2024 (2) TMI 192 - HC - VAT and Sales Tax

Extension of time for payment under Section 8(1) of the Jammu Kashmir General Sales Tax Act, 1962 - Compliance with the requirements of proviso to Section 11 (1) of the Act - HELD THAT - The scope and purport of Explanation to 3rd proviso to Sub Section (1) of Section 11 the Act would be that even if any appeal has been preferred challenging the correctness of the assessment of the tax and other demands made under Section 8 of the Act, in the meantime, if the applicant assessee seeks extension of time for making payment under Section 8 of the Act, the provisions of Sub-section (1) of Section 11 of the Act will not be applicable, inasmuch as, if the assesee decides to make the payment of the assessed amount by seeking extension of time, the question of filing appeal within 30 days from the date he is served with the notice of demand, or making any deposit as required under Clauses (a), (b) and (c) will not arise. The Explanation cannot be invoked to seek deferment of payment stipulated under Clauses (a), (b) and (c), which will be necessary for the appellant authority to entertain the appeal as the statute is very clear that no appeal shall be entertained unless the appellate authority is satisfied that the payments required under Clauses (a), (b) and (c) have been made. Nothing prevented the petitioner from filing the return with the claim of nil liability towards the taxes by taking the plea that he was not liable to pay any tax, as all taxes were to be paid by the Principal Contractor and not by the petitioner. Thus, the above assessment order dated 29.03.2021 clearly shows that the petitioner assessee was given an opportunity to appear and produce relevant documents, and though a representative of the assessee petitioner had appeared, he failed to produce any such document or explain his position which is sought to be explained. Similarly, the assessee also failed to file the return showing absence of any liability to pay tax as per the terms and conditions of the contract and the Letter of Intent. The petitioner himself has to be blamed for the situation he finds himself now. Though the statutory requirement for payment of the amount as stipulated under Clauses (a), (b) and (c) of the second proviso to the Section 11(1) of the Act may appear to be harsh against the petitioner, yet, this is a situation he could have avoided by presenting relevant documents before the Assessing Authority at the time of hearing and also by filing return showing a nil Tax liability. The petitioner will be liable to pay necessary amount as contemplated under Clauses (b) and (c) to the second proviso to Sub-Section (1) of Section 11 of the Act for the appeal to be entertained by the appellate authority, and no case has been made out to interfere with the impugned order dated 27.03.2023 passed by the respondent no. 2 - Petition dismissed.

Summary

Issues Involved:
1. Rejection of extension of time for payment under Section 8(1) of the Jammu & Kashmir General Sales Tax Act, 1962.
2. Requirement to deposit a percentage of assessed tax and penalty before filing an appeal under Section 11 of the Act.
3. Alleged incorrect assessment of tax liability by the Assessing Authority.

Summary:

Issue 1: Rejection of Extension of Time for Payment
The petitioner challenged the order dated 27.03.2023 by the Commissioner of State Taxes, J&K, which rejected the application for an extension of time for payment under Section 8(1) of the Jammu & Kashmir General Sales Tax Act, 1962. The petitioner argued that the Commissioner's order was passed without giving any reason, causing prejudice to the petitioner.

Issue 2: Requirement to Deposit Assessed Tax and Penalty
The petitioner contended that as per the proviso to Section 11(1)(b) & (c) of the Act, no appeal can be entertained unless the appellant deposits 5% of the assessed tax and 50% of the penalty. The petitioner sought an extension of time for payment from the Commissioner under Section 8(1), arguing that this would allow the appeal to be considered on merits during the extended period. However, the Court held that the requirement to deposit the stipulated amount under Section 11(1) cannot be waived, suspended, or deferred by any order of the Commissioner. The Court clarified that Section 8 deals with the payment and recovery of taxes and does not extend to the deferment of payments required for filing an appeal under Section 11.

Issue 3: Alleged Incorrect Assessment
The petitioner claimed that the Assessing Authority incorrectly assessed the tax liability based on the total contract value of Rs. 11,47,54,334.95, whereas the petitioner executed work worth only Rs. 2,83,212.12. The petitioner argued that the Principal Contractor was responsible for paying the taxes, as mentioned in the Letter of Intent. The Court noted that the petitioner failed to produce relevant documents during the assessment proceedings and did not file returns showing nil tax liability. The Court concluded that the petitioner was responsible for the situation and did not make a case for invoking extraordinary jurisdiction under Article 226.

Conclusion:
The Court dismissed the petition, holding that the petitioner must comply with the statutory requirement to deposit the necessary amount under Section 11(1) for the appeal to be entertained. The impugned order dated 27.03.2023 by the Commissioner was upheld.