2016 (6) TMI 7 - HC - VAT and Sales Tax

Validity of Single Judge order - granted stay with a condition to deposit 30% of the demand amount and to furnish bank guarantee for the remaining amount within eight weeks - Appellant submitted 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 statute, 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 - 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 the final order. - Appeals disposed of

Summary

Issues:
Interim stay against recovery of tax based on subsequent Supreme Court decision and jurisdiction under Section 39 of KVAT Act for reopening concluded assessment.

Analysis:
The judgment by the Karnataka High Court, delivered by Justices Jayant Patel and B.V. Nagarathna, pertained to appeals against an interim order that granted a stay on tax recovery subject to certain conditions. The main contention raised was regarding the reopening of a concluded reassessment based on a subsequent Supreme Court decision and the invocation of Section 39 of the KVAT Act. The appellant argued that the reassessment, which was concluded in 2012, could not be reopened under Section 39, which came into force in 2013. Reference was made to a Supreme Court decision stating that a change in legal position does not authorize the Department to reopen a closed assessment. Additionally, the availability of Section 39 was discussed, citing a previous decision of the court. The judges noted that the interim relief granted by the single judge needed reconsideration in light of these aspects. While acknowledging that tax recovery is not typically stayed, they modified the interim order to require the appellant to furnish a bank guarantee for 30% of the demand and provide an undertaking for the remaining 70%. The parties were directed to present their arguments before the single judge, who would independently decide the matter without being influenced by the interim arrangement made by the High Court. It was emphasized that the rights and contentions of both sides would not be prejudiced by the High Court's observations in the order. Ultimately, all appeals were disposed of based on the specified directions.