2018 (4) TMI 1145 - HC - VAT and Sales Tax

Pre-deposit - Inter-state sales - failure to produce necessary documents - Held that - after releasing 90% of the provisional refund, the authorities withheld remaining 10%, value of which comes to ₹ 30 lakhs. We may recall that the Tribunal has imposed condition of assessee depositing ₹ 60 lakhs by way of pre-deposit - considering the fact that the assessee desires to pursue its appeal against the order of assessment, which is in the nature of first appeal, the assessee is directed to deposit a sum of ₹ 30 lakhs with the State authorities by way of pre-deposit - application disposed off.

Summary

Issues: Tax Appeals challenging order of assessment regarding inter-state sales and pre-deposit condition imposed by the Appellate Commissioner and Gujarat Value Added Tax Tribunal.

Analysis:
The Tax Appeals before the Gujarat High Court arose from a common impugned judgment and order passed by the Gujarat Value Added Tax Tribunal concerning the appellant, a registered dealer primarily trading in mobile phones. The appellant claimed reduced duty rates on sales made to dealers outside the State, but the adjudicating authority disputed this claim due to lack of convincing proof of goods transport. The Assessing Officer, in the order of assessment, disbelieved the appellant's inter-state sales, noting the absence of necessary documents like Form 402 and proof of goods passing through check posts. Consequently, the sales were taxed as local sales at a higher rate, resulting in a substantial tax demand with interest and penalty. The appellant challenged this order before the Appellate Commissioner, who imposed a pre-deposit condition of 20% of the total amount. Subsequently, the Gujarat Value Added Tax Tribunal required the appellant to deposit a lump sum amount of ?60 lakhs as pre-deposit.

The appellant contended that all goods were transported by air, negating the need for verification at check posts. The appellant argued that voluminous evidence of goods transport, including documents related to transporters, was provided, and the Assessing Officer erred in disbelieving this evidence. On the other hand, the Department's representative emphasized that the current issue pertained solely to the pre-deposit requirement, highlighting the Assessing Officer's detailed reasoning for questioning the appellant's inter-state sales and branch transfers.

The Court, considering the circumstances and the appellant's intention to appeal the assessment order, directed the appellant to deposit ?30 lakhs with the State authorities as a pre-deposit. Notably, as ?30 lakhs of the provisional refund was withheld by the Department, fulfilling this pre-deposit condition effectively satisfied the Tribunal's requirement. The Court specified that if the pre-deposit was made by the specified date, the appeal would be reinstated before the Commissioner [Appeals] for a substantive hearing without coercive recovery measures, including freezing bank accounts, being initiated until the condition was met. Ultimately, the Civil Application was disposed of in light of these directions.