2019 (2) TMI 1455 - HC - VAT and Sales Tax

Compliance with the pre-deposit - Direction to deposit 5% of the disputed tax amount as a pre-condition for hearing the stay application - Held that - It is true that the petitioner has a prima facie case on merits but it is also true that there was only one member of the Commercial Tax Tribunal deciding the stay application/ exemption application, and he has referred in his order to the fact that the Second Appeal is cognizable by a Division Bench of the Tribunal and, therefore, he cannot consider the matter on merits, as was argued before him by the learned counsel for the petitioner/ appellants therein. This Court therefore directs the learned Tribunal to consider the appeal filed by the petitioner on merits along with the stay application as and when the Division Bench is available before the Tribunal and the direction for pre-deposit of 5% of the assessment amount shall remain stayed, subject to the condition that the petitioner shall deposit the amount as directed by the Tribunal in case of failure in the Appeal along with interest determined on current Bank rate of interest - petition disposed off.

Summary

Issues:
Impugned orders by Commercial Tax Tribunal regarding deposit for hearing stay application and appeal, consideration of waiver application, interpretation of legal provisions, and application of Division Bench judgment.

Analysis:
1. The petitioner challenged the orders of the Commercial Tax Tribunal directing a 5% deposit of disputed tax amount for hearing the stay application and appeal for assessment year 2006-07. The petitioner argued that a similar matter was allowed in a Writ Petition, citing the judgment in Writ Petition No. 4275 of 2019. The Court found merit in the contention that a revision under Section 58 of the VAT Act would not lie, and a writ petition under Article 226 of the Constitution of India was the appropriate remedy. The Court emphasized the need for the Tribunal to consider the merits of the case while deciding on waiver applications.

2. The Court considered the legal position regarding waiver applications, citing a Division Bench judgment in I.T.C. Limited Vs. Commissioner (Appeals) Custom and Central Excise, Meerut-I. It was highlighted that the Tribunal must assess whether the appellant has a strong prima facie case on merit and should not cause undue hardship by requiring a deposit. The Court noted that the Tribunal had not considered the merits of the case adequately while deciding on the waiver, leading to the quashing of the impugned order.

3. The Court reviewed a co-ordinate Bench's order and acknowledged the petitioner's prima facie case on merits. However, it noted that the Tribunal, with only one member, could not consider the matter on merits due to the appeal being cognizable by a Division Bench. The Court directed the Tribunal to consider the appeal on merits alongside the stay application when a Division Bench is available, staying the pre-deposit condition subject to deposit in case of appeal failure with interest at the current Bank rate.

4. In conclusion, the Court directed the Tribunal to reconsider and decide the waiver application in light of the Division Bench judgment, setting a timeline for the decision. The Court granted relief to the petitioner by staying the pre-deposit condition and allowing the appeal to be considered on merits by a Division Bench, ensuring a fair assessment of the case.