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2016 (5) TMI 221 - GUJARAT HIGH COURT

2016 (5) TMI 221 - GUJARAT HIGH COURT - TMI - Nature of amount deposited - deposited as per order of Tribunal - Whether by way of pre-deposit or payment of tax - Held that:- as per provisions of sub-section (4) of section 73 of the GVAT Act, it appears that while the amount deposited under section 35F of the Central Excise Act, 1944 and section 129E of the Customs Act is by way of deposit pending the appeal, the amount paid under sub-section (4) of section 73 of the GVAT Act appears to be in the .....

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of tax under the orders which were subject matter of challenge before the Tribunal. Therefore, the amount deposited by the respondent being in the nature of pre-deposit, once the Tribunal has allowed the appeals and decided the same in favour of the respondent, the consequence would be automatic and the respondent would be entitled to refund of the amount paid by way of predeposit.

Refund of excess amount of tax paid - Section 36 of the GVAT Act - Petitioner submitted that the expres .....

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hall first apply such excess towards the recovery of any amount due under the Act or the earlier laws and shall then refund only the balance amount, if any; provided further that no adjustment under the provision shall be made towards a recovery of an amount due that has been stayed by an appellate authority. On a perusal of the provisions of section 36 of the GVAT Act as a whole, there is nothing therein to indicate that the same requires an application to be made prior to refund of any amount .....

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. The amount deposited by the respondent being in the nature of pre-deposit and not payment of tax under the provisions of the Sales Tax Act, the amount deposited by it is bound to be refunded in view of the fact that the appeal has been allowed by the Tribunal.

Whether the Tribunal acted within the bounds of its jurisdiction in issuing directions of the refund of amount deposited by the respondent by way of pre-deposit pursuant to the above order passed by this court - Held that:- as .....

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e regulations” and postulates that the Tribunal shall, in any matter not provided for in these regulations, follow the procedure, as far as it is applicable, laid down in the Code of Civil Procedure, 1908 as may be amended from time to time. Having regard to the similarity of the provisions under two regulations, the court is of the view that the decision of this court in the case of Girishchandra R. Bhatt v. Dineshbhai V. Sanghvi, Principal and others [1995 (12) TMI 388 - GUJARAT HIGH COURT] wo .....

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rs of the Tribunal were to be stayed, the assessment orders would not spring into operation entitling the petitioner to recover the amount under the same. The impugned order passed by the Tribunal, therefore, cannot, in any manner, be said to come in conflict with any order that may be passed by the High Court in the appeals. Having regard to distinct nature of the proceedings before the High Court and before the Tribunal, it cannot be said that the order passed by the Tribunal lacks propriety. .....

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erred by the petitioner - State of Gujarat through the Commissioner of Commercial Tax, challenging the common orders dated 23.07.2015 and 14.10.2015 in Miscellaneous Application No.74 of 2015 and common order dated 14.10.2015 passed in Rectification Application No.55 of 2015 passed by the Gujarat Value Added Tax Tribunal (hereinafter referred to as the Tribunal ). 2. Since all the petitions are directed against common orders of the Tribunal and the parties as well as the facts of the case are co .....

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s (Unit II). Various demand notices came to be issued to the respondent in the year 2005, which came to be challenged by it before this court by way of writ petitions being Special Civil application No.14422 of 2005 and allied matters. Subsequently in July 2005, by separate orders passed in relation to Unit I and Unit II, the demand of sales tax came to be confirmed and penalty of 150% came to be levied by the Deputy Commissioner of Sales Tax. Notices seeking to impose penalty also came to be is .....

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Civil Application No.14422 of 2005 and allied matters, the court, after discussing the merits of the case, was of the view that the petitioner Company (respondent herein) had not only made out a strong case for waiver of penalty and interest, but had also made out a strong case for exemption from deposit of the tax amount till final disposal of the appeals/revisions filed by the petitioner Company in respect of Unit I. As regards Unit II, the court was inclined to direct the petitioner company t .....

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that the appellant (respondent herein) is not liable to pay any tax, interest or penalty on the disputed transactions and there is no question of enhancement of penalty as prayed for by the Department in the cross objections. 5. Since, pursuant to the orders passed by the Tribunal, the amount paid by the respondent by way of pre-deposit was not refunded to it, the respondent moved the above referred Miscellaneous Applications No.74 to 77 of 2015 before the Tribunal in the above referred second a .....

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spect of Unit I, revision applications had been filed before the Tribunal being Revision Applications No.34 to 39 of 2015, wherein the stand of the Department is that the payment of ₹ 212 crores made by the respondent relates to Unit II and hence, the penalty levied by the revision orders for Unit I cannot be adjusted and the respondent is liable to make payment towards the dues. It was the case of the respondent that if the payment made by it is treated as made only for Unit No.2 and it i .....

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on such refund as per the provisions of the Act. 6. It appears that the Tribunal took up the above applications for hearing along with Revision Applications No.34 to 39 of 2015 filed by the respondent against revision orders relating to Unit I. By a common order dated 27.07.2015, the Tribunal while admitting the revision applications and granting stay against recovery of the outstanding demand, had also directed the Department either to grant refund to the respondent which would be payable as a .....

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ays from that date, failing which the Assistant Commissioner who prepared the statement was directed to remain personally present before it on 14.10.2015. The revision applications and the miscellaneous applications were kept for further hearing on 14.10.2015. On 14.10.2015, the petitioner moved rectification applications before the Tribunal being Rectification Application No.55 to 58 of 2015, which came to be disposed of on the same day, by directing the petitioner to grant refund to the respon .....

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ehemently assailed the impugned orders by submitting that the Tribunal by issuing directions for refund of the amount deposited by the respondent, has exceeded its jurisdiction. It was contended that once the Tribunal decided the second appeals, it became functus officio and could not have thereafter passed any order in those proceedings. Therefore, the impugned order to the extent it relates to the miscellaneous applications filed in the second appeals is without jurisdiction. It was pointed ou .....

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d the scope of the matter before it. It was emphatically argued that the revisions filed by the respondent before the Tribunal, have no bearing on the facts of the second appeal and therefore, the Tribunal was not justified in clubbing the proceedings of the revision applications and the present applications for directions. 8.1 In support of her submissions, the learned Government Pleader placed reliance upon an unreported decision of this court in the case of State of Gujarat v. Essar Oil Ltd. .....

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first appeals pending before him keeping in mind the decision of the Tribunal in the case of ONGC Limited in accordance with law within three months from the date of receipt of the order. The Tribunal also passed further orders directing that if the appeals are not decided within the stipulated period the amount paid by the dealer pursuant to its interim order shall be refunded and that once the existing bank guarantee expires, it shall not be required to be renewed. The Tribunal passed the abo .....

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id any further multiplicity of proceedings, the Tribunal could not have insisted for disposing of the appeals by the first appellate authority following its earlier decision in the case of ONGC Limited, which are the subject matter of appeals before this court and that too, within a stipulated period of time. 8.2 Reference was made to the provisions of section 78 of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as the GVAT Act ), to point out that against the order of the Tribun .....

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preferring an appeal against the order of the Tribunal is 90 days; in the present case, the time limit for filing appeals expired on 29.04.2015 and there was a delay of 54 days in filing the appeals and hence, applications for condonation of delay had been filed. It was submitted that when the delay condonation applications were pending consideration before the court, the Tribunal ought to have stayed its hands and refrained from issuing any directions for grant of refund. 8.3 Referring to the o .....

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that once the second appeals stood decided, the Tribunal became functus officio and did not have any jurisdiction to entertain the miscellaneous applications. It was contended that the fact that such question was not raised before the Tribunal would not preclude the petitioner from raising it before this court, it being a pure question of law. 9 Opposing the petitions, Mr. Mihir Joshi, Senior Advocate, learned counsel with Mr. Keyur Gandhi, learned advocate for M/s Nanavati Associates, learned .....

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implement or enforce the impugned orders of levying tax, interest and penalty, subject to the condition that the petitioner Company deposits 50% of only the tax amount levied in respect of the Unit II within the time stipulated in the order (i.e. 50% of ₹ 423 crores as indicated in Annexure-II to the order). It was submitted that what was deposited pursuant to the order of this court was by way of pre-deposit for entertaining the appeals preferred by the respondent. Such deposit was to en .....

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eposited by way of predeposit, therefore, the moment the appeal came to be decided in favour of the respondent, the petitioner was duty bound to return the pre-deposit amount without the respondent being required to make any application in that regard. It was submitted that since the amount was not returned, the respondent was constrained to approach the Tribunal seeking directions for return of pre-deposit. 9.1 Reliance was placed upon the decision of the Bombay High Court in the case of Suvidh .....

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ordingly, consequent to the order, the pre-deposit is required to be returned. It was urged that the Tribunal, therefore, was wholly justified in passing the impugned order, which is only consequential to the earlier order passed by the Tribunal. Reliance was also placed upon the decision of a Division Bench of the Bombay High Court in the case of Nelco Limited v. Union of India, 2002 (144) ELT 56, for the proposition that the amount deposited under section 35F of the Central Excise Act as a con .....

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. Even without any direction, the respondents being public authorities are bound to respect the declaration of law. It was submitted that therefore, once the Tribunal had allowed the appeals filed by the respondent, the petitioner herein was bound to implement the same and return the amount deposited by the respondent by way of pre-deposit without any direction from the Tribunal. 9.2 Next, it was submitted that merely because the GVAT Act does not make any provision for implementation of the ord .....

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wer to execute. The attention of the court was invited to the provisions of the Gujarat Primary Education Tribunal (Procedure) Order, 1987 referred to in the said judgment as well as the corresponding provisions of the Gujarat Value Added Tax Tribunal Regulations, 2008, to point out that similar provisions are contained in the Order of 1987 as well as in the Regulations of 2008 and therefore, the said decision would be squarely applicable to the present case. 9.3 As regards the contention raised .....

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AT Act would not be applicable to the facts of the present case. It was submitted that in any case, unlike section 11B of the Central Excise Act, 1944, section 36 of the said Act does not contemplate making of an application. Referring to the provisions of sub-section (2) of section 36 of the said Act, which provides that where any refund is due to any dealer, according to the return furnished by him for any period, such refund may provisionally be adjusted by him against the tax due and payable .....

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ereunder, whereas, in the facts of the present case, for six months, no order had been passed under section 39 of the said Act and hence, the Tribunal was justified in directing refund of the amount deposited by way of pre-deposit. Moreover, it is a settled practice before the Tribunal whereby such applications for refund are routinely made and the orders are passed thereon, however, in none of those cases, such orders have been challenged. It was submitted that there is no alternative procedure .....

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to stay the order of the Tribunal that would not revive the assessment order so as to entitle the petitioner to recover the amount determined thereunder. It was submitted that the appeals before this court are completely unconnected with the subject matter of this petition and that the amount deposited by the respondent being in the nature of pre-deposit, has no connection with the appeals before this court. It was urged that the pre-deposit enures till the appeal before the Tribunal is decided .....

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bmissions advanced by the learned counsel for the respective parties and has perused the record and proceedings as produced before the court and the judgement and order dated 28.03.2006 made in Special Civil Application No.14422 of 2008 as well as the paper-book as was filed before the Tribunal, which has been submitted by the learned counsel for the respondent. 11. The record of the case reveals that what was subject matter of challenge before this court in Special Civil Application No.14422 of .....

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s dated 22.07.2005 passed under section 67 of the GVAT Act. The court, in its order dated 28.03.2006, observed that ordinarily, when the disputes are subject matter of appeals/revisions, this court would not entertain the petitions, but for the reasons set out in the order, the court had gone into the arguments advanced by the learned counsel for the respective sides for the limited purpose of considering the question of pre-deposit. Insofar as Unit I is concerned, the court found that a prima f .....

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spondents authorities shall not make any recovery of any tax, interest or penalty in respect of unit No. 1 of the petitioner Company for the period from 1995-96 till 2004-05 on the ground that HBI manufactured by the petitioner Company in its unit No. 1 at Hazira with the tax free purchase of raw materials was transferred to unit No.2 of the petitioner Company for the purpose of manufacturing HRC, if ultimately the final product was sold within the State of Gujarat. B. As far as the liabilities .....

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II to this order). Such amount i.e. 50% of the tax amount for the period from 1995-96 to 2004-05 shall be first reduced by ₹ 75 crores already deposited and the balance amount shall be deposited in twelve equal monthly installments. The first such installments shall commence from 31st May 2006 and last such installment shall be deposited by 30th April, 2007. C. These interim directions shall operate during pendency of the appeals/revisions before the appellate authority/tribunal subject to .....

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parties and shall enure till the final disposal of the appeals/revisions before the appellate authority/Tribunal and in order to ensure that there are no multiplicity of proceedings, the Tribunal shall decide the revisions as expeditiously as possible and preferably by 30th June, 2007. The deposits shall, therefore, enure for stay of operation, implementation and execution of the impugned orders till all the proceedings are decided by the Tribunal. (ii) xxx (iii) xxx E. It is clarified that the .....

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any of the controversies between the parties either regarding the merits of the disputes or the preliminary contentions sought to be raised by the petitioner Company. From the language employed in the above order, it is apparent that the amount which the respondent has been directed to pay is by way of pre-deposit for entertaining the appeals and not towards payment of tax levied under the orders which were subject matter of challenge before the Tribunal. 12. In this backdrop, the merits of the .....

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reads thus: 73. Appeal. (4) 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 the tax in respect of which an appeal has been preferred; Provided that an appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order - (a) without payment of tax with penalty (if any) or, as the case may be, of the penalty, or (b) on proo .....

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3 of the GVAT Act appears to be in the nature of payment of tax. However, it is not necessary to enter into any discussion in that regard, inasmuch as, in the present case, the amount deposited by the respondent is not under subsection (4) of section 73 of the GVAT Act, nor has the appellate authority passed any order under the proviso to subsection (4) of section 73 of the GVAT Act. 15. In the facts of the present case, this court, in exercise of powers under Article 226 of the Constitution of .....

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ce to the rights and contentions of the parties and shall enure till the final disposal of the appeals/revisions before the appellate authority/Tribunal and that the deposits shall enure for stay of operation, implementation and execution of the impugned orders till all the proceedings are decided by the Tribunal. 16. On a plain reading of the directions issued by this court, it is evident that the same envisage that upon the respondent Company depositing 50% of the tax amount, further recovery .....

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allowed the appeals and decided the same in favour of the respondent, the consequence would be automatic and the respondent would be entitled to refund of the amount paid by way of predeposit. 17. It has been contended on behalf of the petitioner that, upon the appeals being adjudicated in favour of the respondent, the respondent ipso facto does not become entitled to return of the amount deposited by it as a condition precedent for entertaining the appeal and that a refund application would be .....

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m him. Provided that, the Commissioner shall first apply such excess towards the recovery of any amount due under the Act or the earlier laws and shall then refund only the balance amount, if any; provided further that no adjustment under the provision shall be made towards a recovery of an amount due that has been stayed by an appellate authority. On a perusal of the provisions of section 36 of the GVAT Act as a whole, there is nothing therein to indicate that the same requires an application t .....

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x paid as envisaged under sub-section (1) of section 36 of the GVAT Act. 19. Section 37 of the GVAT Act makes provision for provisional refund and section 38 makes provision for interest on refund and are not relevant for the present purpose. Section 39 of the GVAT Act provides for power to withhold refund in certain cases and lays down that where an order giving rise to a refund is the subject matter of an appeal or further proceeding or where any other proceeding under the Act is pending and t .....

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Act contemplates is that where an order giving rise to a refund is the subject matter of an appeal or further proceeding or where any other proceeding under the Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue, he may withhold such amount, after giving an opportunity of hearing to the party. In the opinion of this court, the question of refund under section 39 of the GVAT Act would arise provided there is a payment of tax. .....

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osit, being a condition precedent for hearing of the appeal. Besides, assuming for the sake of argument that the provisions of section 39 of the GVAT Act are applicable to the facts of the present case, from the facts as emerging from the record, there is nothing to show that the Commissioner has withheld the amount deposited by the respondent in exercise of powers under section 39 of the said Act after recording satisfaction as envisaged therein. Therefore, no cause has been made out by the pet .....

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ility to pay tax, the petitioner has no legal authority to hold on to the amount deposited by the respondent by way of pre-deposit for stay of recovery of the demand that had arisen under the orders impugned before the Tribunal. As held by the Bombay High Court in the case of Suvidhe Ltd. v. Union of India (supra), a deposit under section 35F of the Central Excise Rules and Act, 1994 is not a payment of duty, but only a pre-deposit for availing the right of appeal. Such amount is bound to be ref .....

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the amount deposited by the respondent by way of pre-deposit pursuant to the above order passed by this court. On a perusal of the provisions of the GVAT Act, it is evident that there is no provision therein for return of the amount deposited by way of pre-deposit during the pendency of the appeal. In this regard, it may be apposite to refer to the decision of this court in the case of Girishchandra R. Bhatt v. Dineshbhai V. Sanghvi, Principal and others (supra), wherein the court has held thus .....

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fic provision that the Tribunal need not be without any power to enforce its own orders, Clause 14 provides to meet that exigency. xxxxx To make adjudication complete and effective, clause 14 provides for application of provisions to follow the procedure of Code of Civil Procedure as far as it is applicable. This may also be read to provide for the enforcement or execution of the order as per the procedure prescribed in the Civil Procedure Code. This is how the Civil Procedure Code is brought in .....

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to adjudicate, it also has power to enforce the same. Right to adjudicate would be incomplete in absence of power to execute. 23. A perusal of the Gujarat Value Added Tax Tribunal Regulation, 2008 shows that the same contains provisions which are in pari materia to that of the Gujarat Primary Education Tribunal (Procedure) Order, 1987. Regulation 44 bears the heading Tribunal to follow provisions of Civil Procedure Code in the matters not provided in these regulations and postulates that the Tr .....

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. Cuttack and others, (2014) 69 VST 310 (Orissa), on which reliance has been placed by the learned counsel for the respondent, wherein the court has made reference to the following observations of the Supreme Court in the case of Smt. Savitri v. Gobind Singh Rawal, AIR 1986 SC 984 : Every Court must be deemed to possess by necessary intendment all such powers as are necessary to make its orders effective. This principle is embodied in the maxim 'ubi aliquid conceditur, conceditur ed id sine .....

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esent case however would advance the object of the legislation under consideration. A contrary view is likely to result in grave hardship to the applicant, who may have no means to subsist until the final order is passed. There is no room for the apprehension that the recognition of such implied power would lead to the passing of interim orders in a large number of cases where the liability to pay maintenance may not exist. It is quite possible that such contingency may arise in a few cases but .....

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rred against the orders dated 29.01.2015 made by the Tribunal in Second Appeals No.420 to 423 of 2015 with Cross Objections No.2 to 2C of 2013, whereas the applications filed before the Tribunal were for the return of the amount of pre-deposit. In the opinion of this court, refund of the amount of pre-deposit is consequential of the orders of the Tribunal and the same has no connection with the appeals preferred by the petitioner before this court. As rightly submitted by the learned counsel for .....

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