2023 (6) TMI 751 - HC - VAT and Sales Tax

Refusal of stay on the order qua the interest, as demanded under Section 30(2) of the Maharashtra Value Added Tax Act, 2002 (stay is granted to the petitioner on the tax as demanded) - separation of Composite order - exercise of appellate jurisdiction under Section 26(6B) of the Act. The petitioner has contended that once the nature of order passed by the first appellate authority itself was a composite order, it was not correct for the tribunal to dissect such composite order by bifurcating/ separating the order as to the interest component and to reject the petitioner s stay application qua the interest amount as demanded under Section 30(2) of the Act. HELD THAT - The provisions being Sections 23 providing for assessment, Section 26 read with 26(6A) and 26(6B) providing for a first appeal and a second appeal respectively. We also need to note the provisions of Section 30 providing for interest payable by a dealer or a person. Section 30 falls under an independent Chapter namely Chapter VI providing for Penalty and Interest . The orders, which include an order on payment of interest by the assessee, necessarily are composite orders. Thus, the basis for any demand for interest is primarily the liability to pay tax. Hence both the orders namely the direction to pay tax and the direction to pay the interest, are interconnected and become part of a common order, which is an appealable order. It is rightly contended by the petitioner that an appeal against such composite order would necessarily include within its ambit appealability of the orders pertaining to the interest. Such composite orders are appealable orders under the provisions of sub-section (6A) and (6B) of Section 26. As a corollary the provisions of sub-section (6C) would become applicable in so far as such appeals as provided under sub-sections (6A) and (6B) are concerned, namely an entitlement of the assessee to seek stay of the recovery of the disputed dues including on interest. The legislature itself has avoided to provide anything in regard to an order on interest to be kept away from the purview of such appeals which the assessee would file under either sub-section (6A) or (6B) of Section 26. Thus to read any bar to appealability in regard to an order on interest, forming part of a composite order passed by the assessing authority or by the first appellate authority, to be read in sub-section (6B) sub-section (6C) would be reading something into such provisions, which has not been expressly provided by the legislature - it is not the intention of the legislature that a composite order cannot be passed either by the assessing authority or by the first appellate authority. In any event, it is quite possible that in a given situation, the order passed under Section 30(2) of the Act levying interest on the assessee, itself would fall to the ground, in view of setting aside of the principal order on assessment. Provisions of Section 85 of the Act which provide for a bar to certain proceedings - HELD THAT - Sub-section (2)(b-3) of Section 85 provides that an order passed under sub-section (2) or (4) of section 30 in regard to the interest payable by the dealer under the provision of the Act, no appeal shall lie - the bar under sub-section 2(b-3), such provisions would be applicable in regard to the proceedings where the issue is only in regard to an independent order on interest passed under Section 30(2) or (4) of the Act. Hence, it would not be appropriate to read the bar under sub-section (2)(b-3) of Section 85 of the Act, to the appealibility of composite orders, being assailed in appeals under Section 26 (6A) and (6B) of the Act, when the order passed by the assessing officer or first appellate authority is a composite order - the submissions as urged on behalf of the petitioner on the interpretation of the provisions of Section 26 (6A) and (6B) of the Act to be kept distinct from the provisions of Section 85(2)(b-3) of the Act, agreed upon. The petitioner s reliance on the decision of the Supreme Court in Arcot Textile Mills Limited vs. Regional Provident Fund Commissioner and Ors. 2013 (10) TMI 1570 - SUPREME COURT is also well founded on the principles of interpretation of the provisions in question although the Supreme Court was considering the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Supreme Court, interpreting the provisions of Section 7A and 7Q of the Employees P.F. Act, observed that the competent authority under the Employees P.F. Act while determining the moneys due from the employee shall be required to conduct an inquiry and pass an order which, according to the petitioner, is akin to the order passed by the assessing officer. The Supreme Court observed that an order under Section 7A of the Employees P.F. Act is an order that determines the liability of the employer under the provisions of the Act and while determining the liability, the competent authority offers an opportunity of hearing to the concerned establishment - The Supreme Court observed that such an order shall be amenable to appeal under Section 7I of the Employees P.F. Act, and the same is true of any composite order a facet of which is amenable to appeal under Section 7I of the Employees P.F. Act. It was observed that if for some reason when the authority chooses to pass an independent order under Section 7Q, the same would not be appealable. Respondent s (Revenue's) contention that the provisions of Section 85(2)(b-3) be read with the provisions of Section 26(6A) and (6B) of the Act, cannot be accepted. If such an interpretation is accepted, it would certainly lead to an absurdity. The tribunal directed to consider the petitioner s stay application qua the challenge to the interest component - petition allowed.

Summary

Issues Involved:
1. Maintainability of appeal against composite orders including interest under Section 30(2) of the Maharashtra Value Added Tax Act, 2002.
2. Interpretation of relevant provisions of the Act (Sections 23, 26, 30, and 85).
3. Applicability of bar under Section 85(2)(b-3) to composite orders.

Summary:

Maintainability of Appeal Against Composite Orders Including Interest:

The petitioner challenged the tribunal's order, which partially allowed the stay application by granting stay on the tax but refusing it on the interest amount of Rs. 3,60,932/- under Section 30(2) of the Maharashtra Value Added Tax Act, 2002. The petitioner argued that the tribunal erred in treating the interest component as non-appealable, asserting that the order in question was a composite one, encompassing both tax and interest, and thus appealable under Section 26(6A) and (6B) of the Act.

Interpretation of Relevant Provisions:

Sections 23, 26, 30, and 85 of the Act were scrutinized. Section 23 deals with assessment, Section 26 provides for appeals, Section 30 pertains to interest payable by a dealer, and Section 85 imposes a bar on certain proceedings. The court emphasized that Section 26 does not exclude orders on interest from being appealable when they form part of a composite order. It was noted that composite orders, which include both tax and interest components, are interconnected and thus appealable under Sections 26(6A) and (6B).

Applicability of Bar Under Section 85(2)(b-3):

The court clarified that the bar under Section 85(2)(b-3) applies to independent orders on interest under Section 30(2) or (4), not to composite orders including interest. It was held that interpreting Section 85(2)(b-3) to bar appeals on composite orders would lead to absurdity and was not the legislature's intent. The court referenced the Supreme Court's decision in Arcot Textile Mills Limited vs. Regional Provident Fund Commissioner, which supported the appealability of composite orders.

Conclusion:

The court allowed the writ petition, directing the tribunal to reconsider the petitioner's stay application concerning the interest component. The tribunal's interpretation that the interest component was non-appealable was found to be incorrect.

Order:

The court issued a writ directing the tribunal to modify its order on the stay application to include the interest amount under Section 30(2) in the stay granted.