2018 (10) TMI 1528 - HC - VAT and Sales Tax

Pre-deposit, pending appeals - CENVAT Credit - cancellation of registration of the dealers with backdate - principles of natural justice - Held that - In the context of requirement of pre-deposit, the Courts examine undue hardship, which would have both the elements of financial difficulties as well as strong prima facie case. Nevertheless a threadbare minute examination of merits and demerits of the case would not be called for. There is no reason for reducing the pre-deposit requirement imposed by the Tribunal. Appeal dismissed - decided against appellant.

Summary

Issues:
Challenge to orders dismissing appeals for want of predeposit.

Analysis:
The appellant challenged two orders passed by the Gujarat Value Added Tax Tribunal dismissing appeals due to lack of predeposit. The Assessing Officer raised principal tax demands for the years 2010-11 and 2011-12, totaling significant amounts. The appellant's appeals before the Appellate Commissioner required a predeposit of 20% of the tax for the appeals to be heard on merits. The Tribunal then demanded predeposits of ?8 lakhs and ?6 lakhs for the respective years, leading to the dismissal of the appeals.

The appellant argued that the disallowance of input tax credit was based on the cancellation of selling dealers' registrations ab-initio, which was unfair as the registrations were valid during the purchases. The appellant cited legal precedents to support their case. On the other hand, the AGP contended that the predeposit stage was not for detailed examination, and the appellant failed to provide evidence regarding the movement of goods.

The Court emphasized that during the predeposit stage, the focus is on undue hardship and prima facie case, rather than a detailed examination of merits. The department's case was based on the cancellation of selling dealers' registrations due to billing activities, leading to the disallowance of input tax credit. The appellant had communicated their stance to the Assessing Officer, arguing against the disallowance based on registration cancellations.

The Court referred to a previous case for guidance on disallowing tax credit due to registration cancellations and highlighted the need for fulfilling predeposit requirements. Ultimately, the Tax Appeals were dismissed, but the restoration of Second Appeals was contingent on the appellant meeting the predeposit conditions by a specified date.

In conclusion, the judgment upheld the predeposit requirements set by the Tribunal, emphasizing the need for compliance to proceed with the appeals on merits.