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2022 DIGILAW 1777 (GUJ)

MANOJ AUTOMOTIVE v. STATE OF GUJARAT

2022-12-15

MAUNA M.BHATT, SONIA GOKANI

body2022
ORDER : 1. Rule, returnable forthwith. Learned AGP waives service of notice of Rule for and on behalf of the respondent-State. 2. This petition is filed with a prayer to quash and set aside the order dated 08.09.2022 and order dated 20.07.2022 passed by the Gujarat Value Added Tax Tribunal (‘the Tribunal’ hereinafter) in Second Appeal No. 988 of 2019. Briefly stated facts are as follow: 2.1 The petitioner is engaged in the business of reselling auto parts, tyers, tubes, etc. purchased certain goods and exported the same outside the country. 2.2 On 08.08.2012, a surprise visit was made at the business premises of the petitioner by Assistant Commissioner of State Tax, however, according to the petitioner, no evasion was found at the time of search. 2.3 It is the case of the petitioner that Assessing Authority thereafter on 31.03.2016, proceeded to pass assessment order, wherein direction of certain export sales was disallowed on the ground that the petitioner failed in producing the export proofs. 2.4 Against the order of the Assessing Authority dated 31.03.2016, the petitioner filed appeal, however, the same could not be decided on merits, as on account of dispute of the petitioner with his legal representative, the legal representative did not remain present and the appeal was dismissed on the ground of non-prosecution. 2.5 Against the order of First Appellate Authority dated 17.01.2017, the petitioner preferred Second Appeal before the Tribunal. The Tribunal under order dated 20.07.2022 directed the petitioner as under: “(6) Considering the submission of both the parties it is crystal clear that appellant has not paid any pre-deposit before the First Appellate Authority as per section 73 of the GVAT Act and appellant is bound to pay reasonable pre-deposit. Now to determine the reasonable pre-deposit in this matter the tax demand is Rs. 6,95,01,762/- Interest is Rs. 5,00,41,269/- and penalty is Rs. 20,85,05,286/- total Rs. 32,80,48,317/- against this demand the First Appellate Authority has not decided any pre-deposit in their order, the pre-deposit is only on tax elements without tax and interest, in this matter the Tax demand is approximately of Rs. 6.95 Cr and this is a tax dispute for the financial year 2011-12 considering the facts on record and prima facie facts of the case Tribunal is direct reasonable pre-deposit in view of Tribunal in this case considering the Tax demand Rs. 1 Cr. 6.95 Cr and this is a tax dispute for the financial year 2011-12 considering the facts on record and prima facie facts of the case Tribunal is direct reasonable pre-deposit in view of Tribunal in this case considering the Tax demand Rs. 1 Cr. is reasonable and sufficient pre-deposit as per section 73 of the GVAT Act and appellant is directed to make the payment of Rs. 1 Cr. within the period of one month. (7) For compliance the order and production of pre-deposit challan of Rs. 1 Cr. and for compliance the order and production of cost challan of Rs. 3,000/- present matter is further adjourned to 08.09.2022. (8) On payment of aforementioned pre-deposit amount, stay against recovery proceedings for the financial year 2011-12 shall come into operation. (9) Registry is directed to place present Second Appeal for compliance the order and production of pre-deposit challan on 08.09.2022.” 2.6 Pursuant to the order dated 20.07.2022 passed in Second Appeal, the matter was placed for compliance on 08.09.2022, wherein the Tribunal has passed the following order: “(A) Second Appeal No. 988 of 2019 is hereby dismissed for non compliance of the direction of pre-deposit passed by this Tribunal on 20.07.2022 as per section 73 of GVAT Act. (B) Any relief is granted earlier is hereby vacated with immediate effect. (C) Accordingly the present Second Appeal stands dismiss with no order as to cost.” 2.7 Aggrieved by the order dated 08.09.2022, present petition is filed. 3. Heard the learned advocate, Mr. Uchit Sheth for the petitioner and learned AGP, Mr. Trupesh Kathiriya for respondent-State. 4. Learned advocate, Mr. Uchit Sheth has submitted that the order of the Tribunal dated 08.09.2022 demanding pre-deposit and thereafter summarily dismissing the appeal on the ground of non-payment of pre-deposit is arbitrary and illegal. 4.1 He has further submitted that the Tribunal demanded pre-deposit without assigning any reasons and without considering the prima facie case of the petitioner. Relying upon the decision of the Coordinate Bench of this Court in case of Kavya Marketing vs. State of Gujarat in Special Civil Application No. 1027 of 2022. He submitted that in a similar fact situation this Court has held as under: “9. Relying upon the decision of the Coordinate Bench of this Court in case of Kavya Marketing vs. State of Gujarat in Special Civil Application No. 1027 of 2022. He submitted that in a similar fact situation this Court has held as under: “9. The aforesaid provision apparently makes it clear that ordinarily no appeal against an order of assessment shall be entertained by the appellate authority, unless an appeal is accompanied by satisfactory proof of payment of tax in respect of which an appeal has been preferred. The proviso to clause 4 makes the picture further clear. The said proviso explicitly gives discretion to the appellate authority to entertain an appeal against the orders as provided under clause (a) or (b) or (c) of sub section 4 of section 73 of the act. Thus, the legislation in its wisdom has reposed discretion upon the appellate authority to entertain an appeal without payment of tax with penalty or in appropriate case on proof of the payment of a smaller sum as the appellate authority may consider reasonable or in an appropriate case on furnishing security by the appellant for such an amount which the appellate authority may direct. Obviously, at the stage of deciding the issue of admitting an appeal based on the payment of pre-deposit amount, the Tribunal is expected to venture into the merits of the case, wherein considering prima-facie case which may very from case to case, the appellate authority may entertain the appeal accordingly. From the language of the statute, one can carved out in a given situation, the appellate authority may admit the appeal even without insisting for payment of tax with penalty or even a smaller sum or may not even insisting for furnishing of security. 10. In the case on hand, while going through the order dated 22.11.2021 passed by the Tribunal, the only reason assigned by the Tribunal as recorded in paragraph 5 of the said order is that the hearing of the matter has been prolonged from the year 2019 on the aspect of pre-deposit and stay and the first appeal being summarily dismissed without going into the merits of the case. Thus, the Tribunal deemed it fit to direct the appellant to pay the amount of Rs. 20,00,000/- towards the pre-deposit. 11. Thus, the Tribunal deemed it fit to direct the appellant to pay the amount of Rs. 20,00,000/- towards the pre-deposit. 11. We find that such an approach of the Tribunal of not addressing prima-facie case of the writ applicant at the pre-deposit stage is erroneous. In fact, having gone through the relevant provisions provided under the VAT Act, it is expected that the first appellate authority to exercise its discretion judiciously and should not have insisted for pre-deposit when the appellant has been able to make out strong prima-facie case in his favour.” 4.2 He has further submitted that in this case, the issue involved is only with regard to the verification of the export documents. Moreover, the petitioner is a regular exporter and export transactions have been accepted in assessment for other years barring the year in question. Therefore, non-granting of time to the petitioner to produce export documents and proceeded to pass order raising huge demand is also arbitrary and violative of principles of natural justice. The petitioner has also pleaded his inability for pre-deposit on account of COVID-19 pandemic and intermittent lock-down. 5. On the other hand, learned AGP, Mr. Kathiriya has submitted that the Tribunal in order dated 17.01.2017 after taking note of the fact that the petitioner could not appear and produce documents, has dismissed the appeal on account of non-prosecution and thus, First Appellate Authority has on merits decided the appeal. However, he could not controvert the fact that without entering into the merits of the appeal, the Second Appeal has been dismissed on account of non-payment of amount as directed towards pre-deposit. 6. Having heard the learned advocates for the respective parties and having considered the facts of this case, in our opinion, the decision of Kavya Marketing (supra) would squarely be applicable in facts of the present case. In our opinion, therefore, the Tribunal has committed serious error of law by not taking note of the prima facie case of the petitioner while examining the aspect of pre-deposit. Therefore, we are of the view that, in the facts and circumstances of the present case, the order passed of the Tribunal dated 08.09.2022 and order dated 20.07.2022 deserves to be quashed and set aside and hereby quashed and set aside. 6.1 We further direct the Commissioner Appeal-First Appellate Authority to hear the appeal on merits. Therefore, we are of the view that, in the facts and circumstances of the present case, the order passed of the Tribunal dated 08.09.2022 and order dated 20.07.2022 deserves to be quashed and set aside and hereby quashed and set aside. 6.1 We further direct the Commissioner Appeal-First Appellate Authority to hear the appeal on merits. The First Appellate Authority may consider the payment of pre-deposit, a fresh keeping in mind the financial hardship expressed by the petitioner. It is made clear that we have not gone into the merits of the matter and kept all the issues open including the stay of demand to the file of the First Appellate Authority. 7. With the above directions, this petition is disposed off. No order as to costs. 8. Over and above the regular mode of service, direct service through e-mode on official email address is also permitted.