2018 (12) TMI 421 - HC - VAT and Sales Tax

Compliance with pre-deposit - section 62(5) of the Punjab VAT Act, 2005 - Whether on the facts and in the circumstances of the case, the Ld. Tribunal was justified in rejecting the pleas of the appellant for not having the sufficient means to comply with the condition of pre-deposit U/s 62(5) of the Punjab VAT Act, 2005? Held that - The Assessing Officer while framing the assessment had noticed that in the absence of original purchase invoices and supporting documents like bank statement, GRs, in/out register or any other proof of movement of goods, the Input Tax Credit (ITC) claim cannot be allowed to the appellant. The ITC claimed on an amount of ₹ 55,205,933/- was disallowed. Accordingly, the Assessing Officer framed the assessment vide order, Annexure A-2, creating demand of ₹ 1,09,86,225/- including the interest and penalty. The order of the First Appellate Authority and dismissed the appeal by holding that neither the appellant had pleaded that it had gone insolvent or was not in possession of any funds, nor it deposited any amount in terms of Section 62 (5) of the Act. The appellant had not filed any affidavit to the effect that it had gone into losses and was unable to pay even 10% of the tax demand. The appellant has failed to pin point any illegality or perversity in the aforesaid findings recorded by the authorities below which may warrant interference by this Court. No substantial question of law as claimed by the appellant arises in this appeal - appeal dismissed.

Summary

Issues:
1. Rejection of pleas for insufficient means to comply with pre-deposit condition under Section 62(5) of the Punjab VAT Act, 2005.
2. Justification of not allowing the law laid down by the Hon'ble Punjab and Haryana High Court in a specific case.

Analysis:

Issue 1:
The appellant, a dealer engaged in trading metals, challenged an assessment order raising a demand of ?1,09,86,225, including penalties and interest. The appellant failed to deposit 10% of the tax demand as required under Section 62(5) of the Act, resulting in dismissal of the appeal by the First Appellate Authority. The Tribunal upheld this decision, emphasizing that the appellant did not provide evidence of insolvency or lack of funds. The Tribunal noted the absence of any affidavit demonstrating financial losses or inability to pay the required amount. The Tribunal opined that granting full protection to the appellant would encourage unnecessary litigation and lead to revenue loss for the State. Consequently, the Tribunal found no grounds to interfere with the discretion exercised by the First Appellate Authority under Section 62(5) of the Act. The appellant's counsel failed to identify any legal errors in the authorities' findings, leading to the dismissal of the appeal by the High Court.

Issue 2:
The appellant contended that the Tribunal should have considered the relaxation of the pre-deposit condition based on a judgment of the Hon'ble Punjab and Haryana High Court in a specific case. However, the High Court found no merit in this argument. The First Appellate Authority had already reduced the deposit requirement from 25% to 10% of the tax demand, aligning with the judgment referred to by the appellant. Despite this reduction, the appellant failed to comply with the 10% deposit condition, leading to the dismissal of the appeal. The High Court concurred with the Tribunal's decision, emphasizing that the appellant did not provide sufficient justification for non-compliance with the statutory requirement. The High Court concluded that no substantial legal question arose from the appeal, thereby dismissing it.

In conclusion, the High Court upheld the decisions of the lower authorities, emphasizing the importance of complying with statutory requirements and providing adequate justification for any deviations. The appellant's failure to deposit the required amount as per Section 62(5) of the Act led to the dismissal of the appeal, highlighting the significance of procedural adherence in tax matters.