2021 (10) TMI 806 - HC - VAT and Sales Tax

Quantum of pre-deposit - Seeking admission of Second Appeal and stay against the recovery of dues - Exemption for high seas sale transaction - HELD THAT - The demand of the pre-deposit is to the tune of 20% of the tax liability for admission of the appeal vide impugned order dated 11.02.2020. As could be noticed from the pleadings for the other assessment year, the petitioner has been able to duly furnish the evidence for high seas sale transactions, which have been accepted also by the different assessment orders. Considering the justifiable grounds and the bona fide nature of the transaction, the First Appellate Authority when has already ordered the reverification of the document, which had not been complied with by the Assessing Authority, the VAT Tribunal could have considered this aspect, which instead has ordered the 20% of the pre-deposit. 5% of the amount by way of the pre-deposit would suffice the insistence of requirement of pre-deposit of to the tune of 20% would need indulgence. The petitioner is directed to deposit 5% of the amount which shall include the amount of ₹ 5,18,935/- within a period of two weeks from the date of receipt of a copy of this order - petition disposed off.

Summary

Issues:
Challenge to order of Gujarat Value Added Tax Tribunal in Second Appeal No.35 of 2020.

Analysis:
1. The petitioner, a private limited company trading in petrochemicals, entered high seas sale agreements with buyers, claiming exemption under the CST Act for sales in the course of import. The Assessing Officer allowed exemption for some transactions but raised a significant tax demand for others, leading to a dispute.

2. The petitioner challenged the Assessment Order before the Appellate Authority, seeking verification of documents. However, the Appellate Authority dismissed the First Appeal for non-payment of pre-deposit, prompting the petitioner to file a Second Appeal before the VAT Tribunal.

3. The petitioner argued that a substantial amount was demanded as pre-deposit for admission of the appeal, highlighting successful furnishing of evidence for similar transactions in other assessment years. The petitioner sought the quashing of the impugned order dated 11.02.2021 and alternative reliefs.

4. The High Court, after hearing both sides, noted the demand for a 20% pre-deposit and the petitioner's compliance with furnishing evidence in other assessment years. The Court emphasized the need for a reasonable pre-deposit amount, considering the bona fide nature of the transaction and the previous order for document re-verification.

5. The Court directed the petitioner to deposit 5% of the amount within two weeks, emphasizing that the First Appellate Authority should proceed with the matter in accordance with the law and without being influenced by the High Court's order. The petition was disposed of with this direction.