2011 (10) TMI 546 - HC - VAT and Sales Tax

Waiver of pre deposit - petitioner was directed to make part payment of the tax liability - Held that - Tribunal has duly taken note of the fact that for the assessment year 2007-08 there is a refund to the extent of Rs. 27.74 lacs. The Tribunal however had due regard to the total tax liability for the assessment years 2005-06 2006-07 and 2007-08 which is about Rs. 1.43 crores. Hence even after taking into account a refund of Rs. 27.74 lacs for the assessment year 2007-08 the direction for deposit of an amount of Rs. 9 lacs for the remaining two years cannot be regarded as arbitrary or contrary to law. The submission which the petitioner has on merits is that the petitioner is entitled to a set-off and that the provisions contained in section 48(2) read with section 48(5) would not be attracted - However time period to make deposit is extended - Decided partly in favour of assessee.

Summary

Issues:
1. Modification of tax liability by Sales Tax Tribunal
2. Refund entitlement for assessment year 2007-08
3. Set-off entitlement and provisions under section 48(2) and 48(5)

Analysis:
1. The High Court of Bombay addressed the issue of modification of tax liability by the Sales Tax Tribunal in the case. The Tribunal had altered the amount the petitioner was directed to pay for the assessment years 2005-06, 2006-07, and 2007-08. Instead of the original amounts, the Tribunal ordered the petitioner to pay reduced sums. The petitioner contended that for the assessment year 2007-08, a refund of approximately &8377; 27.74 lacs was due, thus no deposit was necessary. However, considering the total tax liability of around &8377; 1.43 crores for the three years, the Tribunal upheld the direction to deposit &8377; 9 lacs for the remaining two years. The Court found that even with the refund, the deposit directive was not arbitrary or illegal. The petitioner's claim of entitlement to a set-off under section 48(2) and 48(5) was deferred for consideration by the Deputy Commissioner of Sales Tax (Appeals) during the appeal process. The Court extended the time for deposit by three weeks but did not interfere with the Tribunal's decision.

2. The issue of refund entitlement for the assessment year 2007-08 was crucial in the judgment. The petitioner argued that a substantial refund of &8377; 27.74 lacs was due for this year, negating the need for any deposit. While acknowledging the refund amount, the Tribunal balanced it against the overall tax liability for all three years. Despite the refund, the Tribunal upheld the deposit requirement for the remaining two years, totaling &8377; 9 lacs. The Court concurred with this approach, finding it reasonable and not arbitrary. The petitioner's refund claim was noted but deemed insufficient to nullify the deposit obligation for the other years.

3. The judgment also delved into the issue of set-off entitlement and the relevant provisions under section 48(2) and 48(5) of the law. The petitioner claimed a set-off, arguing that these provisions should not apply. However, the Court deferred the consideration of this claim to the Deputy Commissioner of Sales Tax (Appeals) during the appeal process. The Court did not intervene on this matter at the current stage, emphasizing that the deposit directive of &8377; 9 lacs was upheld without interference. The petitioner's submission regarding set-off entitlement was acknowledged but left for further examination during the appeal proceedings.