2023 (10) TMI 1155 - HC - VAT and Sales Tax

Maintainability of first appeals - first appeals were dismissed by the appellate authority summarily on the ground of non-compliance of the directions of pre-deposit. It was the case of the appellants before the Tribunal that the orders dismissing the first appeals summarily were bad inasmuch as of the total tax dues under various assessment orders which came to Rs. 204 crores and odd, an amount of Rs. 119 crores were already deposited under protest which were approximately more than 20% of the tax payable and therefore the appeals could not have been dismissed summarily on the ground of failure to pre deposit. HELD THAT - Perusal of the order of the Tribunal indicates that it was the case of the principal appellant that the transactions in question were not bogus and the appellant cannot be liable for the other business done by the agents. Effectively, the tax dues against the appellants is Rs. 204 crores of which Rs. 119 crores has been paid under protest. The case of the appellants before the Tribunal was that the deposit so made be considered towards pre-deposit under Section 73 of the GVAT Act. Merely because the amount was paid, as protest amount , the first appellate authority could not have directed the pre-deposit without considering the payment already made by the appellant, particularly, when such amounts were paid before passing of the assessment orders. The decision of the Hon ble Apex Court in the case of VVF India 2021 (12) TMI 477 - SUPREME COURT was in context of Section 26(6A) of the Maharashtra VAT Act which did not have a stipulation of the discretion in the appellate authority as is evident from the language of Section 73 of the GVAT Act. There is no reason why the appeals on the facts of the present case need to be entertained - Appeal dismissed.

Issues Involved:

1. Condonation of delay in filing appeals.
2. Validity of orders dismissing first appeals for non-compliance with pre-deposit requirements.
3. Consideration of protest payments as pre-deposit under Section 73 of the GVAT Act.
4. Implementation of Tribunal's order to lift bank attachment.

Summary:

Issue 1: Condonation of Delay

In view of the averments made in the applications filed for condonation of delay caused in filing the main matters and having heard learned advocates for the respective parties, the delay occurred is hereby condoned. Applications are accordingly allowed.

Issue 2: Validity of Orders Dismissing First Appeals

The appellants before the Tribunal had preferred these appeals challenging the orders of the First Appellate Authority passed under Section 73 of the Gujarat Value Added Tax Act (for short "˜the GVAT Act') read with section 9(2) of CST Act whereby the first appeals were summarily dismissed. The first appeals were dismissed by the appellate authority summarily on the ground of non-compliance of the directions of pre-deposit.

Issue 3: Consideration of Protest Payments as Pre-Deposit

It was the case of the appellants before the Tribunal that the orders dismissing the first appeals summarily were bad inasmuch as of the total tax dues under various assessment orders which came to Rs. 204 crores and odd, an amount of Rs. 119 crores were already deposited under protest which were approximately more than 20% of the tax payable and therefore the appeals could not have been dismissed summarily on the ground of failure to pre deposit.

The Tribunal observed that since the appellants and their agents had already made protest payment of Rs. 119 crores and the disputed tax demand was not more than Rs. 204 crores, the amount was sufficient to be considered as pre-deposit under section 33 of the GVAT Act and therefore it was the case of the appellants there was no scope to direct any pre-deposit in these matters. The Tribunal further directed the state authorities to lift the bank attachment on the account of the principal i.e. Dharampal Satyapal Ltd.

Mr. Pranav Trivedi, learned AGP appearing for the State would submit that as per the details of the various assessment orders the amount of tax, interest and penalty was more than Rs. 825 crores and therefore taking the figure so arrived at, the amount of pre-deposit so made was miniscule and the Tribunal therefore committed an error in allowing the appeals and setting aside the orders of the first appellate authority.

Mr. Mihir Joshi, learned Senior Advocate appearing with Ms. Nisha Ojha, learned advocate for M/s. Wadia Ghandy & Co. for the respondents would submit that the contention of the learned AGP is nothing but a clever interpretation misleading the court into the gamut of calculations when the interpretation per se on reading Section 73 indicates that when an appeal is accompanied by satisfactory proof of payment of tax in respect of which an appeal has been preferred, there is no question of falling into the provisions of Section 30(6) read with Section 42(7) of the Act.

The appellate tribunal in its findings has held asunder:

"In all these appeals the non-disputed facts are as under:

1) The Tax Authority has carried out the investigation at the premises of the appellant and his agents and assessment orders were passed after issuing the notices.

2) During the course of investigation appellant and his agents have made the protest payment of Rs. 119 Cr.

3) The Assessment order is passed after the protest payment is made by the appellant and his agents.

4) Against the orders of Assessment Officer appellant has preferred the First Appeals before the First Appellate Authority and Firs Appellate Authority has summarily rejected all the appeals.

5) First Appellate Authority has not considered the protest payment made by the appellant and his agents against the disputed tax demand while deciding the pre-deposit.

6) In all the appeals the disputed tax demand is not more than Rs. 204 Cr under the VAT Act and under the CST Act the demand is Rs. 90 lakh. Which was forfeited u/s. 31(3) read with section 9(2) of the CST Act.

7) Appellant and his agents have been assessed as jointly and severally by the Tax Authority under section 50 of the GVAT Act and created tax liability.

In light of above prima facie facts now, the Tribunal has to determine the reasonable pre-deposit by taking into consideration the prima facie facts narrated by both the parties and as per the judgment of M/s. Kavya Marketing.

After taking into consideration the above facts Tribunal is of the opinion that in all these appeals it is a non-disputed fact that Tax Authority has assessed the tax liability against the appellant's principal and his agents and the total Tax liability is approximately Rs. 204 Cr without interest and penalty but before passing the assessment order the appellant's principal and his agents have made the protest payment of Rs. 119 Cr. This amount was not treated as pre-deposit by the First Appellate Authority and directed to make the payment towards the pre-deposit under section 73 of the GVAT Act and in absence of any payment the First Appellate Authority has summarily dismissed all the appeals.

Learned Advocate has relied on the judgment of Hon'ble Supreme Court in Civil Appeal No. 7387 of 2021 in case of VVF (India) Limited V/s. State of Maharashtra & Ors order dated 03.12.2021, whereby the Hon'ble Supreme Court has considered the protest payment made by the appellant and has treated as payment made against the total liability of tax demand and therefore in all these appeals appellant's principal and his agents have made the payment of Rs. 119 Cr against the tax demand of Rs. 204 Cr. This amount is sufficient and it is more than 20% amount of disputed tax liability demand therefore Tribunal is of the opinion that considering the facts and pretest payment made by the appellant's principal and his agents prior to the assessment order and during the investigation, the judgment of Hon'ble Supreme Court in case of VVF (India) Limited is squarely applicable in these cases and this amount is treated as payment made towards the pre-deposit under section 73 of the GVAT Act. In this nutshell Tribunal has found no scope to direct anymore pre-deposit in all these matters.

So far as the appeals under the CST Act is concerned, there is a demand of penalty only therefore Tribunal is not directing any pre-deposit against the demand of CST.

In this nutshell Tribunal is of the view that the order of the learned First Appellate Authority is not legal and not based on prima facie facts of the case therefore we set aside the order of the learned First Appellate Authority of directing the pre-deposit amount under section 73 of the GVAT Act. We also set aside the order of the learned First Appellate Authority for non-condoning the delay occurred before the First Appellate Authority of about 2 years and 43 days in Second Appeal Nos. 1605 to 1607 of 2018 for the assessment periods 2010- 11, 01.04.2011 to 30.06.2011 and 01.11.2010 to 31.03.2011 respectively. We are also of the opinion that First Appellate Authority has summarily dismissed the appeals without touching the merits of the cases only on the ground of non compliance of direction of pre- deposit and as appellant's principal and his agents have made the protest payment in these cases this Tribunal is not directing any amount towards the pre-deposit and being a summary rejection in all the appeals all the matters are remanded back to the First Appellate Authority for fresh hearing with direction of stay against recovery as per the judgment of Hon'ble High Court of Gujarat in M/s. Tudor India Limited

The State Tax Authority is hereby directed to lift up the bank attachment made on the account of appellant with immediate effect."

11. It is in light of these facts, if we consider the findings of the appellate tribunal and the relevant paras of which are quoted as above, there is no reason why the appeals on the facts of the present case need to be entertained.

12. The appeals are accordingly dismissed. It is clarified that the affirmation of the order of the tribunal in the appeals are in respect of the peculiar facts of these case.

Issue 4: Implementation of Tribunal's Order

13. Since we are dismissing the appeals of the State, in Special Civil Application No. 12474 of 2023 where the petitioner has prayed for implementation of the order of the Tribunal, we direct the respondent no. 2 - State Tax Officer (6), Unit 5, B-11 Multi storeyed Building, Lal Darwaja, Ahmedabad to lift the attachment on the bank accounts of the petitioner so referred to in para 8D of the order of the Tribunal within four weeks from the date of receipt of the copy of the writ of the order of this court.

Petition is accordingly allowed.

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