2018 (11) TMI 1135 - HC - VAT and Sales Tax

Refund of VAT - goods sold inter-state - denial of refund on the ground that there is no evidence of interstate movement of the goods - case of Revenue is also that petitioner could not produce any reliable evidence of actual movement of goods. Mere production of C form would not ensure the benefit of reduced tax - Held that - petitioner could not produce any reliable evidence of actual movement of goods. Mere production of C form would not ensure the benefit of reduced tax Petitioner is directed to deposit a sum of ₹ 20 lakhs with the respondent authorities latest by 30.11.2018 and further furnish a bank guarantee of a similar amount which will be kept alive till the First Appeal is disposed of - petition disposed off.

Summary

Issues:
Refund of VAT claimed on the premise of interstate sales, assessment by the Assessing Officer, condition of predeposit for appeal, evidence of actual movement of goods, financial difficulties of the petitioner.

Analysis:
The petitioner, engaged in mobile handset business, claimed a VAT refund for the year 2013-14 based on goods sold interstate. The authorities provisionally refunded ?3.33 crores out of the total claim of ?9.72 crores. However, during assessment, the Assessing Officer concluded that there was no evidence of interstate movement, treating the sales as local and demanding ?2.96 crores with interest and penalty after adjusting input tax credit.

The petitioner challenged the assessment before the first Appellate Authority, which required a predeposit of 25% of the tax to hear the appeal. Failing to meet this condition, the appeal was dismissed. Subsequently, the petitioner appealed to the Tribunal, which imposed a predeposit condition of ?55 lakhs, leading to the current petition challenging this requirement.

The petitioner's counsel argued that the provisional refund was granted after thorough verification, with ample evidence presented to prove actual goods movement. They contended that the Assessing Officer erred in treating the sales as local, emphasizing the petitioner's financial constraints.

On the other hand, the AGP opposed the petition, claiming the petitioner failed to provide reliable evidence of goods movement, stating that mere production of Cform did not guarantee tax benefits.

The Court acknowledged that disputed factual questions should be resolved by the Appellate Authorities but imposed a reasonable condition for the petitioner to exercise the right of first appeal. Considering the circumstances, the petitioner was directed to deposit ?20 lakhs with authorities by a specified date and provide a bank guarantee of a similar amount until the First Appeal's resolution. Upon meeting these conditions, the petitioner's First Appeal was reinstated, reversing the orders of the VAT authority and the First Appellate Authority.

In conclusion, the petition was disposed of in accordance with the conditions set by the Court, allowing the petitioner to pursue the First Appeal before the Commissioner.