2019 (6) TMI 492 - HC - VAT / Sales Tax

Requirement of pre-deposit - appellant is incurring huge losses as is evident from the Balance Sheets and is not in a position to deposit the amount - reversal of Input tax credit on closing stock of wheat and rice - Section 19(4) of the Punjab VAT Act - reversal of Input Tax Credit on retention of bye products by the Rice Millers - rule 21(6) of Punjab VAT Rules 2005. HELD THAT - As per the provisions of Section 62(5) of the Act 25% of the amount has to be deposited for entertainment of the appeal. However as per the decision of this Court in PUNJAB STATE POWER CORPORATION LIMITED VERSUS THE STATE OF PUNJAB AND OTHERS 2016 (2) TMI 245 - PUNJAB AND HARYANA HIGH COURT the First Appellate Authority has a power to waive off the precondition in appropriate cases - It would be pertinent to note here that additional demand in the present case is with regard to tax only and the appellant is required to deposit 25% of the tax amount. The condition imposed by the First Appellate Authority and the Tribunal for entertainment of appeal was reasonable. Learned counsel for the appellant has not been able to point out any perversity in the order of the Tribunal. No interference is called for in the impugned order - The appeals involve no question of law much less a substantial question of law - The appeals have been filed along with applications under Section 5 of the Limitation Act 1963 for condoning the delay in filing the appeals. As the appeals have been dismissed on merits no further orders are required to be passed on the applications for condonation of delay. Appeal dismissed.

Summary

Issues involved:
- Interpretation of Section 62(5) of the Punjab Value Added Tax Act, 2005 regarding the requirement of a 25% deposit for entertaining an appeal.
- Whether the First Appellate Authority has the power to waive off the pre-deposit requirement in certain cases.
- Justifiability of the Tribunal's decision to dismiss the appeal and direct the appellant to deposit 25% of the tax amount within two months.

Analysis:
The judgment pertains to six appeals arising from a common order passed by the Value Added Tax Tribunal, Punjab, Chandigarh. The appeals challenge the order dated 17.8.2017 passed by the Tribunal under Section 68 of the Punjab Value Added Tax Act, 2005. The primary issues revolve around the appellant's inability to deposit 25% of the tax amount despite incurring significant losses, reversal of input tax credit, and the Tribunal's decision to dismiss the appeal due to non-compliance with the pre-deposit requirement.

The appellant, a Government agency supplying food grains to the Food Corporation of India, faced a demand of Rs. 9,29,33,163 resulting from the reversal of input tax credit on bye products and imposition of purchase tax on closing stock of wheat and paddy. The appellant's appeal was dismissed by the First Appellate Authority for failure to deposit 25% of the tax amount, leading to further appeal before the Tribunal. The Tribunal, while dismissing the appeal, granted a two-month extension for the appellant to make the required deposit.

The crux of the matter lies in the interpretation of Section 62(5) of the Act, which mandates a 25% deposit for entertaining an appeal. The appellant argued that the Tribunal erred in its decision, citing a previous judgment where the First Appellate Authority was granted the power to waive off the pre-deposit requirement in deserving cases. However, the Court found the Tribunal's decision to be reasonable and justified, emphasizing that the condition imposed was in line with the statutory provision.

Ultimately, the Court held that the appeals did not raise any substantial question of law and lacked merit, leading to their dismissal. The judgment reaffirmed the validity of the pre-deposit requirement under Section 62(5) while recognizing the limited discretion of the First Appellate Authority to waive off the deposit in exceptional circumstances. The Tribunal's decision to uphold the pre-deposit condition was deemed appropriate, and no grounds for interference were found in the impugned order.