2016 (10) TMI 750 - HC - VAT and Sales Tax

Restoration of appeal - pre-deposit to hear the appeal - refund of amount by petitioner - 31.78 crores after giving credit to the tax amounts already deposited by the petitioner - Held that - There may be some minor adjustment or a computation error in the authority arriving at such a figure. Nevertheless, it would not be possible to undertake entire assessment exercise to arrive at a figure with mathematical precession, nor would it be necessary. When the Tribunal has granted benefit of setting aside of assessment leading to tax demands worth hundreds of crores, least that was accepted of the petitioner was to refund that sum, which primafacie, the petitioner had received by way of refund of tax which was based on fake invoices. The Tribunal was perfectly justified in discarding the petitioner s defense that it was the employees of the firm who had carried out such fraud for which they were punished. The Tribunal noted that the firm received the refund based on such fake invoices and input tax credit. Fresh assessment may proceed. The same however cannot be by allowing the petitioner to retain the refund amount. When the Tribunal has imposed a condition of predeposit of ₹ 10 crores by way of condition to hear the Tax Appeal on merits and when the Tribunal had also granted sufficient time to deposit such amounts in installments, in facts of the present case, we see no reason to interfere - We had adjourned this petition on few occasions to enable the counsel for the petitioner to take instructions and to show in what manner the petitioner can even now deposit such sum. Barring pointing out that the department has attached petitioner s shares, of which the current value comes to ₹ 5.02 crores which the department may sell, the petitioner was unable to offer any further amount by way of predeposit. - petition dismissed.

Summary

Issues:
Challenge to order of Gujarat Value Added Tax Tribunal for predeposit of ?10 crores, Fresh assessments ordered by Tribunal, Petitioner's challenge to calculation of refund amount, Petitioner's failure to deposit required amount leading to appeal rejection.

Analysis:
1. The petitioner challenged an order by the Gujarat Value Added Tax Tribunal requiring a predeposit of ?10 crores. The Tribunal had set aside previous assessment orders and ordered fresh assessments due to refund obtained through fake invoices. The Tribunal directed the petitioner to repay the refund amount within three months, failing which the order would stand revoked.

2. The Deputy Commissioner of Commercial Tax calculated the refund to be repaid at ?31.78 crores, which the petitioner contested in the Second Appeal No.732 of 2014. The Tribunal required the petitioner to deposit ?10 crores for further proceedings. The petitioner's failure to comply led to the rejection of the appeal.

3. The Tribunal's order to repay the refund based on fake invoices was not challenged by the petitioner, indicating acceptance of the condition. The Tribunal justified the requirement for repayment, emphasizing the need to refund the amount received through fraudulent means. The Tribunal's decision to reject the appeal for non-compliance with the predeposit condition was upheld.

4. The petitioner failed to provide additional funds for predeposit despite opportunities to do so, only mentioning the attachment of shares by the department. The Court dismissed the petition, affirming the Tribunal's decision to reject the appeal due to non-compliance with the predeposit requirement.

In conclusion, the Court upheld the Tribunal's decision regarding the predeposit condition and the necessity for the petitioner to repay the refund obtained through fraudulent activities. The petitioner's failure to comply with the predeposit requirement led to the rejection of the appeal, ultimately resulting in the dismissal of the petition.