HC Enabled to Facilitate Assessee’s Pre-Deposit Despite Economic Difficulties

Facts:

1. The firm, engaged in yarn manufacturing, challenged three assessment orders dated 25.06.2018, 18.07.2019, and 03.11.2020 for the Assessment Year 2015-16.
2. An inspection by the Excise and Taxation Commissioner’s office raised concerns about the firm’s purchases from specific entities.
3. Assessment proceedings were initiated under the Punjab Value Added Tax Act, disallowing Input Tax Credit (ITC) on purchases from certain firms totaling Rs. 51,05,411/- due to unverified transactions.
4. Appeals were made to different authorities, but a deposit condition for appeal hearings was imposed, causing financial strain on the firm.

Observations:

1. The firm’s financial difficulties were highlighted, indicating heavy debts and a struggle to pay installments and maintain operations.
2. The firm couldn’t comply with the deposit conditions set for appeal hearings due to financial constraints.
3. Legal references to previous judgments involving similar financial hardships and deposit conditions were presented in support of the firm’s plea.

Conclusion:

1. The firm cited judgments emphasizing financial hardships in relation to pre-deposit conditions for appeal hearings.
2. The Court acknowledged the firm’s financial crisis, evident from its balance sheet and inability to meet the 25% deposit requirement.
3. Relying on these observations and the firm’s willingness to deposit 10% instead of the mandated 25%, the Court directed authorities to entertain the firm’s appeal and decide on its merits, considering the financial constraints.

In essence, the Court acknowledged the firm’s financial crisis, altered the deposit requirement to 10% instead of 25%, and directed the authorities to consider the appeal on its merits despite the financial hardships faced by the firm.

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