2023 (2) TMI 602 - HC - VAT and Sales Tax

Attachment of property - recovery of dues - order of pre-deposit had not been complied with - HELD THAT - Here, as can be noticed from the order of the First Appellate Authority it has while quantifying the amount of Rs. 60,64,430/- already given the reasoning for such an amount to be paid by the petitioner. However, when it came to the Tribunal in the Second Appeal, it has directed the petitioner to deposit Rs.3 Crore which is the sum on higher side. The petitioner has pleaded his limitation to pay the amount and the pandemic due to Covid-19 virus is also another reason for him to show his inability to deposit the amount of pre-deposit. These petitions are allowed quashing and setting aside the order dated 17.01.2022 of the VAT Tribunal. As rightly held by the Tribunal the asset value of approximately Rs.61 Crore is attached by the department and the payment of Rs.60,64,430 /- at the stage of First Appellate Authority is already deposited. No further predeposit would be necessary to be imposed. The amount of predeposit, which has already been deposited by virtue of the First Appellate Authority s direction shall continue to be retained by the State and will be adjusted against the tax liability which shall be decided after affording opportunity to the parties in accordance with the law. The pending Second Appeal being Second Appeal No. 593 of 2021 be co-operated by the petitioner and the same shall be completed within a period of three months from the date of receipt of a copy of this order - Petition allowed. Noticing the fact that the base order has been passed on the basis of presumption and assumption and then thereafter the challenge had been made to the First Appellate Authority and then there is a pendency of Second Appeal before the Second Appellate Authority, the matter would require adjudication at the hands of the Appellate Forum and at the same time the requirement of deposit of pre-deposits in accordance with the law as quantified by the First Appellate Authority is already deposited before the Authority concerned. Without endorsing to the action of the Tribunal the amount of Rs.3 Crore directed to be deposited as pre-deposit may not be insisted upon in wake of these glaring facts, the property which is attached is valued at Rs.61 Crore and therefore, also the revenue s interest is protected aptly.

Summary

Issues:
Challenge to order of Gujarat Value Added Tax Tribunal for pre-deposit of tax of Rs. 3 crores based on Second Appeal No. 593 of 2021.

Analysis:
1. The petitioner, a registered dealer under the Gujarat Value Added Tax Act and Central Sales Tax Act, challenged the Assessment Order for the financial year 2016-17. The Assessing Officer based the assessment on online data, considering sales as suppressed purchases, leading to a tax demand, interest, and penalty.

2. The petitioner appealed the Assessment Order before the Deputy Commissioner (Appeals), who granted a partial stay against recovery. However, the stay was canceled later, and the First Appeal was dismissed for non-payment of pre-deposit, leading to Second Appeal No. 593 of 2021.

3. The VAT Tribunal directed the petitioner to pay the full tax amount of Rs. 3 crores as a pre-deposit condition, leading to the petitioner's challenge. The petitioner argued that the assessment was based on assumptions, and the Tribunal decided the appeal prematurely, denying access to legal remedies.

4. The High Court considered the valuation report of the attached property, valued at Rs. 61.55 crores, with outstanding dues to the bank. The Court protected the petitioner from coercive actions, directing no dismissal of the appeal for non-compliance with pre-deposit.

5. Section 73 of the relevant Act mandates proof of tax payment for entertaining appeals, with provisions for reasonable pre-deposit amounts. The First Appellate Authority set the pre-deposit at Rs. 60.64 lakhs, which the Tribunal increased to Rs. 3 crores, deemed excessive by the petitioner.

6. The Court noted the baseless nature of the assessment, the pending Second Appeal, and the substantial property value attached, leading to the decision to quash the Tribunal's order. The Court allowed retention of the already deposited amount and directed the completion of the appeal within three months.

7. The Court instructed the State to create a charge on the property with the bank lien, ensuring no further liabilities. Direct service through e-mode was permitted for communication.

Conclusion:
The High Court allowed the petition, setting aside the Tribunal's order for a Rs. 3 crore pre-deposit, retaining the already deposited amount, and directing the completion of the pending appeal within three months. The State was instructed to create a charge on the property with the bank lien and ensure no further liabilities.