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2020 Supreme(P&H) 1467
IN THE HIGH COURT OF PUNJAB AND HARYANA
Daya Chaudhary, Meenakshi I Mehta, JJ.
M/s Kelmar (india) Exports, 28 Defence Colony, B R S Nagar, Ludhiana - Appellant
Versus
State Of Punjab And Others - Respondent
Civil Writ Petition No. 17975 of 2020
Decided On : 02-11-2020
Aman Bansal, Advocate, Pankaj Gupta, Advocate
The main legal point established is that while the pre-deposit requirement under the PVAT Act is mandatory, the court can consider financial hardship and exercise inherent powers to direct the filing and adjudication of an appeal on a reduced deposit.
Headnote:
PVAT Act - Assessment of Tax - Section 29(2) of PVAT Act, Section 62(5) of PVAT Act - The court discussed the provisions of Section 29(2) and Section 62(5) of the Punjab Value Added Tax Act, 2005, and their interpretation in relation to the mandatory pre-deposit requirement for entertaining appeals. The court also considered the judgments of the Apex Court and the High Court in similar cases, highlighting the requirement of showing financial hardship to seek relaxation or waiver of the pre-deposit amount. The court exercised inherent powers under Section 226 of the Constitution of India to direct the petitioner to file an appeal and deposit 10% of the total demand for the appeal to be heard on merits.
Fact of the Case:
The petitioner firm, registered under the PVAT Act and CST Act, challenged an assessment order creating a demand of Rs.27,76,882. The petitioner's appeals were dismissed due to non-deposit of 25% of the total demand, leading to the present petition seeking quashing of the orders and a writ for adjudication of the appeal without insisting on the prior deposit.
Finding of the Court:
The court found that the petitioner failed to comply with the directions to deposit the required amount, leading to the dismissal of the appeals. However, considering the petitioner's readiness to deposit 10% of the total demand and the financial hardship claimed, the court exercised inherent powers to direct the filing of an appeal and entertain it on depositing 10% of the total demand.
Issues: Non-compliance with pre-deposit requirement, financial hardship, exercise of inherent powers under Section 226 of the Constitution of India.
Ratio Decidendi: The court held that while the pre-deposit requirement is mandatory, a case for financial hardship can be made to seek relaxation. The court exercised inherent powers to direct the filing and adjudication of the appeal on depositing 10% of the total demand.
Final Decision: The petition was disposed of with a direction for the petitioner to file an appeal and deposit 10% of the total demand within two weeks, and the Deputy Excise and Taxation Commissioner was directed to entertain and decide the appeal within four weeks thereafter.
JUDGMENT
Daya Chaudhary, J. - Petitioner firm i.e M/s Kelmar (India) Exports is registered under Punjab Value Added Tax Act, 2005 (here-in-after called as 'PVAT Act') and Central Sales Tax Act, 1956 (here-in-after called as 'CST Act').
2. The firm deals in the trade of Iron and Steel goods. Notice for assessment under Section 29(2) of PVAT Act was issued by the Excise and Taxation Officer-cum-Designated Officer, Ludhiana-II. The authorized representative of the petitioner firm appeared before the concerned authority and produced the invoices as well as other relevant documents. Respondent No.3 passed the impugned order dated 29.06.2016 (Annexure P-2) and created a demand of Rs.27,76,882/-, which is under challenge in the present petition.
3. Aggrieved by said order, the petitioner firm filed first appeal before the Deputy Excise and Taxation Commissioner (Admin), Ludhiana Division, Ludhiana, Punjab (respondent No.2) along with an application for exemption of prior deposit of 25%. A direction was issued by respondent No.2 to the petitioner to deposit 10% of the total demand of Rs.27,76,882/-, which comes to Rs.2,77,688/- by relaxing pre-condition of deposit of 25%. The said amount was to be deposited by 21.03.2017. However, in spite of directions issued by respondent No.2, the petitioner did not deposit the said amount and ultimately, the appeal was dismissed vide Order dated 21.03.2017. Being aggrieved by said order, the petitioner filed an appeal before the Punjab VAT Tribunal, which was also dismissed on 05.11.2019 on the ground of non-deposit of 25% of the total demand. Thereafter, the petitioner has approached this Court by way of filing the present petition for quashing of impugned order dated 05.11.2019 (Annexure P-4) passed by the Punjab VAT Tribunal as well as order dated 21.03.2017 (Annexure P-3) passed by respondent No.2. A prayer has also been made for issuance of a writ in the nature of mandamus directing respondent No.2 to adjudicate the appeal on merits without insisting upon prior deposit of 25% as the petitioner is having a good case on merits and the firm is suffering a huge loss in business and is not in a position to pay the said amount of 25%.
4. Learned counsel for the petitioner also submits that the submissions made by the petitioner firm were not considered as there was a financial problem in depositing 10%. Learned counsel also submits that there is no requirement of pre-deposit, in case, there is merit in the appeal.
5. The amount of pre-deposit could have been reduced. Learned counsel for the petitioner has relied upon the judgment of Hon'ble the Apex Court in case Civil Appeal No.7358 of 2019 titled as M/s TecnimontPvt. Ltd. Vs State of Punjab and others decided on 18.09.2019 as well as judgment of this Court in case CWP No.33146 of 2019 titled as M/s Chadha Super Cars Pvt. Limited, Ludhiana vs State of Punjab and others decided on 28.11.2019 in support of his arguments.
6. Learned counsel for the respondents-State Mr.Pankaj Gupta, Additional Advocate General (Punjab) has opposed the submissions made by learned counsel for the petitioner by submitting that pre-deposit of 25% is a mandatory requirement as per provisions of Section 62(5) of the PVAT Act. He also submits that nothing is mentioned in the petition as well as in the appeals that it was a case of financial hardship. Mr. Gupta has also relied upon the judgment of Hon'ble the Apex Court in case Tecnimont Pvt. Ltd. Vs State of Punjab and others,2019 SCCOnLineSC 1228 as well as judgment of this Court in case CWP No.16751 of 2011 titled as Larsen & Toubro Limited vs The State of Haryana and others decided on 19.01.2012, wherein, it has been held that the appellate authority has no power to waive off the pre-deposit amount. Learned State counsel also submits that the condition of 25% pre-deposit for hearing of the appeal is not harsh, unreasonable and arbitrary.
7. Heard the arguments of learned counsel for the parties. We have also perused the i
