2019 (5) TMI 866 - HC - VAT and Sales Tax

Requirement with the pre-deposit - appellant is incurring huge losses as is evident from the Balance Sheets and is not in a position to deposit the amount - reversal of input tax credit - bye products retained by the millers - HELD THAT - The Tribunal while dismissing the appeal of the appellant noticed that the law required the entertaining of the appeal only when compliance under Section 62(5) of the Act was made. Further, the first appellate authority had already granted partial protection by directing the appellant to deposit 25% of the additional tax demand only. Therefore, the appellant was liable to comply with the provisions of Section 62(5) of the Act. Since the appellant failed to deposit 25% amount of the additional demand of the tax as required under the law, the Tribunal dismissed the appeal on that account. The appellant was required to pre-deposit 25% amount of the additional demand of tax liability only as directed by the DETC(A) and the Tribunal as a condition precedent for hearing of the appeal, which was reasonable and justified - appeal rightly dismissed.

Summary

Issues:
- Appeal against order of Value Added Tax Tribunal
- Justification of directing appellant to deposit 25% of tax
- Reversal of Input Tax Credit on bye products
- Compliance with Section 62(5) of the Punjab VAT Act
- Dismissal of appeal by Tribunal

Analysis:
1. The appellant filed four appeals against the order of the Value Added Tax Tribunal, Punjab, Chandigarh, claiming identical facts and issues. The delay of 32 days in refiling one of the appeals was condoned by the court.

2. The main issue in VATAP-102-2018 was the direction by the Tribunal to deposit 25% of the tax despite the appellant incurring significant losses. The appellant questioned the justification of this directive.

3. Another substantial question of law raised was regarding the reversal of Input Tax Credit on bye products retained by the millers. The appellant contested the Assessing Authority's decision in this regard.

4. The appellant failed to comply with the requirement of depositing 25% of the additional tax demand as directed by the Deputy Excise and Taxation Commissioner (Appeals) under Section 62(5) of the Act. Consequently, the appeal was dismissed by the Tribunal.

5. The court noted that the Tribunal's decision was in line with the law, which mandated compliance with Section 62(5) before entertaining the appeal. The appellant was obligated to adhere to the pre-deposit requirement, which they failed to fulfill, leading to the dismissal of the appeal.

6. The court found the directive to pre-deposit 25% of the additional tax liability reasonable and justified, considering the provisions of the Act.

7. The learned counsel for the appellant could not establish any illegality or perversity in the Tribunal's findings that would necessitate intervention by the court. Consequently, the appeals were dismissed as no question of law arose.

8. Applications for condonation of a 6-day delay in filing the appeals were disposed of since the appeals were dismissed on merits, requiring no further action on the delay issue.