2020 (4) TMI 375 - HC - VAT and Sales Tax

Grant of stay on collection of 50% of the disputed tax - HELD THAT - Admittedly, the appeal preferred by the petitioner before the Telangana Value Added Tax Appellate Tribunal challenging the revision order dt.09-05-2019 for the assessment years 2013-14 and 2014-15 is pending consideration before the said Tribunal and the petitioner had already deposited 25% of the disputed tax. Having regard to the Advance Rulings issued by the competent authority under Section 67 of the said Act, and since based on the Advance Rulings of the respondents, petitioner did not to collect tax at 5% on the photo albums being sold by petitioner from 2005-06 onwards, the action of the 1st respondent in compelling the petitioner to pay 50% of the disputed tax and now proposing at 14.5% VAT on the sales appears to be arbitrary and illegal - Petition disposed off.

Summary

Issues:
Challenge to stay order on payment of disputed tax pending appeal before Telangana Value Added Tax Appellate Tribunal; Allegation of illegal imposition of conditions on petitioner; Violation of constitutional provisions.

Analysis:
The Writ Petition challenges the order granting stay on the collection of 50% of the disputed tax, amounting to ?34,41,386, with a condition for the petitioner to pay the remaining 50% within four weeks. The petitioner, a dealer in photo albums, had been collecting 5% VAT since 2005-06 based on Advance Rulings issued under the Telangana Value Added Tax Act. However, a show cause notice was issued proposing to levy tax at 14.5% on photo albums, which the petitioner objected to. The revision order confirmed the levy of additional tax, leading to an appeal before the Telangana Value Added Tax Appellate Tribunal.

The petitioner argued that the condition imposed by the 1st respondent to pay 50% of the disputed tax was illegal, arbitrary, and violated constitutional provisions. The Tribunal was already considering the appeal, and the petitioner had deposited 25% of the disputed tax as a pre-deposit. The court noted that the Advance Rulings supported the petitioner's position of collecting tax at 5% on photo albums, making the respondent's proposal of 14.5% VAT appear arbitrary and illegal.

In the judgment, the court set aside the order of the 1st respondent and directed a stay on the collection of the disputed tax pending the appeal before the Tribunal, considering the pre-deposit made by the petitioner. The court found the 1st respondent's actions to be arbitrary and illegal based on the Advance Rulings and the petitioner's compliance with the pre-deposit requirement. The Writ Petition was disposed of with no costs, and pending miscellaneous petitions were closed without costs as well.