2021 (6) TMI 999 - HC - VAT and Sales Tax

Maintainability - requirement with the pre-deposit or security - restraint on Respondent from making coercive recovery in relation to the subject matter of the petition - bone of contention raised by petitioner is that the Tribunal could not have taken into consideration the turnover of the petitioner for both the accounting years for the purpose of determining the amount of pre-deposit - Section 67 of the Gujarat Value Added Tax Act, 2003 - HELD THAT - From the bare reading of the subsection (4) of Section 73, it clearly transpires that an Appeal before the Appellate Authority against the order of assessment would not be ordinarily entertained unless such an appeal is accompanied by satisfactory proof of payment of the tax in respect of which an appeal has been preferred. Of course, the Appellate authority may if it deems fit for the reasons to be recorded in writing entertain the Appeal by granting relaxation in payment of tax in respect of which the Appeal is preferred as mentioned therein. The petitioner has challenged the order passed by the Tribunal directing it to pay 15% of the tax dues instead of 25% as directed by the First Appellate Authority. Apart from the fact that the First Appellate Authority had exercised the discretion in favour of the petitioner as contemplated under Section 73(4) of the GVAT Act by directing the petitioner to make payment of 25% of the tax dues instead of entire tax dues, for entertaining the Appeal, however the first appellate authority dismissed the Appeals on account of non-payment of the said pre-deposit amount, the Tribunal also passed the impugned order exercising its discretion by granting stay against the recovery of tax dues by directing the petitioner to pay 15% instead of 25% of the tax dues, while admitting the Second Appeals. Such an order of the Tribunal being interim and discretionary in nature, no statutory or legal right of the petitioner could be said to have been infringed, which would warrant interference of this Court under Article 226 of the Constitution of India. It is well settled position of law that the High Court will ordinarily not entertain the petition under Article 226 of the Constitution of India, involving recovery of taxes, cess, fees or other types of public money. It cannot be gainsaid that any stay of an action initiated by the State or its authorities for the recovery of taxes etc. would have serious implication on the authorities in discharging their constitutional and legal obligations - The Tribunal has not committed an error in taking into consideration the turnover of sales and purchase of the petitioner, while passing the impugned order. It transpires that the details of sales and purchase of the petitioner were taken into consideration by the Tribunal with a view to ascertain the financial position of the petitioner. The Tribunal has considered the relevant aspects namely the financial position of the petitioner and has exercised its discretion to the extent of granting the stay against the recovery of the dues by directing the petitioner to deposit 15% of the tax dues instead of 25% as directed by the first Appellate Authority. Petition dismissed.

Issues:
1. Challenge to order of reassessment under GVAT Act.
2. Dismissal of First Appeals for non-payment of pre-deposit amount.
3. Second Appeals filed before Gujarat Value Added Tax Tribunal.
4. Petitioner's contention regarding determination of pre-deposit amount.
5. Interpretation of Section 73 of the Gujarat Value Added Tax Act, 2003.
6. Discretion of appellate authority in entertaining appeals.
7. Tribunal's order on pre-deposit amount and stay against recovery.
8. Jurisdiction of High Court under Article 226 in tax recovery matters.
9. Consideration of petitioner's financial position by the Tribunal.
10. Dismissal of the petition for lack of merits.

Analysis:

1. The petitioner challenged a reassessment order under the Gujarat Value Added Tax Act following a search conducted by the State Tax Officer. Show-cause notices were issued, and a reassessment order was passed raising demands for Assessment Years 2013-14 and 2014-15.

2. First Appeals by the petitioner were dismissed for non-payment of pre-deposit amount, leading to the filing of Second Appeals before the Gujarat Value Added Tax Tribunal.

3. The Tribunal admitted the Second Appeals and granted a stay against recovery, directing the petitioner to deposit 15% of the tax dues within one month.

4. The petitioner contended that the Tribunal should not have considered the turnover for both accounting years in determining the pre-deposit amount, citing a previous judgment.

5. Section 73 of the GVAT Act requires proof of tax payment for entertaining appeals, with provisions for the appellate authority to relax payment requirements under certain circumstances.

6. The discretion of the appellate authority in entertaining appeals was highlighted, emphasizing the need for satisfactory proof of tax payment.

7. The Tribunal's order on the pre-deposit amount and stay against recovery was seen as an interim and discretionary measure, not infringing on the petitioner's legal rights.

8. The High Court's jurisdiction under Article 226 in tax recovery matters was discussed, with reference to previous judgments emphasizing the implications of stay orders on tax recovery.

9. The Tribunal's consideration of the petitioner's financial position in granting the stay and determining the pre-deposit amount was deemed appropriate, reflecting a discretionary decision.

10. The petition was dismissed for lacking merits, with the Court upholding the Tribunal's order and discretion exercised in the matter.

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