2018 (11) TMI 147 - HC - VAT and Sales Tax

Pre-deposit - stay of order - Maharashtra Tax on Entry of Goods into Local Areas Act, 2002 - Jurisdiction of assessing authority viz. The Asst. Commissioner of Sales Tax (Investigation) to pass the order - applicability of Section 3 of the Act - goods have entered the local area from Thane - financial hardship of petitioner. Jurisdiction of assessing authority viz. The Asst. Commissioner of Sales Tax (Investigation) to pass the order - applicability of Section 3 of the Act - goods have entered the local area from Thane - Held that - he Tribunal has noted that it would require deeper consideration at final hearing and had factored in the above while holding that the payment of ₹ 12.69 crores out of a confirmed demand of ₹ 90.82 crores was reasonable. Thus, there is no merit in the submission of the petitioners that the submission was not considered by the Tribunal leading to the impugned order being bad in law. Financial hardship to make pre-deposit - Held that - The appellant had already deposited an amount of ₹ 2.69 crores out of ₹ 12.69 crores as directed by the first appellate authority but was finding it impossible to pay the balance amount of ₹ 10 crores for the subject assessment year - the financial hardship urged by the petitioners is not at all considered by the impugned order of the Tribunal. Petition disposed off.

Summary

Issues:
Challenge to order of Maharashtra Sales Tax Tribunal under MVAT Act, 2002 regarding deposit amount for staying assessment order; Petitioner's grievance of non-speaking order by Tribunal; Consideration of financial hardship in depositing the directed amount.

Analysis:
The petition challenged the order of the Maharashtra Sales Tax Tribunal passed under Section 26(6) of the Maharashtra Value Added Tax Act, 2002. The Tribunal's order stemmed from the petitioner's appeal against the Deputy Commissioner of Sales Tax's directive to deposit ?12.69 crores out of total dues of ?90.82 crores under the Maharashtra Tax on Entry of Goods into Local Areas Act, 2002. The Tribunal found the stay amount reasonable as it would result in a loss to the Revenue of ?12.69 crores, comprising tax and interest. The petitioners contended that the Tribunal's order was non-speaking and failed to consider their submissions regarding jurisdiction, levy application, and financial hardship.

The Tribunal acknowledged the need for deeper consideration of the jurisdiction and levy application issues raised by the petitioners, ultimately deeming the stay amount reasonable. However, the Tribunal did not adequately address the financial hardship argument put forth by the petitioners. The petitioners had already deposited ?2.69 crores but found it impossible to pay the remaining ?10 crores due to financial constraints. The Tribunal's failure to consider the financial hardship aspect was deemed a crucial omission.

The High Court set aside the Tribunal's order to the extent that it did not address the petitioner's financial hardship contention. The Tribunal was directed to reconsider the petitioner's application for stay in light of the financial difficulties claimed. The respondents were instructed not to initiate recovery proceedings until the Tribunal made a decision on the financial hardship issue and for three weeks thereafter. The petition was disposed of with these terms, emphasizing the importance of balancing the petitioner's financial constraints with the Revenue's interests.