2020 (3) TMI 1151 - HC - VAT and Sales Tax

Imposition of penalties u/s 10-A of the CST Act - purchase of High Speed Diesel - allegation that High Speed Diesel purchased by the petitioners for manufacturing process, were not being used fully in the manufacturing process, rather they were being used for other purposes also - offence under section 10(d) of the Central Sales Tax Act - HELD THAT - The impugned orders passed by the Appellate Authority cannot be sustained in the eyes of law, as the matter of deletion of High Speed Diesel from the CST registration of the petitioners was not sub-judice before the Appellate Authority. The only matter that was sub-judice before the Appellate Authority was the imposition of penalty upon the petitioners under Section 10-A of the CST Act. Both these issues are separate issues, and it cannot be said that the decision in the appeals filed by the petitioners would depend upon the decision of the High Court in the other pending writ applications. Irrespective of the results in the writ applications filed challenging the deletion of High Speed Diesel from the CST registration, the legality or otherwise of the penalty imposed under Section 10-A of the CST Act may be adjudicated. There appears to be no reason for dismissing the appeals awaiting the decision of the High Court. The impugned orders are prima-facie not sustainable in the eyes of law - matters are remanded back to the Appellate Authority for adjudication of the appeals filed by the appellants on their own merits - application allowed by way of remand.

Summary

Issues:
1. Challenge against impugned orders dated 09.11.2016 passed by the Appellate Authority.
2. Dismissal of appeals by the Appellate Authority due to pending matters in the High Court.
3. Allegations of misuse of High Speed Diesel in the manufacturing process.
4. Imposition of penalty under Section 10-A of the Central Sales Tax Act.
5. Deletion of High Speed Diesel from CST registration.
6. Separation of issues related to penalty and registration deletion.
7. Legality of dismissal of appeals by the Appellate Authority.

The judgment involved a group of writ applications challenging the impugned orders dated 09.11.2016 passed by the Appellate Authority, where the petitioners were aggrieved by the dismissal of their appeals. The petitioners were engaged in a manufacturing process and were inter-State purchasers of High Speed Diesel under concessional tax rates using Form-C. An issue arose during a raid where it was discovered that the Diesel purchased was not fully used in manufacturing, leading to penalties under Section 10-A of the Central Sales Tax Act. The petitioners contested the penalty orders before the Appellate Authority, focusing solely on the penalty imposition, not the deletion of High Speed Diesel from their CST registration. However, the Appellate Authority, citing pending High Court matters, dismissed the appeals, prompting the filing of writ applications.

The High Court found that the Appellate Authority's dismissal was unjust as the matter of High Speed Diesel's deletion from CST registration was not under consideration before them. The only issue sub-judice was the penalty imposed under Section 10-A of the CST Act. The Court emphasized the separation of these issues, stating that the decision on the penalty should not depend on the High Court's ruling on registration deletion challenges. Consequently, the Court set aside the impugned orders and remanded the matters back to the Appellate Authority for a fair adjudication of the appeals based on their merits and in accordance with the law.

In conclusion, the High Court allowed all the writ applications, directing the Appellate Authority to reconsider the appeals independently of the High Court's pending matters, highlighting the importance of distinct legal issues and the need for a fair and separate evaluation of each issue involved.