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Gujarat High Court · body

2016 DIGILAW 712 (GUJ)

Parini Industries Pvt. Ltd. v. State of Gujarat

2016-03-31

G.R.UDHWANI, HARSHA DEVANI

body2016
ORDER : Harsha Devani, J. 1. This petition under Articles 226 and 227 of the Constitution of India is directed against the order dated 18.9.2015 passed by the Gujarat Value Added Tax Tribunal, Ahmedabad (hereinafter referred to as "the Tribunal"), whereby the Tribunal has directed the petitioner to make a pre-deposit of Rs. 10,00,000/- under the Gujarat Value added Tax Act, 2003 (hereinafter referred to as "the GVAT Act") and Rs. 1,00,000/- under the Central Sales tax Act, 1956 (hereinafter referred to as "the CST Act") as well as the order dated 19.10.2015, whereby the Tribunal has dismissed the second appeals preferred by the petitioner on account of non-payment of pre-deposit, as directed vide order dated 18.9.2015. 2. It is the case of the petitioner as averred in the petition that it is engaged in the business of dealing with tax free goods covered by Schedule I of the GVAT Act. The Assistant Commissioner of Commercial Tax passed an ex-parte assessment order dated 29.3.2014 with respect to the assessment period 1.4.2009 to 31.3.2010 raising a total demand of Rs. 3,57,12,395/-, including interest and penalty under the provisions of the GVAT Act and also raised a demand of Rs. 58,20,230/-, including interest and penalty for the assessment period 1.4.2009 to 31.3.2010 under the provisions of the CST Act. The petitioner carried the matter in appeal before the Deputy Commissioner of Commercial Tax (hereinafter referred to as the "first appellate authority") under section 73 of the GVAT Act read with section 9(2) of the CST Act. The first appellate authority directed the petitioner to make a pre-deposit of Rs. 10,00,000/- under the GVAT Act and Rs. 2,00,000/- under the CST Act. Since the petitioner failed to make such pre-deposit before the stipulated date, viz., 20.1.2015, by an order dated 12.3.2015, the first appellate authority dismissed the appeal. Being aggrieved, the petitioner preferred appeals before the Tribunal being Second Appeals No. 424 and 425 of 2015, together with stay applications. 2.1 By an order dated 8.7.2015, the Tribunal directed the petitioner to produce all necessary evidences in respect of its contention regarding tax free turnover under the GVAT Act. The Tribunal also directed the petitioner to produce a detailed list along with copies of the forms due to non-submission of which, demand was raised under the CST Act. 2.1 By an order dated 8.7.2015, the Tribunal directed the petitioner to produce all necessary evidences in respect of its contention regarding tax free turnover under the GVAT Act. The Tribunal also directed the petitioner to produce a detailed list along with copies of the forms due to non-submission of which, demand was raised under the CST Act. By an order dated 17.8.2015, the Tribunal, inter-alia, directed the Government Pleader to call for the assessment of the record with regard to tax free sales for the years 2008-09 and 2010-2011. It appears that the petitioner filed an affidavit before the Tribunal stating that the documents were lying at the premises of one Director, Mr. Sanjay Patel, and could not be produced before the lower authorities as the Bank of India has attached the premises and no one was permitted to enter the said premises. It is the case of the petitioner that it had clearly stated the reasons for not producing the documents in the affidavit, but the Tribunal, without considering the true purport of the affidavit, vide impugned order dated 18.9.2015, held that there was no ground to interfere with the order of pre-deposit of Rs. 10,00,000/- under the GVAT Act. It, however, reduced the amount payable under the CST Act to Rs. 1,00,000/- from Rs. 2,00,000/- and adjourned the matter to 19.10.2015 for compliance thereof. On 19.10.2015, the petitioner produced considerable material such as commodity wise stock inventory, statement of tax free goods, copy of ledger account of Temptation Foods Limited to which the sales were made in the year 2009-10, and a copy of the annual report for the year 2009-10. The Tribunal, however, by the impugned order dated 19.10.2015 dismissed the appeal on account of non-compliance of the order of pre-deposit. Being aggrieved, the petitioner has filed the present petition. 3. Mr. Aditya Gupta, learned advocate for the petitioner assailed the impugned order by submitting that insofar as the order dated 18.9.2015 is concerned, the same suffers from lack of application of mind on the part of the Tribunal, inasmuch as, though the Tribunal has referred to the affidavit filed by the petitioner, it has not taken into consideration the facts stated in the affidavit, namely, that the relevant documents were lying in premises which were under attachment of the bank and hence, it was not possible for the petitioner to produce such documents. It was submitted that on the subsequent date, that is, on 19.10.2015, the documents had been, in fact, produced before the Tribunal; however, the Tribunal did not consider the same and dismissed the appeal. It was submitted that the petitioner deals in tax free goods and hence, is not liable to pay any tax under the GVAT Act or CST Act. Therefore, the Tribunal is not justified in upholding the order passed by the first appellate authority and directing the petitioner to deposit Rs. 10,00,000/- under the GVAT Act. It was submitted that the petitioner being in dire financial constraints is not in a position to deposit the amount as directed by the Tribunal, and that the matter is required to be restored to the Tribunal for reconsidering the question of pre-deposit afresh, after giving the petitioner an opportunity of hearing and of producing documentary evidence in support of its case. It was, accordingly, urged that the petition deserves consideration. 4. This court has considered the submissions advanced by the learned advocate for the petitioner and has perused the record of the case as placed before it. From the facts, as narrated hereinabove, what emerges is that the Tribunal, by the order dated 18.9.2015, had directed the petitioner to deposit an amount of Rs. 10,00,000/- under the GVAT Act and Rs. 1,00,000/- under the CST Act by way of pre-deposit as a condition precedent for entertaining the appeals. By the impugned order, the Tribunal had slightly modified the order of the first appellate authority by reducing the amount payable under the CST Act to Rs. 1,00,000/- instead of Rs. 2,00,000/-. The record of the case reveals that the tax liability of the petitioner has been assessed at Rs. 3,57,12,395/- under the GVAT Act and Rs. 58,20,213/- under the CST Act by the assessment order dated 29.3.2014. Thus, the total liability of the petitioner under the assessment order exceeds Rs. 4,00,00,000/-, as against which, the Tribunal has merely directed the petitioner to deposit a total amount of Rs. 11,00,000/- by way of pre-deposit. 5. Sub-section (4) of section 73 of the GVAT Act provides that no appeal against an order of assessment shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of payment of tax in respect of which an appeal has been preferred. 11,00,000/- by way of pre-deposit. 5. Sub-section (4) of section 73 of the GVAT Act provides that no appeal against an order of assessment shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of payment of tax in respect of which an appeal has been preferred. Thus, ordinarily an appeal cannot be entertained unless the tax assessed under the assessment order is paid and proof thereof is submitted along with the appeal. Sub-section (4) of section 73 of the GVAT Act, however, carves out an exception by vesting in the Tribunal the discretion to entertain an appeal, if it thinks fit, for reasons to be recorded in writing, inter alia, without payment of tax with penalty (if any) or, as the case may be, of penalty. Thus, no dealer can demand as a matter of right that his appeal should be heard without payment of tax or penalty and it is for such dealer to satisfy the Tribunal that a case has been made out for total exemption from payment of tax with penalty. However, the Tribunal, while considering an application for waiver of tax and penalty for the purpose of hearing the appeal is required to exercise discretion in a judicious manner. 6. Adverting to the facts of the present case, as can be seen from the impugned order, the Tribunal, having regard to the facts and circumstances of the case, has exercised its discretion and has directed the petitioner to deposit a total amount of Rs. 11,00,000/- as against a total demand exceeding Rs. 4,00,00,000/-. Having regard to the facts and circumstances of the case as well as considering the fact that before the assessing authority as well as the first appellate authority, the petitioner has not produced any documentary evidence in support of its case, as well as considering the meagre amount that the Tribunal has directed the petitioner to pay as compared to the total demand, it is not possible to state that the exercise of discretion on the part of the Tribunal is in any manner arbitrary or illegal. 7. In the aforesaid premises, no case has been made out so as to warrant interference. The petition, therefore, fails and is, accordingly, summarily dismissed.