2017 (9) TMI 1417 - HC - VAT and Sales Tax

Issuance of C declaration forms - amount of penalty due to be deposited - whether the respondent would be justified in withholding the C Form declarations? - Held that - The petitioner, though entitled to prefer an appeal before the First Appellate Authority against the assessment order, is not required to effect any pre-deposit of penalty amount. If there are tax arrears, then 25% of the disputed tax has to be pre-deposited mandatorily for being entitled to present the appeal. The Statute itself does not provide for any pre-deposit in the case of penalty - it is too harsh to withhold the C Form declarations, when the petitioner is entitled to C Form declaration. The writ petition is disposed of by directing the respondent to release the C Form declarations, to which, the petitioner is eligible - petition allowed.

Summary

Issues:
1. Direction to issue C declaration forms for dealership in petroleum products.
2. Validity of penalty levied by the respondent.
3. Withholding of C Form declarations by the respondent.
4. Appellate Tribunal's delay in considering stay petitions and appeals.
5. Requirement of pre-deposit for appealing against penalty.
6. Justification for withholding C Form declarations.

Analysis:

1. The petitioner sought a direction for the continuous issuance of C declaration forms to operate their petroleum products dealership. The petitioner was a registered dealer under the Puducherry General Sales Tax Act and the Puducherry Value Added Tax Act. Despite paying the entire tax before assessment orders, penalties were levied at 150%, leading to statutory appeals. The Appellate Authority acknowledged tax payment but upheld penalty orders, creating a contradictory situation. The petitioner filed second appeals before the Appellate Tribunal, seeking stay orders, as the C Form declarations were withheld by the respondent.

2. The respondent's power to withhold C Form declarations was upheld by the High Court in a previous case. While acknowledging this statutory authority, the court examined whether the respondent's action in withholding declarations from the petitioner was justified. The Appellate Authority and Assessing Officer recognized the tax payment, but the penalty imposition was disputed. The contradictory order by the Appellate Assistant Commissioner required rectification by the Appellate Tribunal, which had not addressed the pending stay petitions.

3. The petitioner was not required to make a pre-deposit for penalty appeals, unlike tax arrears where a 25% pre-deposit was mandatory. The court found it harsh to withhold C Form declarations when the penalty amount was under appeal before the Appellate Tribunal. It emphasized that the correctness of penalty levy was yet to be finalized until the Tribunal's decision. Consequently, the court directed the respondent to release the C Form declarations to the petitioner and instructed the Appellate Tribunal to expedite the hearing of stay petitions within three weeks.

4. The court clarified that its decision was based on the specific circumstances of the case and should not be considered a precedent. It warned the petitioner of stringent actions if there were future tax payment defaults. The judgment highlighted the importance of resolving the penalty issue through the pending appeal process before making final decisions on withholding C Form declarations.