2017 (8) TMI 807 - HC - VAT and Sales Tax

Inter-state or intra-state sale - penalty - the revisional authority passed an order dated 23.04.2015, in which, she set aside the appellate order only on the ground that the communication dated 26.11.2010 was not an appealable order. If at all the petitioner was aggrieved by the action of the departmental authorities, he should have preferred appeal against the order dated 04.12.2010 - Held that - We may recall, in the notice for revision, the revisional authority raised two grounds. One was of the maintainability of the appeal and the other was on the merits of the appellate order. The revisional authority having held that the appeal itself was not maintainable, refused to elaborate on the merit of the order. When we are of the opinion that the appeal was maintainable and that the revisional authority therefore committed an error in reversing the appellate order on the ground of maintainability, we must restore the proceedings before the revisional authority for decision on merits. For such purpose, the revisional order shall have to be set aside. For the same reason the order passed by the Tribunal confirming the revisional order shall also go. The proceedings are restored before the revisional authority - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to order of Value Added Tax Tribunal confirming revisional order dated 22.04.2015.

Analysis:
The petitioner, a company engaged in manufacturing and sale of asbestos cement products, imported raw fiber asbestos which was detained by checkpost authorities. The authorities demanded duty and penalty, leading to the petitioner depositing a sum of ?10,24,256 for release of goods. The petitioner appealed against the order but only the penalty was set aside, not the duty. Subsequently, the revisional authority sought to revise the appellate order, arguing that the duty evasion justified the penalty. The revisional authority set aside the appellate order on the ground that the communication was not appealable, leading to the petitioner approaching the Tribunal.

The High Court found that the communication dated 04.12.2010 was not an order of assessment and could not be considered as such. Without a proper order of assessment, the demand for duty and penalty could not be upheld. The Court noted that the communication lacked the characteristics of a quasi-judicial order. The law prescribes a ceiling for penalty imposition, and in this case, the maximum penalty was imposed without proper assessment. The Court emphasized that the duty and penalty were not finalized without a valid order of assessment.

The Court held that the communication dated 26.11.2010, assessing the duty and penalty, could be treated as an appealable order. As the revisional authority erred in deeming the appeal as not maintainable, the Court set aside the revisional order and directed a review on merits. Consequently, the orders of the revisional authority and the VAT Tribunal were set aside, and the proceedings were restored before the revisional authority for a decision on the duty and penalty issue. All contentions regarding the leviability of duty and penalty were left open for consideration, with a deadline set for the revisional authority to decide the matter.

In conclusion, the High Court partially allowed the petition, emphasizing the importance of a valid order of assessment for duty and penalty imposition. The Court's decision aimed to ensure a fair review of the duty and penalty liabilities, underscoring the need for proper legal procedures in tax matters.