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TMI Blog2024 (2) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... udgments relied upon by learned HCGP is concerned, the same were rendered in the facts and circumstances obtaining in the said case and no ratio, much less any principle of law is laid down to the effect that this Court does not have powers / jurisdiction under Article 226 of the Constitution of India to waive / reduce the pre-deposit. Depending on the peculiar / special facts and circumstances of a case, it is always open for this Court to waive / reduce, etc., the pre-deposit condition prescribed under Section 63 (4) of the KVAT Act, especially in the light of the judgment of this Court in Hare Krishna Enterprises case and Bharat Earth Movers Limited - In the instant case, the material on record discloses that the petitioner has not earned any revenue for over five years and being a holding company, petitioner is also undergoing corporate insolvency resolution process / proceedings. Further, moratorium has been declared as long back as on 20.02.2018 and there is complete and total financial instability insofar as the petitioner is concerned as is clear from the financial statements produced by the petitioner, which is sufficient to come to the conclusion that the petitioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evance of the petitioner before this Court in the present petition is that usage/lease rental charges are not being paid by the aforesaid holding company i.e., WWIL, which is now before the National Company Law Appellate Tribunal (for short, NCLAT ), in respect of which corporate insolvency resolution proceedings have been initiated and moratorium has been declared and the same is still pending adjudication. It is contended that in view of the aforesaid CIRP proceedings and restrictions imposed upon the resolution professional of WWIL for undertaking transactions with its related party including the petitioner, the lease rentals/usage charges due to the petitioner have remained outstanding for over 5 years and petitioner, who has not been generating any operational revenues for over 5 years and in fact, incurred huge loss and financial hardship and has resulted on petitioner, who has a negative reserve of Rs. 454 crores, which reflects its financial instability as indicated in the Financial Statements of the petitioner for the financial year 2018-19 to 2022-23 and is not in a position to pay the pre-deposit to an extent of 30% for the purpose of prosecuting the appeal. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HCGP for the respondents would submit that the provisions being mandatory in nature, the petitioner has no option but to deposit 30% of the tax amount failing which, he would not be entitled to prosecute the appeal and as such, there is no merit in the petition and the same is liable to be dismissed. 8. I have given my anxious consideration to the rival submissions. 9. Before adverting to the rival contentions, it would be profitable to extract Section 63(4) of KVAT Act reads as under: The appeal, or the memorandum of cross-objections, shall be in the prescribed form, shall be verified in the prescribed manner, and, in the case of an appeal preferred by any person other than an officer 1 [empowered by the State Government or the Commissioner] 1 under sub-section (1) shall be accompanied by 2 [proof of 3 [payment of thirty per cent of tax] 3 or other amount disputed and also] 2 a fee equal to two percent of the amount of assessment objected to, provided that the sum payable in no case be less than two hundred rupees or more than one thousand rupees. 10. In the recent judgment of the Delhi High Court, in the case of Mohammed Akmam Uddin Ahmed Ors v. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined that waiver of pre-deposit cannot be granted, and Tribunal s opinion is in the light of this Court s decision in Holeyappa C Nayak V/s. The Karnataka Appellate Tribunal, Bengaluru and others This petition is disposed of by the order dated 07.03.2009. The Tribunal has finally concluded thus while rejecting the petitioner s application: In view of aforesaid reasons, in the light of clear provision of law u/s.. 63(4) of the KVAT Act, 2003 and decision/s of the Hon'ble High Court of Karnataka, we are of the considered opinion that this KAT is not vested with power or discretion to waive of or dispense with the payment of pre-deposit because, it is mandate of law. 3. Sri Sandeep Huilgol, the learned counsel for the petitioner, submits that the petitioner s grievance as against the order-in-original is essentially because the petitioner is denied the benefit of input tax credit [ITC] on the ground that the Returns in Form VAT 100 are filed belatedly, but the question whether ITC could be denied when the Returns are filed belatedly is pending consideration before the Hon ble Supreme Court in Civil Appeal No. 4936/2016. If the Hon ble Supreme Court holds that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain waiver and in this regard, he places reliance upon the decision of this Court in W.P. No. 16323/2016 [This petition is disposed of on 24.03.2016.] and W.P. No. 9511/2021 [This petition is disposed of on 23.06.2021.] with caveat that this Court, while considering the question of waiver of pre-deposit for stay under Section 62 of the KVAT Act in these cases, has granted such waiver in the light of the fact that the petitioners in such cases were public undertakings. 7. Sri Hema Kumar K., the learned Additional Government Advocate for the respondents on the other hand, submits that the stipulation under Section 63(4) of the KVAT Act for pre-deposit is part of the scheme of appeal as contemplated under Sections 62 and 63 of the KVAT Act. He emphasizes that for an appeal under Section 63 of the KVAT Act, no pre-deposit is contemplated, and deposit is envisaged only for considering the request for stay. However, in the case of the second appeal under Section 63 of the KVAT Act, pre-deposit is made a condition for filing an appeal with discretionary jurisdiction in the Tribunal to grant stay insofar as the remaining amount in demand under Section 63(7) of the KVAT Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish bank guarantee. These decisions have prevailed without challenge, and it follows from this that this Court in exercise of jurisdiction under Article 226 of the Constitution of India has modulated the requirement of pre-deposit depending on the facts and circumstances of the case. The modulation is in due deference to the statutory provisions and also to ensure that the appellate remedy is adequately exhausted. In fact, in the decision of a Division Bench of the High Court of Gujarat Vinod Kumar Dugar, Proprietor of Arihant Enterprise v. State of Gujarat in R/Special Civil Application No. 21012/2019 and connected matters disposed of on 30.01.2023., which is relied upon by Sri Sandeep Huilgol, the requirement of pre-deposit is modulated even in the case of an entity that is not a public undertaking. For these reasons, this Court is not persuaded to opine that the petitioner s request for waiver of pre-deposit must be rejected in its entirety, and the request in this regard must be considered in the peculiarities of the case. 11. The petitioner s first appeal under Section 62 of the KVAT Act is decided in the backdrop of the questions whether the petitioner must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be at liberty to make this deposit within six (6) weeks from the date of receipt of a certified copy of this order. [b] If the petitioner makes deposit as now permitted within the time allowed, the Tribunal shall consider, in accordance with law, the petitioner s application, if filed, under Section 63(5) of the KVAT Act for deferring the proceedings in STA Nos. 74, 75 and 76 of 2021 until the decision of the Hon ble Supreme Court in Civil Appeal No. 4936/2016. 12. Similarly, in the case of Bharat Earth Movers Limited, Bangalore Vs. State of Karnataka and others 2016(84) Kar.LJ 332 (HC), 2023 while dealing with Section 63(4) of the KVAT Act, the Coordinate Bench of this Court has held as under: Petitioner is a public sector undertaking which has assailed endorsement dated 07.07.2014 issued by the 3rd respondent authority (Annexure-A). By that endorsement, 3rd respondent has demanded the outstanding dues of tax from the petitioner. That endorsement was issued pursuant to the order of reassessment passed under Section 39 of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as the Act for brevity) by the 2nd respondent. Petitioner has also stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be by passing the provision of sub-Section 4 of Section 62 of the Act. He also contended that the petitioner is a company which is in comfortable financial condition and that no hardship whatsoever would be caused to the petitioner, if the statutory deposit is to be made. He also contended that the Hon ble Supreme Court granted relief to Bharath Petroleum Corporation Limited having regard to the fact that it was a public sector company selling kerosene via PDS route and no comparison can be made between the petitioner with Bharat Petroleum Corporation Limited. 6. Having heard the contentions of both sides and keeping in mind the facts of the present case and also the decision of the Hon ble Supreme Court, it is noted that as against the outstanding tax dues, the case of the petitioner is that it is not liable to pay the dues. No opinion is expressed on that aspect of the matter as it is pending consideration before the appellate authority. However, the only interference that can be made in these Writ Petitions is as to whether the petitioner should deposit 30% of the tax dues before the appellate authority in terms of Section 62 (1)(4)(c)(i) of the Act. Reliance could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endered in the facts and circumstances obtaining in the said case and no ratio, much less any principle of law is laid down to the effect that this Court does not have powers / jurisdiction under Article 226 of the Constitution of India to waive / reduce the pre-deposit. 15. Under these circumstances, I am of the considered opinion that depending on the peculiar / special facts and circumstances of a case, it is always open for this Court to waive / reduce, etc., the pre-deposit condition prescribed under Section 63 (4) of the KVAT Act, especially in the light of the judgment of this Court in Hare Krishna Enterprises case and Bharat Earth Movers Limited case referred to supra. 16. In the instant case, the material on record discloses that the petitioner has not earned any revenue for over five years and being a holding company, petitioner is also undergoing corporate insolvency resolution process / proceedings. Further, moratorium has been declared as long back as on 20.02.2018 and there is complete and total financial instability insofar as the petitioner is concerned as is clear from the financial statements produced by the petitioner, which is sufficient to come to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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