2016 (7) TMI 141 - HC - VAT and Sales Tax

Waiver of pre-deposit - Denial of Input tax credit - petitioner submitted that the disallowance of the input tax credit was solely on account of what the authority believed was nonconciliation of input tax credit. However, the authorities never brought such materials to the notice of the petitioner enabling the petitioner to point out the reasons for the discrepancies if at all. - The Tribunal by order dated 28.4.2016 required the petitioner to deposit 20% of the tax demand latest before 10.6.2016 but relieved the petitioner from the responsibility of providing bank guarantee for the remaining 80 per cent. Under these circumstances, the petitioner has approached the High Court. Held that - Before the Tribunal also, the report was not placed on record, obviously it was not made available to the petitioner. If that be so, a serious question would arise how such materials could have been utilised to make such substantial additions. - The Tribunal was also of the opinion that the transactions of the petitioner appeared to be genuine. Full wavier granted to the petitioner - entire proceedings sent back before first appellate authority to be decided on merits - Decided in favor of petitioner.

Issues:
Assessment of input tax credit disallowed by the Assessing Officer, requirement of pre-deposit for appeal, availability of adverse material for the petitioner, interference in writ jurisdiction, Tribunal's decision on pre-deposit, restoration of petitioner's appeal.

Assessment of Input Tax Credit Disallowed:
The petitioner was assessed by the Assessing Officer for the year 2011-2012, where input tax credit for purchases from registered dealers was disallowed for nine dealers. This led to a tax demand of &8377; 10.85 crores, with interest and penalty, totaling &8377; 21.97 crores. The petitioner appealed this order, but the first appellate authority required a 20% pre-deposit and a bank guarantee, which the petitioner failed to provide, resulting in the dismissal of the appeal.

Requirement of Pre-Deposit for Appeal:
The petitioner approached the Value Added Tax Tribunal against the appellate authority's decision. The Tribunal ordered the petitioner to deposit 20% of the tax demand by a specified date but relieved the petitioner from providing a bank guarantee for the remaining amount. The petitioner then approached the High Court challenging the pre-deposit requirement.

Availability of Adverse Material for the Petitioner:
The petitioner argued that the disallowance of input tax credit was based on non-conciliation, but the authorities did not provide the necessary materials for the petitioner to refute the discrepancies. The Tribunal acknowledged the absence of such data but still required the pre-deposit. The Court noted the lack of material available to the petitioner and questioned the need for the pre-deposit.

Interference in Writ Jurisdiction:
The Assistant Government Pleader opposed the petition, stating that the Court should not interfere at the pre-deposit stage. However, the Court considered the petitioner's contentions regarding the unavailability of adverse material and the necessity of the pre-deposit.

Tribunal's Decision on Pre-Deposit:
The Tribunal acknowledged the absence of the report and directed the petitioner to make a 20% pre-deposit, exempting them from providing a bank guarantee. The Court raised concerns about the use of unavailable materials for substantial additions and questioned the need for the pre-deposit if transactions appeared genuine.

Restoration of Petitioner's Appeal:
Considering the circumstances, the Court set aside the orders of the appellate authority and the Tribunal, restoring the petitioner's appeal before the first appellate authority for a decision on merits. The Court waived the pre-deposit requirement until the appeal was decided by the appellate authority.

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