery on certain conditions. The parties were directed to present their arguments before the learned single judge, ensuring that their rights and contentions remain unaffected by the High Court's observations.

In conclusion, the High Court's judgment focused on the legality of reopening a concluded reassessment based on subsequent legal interpretations, particularly in the context of Section 39 of the KVAT Act. The modification of the interim order aimed to balance the interests of both parties while ensuring a fair and just resolution pending the final decision by the learned single judge. The judgment emphasized the importance of upholding legal principles and allowing parties to present their arguments without prejudice.