9911796707
TMI Blog2016 (5) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided by this common judgment. 3. The respondent - M/s Essar Steel Limited is a Public Limited Company, which was granted the benefit of exemption under an Incentive Scheme framed under section 49(2) of the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Act"). The company manufactured Hot Briquetted Iron (HBI) in its pioneer unit (Unit I) and carried out commercial production of Hot Rolled Coils (HRC) at another of its units (Unit II). Various demand notices came to be issued to the respondent in the year 2005, which came to be challenged by it before this court by way of writ petitions being Special Civil application No.14422 of 2005 and allied matters. Subsequently in July 2005, by separate orders passed in relation to Unit I and Unit II, the demand of sales tax came to be confirmed and penalty of 150% came to be levied by the Deputy Commissioner of Sales Tax. Notices seeking to impose penalty also came to be issued by the Commissioner of Sales Tax to Units I and II in revision proceedings, which were also challenged before this court by way of writ petitions. Vide orders dated 22.07.2005 issued under section 67 of the Act, the Commissioner of Sales Tax revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is that the payment of Rs. 212 crores made by the respondent relates to Unit II and hence, the penalty levied by the revision orders for Unit I cannot be adjusted and the respondent is liable to make payment towards the dues. It was the case of the respondent that if the payment made by it is treated as made only for Unit No.2 and it is, therefore, required to make payment towards the dues raised by passing revision orders for Unit I, then correspondingly, it is entitled to refund of excess payment made by it for Unit II in view of the decision of the Tribunal in Second Appeals No.420 to 423 of 2013 in its favour. The respondent, accordingly, sought a direction to the petitioner to forthwith grant refund of the amount of Rs. 77.33 crores as per the statement annexed at Annexure "C" thereto, together with interest admissible on such refund as per the provisions of the Act. 6. It appears that the Tribunal took up the above applications for hearing along with Revision Applications No.34 to 39 of 2015 filed by the respondent against revision orders relating to Unit I. By a common order dated 27.07.2015, the Tribunal while admitting the revision applications and granting stay agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted that when the matter was pending before this court, propriety demanded that the Tribunal should refrain from passing any order issuing the kind of directions it has issued. It was submitted that the Tribunal has gone way beyond the scope of the matter before it. It was emphatically argued that the revisions filed by the respondent before the Tribunal, have no bearing on the facts of the second appeal and therefore, the Tribunal was not justified in clubbing the proceedings of the revision applications and the present applications for directions. 8.1 In support of her submissions, the learned Government Pleader placed reliance upon an unreported decision of this court in the case of State of Gujarat v. Essar Oil Ltd. rendered on 01.05.2015 in Tax Appeal No.254 of 2015 and cognate matters wherein, against the order of the first appellate authority directing payment of pre-deposit of 20% of the tax demand and bank guarantee for the balance amount, the dealer went in appeal before the Tribunal. The Tribunal without considering the validity of the order of pre-deposit made by the first appellate authority, allowed the appeals and remanded the matter to the first appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the court, the Tribunal ought to have stayed its hands and refrained from issuing any directions for grant of refund. 8.3 Referring to the order dated 28.03.2006 made in Special Civil Application No.14422 of 2005 and allied matters, it was submitted that in terms of the order of the Division Bench, the pre-deposit made by the respondent in compliance with the said order would enure till the final adjudication of the appeals, viz., till the stage of the highest forum. It was pointed out that while deciding the second appeals, the Tribunal did not pass any consequential order directing refund of the amount deposited by the respondent; that once the second appeals stood decided, the Tribunal became functus officio and did not have any jurisdiction to entertain the miscellaneous applications. It was contended that the fact that such question was not raised before the Tribunal would not preclude the petitioner from raising it before this court, it being a pure question of law. 9 Opposing the petitions, Mr. Mihir Joshi, Senior Advocate, learned counsel with Mr. Keyur Gandhi, learned advocate for M/s Nanavati Associates, learned advocates for the respondent, invited the attention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of pre-deposit follows automatically. Accordingly, consequent to the order, the pre-deposit is required to be returned. It was urged that the Tribunal, therefore, was wholly justified in passing the impugned order, which is only consequential to the earlier order passed by the Tribunal. Reliance was also placed upon the decision of a Division Bench of the Bombay High Court in the case of Nelco Limited v. Union of India, 2002 (144) ELT 56, for the proposition that the amount deposited under section 35F of the Central Excise Act as a condition precedent, for hearing of appeal, does not bear the character of duty but bears the character only of a security deposit, being a statutory condition precedent for hearing of the appeal. Reliance was also placed upon the decision of the Kerala High Court in the case of Sreedharan v. Union of India, 2002 (93) FLR 303 for the proposition that when the declaration made by the Tribunal has become final, the respondents are bound to implement it even in the absence of a consequential direction. Even without any direction, the respondents being public authorities are bound to respect the declaration of law. It was submitted that therefore, once the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny subsequent period in the year, it was submitted that the same is indicative of the fact that the section contemplates tax paid. Referring to section 39 of the GVAT Act, it was pointed out that the same refers to refund of tax and is unrelated to pre-deposit. It was contended that apart from the fact that pre-deposit is different from payment of tax, section 39 of the GVAT Act would be attracted provided the Commissioner had made any order thereunder, whereas, in the facts of the present case, for six months, no order had been passed under section 39 of the said Act and hence, the Tribunal was justified in directing refund of the amount deposited by way of pre-deposit. Moreover, it is a settled practice before the Tribunal whereby such applications for refund are routinely made and the orders are passed thereon, however, in none of those cases, such orders have been challenged. It was submitted that there is no alternative procedure for return of the amount in case of pre-deposit and hence, the court may not interdict the operation of the order of the Tribunal. 9.4 As regards the question of propriety on the part of the Tribunal in directing refund of the pre-deposit when the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject matter of appeals/revisions, this court would not entertain the petitions, but for the reasons set out in the order, the court had gone into the arguments advanced by the learned counsel for the respective sides for the limited purpose of considering the question of pre-deposit. Insofar as Unit I is concerned, the court found that a prima facie case had been made out, inter alia, for exemption from deposit of tax amount till disposal of the appeals/revisions filed by the Company. As regards Unit II, the court was inclined to direct the petitioner Company to make pre-deposit of 50% of only the tax amount without making pre-deposit of any interest or penalty. The court, accordingly, issued the following directions: "A. It is directed that till final hearing and disposal of the appeals/revisions filed by the petitioner Company, the respondents authorities shall not make any recovery of any tax, interest or penalty in respect of unit No. 1 of the petitioner Company for the period from 1995-96 till 2004-05 on the ground that HBI manufactured by the petitioner Company in its unit No. 1 at Hazira with the tax free purchase of raw materials was transferred to unit No.2 of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the limited purpose of considering the request for pre-deposit and the directions regarding pre-deposit have also been made having regard to the questions of prima facie case and financial hardship. This Court may not be treated to have expressed any final opinion on any of the controversies between the parties either regarding the merits of the disputes or the preliminary contentions sought to be raised by the petitioner Company." From the language employed in the above order, it is apparent that the amount which the respondent has been directed to pay is by way of pre-deposit for entertaining the appeals and not towards payment of tax levied under the orders which were subject matter of challenge before the Tribunal. 12. In this backdrop, the merits of the rival submissions have to be examined. 13. Insofar as the provisions of the Gujarat Sales Tax Act are concerned, provision for appeal is made under section 65 thereof. However, since by virtue of the provisions of section 100 of the Gujarat Value Added Tax Act, 2003, the Gujarat Sales Tax Act, 1969 has been repealed, the appeals before the Tribunal appear to have been filed under section 73 of the GVAT Act. Sub-section (4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal. 16. On a plain reading of the directions issued by this court, it is evident that the same envisage that upon the respondent Company depositing 50% of the tax amount, further recovery under the orders impugned before the Tribunal would be stayed and such interim orders would enure till the final disposal of the appeals before the Tribunal. From the language employed in the said orders, it is clear that what the respondent has been directed to pay is by way of pre-deposit and not payment of tax under the orders which were subject matter of challenge before the Tribunal. Therefore, the amount deposited by the respondent being in the nature of pre-deposit, once the Tribunal has allowed the appeals and decided the same in favour of the respondent, the consequence would be automatic and the respondent would be entitled to refund of the amount paid by way of predeposit. 17. It has been contended on behalf of the petitioner that, upon the appeals being adjudicated in favour of the respondent, the respondent ipso facto does not become entitled to return of the amount deposited by it as a condition precedent for entertaining the appeal and that a refund application would be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal or further proceeding, he becomes entitled to refund. 20. Thus, what section 39 of the GVAT Act contemplates is that where an order giving rise to a refund is the subject matter of an appeal or further proceeding or where any other proceeding under the Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue, he may withhold such amount, after giving an opportunity of hearing to the party. In the opinion of this court, the question of refund under section 39 of the GVAT Act would arise provided there is a payment of tax. Though the expression "refund" may also be used for returning the amount of pre-deposit, there is a clear distinction between the character of the amount paid by way of tax and by way of predeposit pending the appeal. This court is in agreement with the view taken by the Bombay High Court in the case of Nelco Limited v. Union of India (supra) that the amount deposited as a condition precedent for hearing an appeal, does not bear the character of duty but bears the character only of a security deposit, being a condition precedent for hearing of the appeal. Besides, assuming for the sake of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thus: "22. Xxxxx Clause 7 providing for stay of the execution of the order is suggestive of the fact that it was in the mind of the legislature that a situation to execute orders may arise. It has appeared that there is nothing in this Procedure Order for enforcement or execution of the order that may be passed by the Tribunal. In absence of any express provision for the execution and that State Government would have thought it fit to avoid any situation that may rise because of absence of such specific provision that the Tribunal need not be without any power to enforce its own orders, Clause 14 provides to meet that exigency. xxxxx To make adjudication complete and effective, clause 14 provides for application of provisions to follow the procedure of Code of Civil Procedure as far as it is applicable. This may also be read to provide for the enforcement or execution of the order as per the procedure prescribed in the Civil Procedure Code. This is how the Civil Procedure Code is brought in by clause 14. It will be relevant to refer that where jurisdiction to adjudicate and decide rights and liabilities is conferred by a statute, power to enforce said rights and liabilities mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A contrary view is likely to result in grave hardship to the applicant, who may have no means to subsist until the final order is passed. There is no room for the apprehension that the recognition of such implied power would lead to the passing of interim orders in a large number of cases where the liability to pay maintenance may not exist. It is quite possible that such contingency may arise in a few cases but the prejudice caused thereby to the person against whom it is made is minimal as it can be set right quickly after hearing both the parties." 25. On the question of propriety on the part of the Tribunal in entertaining the applications made by the respondent despite the fact that the appeal filed by the petitioner was pending before this court, it may be noted that till the date of hearing of the petition, the delay in filing the appeals had not been condoned. Besides, the appeals have been preferred against the orders dated 29.01.2015 made by the Tribunal in Second Appeals No.420 to 423 of 2015 with Cross Objections No.2 to 2C of 2013, whereas the applications filed before the Tribunal were for the return of the amount of pre-deposit. In the opinion of this court, refu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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