2016 (6) TMI 907 - HC - VAT and Sales Tax

Withholding of Refund - refunds payable to the respondent out of the orders passed by the Tribunal - department appeal is pending before the Supreme Court - Held that - For multiple reasons, we simply cannot approve the approach of the Tribunal. When the Supreme Court has issued notice not only on the application for condonation of delay but also on special leave petition and on the prayer for interim relief, it was, in our opinion, more than a command to the Tribunal not to bring any further pressure on the department to release the refund. The question of asking the Commissioner to remain personally present explaining why contempt proceedings should not be initiated, simply did not arise. We have serious doubt whether the Tribunal has the power to summon personal presence of a Government authority. In any case, there was no tarrying hurry or mighty urgency owing to which, despite the Supreme Court being cognizant of the department s appeal and having issued notice for interim relief, the Tribunal should have issued such strong directions for release of the refund. The approach and the order of the Tribunal to put it mildly simply baffles us. - Decided in favor of the revenue.

Summary

Issues:
Challenging order of Gujarat Value Added Tax Tribunal for release of refunds, Coercive action by Tribunal against department for refund release, Tribunal's approach in light of Supreme Court proceedings, Quashing of impugned order dated 01.03.2016.

Analysis:
1. The Government challenged an order passed by the Gujarat Value Added Tax Tribunal seeking release of refunds to the respondent. The Tribunal directed the opponent to pay back the refund along with costs within 30 days or obtain an order from the Supreme Court, failing which contempt proceedings would be initiated. The Tribunal emphasized the department's failure to make payments despite successful appeals, leading to coercive action. The Tribunal's approach raised concerns regarding the department's compliance with Tribunal orders and Supreme Court proceedings.

2. The High Court noted that the department challenged the High Court judgment before the Supreme Court, which issued notices on the application for condonation of delay and special leave petitions. Despite the Supreme Court's cognizance of the appeal and indication to hear the respondent on interim relief, the Tribunal proceeded with coercive measures for refund release. The High Court criticized the Tribunal's insistence on obtaining an interim relief or payment of costs, disregarding the Supreme Court's involvement and directions.

3. The High Court expressed disapproval of the Tribunal's actions, highlighting the impropriety in pressuring the department for refund release despite Supreme Court proceedings. The Tribunal's decision to require the Commissioner's personal presence and threaten contempt proceedings was deemed unjustified. The High Court questioned the Tribunal's authority to summon a Government authority and emphasized the need to await further developments in the Supreme Court proceedings before issuing strong directives for refund release.

4. Ultimately, the High Court quashed the impugned order dated 01.03.2016, citing the Tribunal's improper approach and lack of consideration for the Supreme Court's involvement. The High Court allowed the petition and disposed of the matter, emphasizing the importance of aligning Tribunal actions with ongoing Supreme Court proceedings and avoiding undue pressure on the department for refund release.