2014 (9) TMI 850 - HC - VAT and Sales Tax

Tamil Nadu Value Added Tax Act, 2006 - Section 22(2) & 27 - Security Bond - penalty - bank guarantee - Whether when the assessee is unable to comply with the condition to furnish security bond for the balance of tax and penalty, it can be allowed to execute a personal bond as an alternate remedy - Held that - Following decision of previous precedents petitioner is directed to execute a personal bond for the balance of tax and entire penalty of ₹ 1,24,099/- within a period of two weeks from the date of receipt of a copy of this order. Upon the petitioner furnishing the personal bond as aforesaid, the impugned order shall stand modified entitling the petitioner to interim order of stay of collection of tax pending disposal of the statutory appeal - Decided conditionally in favour of assessee.

Summary

Issues involved:
1. Challenge to the requirement of filing a Security Bond or Bank guarantee for the balance of tax and entire penalty.
2. Granting of stay till disposal of the petitioner's appeal.

Analysis:
Issue 1: The petitioner filed a writ petition seeking to quash the proceedings in S.P.No.33/2014 in TNVAT.AP.55/2014, challenging the condition to file a Security Bond or Bank guarantee for the balance of tax and entire penalty. The petitioner contended that the assessment was reopened based on Enforcement Wing Officers' proposals without proper consideration, leading to a disputed tax and penalty. The first respondent imposed a condition for stay, requiring a Security Bond or Bank guarantee. The petitioner cited a previous judgment where a personal bond was accepted instead of a security bond. The court examined the previous judgment and directed the petitioner to execute a personal bond for the balance amount, similar to the previous case, granting interim stay of tax collection pending appeal disposal.

Issue 2: The petitioner requested stay of collection of the disputed tax and penalty pending appeal resolution. The court considered the petitioner's submission regarding a previous case where a personal bond was accepted instead of a security bond. Relying on the precedent, the court directed the petitioner to execute a personal bond for the balance of tax and entire penalty within two weeks. Upon compliance, the impugned order was modified, granting interim stay of tax collection until the appeal's disposal. The writ petition was disposed of accordingly, with no costs imposed.

Overall, the court allowed the writ petition, modifying the conditions for stay by accepting a personal bond instead of a security bond or bank guarantee, based on a previous judgment. The petitioner was granted interim relief of stay on tax collection pending appeal resolution.