2023 (11) TMI 717 - HC - VAT and Sales Tax

Stay of Demand / Waiver of pre-dposit - Validity of assessment order - compliance with the condition of pre-deposit of 25% of the additional demand under Section 62 (5) of the PVAT Act - HELD THAT - The balance sheet for the financial year 2020-21 placed on record by the petitioner (P-6) is not being disputed by the respondent. It is not in dispute that if the petitioner will be forced to pay 25% pre-deposit, he will not be able to pay the instalments of the loan. He is also paying GST regularly to the department and if he will shut down the business, it will lead to cancellation of GST registration. Thus, the condition of 25% pre deposit is liable to be modified, keeping in view the fact that the petitioner is in hug debt. In the present case, the petitioner is in debt and is paying instalments of loan regularly and this fact is not being disputed by the respondents. Hence for all intents and purpose, the petitioner in order to run the business should be able to make the payment of loan, as per detail given in balance sheet (P-6) at page No. 51 of the paper book - In order to avoid cancellation of its GST registration, the petitioner is seeking direction to respondent No. 3 to entertain the appeal of the petitioner on merits without insisting upon the condition of pre-deposit under Section 62 (5) of the Act 2005. Petitioner is ready to pre-deposit 10% of the amount, as observed in the order dated 25.6.2018. Keeping in view the fact that the petitioner is in huge debt and the fact that the petitioner is ready to deposit 10% as pre-deposit instead of 25% of the total demand before the Appellate Authority, this Court by exercising the inherent powers as provided under Article 226 of the Constitution of India and by considering the financial hardship faced by the petitioner, this petition is being disposed of by directing the petitioner (s) to file an appeal and respondent-authorities is directed to entertain the appeal and decide in accordance with law on merits. Petition disposed off.

Summary

Issues involved:
The judgment involves challenges to assessment orders for the assessment year 2015-16, focusing on financial difficulties faced by the petitioner in complying with pre-deposit conditions under Section 62(5) of Act 2005.

Assessment Order Challenge:
The petitioner, engaged in the business of manufacturing and selling yarn, challenged assessment orders due to financial constraints in complying with pre-deposit conditions. The assessment order disallowed input tax credit claimed on certain purchases, leading to financial burden on the petitioner.

Appeals and Tribunal Proceedings:
The petitioner filed appeals against the assessment orders, but due to financial constraints, was unable to fulfill pre-deposit requirements leading to rejection of appeals. The Punjab VAT Tribunal dismissed the appeal, granting a limited time for pre-deposit.

Legal Precedents and Arguments:
The petitioner relied on legal precedents, including the judgment in M/s Tecnimont Pvt. Ltd's case, to support the argument of financial hardship. The petitioner's financial difficulties were highlighted, including heavy debts and inability to pay due to market conditions.

Court's Decision:
The Court considered the financial hardship faced by the petitioner, noting the petitioner's regular payment of GST and debt obligations. In light of the petitioner's financial situation and willingness to deposit 10% as pre-deposit, the Court directed the authorities to entertain the appeal and decide on merits by accepting the reduced pre-deposit amount, exercising inherent powers under Article 226 of the Constitution of India.