Jagannath Dudadhar And Ors. vs Commissioner Of Sales Tax And Ors.
2003 Latest Caselaw 213 Del

ORDER

D.K. Jain, J.

1. On being pointed out that five independent dealers, with different demands, cannot be permitted to file a common petition, Mr. R.C. Chawla, learned counsel for the petitioners, prays that the present petition may be confined to the first petitioner, namely, M/s. Jagannath Dudadhar. We order accordingly.

2. The challenge in this writ petition under Article 226 of the Constitution, is to a consolidated order dated October 31, 2002/November 7, 2002, passed by the Appellate Tribunal, Sales Tax, Delhi (for short "the Tribunal"), under Section 43(5) of the Delhi Sales Tax Act, 1975 (for short "the Act"), in Appeals Nos. 51 to 53/STT/02-03, pertaining to the assessment years 1998-99 (Local and Central) and 1999-2000 (Local) respectively. By the impugned order, the Tribunal has directed the petitioner to make a pre-deposit of Rs. 5,08,40,000 as a pre-condition for entertaining their appeals pending before the Additional Commissioner (Appeals). Out of the said amount, a sum of Rs. 3,21,00,000 has been directed to be deposited in cash and for the remaining amount, the petitioner is required to furnish surety.

3. Shorn of unnecessary details, the material facts giving rise to the present petition, are that during the course of assessment proceedings for the relevant assessment years, the assessing officer while noticing that sales claimed to have been made to registered dealers were not proved and there had been contravention of the declarations on which purchases were made without payment of tax, disallowed : (i) the claims for deductions made by the petitioner under Sections 4(2)(a)(i), (iii) and (vi) of the Act ; (ii) claim for concessional levy under Section 8(5) of the Act ; made addition under the third proviso to Section 4(2) and estimated gross turnover on best judgment. All this resulted in creation of the following additional demand :

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   Name             Year                 Tax        Interest         Penalty
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M/s. Jagannath    1998-99 (L)       6,21,21,387    2,32,34,429     8,34,31,766
  Dudadhar
    -do-          1998-99 (C)          3,60,840       1,46,140        3,60,840
    -do-         1999-2000(L)       6,42,67,841    1,26,08,404     1,42,69,690
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Thus, a total demand of Rs. 12,67,50,068 on account of tax only, was created in respect of the two assessment years.
 

4. Aggrieved, the petitioner preferred appeals to the Additional Commissioner (Appeals) along with an application for stay of the disputed demand. The Additional Commissioner directed the petitioner to deposit 25 per cent of the disputed tax and penalty, as a condition precedent for entertaining the appeals preferred by the petitioner. Not being satisfied with the said order, the petitioner carried the matter in further appeal to the Tribunal. By the impugned order, the Tribunal has directed the petitioner to deposit the aforenoted amounts. Being still aggrieved, the petitioner is before us.

5. We have heard learned counsel for the parties.

6. Assailing the said order as unreasonable, onerous and incapable of being complied with on account of precarious financial condition of the petitioner, it is vehemently submitted by Mr. R.C. Chawla, learned counsel for the petitioner, that the Tribunal has not only lost sight of the actual factual position, it has also failed to apply the settled principles governing a stay application under Section 43(5) of the Act. Learned counsel would submit that while bringing to tax all the purchases made by the petitioner for inter-State sales under the third proviso to Section 4(2) of the Act, the Sales Tax Officer has again subjected to tax all the sales made to local dealers. Further, all the sales made by the petitioner on re-packed kerosene and mobil oil have been brought to tax although both the said items are taxable at first point. It is also contended that no penalty under Section 10(f) of the Central Sales Tax Act, 1956, could be levied on the petitioner even if it was assumed that there was contravention of declarations within the meaning of third proviso to Section 4(2) of the Act. Learned counsel would also submit that since inter-State turnover has been treated as intra-State sales, a substantial amount has become refundable to the petitioner in respect of assessment years in question but the respondents have declined to either refund or give credit for the same against the disputed demand. Learned counsel also prays that the petitioner should be given the credit for a sum of Rs. 46.50 lakhs, which has been deposited in this Court in terms of order dated August 28, 2000 (C.W.P. No. 7267 of 1999 Reported as Jagannath Dudadhar v. Commissioner of Sales Tax [2001] 121 STC 547). It is thus, asserted that if the Tribunal had applied its mind to all these factors, it would not have directed the petitioner to make the aforenoted deposits, which the petitioner is not in a position to pay.

7. Mr. Rajesh Mahna, learned counsel for the respondent, on the other hand, has strenuously urged that the order passed by the Tribunal is very reasonable inasmuch as the petitioner has been directed to pay in cash only a sum of approximately Rs. 3 crores as against a tax demand of approximately Rs. 12 crores pertaining to the two years in question.

8. Having heard learned counsel for the parties and carefully perused the reasoning of the Tribunal, we are of the view that a case for total waiver of pre-deposit is not made out. The statute confers on the person aggrieved a right to appeal. But, while granting such a right, the Legislature is competent to circumscribe it by imposing certain conditions. Section 43(5) of the Act provides that no appeal against an order of assessment, etc., shall be entertained by an appellate authority unless such appeal is accompanied by a satisfactory proof of the payment of tax, etc. However, under proviso to the Sub-section (5), a discretion is conferred on the appellate authority to entertain the appeal without payment of tax, etc., if it thinks fit, for the reasons to be recorded in writing, on appellants' furnishing security or proof of payment of a smaller amount as the appellate authority may direct. It is trite that while dealing with application for waiver of the condition of pre-deposit, the authority concerned is not required to embark upon a detailed enquiry to find out whether the stand of the appellant is correct or not. What is required to be seen is whether : (a) there is a prima facie case in favor of the appellant for grant of full stay ; (b) the balance of convenience qua deposit or otherwise ; and (c) irreparable loss, if any, would be caused to the appellant in case stay is not granted. While imposing any condition for pre-deposit, it is also to be borne in mind that the condition is not so stringent that it is incapable of being complied with, so as to render the right of appeal illusory.

9. At this juncture, we are not concerned with the question of either the taxability of the local sales in addition to bringing the same to tax as purchases under third proviso to Section 4(2) of the Act or the issue with regard to the taxability of the re-packed kerosene/mobil oil or even the question of levy of penalty under Section 10(f) of the Central Sales Tax Act, 1956. These would be the matters to be gone into by the appellate authority at the time of hearing of the appeals. It would neither be proper nor desirable for us to comment on these issues lest it may prejudice either of the parties. We may, however, note that neither the amount of any penalty nor the interest charged has been taken into account by the Tribunal in directing the aforenoted deposit. Therefore, the only question with which we are concerned is whether the Tribunal has exercised its discretion in directing the petitioner to make the deposits as aforesaid on sound legal principles, noted above, by taking into consideration all the relevant facts.

10. Having carefully perused the impugned order in the light of the material on record, we are of the view that on merits the impugned order does not warrant any interference. The Tribunal has analysed the facts of the case to the extent desirable. The order does not suffer from any inherent, legal or factual fallibility. However, we find some merit in the submission of Mr. Chawla that credits for the sum of Rs. 46.50 lakhs deposited in this Court in the account of the petitioner and another sum of Rs. 80 lakhs, stated to be due to the petitioner as refund should be given to the petitioner. Accordingly, we direct that while making deposit in terms of the impugned order of pre-deposit, the said two amounts may be accounted for by the petitioner. In other words, the amount of pre-deposit directed by the Tribunal shall stand reduced by the aforenoted two amounts. The order of the Tribunal is modified to that extent.

11. Let the deposit in terms of the Tribunal's order, as modified by us, be made on or before April 15, 2003. In case the petitioner deposits the amounts directed to be paid, its appeals pertaining to the assessment years 1998-99 and 1999-2000, shall be entertained and disposed of on merits.

12. We further direct that on the said deposit being made, petitioner's application for issue of statutory forms shall be considered favorably by the authority concerned, according to the rules of reasons and justice. True that the interest of the revenue is paramount while considering the request for issue of statutory forms but in the case of a running concern, too much insistence on liquidation of all pending demands, for whatever reason, sometimes not only causes undue hardship to a dealer, it may also lead to unnecessary litigation. As far as possible, it needs to be avoided. We leave it at that.

13. The writ petition and all the applications for interim relief, stand disposed of in the above terms.

14. Copies of the order be issued dusty to both the parties.