2024 (8) TMI 590 - HC - VAT and Sales Tax

Non-compliance of the order of pre-deposit - second appeal dismissed on the ground of non-payment of pre-deposit amount at the rate of 20% of the tax amount - HELD THAT - Considering the audited balance-sheet of the appellant for the year ended on 31st March, 2018 wherein cash balance is shown at Rs.31,961.60 and there being no fixed assets available with the appellant, interest of justice would be meet if the appellant is directed to deposit Rs.10.00 lakh within a period of four weeks from today. On condition of deposit of Rs.10.00 lakh within four weeks, the impugned order passed by the Tribunal as well as the first appellate authority are hereby quashed and set aside and the matter is remanded back to the first appellate authority to consider the same on merits. Appeal disposed off.

Issues:
1. Non-compliance of pre-deposit order by the appellant before the Gujarat Value Added Tax Tribunal.
2. Assessment of pre-deposit amount by the Tribunal.
3. Entitlement to input tax credit under Section 11 of the GVAT Act.
4. Consideration of documentary evidence and judicial discretion by the Tribunal.
5. Recovery of tax from purchasing dealer due to vendor's failure to pay taxes.
6. Allegations of perversity in the Tribunal's order.
7. Applicability of judgments and principles of natural justice by the Tribunal.

Analysis:
1. The appellant challenged the order of the Gujarat Value Added Tax Tribunal for non-compliance with the pre-deposit order. The appellant argued that the assessment order was passed without providing an opportunity to address the disallowance of Input Tax Credit related to specific vendors. The appellant contended that the assessment additions were not sustainable on merits due to lack of notice regarding certain facts during the assessment proceedings.

2. The appellant disputed the pre-deposit amount of Rs. 96,88,278, equivalent to 20% of the tax demanded, citing financial constraints. The appellant proposed to pay Rs. 10.00 lakh as a show of good faith instead. The Tribunal had dismissed the appeal based on non-payment of the pre-deposit amount, prompting the appellant's challenge.

3. The issue of entitlement to input tax credit under Section 11 of the GVAT Act was raised. The appellant argued that the cancellation of a vendor's registration ab initio and mismatches in input tax credit should not have led to the reversal of credits claimed by the appellant, emphasizing a lack of opportunity to address these issues during the assessment proceedings.

4. The appellant criticized the Tribunal for allegedly failing to consider documentary evidence, judicial discretion, and the appellant's submissions. The appellant contended that the Tribunal's decision lacked proper consideration of evidence, arguments, and natural justice principles, leading to an unjust outcome.

5. Concerns were raised regarding the recovery of tax from the purchasing dealer due to the vendor's failure to pay taxes. The appellant argued that the tax liability should not fall on the purchasing dealer when the transaction occurred under valid circumstances, despite the vendor's subsequent non-compliance.

6. Allegations of perversity in the Tribunal's order were made by the appellant. The appellant claimed that the Tribunal disregarded crucial evidence, failed to address arguments, and upheld decisions without proper examination. The appellant asserted that the lower authorities' actions, including dismissing the appeal based on non-payment of pre-deposit, violated principles of natural justice.

7. The appellant contested the Tribunal's handling of judgments relied upon and its failure to explain their inapplicability to the case. The appellant argued that the Tribunal did not adequately address the cited judgments, raising concerns about the Tribunal's adherence to legal precedents and its reasoning in the decision-making process.

In conclusion, the High Court directed the appellant to deposit Rs. 10.00 lakh within four weeks, overturning the Tribunal's decision due to the appellant's financial situation. The matter was remanded back to the first appellate authority for reconsideration on merits, setting aside the impugned orders.

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