2013 (2) TMI 588 - HC - VAT and Sales Tax

Penalty u/s 67 of KVAT Act - stay has been granted subject remitting 1/3rd of the penalty levied - Held that - Reading of the impugned orders show that the appellate authority was satisfied that the petitioner had made out a prima facie however, in so far as the condition imposed is concerned, having regard to the total amount of penalty payable by the petitioner for the aforesaid 3 years, the condition being onerous, is to be modified. Therefore modify the directions in Exts.P7 to P9 orders requiring remittance of 1/3rd of the penalty levied and direct that the petitioner will remit 1/4th of the amount payable as per Exts.P2, P2(a) and P2(b) penalty orders. Payment shall be made within 4 weeks from today.

Summary

Issues:
1. Challenge against penalty orders under section 67 of the KVAT Act for the years 2004-05, 2005-06, and 2006-07.
2. Allegation of violation of principles of natural justice and non-compliance of court directions.
3. Examination of the appellate authority's decision on granting stay subject to penalty remittance.
4. Modification of the condition imposed on the petitioner for remittance.

Analysis:
1. The petitioner contested penalty orders under section 67 of the KVAT Act for three consecutive years, challenging penalties amounting to Rs.17.33 lakhs, Rs.44.13 lakhs, and 94.54 lakhs respectively. Appeals were filed against these penalties, and stay petitions were submitted alongside. The petitioner questioned the penalty orders through a writ petition, focusing on the alleged violation of natural justice principles and non-compliance with court directives.

2. The primary contention raised by the petitioner revolved around the perceived breaches of natural justice principles and the failure to adhere to court instructions. These issues were deemed crucial for consideration by the appellate authority during the pending appeals (Exts.P3 to P5). The court acknowledged these concerns as pertinent for future appellate review.

3. During the evaluation of the stay petitions (Exts.P7 to P9), the appellate authority assessed whether the petitioner had established a prima facie case warranting a stay order. The court concurred with the authority's finding that a prima facie case was indeed demonstrated. However, the court found the imposed condition of remitting 1/3rd of the penalty to be excessively burdensome given the total penalty amount. Consequently, the court modified the condition, directing the petitioner to remit 1/4th of the total penalty specified in the orders.

4. Consequently, the writ petition was resolved by adjusting the condition outlined in the stay orders (Exts.P7 to P9). The petitioner was instructed to remit 1/4th of the total penalty amount within four weeks from the judgment date. Additionally, the petitioner was required to provide security as directed by the appellate authority. Pending the resolution of the appeals, recovery actions were stayed subject to the petitioner's compliance with the revised payment terms.