9911796707
TMI Blog2024 (2) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner , namely, M/s V R Power Equipments Pvt. Ltd. claims to be a sub-contractor of the Principal Contractor namely, M/s McNally Bharat Engineering Company Limited. The Principal Contractor was allotted certain work by the Ministry of Defence, Government of India during the year 2017-18 of a total contract value of Rs. 11,47,54,334.95 and the said company in-turn subcontracted the said work to the present petitioner and, accordingly, a Letter of Intent was issued in favour of the petitioner Company on 22.11.2017 by the Principal Contractor. 04. According to the petitioner Company, the Company commenced execution of work on 01.04.2017 but could not continue beyond 10.10.2018 due to certain unavoidable reasons. Thus, the petitioner Company could execute work worth Rs. 2,83,212.12 only during the period 01.04.2017 to 07.07.2017. As far as the work done for period from 08.07.2017 till 10.10.2018 is concerned, it has been submitted that the Sale tax had been paid under new GST regime. According to the petitioner, apart from the work executed till 10.10.2018, the petitioner has no knowledge of the rest of the work dated 22.11.2017. In the letter of allotment of work by the Princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the said application was filed before the Commissioner under Section 8(1) which, however, was rejected by the Commissioner by a crisp order without giving any reason thereby causing great prejudice to the petitioner. According to the petitioner, since the Commissioner has not passed any order of extension of time for payment, the petitioner as appellant will be compelled to pay 5% of the assessed tax and 50% of the penalty as required under Section 11 of the Act, though according to the petitioner, he is not liable to pay any tax inasmuch as, firstly, the tax is to be paid by the Principal Contractor namely, M/s McNally Bharat Engineering Company Limited, as it has been clearly mentioned in the Letter of Allotment that the tax will be paid by the Principal Contractor and not by the petitioner- sub-contractor. Hence, if the petitioner is compelled to pay the aforesaid 5% of the assessment amount and 50% of the penalty, it will cause serious injustice to the petitioner. Accordingly, being aggrieved by the order dated 27.03.2023 passed by the Commissioner-respondent no. 2 declining to extend the date of payment and also directing the petitioner to comply with the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing authority has made a serious blunder by imposing the aforesaid tax, surcharge and penalty. According to the petitioner, if however, the Commissioner passes an order for extension of time for payment under Section 8(1) of the Act, as provided under the „Explanation' to sub-section (1) of Section 11 of the Act, the appeal preferred by the appellant can be considered on merits during the extended period. We are, however, of the view that the contentions and the course of action adopted by the petitioner are misconceived and not in accordance with the provisions of the Act. 13. Assuming that there was an error made by the assessing authority, and that the petitioner filed the appeal under Section 11 of the Act, which is meritorious, yet without fulfilling the requirement of the statute for depositing 20% of amount of tax assessed or the amount of tax admitted by the assessee, whichever is higher, the appellate authority cannot entertain the appeal. Similarly, in case of appeal against the imposition of penalty, unless 50% of penalty levied is paid, the appellate authority cannot entertain the appeal. This requirement of deposit by way of payment to activate any appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demanded, under this Act shall be paid in such manner within such time not being less than fifteen days from the date of notice of demand, as may be specified in the notice. In default of such payment the whole of the amount then remaining due shall become recoverable in accordance with sections 16 and 16-A: Provided that the [Appellate Authority or] Commissioner or any other officer not below the rank of assessing authority, authorized in writing by the [Appellate Authority or] Commissioner, may on any application in the prescribed form, extend, the date of payment specified in the notice of demand or allow him to pay demand in installment subject to such conditions including the payment of and interest under sub-section (2) and furnishing of a security, as the officer may consider necessary. (2) If the tax or any other amount [due under this Act excluding the interest] is not paid by the dealer or any other person, by whom it is payable within the period [allowed] the dealer or such other person shall be liable to pay interest on the tax or other amount from the date it was payable to the date of actual payment at the following rates:- a) If the default is for a period not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid basis of original return, he shall pay the extra tax payable before furnishing the revised returns: Provided that if the tax already paid is in excess of the tax payable, such excess amount shall be treated to have been towards the tax payable for the quarter next following the date of furnishing such revised return. (8) Notwithstanding anything contained in this Act, but subject to the provisions of sub-section(5) of section 16-C of this Act, if a dealer fails to pay the quarterly tax under this section, he shall be liable to pay interest on the tax from the date it was payable to the date of actual payment at the rates prescribed in sub-section (2) of this section and the provisions of section 16 and section 16-A shall apply mutatis mutandis to the recovery thereof.' 18. On the other hand, what „Explanation' to Section 11 (1) of the Act provides is that where the demand for payment of tax has been made under Section 8 of the Act, the period for such payment can be extended by an order by the Commissioner under Section 8 of the Act which by inference would mean that the assessee has opted not to challenge by way of an appeal the assessed amount but desires to pay th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to the power conferred on the Commissioner under Section 8 of the Act. 22. As noticed above in Section 8 and Section 11 of the Act are independent provisions dealing with different subjects. Section 8 of the Act relates to the payment of taxes assessed or any other amount demanded, whereas, Section 11 deals with the situation where the assessee seeks to challenge such tax assessed or any other demand made under Section 8 of the Act. 23. As far as the power of Commissioner vested under Section 8 of the Act is concerned, he can pass an order for extending the date of payment specified in the notice of demand or allow the assessee to pay the demand in installments subject to such conditions including the payment of interest and furnishing of security as provided under first proviso to Sub-section 1 of Section 8 of the Act. 24. However, if the assessee desires to contest the assessment of tax and any other money demanded under Section 8 of the Act by way of filing an appeal under Section 11 of the Act, the question of extending the date of payment of the assessed amount does not arise as there is no such provision under the Act for the same. If any application is made under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice of demand, or making any deposit as required under Clauses (a), (b) and (c) will not arise. The 'Explanation' cannot be invoked to seek deferment of payment stipulated under Clauses (a), (b) and (c), which will be necessary for the appellant authority to entertain the appeal as the statute is very clear that no appeal shall be entertained unless the appellate authority is satisfied that the payments required under Clauses (a), (b) and (c) have been made. The statute has not made any provision for any exception to the requirement for payment to be made at the time of filing of appeal, though there is a provision under the third proviso by the appellate authority to stay recovery of the disputes amount of tax and penalty for reasons to be recorded in writing. 27. In our opinion, 'Explanation' to the third proviso to Sub-section (1) of Section 11 of the Act cannot be understood to mean that if the Commissioner passes an order under Section 8 of the Act for extending the time of payment, the deposit/ payment required to be made at the time of filing of the appeal can be waived or deferred. If that is so, the Legislature would have used the word 'Section 11' instead of 'Section 8' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the work worth only about Rs. 2,83,212.12 during the period 01.04.2017 to 07.07.2017, the assessing authority had wrongly assessed him on the basis of the entire amount mentioned in the Letter of Intent which is Rs. 117454334.95 and made the demand notice for an amount of Rs. 4,08,45,922.20. Further, as per the Letter of Intent issued by the Principal Company, namely, M/s McNally Bharat Engineering Company Limited to the petitioner Company, M/s V R Power Equipments Pvt. Ltd., the petitioner Company being a sub-contractor is not liable to pay any tax, as also clearly mentioned in the terms and conditions of the Contract and Letter of Intent dated 22.11.2017. Thus, it is the specific plea of the petitioner that he is not liable to pay any GST at all and if the petitioner had executed work for a paltry amount of Rs. 2,83,212.12, he cannot be saddled with such huge financial liability of Rs. 4,08,45,922.20 and to pay more than Rs. 26.00 lacs at the time of filing of appeal, which is not only absurd but will cause serious prejudice and injury to him and, as such, it would be in fitness of things that the requirement for deposit of amount mentioned under Clauses (a) and (c) of the 2nd pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act and the Letter of Intent referred to above. 32. Thus, we are of the opinion that the petitioner himself has to be blamed for the situation he finds himself now. Though the statutory requirement for payment of the amount as stipulated under Clauses (a), (b) and (c) of the second proviso to the Section 11(1) of the Act may appear to be harsh against the petitioner, yet, this is a situation he could have avoided by presenting relevant documents before the Assessing Authority at the time of hearing and also by filing return showing a nil Tax liability. 33. Under these circumstances, we are reluctant to invoke our extra ordinary jurisdiction conferred on us under Article 226 to mitigate the hardships being faced by the petitioner which he created for himself. Further, this would entail considering certain disputed facts which may not be appropriate for us to do so at this stage. 34. Under these circumstances, we are of the view that the petitioner will be liable to pay necessary amount as contemplated under Clauses (b) and (c) to the second proviso to Sub-Section (1) of Section 11 of the Act for the appeal to be entertained by the appellate authority, and no case has been made ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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