2016 (11) TMI 1075 - HC - VAT and Sales Tax

Imposition of VAT and Entry Tax under the VAT Act, 2002 and Central Sales Tax - Article 226 of the Constitution - pre-deposit not made - Held that - there are substantial and cogent material available on record to show that petitioner s Company has been declared as sick industry, there is an order passed by the Board under the SICA and even in the matter of recovery of sales tax certain prohibition has been imposed by the Board. Taking note of all the circumstances, it is a fit case where the condition of pre deposit amount can be waived and the appeal directed to be decided on merit, as material are available on record to show that petitioner would suffer irreparable loss resulting in injustice to them in case the appeal is not decided on merit. Accordingly, looking to the financial condition of the petitioner, we allow this petition, direct for waiver of pre deposit amount and direct the Appellate Authority to proceed after hearing all concern - Appeals are restored to its original file and petitioner s appearing before the Appellate Authority along with certified copy of this order, the Appellate Authority shall proceed to decide the appeal in accordance to law on merit. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenging orders on imposition of VAT and Entry Tax under VAT Act and Central Sales Tax.

Analysis:
The petition was filed under Article 226 of the Constitution challenging the orders by the Assessing Officer and the Appellate Authority regarding VAT, entry tax, and Central Sales Tax. The Appellate Authority dismissed the appeals due to non-payment of mandatory pre-deposit without considering the merits of the case. The petitioner argued that the financial condition of the company, declared a sick industry under the Special Provision Act, warranted a waiver of the pre-deposit amount under Section 46(5) of the VAT Act, citing a similar judgment. The court emphasized that the right of appeal should not be denied solely based on non-payment of pre-deposit and stressed the need to assess the financial status of the appellant before dismissing appeals mechanically.

The court acknowledged the financial crisis faced by the petitioner's company, including being declared a sick industry and facing restrictions on sales tax recovery by the Board. Considering the substantial evidence of financial distress, the court waived the pre-deposit amount and directed the Appellate Authority to hear all concerns and decide the appeals on merit. The impugned orders were quashed, appeals restored, and the petitioner instructed to appear before the Appellate Authority with a certified copy of the order for further proceedings. The court allowed the petition, directing a waiver of pre-deposit and a decision on the appeals based on merit, considering the financial condition of the petitioner.

In conclusion, the petition was allowed and disposed of, emphasizing the importance of assessing the financial situation of appellants before dismissing appeals based solely on non-payment of pre-deposit amounts. The court's decision aimed to prevent irreparable loss to the petitioner and ensure justice by allowing the appeals to be decided on merit after considering the financial circumstances.