2020 (12) TMI 1166 - HC - VAT and Sales Tax

Validity of assessment order - Transfer of title of goods - seeking direction to First Appellate Authority to hear appeal without insisting for pre-deposit as required under Section 62(5) of the PVAT Act - HELD THAT - The respondent issued Form C for all the years in question and in case of doubt must have stopped as well initiate appropriate steps instead of waiting for framing assessment at fag end of limitation period. It would be harsh if petitioner is required to deposit 25% of tax, interest and penalty. Penalty imposed is 200% and it is a case of interpretation and not fraud. Keeping in mind that petitioner has prime facie case on merits, we direct the petitioner to make pre-deposit of 25% of tax and further some amount towards interest, which would make a total deposit ₹ 7.5 Crore towards the condition of pre-deposit for hearing of the three appeals for assessment years concerned. We make it clear that petitioner shall make deposit of ₹ 7.5 Crore within one month from the date of receipt of certified copy of this order and it would be in respect of Assessment years 2010-11, 2011-12 and 2012-13 - On furnishing of proof of deposit, First Appellate Authority i.e. Deputy Excise and Taxation Commissioner (Appeals) shall hear and decide appeals preferably within three (03) months - petition disposed off.

Summary

Issues:
1. Quashing of assessment orders under PVAT Act for different assessment years.
2. Direction to First Appellate Authority to hear appeal without pre-deposit as required under Section 62(5) of PVAT Act.

Analysis:
1. The petitioner sought to quash assessment orders for different years under PVAT Act, claiming the sale transactions were inter-state sales. The Assessing Authority contended that ownership did not transfer to the buyer until project completion. The Assessing Authority created substantial demands towards tax, interest, and penalty. The Appellate Authority required a 25% pre-deposit for entertaining appeals under Section 62 of PVAT Act.

2. The petitioner argued that all conditions for inter-state sales were met, including movement of goods and transfer of title documents. The respondent continued issuing Form 'C' for concessional rates, indicating inter-state sales. The petitioner offered a pre-deposit of 25% of the tax demanded. The State Counsel suggested the court could waive or reduce pre-deposit conditions in deserving cases.

3. The court found no grounds to quash the assessment orders but agreed to reduce the pre-deposit amount. Multiple transactions occurred over different years, with consistent issuance of Form 'C' and 'E-1'. The court noted that the transactions were initially accepted as inter-state but later declared intra-state. Dispute arose over the transfer of title of goods, with the petitioner presenting a strong case based on contract terms, submitted documents, and legal precedents.

4. Considering the petitioner's strong case on merits, the court directed a reduced pre-deposit of 25% of tax and additional amount towards interest, totaling ?7.5 Crore for the three assessment years. The court emphasized the need for timely appeal resolution by the Appellate Authority within three months upon deposit confirmation.

Overall, the court upheld the assessment orders but acknowledged the petitioner's prima facie case on merits, leading to a reduced pre-deposit requirement for appeal consideration.