2021 (11) TMI 172 - HC - VAT and Sales Tax

Direction to deposit 40%of deposit - seeking full stay on demand - constitutional validity of the Uttarakhand Tax on Entry of Goods Into Local Areas Act, 2008 is subjudice before this High Court - applicability of Section 53(8) of Uttarakhand Tax on Entry of Goods Into Local Areas Act, 2008 - HELD THAT - Admittedly, even when the constitutional validity of the Act has been challenged before this Court, this Court has not granted any stay on the recovery of the assessed amount. Therefore, merely because constitutional validity is under challenge, it will not prevent the Department from assessing and from passing the assessment order. Moreover, it will not prevent the learned Joint Commissioner from directing the revisionist to deposit at least 40% of the demand amount. In fact, the law bestows a discretionary power on the Joint Commissioner to decide as to how much of the demand amount should be stayed by him. Since it is the discretionary power, which has been validly exercised, the learned Tribunal was justified in upholding the order passed by the learned Joint Commissioner. The learned counsel for the revisionist is equally unjustified in claiming that the learned Tribunal could not have relied on Section 53(8) of the Act - obviously, when the revisionist filed the Second Appeal, Section 53 of the Act would have come into effect. Therefore, even the second contention raised by the learned counsel is unsustainable. Admittedly, the amount to be deposited by the revisionist is around ₹ 50 Lacs. The revisionist possibly cannot claim that it on the brink of liquidation, or that it does not have the said amount within its finances. Therefore, even the third contention being raised by the learned counsel is an attempt to seek misplaced sympathy of this Court - revision dismissed.

Summary

Issues:
Challenge to order passed by Commercial Tax Tribunal regarding stay of demand amount and deposit requirement.

Analysis:
The revisionist challenged an order passed by the Commercial Tax Tribunal upholding a decision by the Joint Commissioner to stay 60% of the demand amount and direct the revisionist to deposit 40%. The revisionist declared a purchase of sugar value at ?57,11,97,296 and was assessed an entry tax of ?2,85,59,865 for 2016-17, resulting in a demand of ?1,11,25,279 after adjustments. The revisionist moved an application for stay of the demand amount pending appeal. Additionally, a challenge to the constitutional validity of the Uttarakhand Tax on Entry of Goods Into Local Areas Act, 2008 was pending before the High Court.

The revisionist argued that due to the pending constitutional challenge, the demand should have been stayed in full. However, the Court noted that the absence of a stay on recovery does not prevent assessment or the Joint Commissioner from directing a deposit. The discretionary power of the Joint Commissioner was validly exercised in determining the deposit requirement. The Court upheld the Tribunal's decision in this regard.

The revisionist also contended that the Tribunal erred in relying on Section 53(8) of the Act, but the Court clarified that the provision would naturally apply when the appeal was filed. The Court found this argument unsustainable.

Regarding the revisionist's financial crisis due to the Covid pandemic, the Court noted that the revisionist could not claim an inability to deposit the required amount of around ?50 lakhs. The Court deemed this contention as an attempt to seek unwarranted sympathy.

Ultimately, the Court found no merit in the revision and dismissed it, along with disposing of any pending applications. No costs were awarded in the matter.