2021 (11) TMI 168 - HC - VAT and Sales Tax

Concessional rate of duty - inter-state sale - C forms not produced - applicability of Entry No.85 of Schedule II of the VAT Act - HELD THAT - Without entering into the merit and without endorsing anything that has been done in the past years by the Tribunal as no such challenge is before this Court solely on the ground of absence of the Presiding Officer and for want of forum as the parties litigating must not suffer the Court first has chosen to intervene and presently would direct the respondent not to pursue any coercive recovery till the appointment of Presiding Officer is made. Acceding to the request for present, without entering into the merit of the matter and without deciding also on the propriety of the earlier order of the Tribunal waiving the pre-deposit and of remanding the matter to the concerned authority, the impugned recovery notice dated 11.06.2021 is being stayed till the appointment of either the President or Member of the Tribunal. The additional two weeks time shall be given to the petitioners as taking up his matter may take some more time. As a parting note, it is being specifically mentioned that grant of the stay will not weigh with the Tribunal in considering the matter on merit. It is only because of the absence of the Forum that the Court needed to intervene in exceptional circumstances - petition disposed off.

Summary

Issues:
1. Classification of stainless steel wires for tax assessment under the VAT Act.
2. Validity of recovery notice issued by the second respondent authority.
3. Absence of Presiding Officer in the Tribunal affecting the petitioners' application for stay.

Classification of Stainless Steel Wires:
The petitioners, engaged in manufacturing and selling stainless steel wires, admitted tax liability on local and inter-State sales. An audit assessment dispute arose regarding the classification of stainless steel wires under the VAT Act. The Assessing Officer proposed a tax rate of 12.5% + 2.5% additional tax, considering the wires as falling under the residuary Entry 87 of Schedule II. The petitioners, after exhausting legal remedies, challenged this before the Tribunal, seeking protection against outstanding demands.

Validity of Recovery Notice:
Despite the pending Second Appeal before the Tribunal and a stay application against demands, the second respondent authority issued a recovery notice. The petitioners, in response, filed for an early hearing and informed the authority about the stay application. Due to the absence of the Presiding Officer in the Tribunal, the petitioners approached the High Court seeking relief against the recovery notice and the delay in addressing their application for interim relief.

Absence of Presiding Officer in Tribunal:
The High Court, acknowledging the absence of a Presiding Officer in the Tribunal, intervened to protect the petitioners' interests. The Court directed the second respondent not to pursue coercive recovery until the appointment of a new Presiding Officer. The petitioners were granted an additional two weeks after the appointment for their matter to be addressed. The Court emphasized that the stay granted was due to the exceptional circumstance of the Tribunal's absence and would not influence the Tribunal's decision on the merits of the case.

This judgment addresses the classification of stainless steel wires for tax assessment, the validity of a recovery notice issued despite pending legal proceedings, and the impact of the absence of a Presiding Officer in the Tribunal on the petitioners' application for stay. The High Court's intervention aims to safeguard the petitioners' rights until the Tribunal is properly constituted, emphasizing that the stay granted does not prejudge the Tribunal's future decision on the merits of the case.