2018 (11) TMI 341 - HC - VAT and Sales Tax

Demand of entry tax to be deposited before assessment order - in the earlier round of litigation, HC rejected the challenge to the demand notices - Petitioner seeks clarification of the directions contained in the judgment - Held that - the High Court, while disposing of the main petition of the present petitioner did not shut down the petitioner s doors for contesting the assessment. - This is an inbuilt indication in the judgment which would convince us that the High Court required the petitioner, at this stage to deposit the principal sum of tax, but not the penalty; as indicated in the two demand notices dated 13th April 2016. Ordinarily even otherwise, there cannot be demand of penalty even before assessment is made and penalty imposed. Once the petitioner therefore abides by the directions of the Court by filing return-cum-challan and also deposits the principal tax demanded in the two demand notices, the mechanism of assessment being completed in accordance with law, would operate. It goes without saying that once assessment is complete, all statutory rights and remedies would be available to the assessee - if the penalty is confirmed, the Department could assert its right to recover the same. Application disposed off.

Summary

Issues:
Clarification of directions in a judgment regarding assessment notices and demand of entry tax for specific years.

Analysis:
The High Court's judgment involved a Civil Application seeking clarification of directions in a previous judgment regarding assessment notices and demand of entry tax for specific years. The petitioner challenged the assessment notices and demand notices issued by the respondent authorities for the years 2011-2012 and 2013-2014. The High Court rejected the petitioner's grounds that the notices were barred by limitation and that no tax could be levied before assessment. The Court emphasized the scheme of the Act and Rules, stating that tax payment could be required before assessment. The petitioner's argument regarding tax credit under the Gujarat Value Added Tax Act was also addressed, allowing for credit under certain conditions.

The High Court further discussed the issue of whether certain goods were 'specified goods' during assessment proceedings, indicating that this aspect should be considered if the petitioner files return-cum-challan and responds to the assessment notice. The Court dismissed the Special Civil Application filed by the petitioner, leading to an appeal to the Supreme Court. The Supreme Court, after considering the relevant material, dismissed the appeal but allowed the petitioner to seek further direction from the High Court if needed.

Subsequently, a new application was filed seeking a review of the judgment and setting aside the demand notices, with a direction for assessment for the specified years. The High Court clarified that the petitioner could contest the assessment by filing return-cum-challan and paying the tax demanded. The Court indicated that the principal tax amount, not including penalty, needed to be deposited for assessment to proceed. Once the assessment is completed, statutory rights and remedies would be available, including the recovery of penalties if confirmed. The Court set a deadline for availing the clarification provided and directed assessment to be carried out accordingly.

In conclusion, the High Court's judgment clarified the requirements for the petitioner to contest the assessment, emphasizing the need to deposit the principal tax demanded before assessment could proceed. The Court provided a deadline for compliance, ensuring that statutory rights would be preserved for the petitioner.