2017 (4) TMI 1040 - HC - VAT and Sales Tax

Pre-deposit - demand is based on the cancellation of the registration of the dealers from whom purchases were made by the appellant with retrospective effect - in earlier round of litigation against the order of pre-deposit the matter reached before this Court and the Division Bench of this Court vide its order dated 15/2/2013 passed in Tax Appeal No.850 of 2012 waived pre-deposit and granted unconditional stay - whether demand of pre-deposit at this stage is justified? - Held that - though opportunity was given to the appellant dealer to prove genuineness of the transactions, the appellant dealer failed to avail such an opportunity and failed to prove genuineness of the transactions - when the appellant has failed to satisfy and/or prove genuineness of the transactions, it cannot be said that the learned tribunal has committed any error in directing the appellant to deposit ₹ 13 Lacs (approximately 10% of the total demand, excluding interest and penalty), which calls for interference of this Court. No substantial question of law arise in the present appeals - appeal dismissed - decided against appellant.

Summary

Issues:
1. Appellant directed to pay pre-deposit for staying recovery proceedings.
2. Appellant directed to deposit a specific amount for a stay order.
3. Authorities erred in disallowing Input Tax Credit due to vendor registration cancellations.
4. Lack of intimation regarding vendor registration cancellations to the appellant.
5. Legality and sustainability of lower appellate authority's orders.

Analysis:

1. The appellant challenged the order by the Gujarat Value Added Tax Tribunal, which directed a pre-deposit of 10% of the total demand to stay recovery proceedings. The appellant argued that a previous High Court order had waived pre-deposit in a similar case. However, the Tribunal had remanded the matter to allow the appellant to prove the genuineness of transactions with vendors whose registrations were canceled. The appellant failed to provide evidence of the transactions' genuineness, leading to the Tribunal's decision to uphold the pre-deposit requirement.

2. The appellant contested the directive to deposit a specific amount for a stay order related to Assessment Year 2007-08. The appellant claimed that all purchases were made before the vendors' registrations were canceled, making Input Tax Credit valid. However, the Tribunal found that the appellant did not prove the transactions' genuineness, and as the vendors had not paid any tax, the appellant was not entitled to the credit. The Tribunal's decision to require the deposit was upheld based on the lack of evidence provided by the appellant.

3. The appellant argued that the authorities erred in disallowing Input Tax Credit due to vendor registration cancellations. The court noted that even if the appellant's claim regarding the vendors' registrations being valid at the time of purchase was accepted, the appellant failed to prove the transactions' genuineness. Without evidence of the transactions' authenticity and the vendors' tax compliance, the appellant could not claim Input Tax Credit, justifying the Tribunal's decision.

4. The appellant raised concerns about not being informed of the vendors' registration cancellations. However, the court emphasized that the appellant's failure to prove the transactions' genuineness was the primary issue. The lack of communication regarding the cancellations did not absolve the appellant from the burden of demonstrating the transactions' legitimacy to claim Input Tax Credit.

5. The appellant challenged the lower appellate authority's orders' legality and sustainability. The court found that the appellant's failure to prove the transactions' genuineness and the vendors' tax compliance rendered the assessments unsustainable in law. The court dismissed the appeals, stating that no substantial question of law arose, and upheld the Tribunal's decision to require the pre-deposit for staying recovery proceedings.