2021 (12) TMI 149 - 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 - Today, when the matter was taken up, learned advocate Mr. Sheth appearing for the petitioner has submitted that no order has been passed as that was the last date on which the member of the Tribunal is demitting the office. Learned Assistant Government Pleader confirms non-appointment of any Member of the Tribunal till date - Learned advocate Mr. Sheth submits that 40% of the amount of tax has already been deposited by way of predeposite. Without entering into the merit of the matter, the impugned recovery notice dated 29.05.2021 qua Financial Years 2011-2012 and 2013-14 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 tax liability classification of stainless steel wires under VAT Act.
2. Assessment initiated by Assessing Officer under Section 34 of VAT Act.
3. Challenge against order passed by First Appellate Authority before Gujarat VAT Tribunal.
4. Recovery notice issued despite pendency of Second Appeal.
5. Absence of Presiding Officer at the Tribunal.

Analysis:

1. The petitioners, engaged in manufacturing and selling stainless steel wires, admitted tax liability on local and inter-State sales. Dispute arose regarding the classification of stainless steel wires under the VAT Act, leading to an assessment by the Assessing Officer proposing a higher tax rate based on a different entry in the Schedule II of the VAT Act.

2. After exhausting legal remedies, the petitioners challenged the order before the Gujarat VAT Tribunal. Despite the pendency of the Second Appeal and a stay application, the second respondent authority issued a recovery notice, prompting the petitioners to approach the High Court due to the imminent demission of the sole member of the Tribunal.

3. The High Court intervened due to the absence of a Presiding Officer at the Tribunal and directed a stay on coercive recovery until the appointment of a new Presiding Officer. The Court refrained from delving into the merits of the case but granted additional time to the petitioners, emphasizing that the stay granted would not influence the Tribunal's decision on the case's merits.

4. In a subsequent hearing, the Court reiterated the stay on recovery notices for specific financial years, emphasizing the exceptional circumstances necessitating the Court's intervention due to the absence of a Tribunal member. The Court granted the petitioners additional time and reiterated that the stay would not impact the Tribunal's assessment of the case on its merits.

5. The Court's intervention aimed to prevent undue hardship to the litigating parties due to the absence of a Presiding Officer at the Tribunal. The Court's directions ensured a temporary halt on recovery actions, providing relief to the petitioners until the appointment of a new Tribunal member, while emphasizing that the stay granted would not influence the Tribunal's independent assessment of the case.