2021 (12) TMI 126 - HC - VAT and Sales Tax

Classification of goods - local sales of stainless steel wires as well as the inter-State sales not supported by C forms - Entry No.85 of Schedule II of the VAT Act - HELD THAT - The petitioners are hopeful of making a request for the similar stand to be taken by the Tribunal. 9.1 Without entering into the merit and without endorsing anything that has been done in the past years by the Tribunal as no such challenge solely is before this Court 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 11.10.2021 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. Petition disposed off.

Summary

Issues:
1. Dispute over the classification of stainless steel wires for tax assessment.
2. Issuance of recovery notice despite pending appeal before the Tribunal.
3. Absence of Presiding Officer in the Tribunal leading to delay in proceedings.

Analysis:
1. The petitioners, engaged in manufacturing and selling stainless steel wires, admitted tax liability on local and inter-State sales. However, a dispute arose during audit assessment regarding the classification of stainless steel wires under the VAT Act. The Assessing Officer proposed a higher tax rate, leading to the petitioners challenging the order through Second Appeals before the Tribunal, seeking protection against outstanding demands.

2. Despite the pending appeal before the Tribunal, the second respondent authority issued a recovery notice, causing concern to the petitioners. They sought an early hearing and informed the second respondent about the stay application. Due to the imminent demission of the sole member of the Tribunal, the petitioners approached the High Court seeking interim relief and intervention due to the absence of a presiding officer in the Tribunal.

3. The High Court, after hearing both parties, acknowledged the unresolved issue of the residuary entry classification pending before the Tribunal. In light of the exceptional circumstances arising from the absence of the Presiding Officer in the Tribunal, the Court intervened to protect the petitioners from coercive recovery actions until the appointment of a new Presiding Officer. The Court granted a stay on the recovery notice and allowed additional time for the petitioners to address the matter further post the appointment of the Tribunal's President or Member.

4. The Court clarified that the grant of stay was necessitated by the absence of the Tribunal's Forum and would not influence the Tribunal's consideration of the case on its merits. The Court emphasized that the intervention was due to the unique circumstances and the need to ensure that the parties involved did not suffer due to the lack of a presiding officer. The petition was disposed of with the direction to provide direct service through Speed Post and e-mode in addition to regular modes of service.