Laxmi Dye Chem vs State Of Gujarat
2021 Latest Caselaw 6196 Guj

    C/SCA/5652/2021                                 ORDER DATED: 17/06/2021



          IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

            R/SPECIAL CIVIL APPLICATION NO. 5652 of 2021

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                          LAXMI DYE CHEM
                               Versus
                         STATE OF GUJARAT
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Appearance:
MR VARIS V ISANI(3858) for the Petitioner(s) No. 1
MS DHWANI TRIPATHI, ASSISTANT GOVERNMENT PLEADER/PP(99) for
the Respondent(s) No. 1
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 CORAM: HONOURABLE MS. JUSTICE BELA M. TRIVEDI
        and
        HONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI

                          Date : 17/06/2021

                        ORAL ORDER

(PER : HONOURABLE MS. JUSTICE BELA M. TRIVEDI)

1.The petitioner, by way of the present petition filed under Article 226 of the Constitution of India, has prayed for the following prayers:-

"A. This Hon'ble Court may be pleased to issue of writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order quashing and setting aside the impugned order dated 09.10.2020 (annexed at Annexure A) passed by the learned Gujarat Value Added Tax Tribunal and the appeal may please be ordered to be heard without insistence of any further pre-deposit or security;

B. In the alternative this Hon'ble Court may be pleased to quash and set aside the appeal orders as well as re-assessment order dated 07.03.2019 and the matter may please be remanded to the assessing authority for fresh assessment after verifying documents to be produced by the Petitioner;

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C. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to restrain the learned Respondent from making coercive recovery in relation to the subject matter of the petition and the learned Tribunal may also be restrained from proceeding further in the matter; D. Ex parte ad interim relief in terms of prayer may kindly be granted;

E. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray."

2.As emerging from the memorandum of the petition, a search was conducted by the State Tax Officer(1), Enforcement, Division-1, Ahmedabad on 04.04.2018 under Section 67 of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to in short as 'GVAT Act'), on which date, the statement of the petitioner was recorded. On the basis of the said statement of the petitioner, the respondent authority had initiated proceedings of reassessment under Section 35 of GVAT Act. The show-cause notices dated 17.01.2019 and 11.02.2019 were issued by the respondent authority, in response to which detailed written submissions were produced by the petitioner. However, the respondent authority passed the reassessment order on 07.03.2019, and raised the demand under GVAT

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and CST Act including tax, interest and penalty for the Assessment Years 2013-14 and 2014-15.

3.Being aggrieved by the said order of reassessment, the First Appeals were filed by the petitioner, under Section 73 of GVAT Act read with Section 73 of the CST Act which came to be dismissed for non-payment of pre- deposit amount vide order dated 30.03.2019 passed by the First Appellate authority. The petitioner being aggrieved by the said order filed Second Appeals being No.301/2019 to 304/2019 before the Gujarat Value Added Tax Tribunal at Ahmedabad. The said Appeals have been admitted by the Tribunal vide order dated 09.10.2020, and the stay against recovery is granted on the condition that the appellant shall deposit 15% of the tax dues towards pre-deposit instead of 25% as directed by the first appellate authority within one month. Being aggrieved by the said order of the Tribunal, the petitioner has invoked the extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India.

C/SCA/5652/2021 ORDER DATED: 17/06/2021

4.The bone of contention raised by learned Advocate for the petitioner is that the Tribunal could not have taken into consideration the turnover of the petitioner for both the accounting years for the purpose of determining the amount of pre-deposit. In this regard he has placed reliance upon the unreported judgment of this Court in the case of Crystal Alloys Ltd. v/s. State of Gujarat (Special Civil Application No.14977/2019 and Others) decided on 26.02.2020. He also submitted that the amount of tax liability as determined by the concerned Officer on reassessment or the Assessment years 2013- 2014 and 2014-2015 being very high, he had requested the first appellate authority to hear the Appeals without insisting for the payment of predeposit amount, however the said appeals having been dismissed for want of payment of predeposit amount, the petitioner has preferred Second Appeals in which the petitioner is directed to deposit 15% of the tax dues, however the said amount is also on a very higher side.

5.In order to appreciate the submissions of the learned Advocate Mr. Isani for the petitioner, it would be beneficial to

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reproduce the relevant provisions of Appeal under Section 73 of the Gujarat Value Added Tax Act, 2003 which reads as under :-

"73. Appeal.

(1) An appeal from every original order, not being an order mentioned in section 74, passed under this Act or the rules, shall lie,-

(a) If the order is made by an Assistant Commissioner or Commercial Tax Officer, or any other officer sub-ordinate thereto, to the Deputy Commissioner;

(b) If the order is made by a Deputy Commissioner, to the Joint Commissioner;

(c) If the order is made by a Joint Commissioner, Additional Commissioner or Commissioner, to the Tribunal. (2) In the case of an order passed in appeal by a Deputy Commissioner or, as the case may be, by a Joint Commissioner, a second appeal shall lie to the Tribunal.

(3) Subject to the provisions of section 84, no appeal shall be entertained unless it is filed within sixty days from the date of communication of the order appealed against. (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 proof of payment of such smaller sum as it may consider reasonable, or

(c) on the appellant furnishing in the

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prescribed manner, security for such amount as the appellate authority may direct."

6.From the bare reading of the aforesaid sub- section (4) of Section 73, it clearly transpires that an Appeal before the Appellate Authority against the order of assessment would not be ordinarily entertained unless such an appeal is accompanied by satisfactory proof of payment of the tax in respect of which an appeal has been preferred. Of course, the Appellate authority may if it deems fit for the reasons to be recorded in writing entertain the Appeal by granting relaxation in payment of tax in respect of which the Appeal is preferred as mentioned therein.

7.At this juncture, it may be noted that the petitioner has challenged the order passed by the Tribunal directing it to pay 15% of the tax dues instead of 25% as directed by the First Appellate Authority. Apart from the fact that the First Appellate Authority had exercised the discretion in favour of the petitioner as contemplated under Section 73(4) of the GVAT Act by directing the petitioner to make payment of 25% of the tax

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dues instead of entire tax dues, for entertaining the Appeal, however the first appellate authority dismissed the Appeals on account of non-payment of the said predeposit amount, the Tribunal also passed the impugned order exercising its discretion by granting stay against the recovery of tax dues by directing the petitioner to pay 15% instead of 25% of the tax dues, while admitting the Second Appeals. Such an order of the Tribunal being interim and discretionary in nature, no statutory or legal right of the petitioner could be said to have been infringed, which would warrant interference of this Court under Article 226 of the Constitution of India.

8.It is well settled position of law that the High Court will ordinarily not entertain the petition under Article 226 of the Constitution of India, involving recovery of taxes, cess, fees or other types of public money. It cannot be gainsaid that any stay of an action initiated by the State or its authorities for the recovery of taxes etc. would have serious implication on the authorities in discharging their constitutional and legal obligations. To

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cite a few judgments are in case of United Bank of India vs. Satywati Tandon and Others reported in (2010) 8 SCC 110, in case of Assistant Collector of Central Excise vs. Dunlop India Ltd. reported in 1985 2 SCR 190, in case of Assistant Commissioner (CT), (LTU) Kakinada vs. M/s. Glaxo Smith Kline Consumer Healthcare Ltd. reported in AIR 2020 SC 2819.

9.The Court also does not find any substance in the submission made by Mr. Isani that the Tribunal has committed an error in taking into consideration the turnover of sales and purchase of the petitioner, while passing the impugned order. It transpires that the details of sales and purchase of the petitioner were taken into consideration by the Tribunal with a view to ascertain the financial position of the petitioner. The Tribunal has considered the relevant aspects namely the financial position of the petitioner and has exercised its discretion to the extent of granting the stay against the recovery of the dues by directing the petitioner to deposit 15% of the tax dues instead of 25% as directed by the first Appellate Authority. As stated earlier, such an order passed by the Tribunal being

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discretionary in nature, the Court is not inclined to interfere with the same.

10. In that view of the matter, the petition being devoid of merits is dismissed.

Sd/-

(BELA M. TRIVEDI, J)

Sd/-

(A. C. JOSHI, J) CAROLINE