2016 (4) TMI 274 - HC - VAT and Sales Tax

Waiver of pre-deposit - Total liability of the petitioner under the assessment order exceeds ₹ 4,00,00,000/- against which Tribunal, by the order dated 18.9.2015, had directed the petitioner to deposit an amount of ₹ 10,00,000/- under the GVAT Act and ₹ 1,00,000/- under the CST Act by way of pre-deposit as a condition precedent for entertaining the appeals - Held that - Sub-section (4) of section 73 of the GVAT Act provides that no appeal against an order of assessment shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of payment of tax in respect of which an appeal has been preferred. Thus, ordinarily an appeal cannot be entertained unless the tax assessed under the assessment order is paid and proof thereof is submitted along with the appeal. Sub-section (4) of section 73 of the GVAT Act, however, carves out an exception by vesting in the Tribunal the discretion to entertain an appeal, if it thinks fit, for reasons to be recorded in writing, inter alia, without payment of tax with penalty (if any) or, as the case may be, of penalty. Thus, no dealer can demand as a matter of right that his appeal should be heard without payment of tax or penalty and it is for such dealer to satisfy the Tribunal that a case has been made out for total exemption from payment of tax with penalty. However, the Tribunal, while considering an application for waiver of tax and penalty for the purpose of hearing the appeal is required to exercise discretion in a judicious manner. In the present case as the petitioner has not produced any documentary evidence in support of its case, as well as considering the meagre amount that the Tribunal has directed the petitioner to pay as compared to the total demand, it is not possible to state that the exercise of discretion on the part of the Tribunal is in any manner arbitrary or illegal. - Waiver not granted

Summary

Issues:
1. Validity of the order of pre-deposit under the GVAT Act and CST Act by the Tribunal.
2. Consideration of documentary evidence and financial constraints of the petitioner.
3. Discretion of the Tribunal in entertaining appeals without full payment of tax and penalty.

Analysis:

Issue 1:
The petition challenged the order of the Gujarat Value Added Tax Tribunal directing the petitioner to make a pre-deposit of &8377; 10,00,000 under the GVAT Act and &8377; 1,00,000 under the CST Act. The petitioner contended that being engaged in dealing with tax-free goods, no tax liability should exist. The Tribunal had modified the amount payable under the CST Act but upheld the pre-deposit order. The High Court noted the substantial tax liability assessed against the petitioner and the discretion of the Tribunal in requiring pre-deposit as a condition for entertaining appeals.

Issue 2:
The petitioner argued that financial constraints prevented compliance with the pre-deposit order and that necessary documents were not produced due to attachment of premises. Despite producing substantial evidence later, the Tribunal dismissed the appeal. The High Court observed that the Tribunal had considered the circumstances and exercised discretion reasonably in setting the pre-deposit amount lower than the total demand. The petitioner's failure to provide documentary evidence earlier was also noted.

Issue 3:
The High Court analyzed the provisions of the GVAT Act regarding the pre-deposit requirement for entertaining appeals. While the Act mandates proof of tax payment with appeals, the Tribunal has the discretion to waive this requirement under specific conditions. The Court found that the Tribunal had properly exercised its discretion in this case, considering the facts and circumstances, the lack of evidence provided earlier, and the relatively small pre-deposit amount compared to the total liability assessed.

In conclusion, the High Court dismissed the petition, finding that the Tribunal's decision on the pre-deposit amount was not arbitrary or illegal, given the circumstances of the case. The petitioner failed to demonstrate grounds for interference, and the petition was summarily dismissed.