Kuchhal Enterprises vs Commissioner Of Trade & Taxes
2014 Latest Caselaw 3589 Del

$~4.
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+                 SALES TAX APPEAL NO.33/2014


                                               Date of decision: 7th August, 2014
        KUCHHAL ENTERPRISES                                        ..... Appellant
                               Through Mr. Ruchir Bhatia, Advocate.

                               versus

        COMMISSIONER OF TRADE & TAXES             ..... Respondent
                    Through Ms. Ruchi Sindhwani, Additional
                    Standing Counsel, Ms. Bandana Shukla &
                    Ms. Megha Bharara, Advocates with Mr.
                    Rajeev, VATO.

        CORAM:
        HON'BLE MR. JUSTICE SANJIV KHANNA
        HON'BLE MR. JUSTICE V. KAMESWAR RAO

SANJIV KHANNA, J. (ORAL):

        Having heard learned counsel for the parties, we are inclined to
frame the following substantial question of law:-
                  "Whether Appellate Tribunal Value Added Tax was
                  justified and correct in directing the appellant-assessee
                  to deposit 10% of the penalty amount as a pre-
                  condition for hearing the appeal?"

2.      With the consent of the parties, we have heard arguments on the

aforesaid question of law, which arises out of impugned order dated 16 th

May, 2014. The appellant-assessee was at the relevant time engaged in the

business of lubricants as distributor of M/s Hindustan Petroleum

Corporation Limited, a Government of India undertaking. Entire purchases
STA No. 33/2014                                                       Page 1 of 4
 by the appellant-assessee were from the said corporation. As per the

appellant-assessee and as noted in the impugned order (paragraph 2), M/s

Hindustan Petroleum Corporation Limited has issued a certificate that they

had paid VAT on the entire sale consideration mentioned in their invoices

and had not claimed any reduction or set off of tax liability on incentives or

discounts, which were subsequently granted to the appellant-assessee. In

these circumstances, learned counsel for the appellant-assessee relies upon

decision of the Supreme Court in Andhra Agencies versus State of A.P.,

(2008) 14 SCC 540 and submits that the tribunal was not justified in

directing the appellant-assessee to deposit 10% of the penalty amount, even

when Rs.4,68,096/- was still available with the respondent-Revenue as

refund payable.

3.      Normally, we would not have interfered with the order passed by the

tribunal, but in the facts of the present case, we deem it appropriate and

proper to step in as it is noticeable that the appellant-assessee as per the

impugned order had paid tax and interest by way of adjustment of the

refunds and the primary tax liability as well as interest stands satisfied in

view of adjustments. Further, the case of the appellant-assessee is that M/s

Hindustan Petroleum Corporation Limited has paid the full tax on the sale

price without taking into account subsequent incentives and discounts

issued.     Thus, respondent-Revenue has collected as per the averments

recorded in the impugned order twice on the same sale price.
STA No. 33/2014                                                   Page 2 of 4
 4.      Learned counsel for the respondent-Revenue relies upon Section

10(1) and circular of the department to support their contention that

adjustment was required in the case of M/s Hindustan Petroleum

Corporation Limited in view of discounts/incentives. She submits that tax

may be refundable to M/s Hindustan Petroleum Corporation Limited, but

the appellant-assessee must pay the tax and interest at the first instance and

this will also mean that the assessee should pay entire penalty. She submits

that appeal should be only heard after full amount of tax, interest and

penalty is paid as is normal and mandated. Only in exceptional cases,

waiver should be granted.

5.      We have considered the said contention, but do not find in the facts

of the present case that the appellant-assessee should be asked to pay or

deposit 10% of the penalty amount. The total amount of tax and interest

due, which already stands adjusted, is to the tune of Rs.10,73,202/-. The

total amount of penalty imposed is Rs.7,99,340/-, out of which

Rs.4,68,096/- is already available with the Revenue as due and refundable.

Revenue is not required to refund the said amount and is entitled to make

adjustment. We feel in the facts of the present case that the appellant-

assessee has made substantial deposits and there are legal issues and

contentions, which require detailed adjudication and decision. Question of

penalty itself would be a matter of debate in view of legal submissions.

Judgment of the Supreme Court in Andhra Agencies (supra) is relied upon
STA No. 33/2014                                                   Page 3 of 4
 by the appellant-assessee. Further, in terms of the certificate issued by M/s

Hindustan Petroleum Corporation Limited, they have paid full tax without

taking any adjustment in respect of incentives and discounts.

6.      Accordingly, we answer the question of law in favour of the

appellant-assessee and against the respondent-Revenue. It is held that the

appeal before the tribunal shall be heard without directing the appellant to

deposit 10% of the penalty amount. The observations made in this order

are for the purpose of disposal of the present appeal. This will not be

considered as binding findings or observations when the appeal of the

appellant-assessee is taken up for hearing before the tribunal. The appeal

is disposed of. No costs.



                                       SANJIV KHANNA, J.

V. KAMESWAR RAO, J. AUGUST 07, 2014 VKR