2023 (11) TMI 556 - HC - VAT and Sales Tax

Demand to deposit 10% of the balance tax demanded for the years, 2014-15 2015-16 - validity of Ext. P6 conditional order - HELD THAT - It is evident from a bare perusal of first proviso to sub-section (1A) of Section 60 of the KVAT Act that the pre-deposit amount, if any, already remitted under Section 55, (ie; at the time of filing of the first appeal), shall be adjusted towards the amount to be remitted under the sub-section. Since the petitioner had submitted that he had already remitted 20% of the amount demanded during the filing of first appeal, he has to be exempted from paying any further amount. Hence, we are of the considered opinion that the Original Petition (TAX) is to be allowed. The condition imposed by the third respondent in Ext. P6 to deposit 10% of the balance tax demand for both the years is set aside, if the petitioner had already remitted the amount under section 55 of the KVAT Act - Petition disposed off.

Summary

Issues involved:
Challenge to conditional order by Kerala Value Added Tax Appellate Tribunal u/s 60 of KVAT Act for deposit and bond requirements.

The petitioner challenged Ext. P6 conditional order passed by the Kerala Value Added Tax Appellate Tribunal, Additional Bench, Kozhikode, directing a 10% deposit of balance tax for 2014-15 & 2015-16, and executing a bond within one month.

The petitioner filed appeals against assessment orders for 2014-15 & 2015-16. Third respondent passed Ext. P6 conditional order after dismissal of appeals, requiring deposit and bond, leading to the current challenge in the High Court.

The petitioner argued financial incapacity to comply with the onerous Ext. P6 conditional order, emphasizing the difficulty in meeting the deposit and bond requirements.

The petitioner cited sub-section(1A) of Section 60 of the Kerala Value Added Tax Act, inserted by the Kerala Finance Act, 2023, allowing a 10% pre-deposit of disputed tax to stay balance amount in appeal, which was allegedly not considered by the tribunal.

The Senior Government Pleader contended that the petitioner did not raise the statutory provision argument before the tribunal, and highlighted the effective date of the amendment to Section 60 of the KVAT Act.

The amendment to Section 60 of the KVAT Act by the Kerala Finance Act, 2023, introduced sub-section(1A) allowing a 10% pre-deposit of disputed tax to stay recovery proceedings for the balance amount until appeal disposal.

The High Court analyzed the statutory provision and observed that the pre-deposit already made by the petitioner should be adjusted as per the first proviso to sub-section (1A) of Section 60 of the KVAT Act, exempting the petitioner from further payment based on the amount remitted during the first appeal.

The High Court allowed the Original Petition (TAX) and set aside the condition to deposit 10% of the balance tax demand if the petitioner had already remitted the amount under section 55 of the KVAT Act, directing compliance with the judgment before the competent respondent.