2019 (4) TMI 1324 - HC - VAT and Sales Tax

Requirement with the pre-deposit - 30.55% of the penalty - Section 31 (2) of the Bihar Value Added Tax Act, 2005 - HELD THAT - The legislature has been conscious while conferring a right in the assessee to pray for interim relief pending statutory appeal questioning an order of assessment, interest or a penalty and even though a discretion is vested in the Appellate Authority and the Revisional Authority to set up such terms and conditions as deem proper while considering application for stay of tax and interest but no such discretion to set up terms and conditions is present in so far as the prayer for stay of penalty is concerned. Meaning thereby either the Appellate Authority can accept or reject the prayer for interim stay but in case he is persuaded with the prayer so made then he cannot set up conditions therefor. The excess deposit of tax made by the petitioner, that the issue, whether or not the petitioner has made himself liable for penalty, is pending before the Appellate Authority, we direct the Joint Commissioner, Commercial Taxes (Appeal), Central Division, Patna to dispose of the appeal of the petitioner in accordance with law without coercing him for pre-deposit of the amount as found in the order impugned for the purpose of grant of interim stay and which order of penalty shall remain in abeyance and which amount of penalty so imposed would be governed by the final outcome of the appeal pending before the Appellate Authority - petition allowed.

Summary

Issues:
1. Direction to deposit a sum of ?1,31,97,300 as part of penalty amount.
2. Interpretation of Rule 46(1) of the Bihar Value Added Tax Rules, 2005 regarding pre-deposit for interim order.
3. Discretion of the Appellate Authority in setting terms and conditions for stay of recovery.

Analysis:
1. The petitioner challenged the order directing them to deposit ?1,31,97,300, which is 30.55% of the penalty imposed under Section 31(2) of the Bihar Value Added Tax Act, 2005. The court refrained from delving into the merits of the penalty but acknowledged the excess tax deposit made by the petitioner. The Appellate Authority was directed to dispose of the appeal without coercing the petitioner for pre-deposit, with the penalty remaining in abeyance pending the appeal's outcome.

2. The court analyzed Rule 46(1) of the Bihar Value Added Tax Rules, 2005, which allows an assessee to seek interim relief against tax, penalty, or interest assessments. Notably, the rule grants discretion to the Appellate Authority or revisional authority to set terms and conditions for stay of tax and interest recovery. However, the discretion does not extend to setting conditions for penalty stay requests. The court emphasized the legislative intent in providing relief pending statutory appeals and clarified the absence of similar discretion for penalty stay requests.

3. Considering the excess tax deposit by the petitioner and the pending appeal on penalty liability, the court emphasized that the Appellate Authority should decide the appeal without mandating pre-deposit. The court directed the Appellate Authority to handle the matter in accordance with the law, ensuring that the penalty order remains suspended until the appeal's resolution. The timeline for the appeal's final disposal was mentioned, emphasizing the need for compliance with the court's directives.

This judgment highlights the importance of procedural fairness and the Appellate Authority's discretion in setting terms for stay requests. The court's decision aimed to protect the petitioner's rights pending the appeal's outcome and ensure a just resolution without undue financial burden during the interim period.