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2016 (6) TMI 656 - GUJARAT HIGH COURT

2016 (6) TMI 656 - GUJARAT HIGH COURT - TMI - Waiver of pre-deposit - GVAT - pendency of BIFR proceedings - tribunal insisted that the appellant deposits 25% of the tax demand for each year within three months of the date of the order, failing which, the appeals would be dismissed. - Held that:- if any proceedings are pending before the BIFR or the appellate authority, that by itself not mean that the predeposit requirement under subsection (4) of section 73 of the VAT Act would be obliterated. .....

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uthority for fresh decision without insisting on any predeposit. It was only when the appellant failed to appear before the appellate authority despite sufficient chances that the appellate authority dismissed the appeals for default. In such facts, in order to bring a degree of seriousness on part of the appellant, it was undoubtedly necessary to impose a condition of predeposit. However, directing deposit of 25% of the due tax demand was excessive.

In facts of the case, we therefore .....

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In essence in these appeals, we are concerned with condition of predeposit imposed by the Value Added Tax Tribunal ( the Tribunal for short) by an order dated 8.1.2013. By such order, the Tribunal insisted that the appellant deposits 25% of the tax demand for each year within three months of the date of the order, failing which, the appeals would be dismissed. 3. Brief facts are as under. The appellant is a company registered under the Companies Act. The appellant is assessed to tax under the G .....

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in accordance with law, further providing that there shall be stay against recovery of the outstanding dues, till the appellate authority decide the appeals. However, in case of failure, the assessee would be liable to pay interest at the rate of 18%. 4. On 17.6.2010, the appellate Commissioner dismissed the appeals once again on the ground that the assessee had failed to appear, though sufficient opportunities were given. The assessee thereupon preferred four separate appeals before the Tribun .....

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llate Authority for Industrial & Financial Reconstruction ( AAIFR for short), in view of the Tribunal, assessee was merely prolonging the proceedings. The Tribunal thus provided as under : 3. The above details clearly indicate that the appellantcompany is only interested in making use of BIFR proceedings as shelter under which the appellantcompany can easily avoid the liability under the GVAT Act and proceedings which are stated to be pending before AAIFR do not inspire any confidence to adm .....

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2013 for want of fulfilling the condition of predeposit. On 14.6.2013, therefore, the assessee withdrew Tax Appeal No.430/2013 and connected appeals. These fresh appeals were thereafter, filed in which the assessee has challenged both the orders passed by the Tribunal imposing condition of predeposit and subsequent order dismissing the appeals for non fulfillment of such conditions. 6. Learned counsel Shri Majmudar for the appellant submitted that the company is in weak financial condition. The .....

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lt. The imposition of condition of predeposit of 25% of tax dues is therefore, unreasonable. 7. On the other hand, learned counsel Ms. Jirga Jhaveri for the Government opposed the appeals contending that the Tribunal has imposed condition which is discretionary in nature. The Tribunal has given valid reasons for the same. In terms of subsection (4) of section 73 of the VAT Act, appeals would not be maintainable unless such condition of predeposit is satisfied. 8. Section 73 of the VAT Act pertai .....

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t of tax. Proviso to subsection (4) however, empowers the appellate authority for reasons to be recorded in writing to waive such predeposit requirement partially or totally. Section 22 of SICA, as is well known, pertains to suspension of legal proceedings. Subsection (1) of section 22 reads as under : 22. Suspension of legal proceedings, contracts, etc. (1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under prepa .....

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any of the properties of the industrial company or for the appointment of a receiver in respect thereof [and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company] shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority 9. In terms of subsection (1) of section 22 in respect of an industrial .....

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security against the company or its guarantors shall lie or be proceeded further, except with the consent of the Board or, as the case may be, the Appellate Authority. Subsection (1) of section 22 of SICA is worded widely and range of proceedings such as winding up of the company, execution, distress or the like against the properties of the company or suit for recovery of money etc, would not lie or be proceeded, except with the consent of the Board or the appellate authority. The question is, .....

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tion (1) of section 73 before the authorities mentioned in clauses (a) to (c) therein. Subsection (4) of section 73 pertains to requirement of depositing the tax in connection with appeal presented by a party. Proviso to subsection (4) of section 73 authorises the appellate authority to partially or fully waive this requirement of predeposit. In terms of section 73 and in particular subsection (4) thereof, an appeal from the original order would lie subject to certain conditions. It is by now we .....

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l waiver would not fall within the scope of subsection (1) of section 22. The condition of predeposit is neither a proceeding for for execution, distress or the like against the properties of the company nor can it be equated with any proceedings for recovery muchless in the nature of a suit. 11.Under what circumstances and to what extent recovery of sales tax dues of the Government can be differed in view of pendency of BIFR proceedings has been considered by Supreme Court in case of Deputy Com .....

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v. State of UP and others reported in Judgement Today 1997 (1) SC 688. In the said case, the petitioner had obtained electric connection from UP State Electricity Board and had executed an agreement for such purpose. A sum of ₹ 49.95 lacs was due from the petitioner to the Board. When the Board raised such demand, the petitioner with a view to avoid disconnection of the electric supply, agreed to pay the sum in installments in 12 months. The petitioner after depositing one installment defa .....

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without the leave of the Board or appellate authority. It is seen that under the Indian Electricity supply Act, one of the conditions is that continued payment of the price of electrical energy supplied by the Board is a condition for the condition for the continued supply and the default committed in the payment thereof entails disconnection of the supply of electrical energy, except in accordance with the procedure prescribed under the contract or the regulation issued under the Indian Electr .....

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have it executed pending proceeding before or leaf BIFR. There is no decree of court. since the petitioner had committed default and as a condition for reconnection, agreed to pay the amount in instalments, he is liable to comply with the undertaking given for supply of electrical energy. the petitioner committed default in that behalf. so, it is not entitled to seek any declaration or direction from the Court that since the matter is pending before the BIFR, he would be untitled to the supply .....

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