2016 (11) TMI 415 - HC - VAT and Sales Tax

Interpretation of statute - section 11(3)(b) of the GVAT Act, 2003 - input tax credit - pre-deposit - Held that - the issue is not res-integra and the matter decided in the case of Commissioner of Central Excise, Chandigarh v. Smithkline Beecham Company Holding Limited 2003 (9) TMI 82 - SUPREME COURT OF INDIA where it was held that Parties are agreed that the order of the Tribunal should be set aside and the matter be referred back to the Commissioner (Appeals) with the condition that the pre-deposit is dispensed with. Accordingly, the impugned order is set aside. The Commissioner (Appeals) to see that pre-deposit is waived. As the appeal before the learned Tribunal was against the order passed by the first appellate authority dismissing the appeal on the ground of non-deposit of pre-deposit only. The learned Tribunal ought not to have decided the appeal on merits and ought not to have restricted the appeal with respect to pre-deposit only. The impugned judgment and order passed by the learned Tribunal deserves to be quashed and set aside and the matter is required to be remanded to the learned Tribunal to consider the issue with respect to pre-deposit only and/or the order passed by the first appellate authority dismissing the appeal on the ground of non-deposit of pre-deposit. Without further entering into the merits of the case and without expressing any opinion on merits of the matter, the impugned judgment and order passed by the learned Tribunal is hereby quashed and set aside and the matter is remitted back to the learned Tribunal to decide the issue of pre-deposit and to consider the legality and validity of the order passed by the first appellate authority dismissing the appeal on the ground of non-deposit of pre-deposit and decide the same on merits, in accordance with law - appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Interpretation of section 11(3)(b) of the Gujarat Value Added Tax Act, 2003.
2. Entitlement to Input Tax Credit for goods sent outside the State for job work activities.
3. Tribunal's jurisdiction to adjudicate issues on merits instead of restricting to pre-deposit.

Analysis:

Issue 1: Interpretation of section 11(3)(b) of the Gujarat Value Added Tax Act, 2003
The appellant challenged the Tribunal's judgment, arguing that the Tribunal erred in interpreting section 11(3)(b) of the Gujarat Value Added Tax Act, 2003. The High Court noted that the Tribunal should have restricted itself to the issue of pre-deposit rather than deciding the appeal on merits. Citing relevant case law, the High Court remanded the matter to the Tribunal to consider the issue of pre-deposit only.

Issue 2: Entitlement to Input Tax Credit for goods sent outside the State for job work activities
The High Court observed that the Tribunal dismissed the appeal due to non-deposit of pre-deposit, which was challenged by the appellant. Despite being informed about similar matters before the High Court, the Tribunal decided the appeal on merits. The High Court referred to Supreme Court decisions and its own precedents to emphasize that the Tribunal should have focused on the issue of pre-deposit only. The High Court quashed the Tribunal's judgment and remanded the matter for consideration of pre-deposit and the validity of the first appellate authority's order.

Issue 3: Tribunal's jurisdiction to adjudicate issues on merits
The High Court reiterated that the Tribunal's decision to adjudicate on merits, instead of restricting itself to the issue of pre-deposit, was not appropriate. The High Court emphasized that the Tribunal should have awaited the High Court's decision on similar legal questions before deciding the matter. Consequently, the High Court set aside the Tribunal's judgment and directed it to consider the issue of pre-deposit and the legality of the first appellate authority's order.

In conclusion, the High Court partially allowed the appeal, quashed the Tribunal's judgment, and remitted the matter back to the Tribunal for a fresh consideration focusing on the issue of pre-deposit and the validity of the first appellate authority's decision.