2017 (3) TMI 209 - HC - VAT and Sales Tax

Waiver of pre-deposit - the default assessment was not preceded either by a notice or hearing and that it appears, apparently, the order was passed on system generated pre-determined order and the result of a programme - Held that - Bhumika Enterprises s case 2015 (9) TMI 535 - DELHI HIGH COURT too substantiates that system generated orders cannot stand the test of law - Prima facie the default assessment in this case too appears to follow the same course, of course the appeal is not before the Court nor can in the present instance, the Court comment either favourably or adversely against the default assessment order - Tribunal is directed to hear the assessee s appeal, pending before it without insisting upon the pre-deposit - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Waiver of pre-deposit in a VAT appeal.

Analysis:
In the case, the appellant/assessee challenged an order of the Appellate Tribunal, Value Added Tax (VAT Tribunal), which denied its request for waiver of pre-deposit. The appellant contended that the default assessment was not preceded by a notice or hearing, and the order seemed to be system-generated. The appellant relied on a previous court decision and argued for a complete waiver of the pre-deposit amount. The VAT Tribunal granted some relief, but the appellant considered it inadequate, as it still required payment of 10% of the tax penalty and interest.

Analysis:
The Revenue's counsel argued that the relief granted by the VAT Tribunal was substantial, and further relief should not be granted by the High Court in its limited jurisdiction. The High Court, after considering the submissions and referring to a previous case, acknowledged that system-generated orders may not comply with the law. The Court directed the Tribunal to hear the appellant's appeal without insisting on the pre-deposit amount, taking into account the circumstances of the case.

Analysis:
The High Court allowed the appeal, directing the Tribunal to proceed with the appellant's appeal without requiring the pre-deposit. The Court emphasized the importance of following due process and indicated that system-generated orders may not be legally valid. The order was given to the parties directly for compliance.