Pre-deposit is limited to 15% of the tax demand rather than the total sum set by the AO’s 15%
Fact and issue of the case
Brief facts leading to the present petition under Articles 226 and 227 of the Constitution of India are as follow:
The petitioner is in the business of trading of various goods such as scraps, confectioneries, cosmetics, tobacco, etc. The respondent No.1 as the Commissioner of the State Tax exercises the jurisdiction under the provision of the Gujarat Value Added Tax Act, 2003 (‘the VAT Act’ hereinafter) and the Goods and Services Tax Act, 2017 (‘the GST Act’ hereinafter).
The petitioner had local registration and central tax registration as well. During the year under consideration, the petitioner worked out Input Tax Credit on purchases made from registered dealer as per Section 11 of the VAT Act. It had been worked out on sales within the State of Gujarat and sales made outside the State under Section 3(a) of the Central Sales Tax Act, 1956.
The petitioner had adjusted the output tax liability against the Input Tax available and submitted its return by working out the said procedure for the assessment year 2008-09.
A search operation had conducted at the premise of the petitioner, which continued from 24.01.2012 to 01.02.2012. Numerous files were impounded by officers containing purchase and sales bills, LR, Weigh Slips, Transport receipts, etc. for the period 2008 to 2012.
The assessment proceedings for the year 2008-09 were commenced and notice for audit assessment under Section 34(2) of the VAT Act had been issued on 01.02.2012. It is further averred that on 01.02.2012 the residential house belonging to the mother of the petitioner and a shop were attached under Section 45(1) of the VAT Act. Totally 93 items were impounded and the list of the same had been annexed.
Notice had been issued in Form 303 for making assessment under Section 35 of the VAT Act and a show cause notice dated 10.07.2012 was issued wherein it was alleged that the petitioner was engaged in billing activities only. The detail of the purchases and the sales were called for otherwise it was proposed that in absence of production of them, the sales made outside Gujarat were to be construed as local sales.
It appears that another show cause notice dated 20.09.2012 was issued that has been responded too by the petitioner reiterating his submissions that all seized documents have not been released after eight months of the search and unless those details are available with the petitioner, giving of an opportunity will be an empty formality.
Once again, show cause notice of 01.10.2013 was issued asking the petitioner to remain present with all the details. The petitioner since could not produce the ‘C’ Forms and other details like Form 402, the Assistant Commissioner of Commercial Tax raised the demand by treating the entire interstate sale as the local sale.
This was challenged by preferring First Appeal before the Deputy Commissioner of Commercial Tax, Appeal-2, Ahmedabad. The petitioner was asked to pay pre-deposit of 20% of the total demand under the VAT Act and under the CST Act, which the petitioner failed to pay and appeal was summarily dismissed on 17.04.2014. Aggrieved petitioner preferred an appeal before the Tribunal. The Tribunal after hearing both the sides also had directed on 08.04.2015 the amount of 20% of the total demand to be paid as pre-deposit thereby confirming the directions of the First Appellate Authority.
The petitioner was not in a position to pay the amount of pre-deposits and had also closed its business and shifted to Rajasthan owing to the fact that, its registration had been cancelled.
Observation by the tribunal
The tribunal has heard the learned senior advocate, Mr.Tushar Hemani assisted by the learned advocate, Mr.Hiren Trivedi for the petitioner and learned AGP, Ms.Ashar for respondents.
At the outset, our attention is drawn to the order of the Appellate Authority for the year 2010-11 and 2011-12 as also the order dated 29.06.2019 under Section 73 of the VAT Act, whereby the authority concerned had permitted the payment of pre-deposit of 15% of the tax amount. The First Appellate Authority also had adjudicated the matter and as a substantial reduction from the total demand which had been raised the concerned years. There had been no challenge to the direction of 15% of the tax amount during the pendency of the adjudication. There is no reason as to why in the case of the very assessee when for the assessment years 2010-11 and 2011-12 the authority concerned had permitted the payment of pre-deposit of 15% of the tax amount. This be also not applied for the earlier assessment years 2008-09 and 200910 where the total demand made by the assessing officer. These matters are pending for adjudication for a long time on account of the fact that these petitions have been pending after the Court issued the notice on 11.12.2019, nothing has moved so far as those two years are concerned and the matter has got entangled in this litigation taking a que from the subsequent year of 2010-11 and 2011-12.
Without entering into merit of the matters and also the sheer reflects of time also would necessiate for us to intervene and direct the pre-deposit amount to be quantified at the rate of 15% of the tax demand raised by the respondent rather than 15% of the total amount fixed by the Assessing Officer.
Accordingly, these petitions are allowed by quashing and setting aside the impugned order dated 15.06.2015 passed by the Tribunal and relegating the petitioner to the First Appellate Authority for the deposit of 15% of the tax amount within a period of four weeks from the date of receipt of a copy of this order. The authority concerned is directed to accept the pre-deposits of 15% of the tax demand. This reduction of 15% of the tax demand rather than of the total demand shall be paid within a period of four weeks from the date of receipt of a copy of this order. Once deposited, let the adjudication take place by affording an opportunity in accordance with law. If not deposited, consequential order shall follow. The order passed by this Court in Special Civil Application Nos.16901 of 2014 with Special Civil Application No.6182 of 2015 has been pressed into service. However, that being the case of the sister concern, presently not being dilated as in case of the very assesssee as mentioned hereinabove, the authority concerned has taken a specific stand.
None of the observations shall come in the way of either side in the matter to be adjudicated on merit.
Read the full order from hereVinod-Kumar-Dugar-Vs-State-of-Gujarat-Gujarat-High-Court
The tribunal has ruled in favour of the assessee and dismiss the appeal.