M/S. Iqbal Ahmed Infra Projects PVT. LTD. vs. State Of Karnataka
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The petitioner, M/s. Iqbal Ahmed Infra Projects Pvt. Ltd., filed a writ petition challenging an order passed by the Karnataka Appellate Tribunal (KAT) on IA No.1 dated 28.08.2024. The KAT had rejected the petitioner's application seeking waiver or dispensation of 30% of the disputed tax for the admission and disposal of their appeal. The petitioner's appeal before the KAT, STA 39/2023, was against an order dated 25.09.2020 passed under Section 39(1) of the KVAT Act. The petitioner contended that due to non-payment by respondent No.4 (State Highway Development Project), they were unable to make the mandatory pre-deposit. The respondents, represented by the Additional Government Advocate, submitted details of payments made to the petitioner, including a sum of Rs.2,62,71,504/- paid in March 2025.
Held
The High Court allowed the writ petition and set aside the impugned order of the Karnataka Appellate Tribunal. The Court disposed of IA No.1 by directing the petitioner to make a pre-deposit of Rs.45,00,000/- before the 3rd respondent within six weeks. The Court reasoned that while Section 63(4) of the KVAT Act mandates a pre-deposit, the Tribunal has the discretion to consider applications for waiver or modification in exceptional circumstances. The Court found the petitioner's plea of financial hardship, stemming from non-payment by a government project, to be a peculiar circumstance. The Court directed that upon the petitioner making the specified deposit and producing proof before the KAT, the Tribunal shall admit and dispose of the appeal on merits. The deposited amount would be subject to the final outcome of the appeal. The Court explicitly stated that this order was passed due to the special facts and circumstances and should not be treated as a precedent.
Key Issues
1. Whether the Karnataka Appellate Tribunal erred in rejecting the petitioner's application for waiver/dispensation of the mandatory pre-deposit of 30% of the disputed tax, considering the petitioner's financial hardship due to non-payment by a government project? Petitioner's contention: The petitioner argued that due to the non-payment of dues by respondent No.4, the State Highway Development Project, they were financially incapable of making the mandatory 30% pre-deposit. They relied on Section 151 of the CPC for their application to the Tribunal, seeking waiver of this pre-deposit in the peculiar facts of the case. Revenue's contention: The learned Additional Government Advocate for the respondents submitted a memo along with a statement detailing payments made to the petitioner, including a significant sum paid in March 2025, implying the petitioner had received funds and could potentially make the deposit. The Tribunal, in its impugned order, rejected the application on the ground that Section 63(4) of the KVAT Act mandates the pre-deposit and waiver is not permissible.
Sections Cited
Section 39(1), Section 63(4)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER This petition by the appellant in STA No.39/2023 on the file of the Karnataka Appellate Tribunal, Bengaluru, is directed against the impugned order passed on IA No.1 dated 28.08.2024, whereby the application filed by the petitioner seeking waiver/dispensation of 30% of the disputed tax for the purpose of getting the appeal admitted and disposed of, was rejected by the Tribunal.
A perusal of the material on record will in indicate, aggrieved by the order dated 25.09.2020 passed under Section 39(1) of the KVAT Act, the petitioner has preferred the aforesaid appeal in STA 39/2023 which is pending before the Tribunal. In the said appeal, the petitioner filed an instant application IA No.1 seeking waiver/dispensation of mandatory pre-deposit of 30% of the tax amount. The said application having been opposed by the respondent, the Tribunal NC: 2025:KHC:15636 proceeded to pass the impugned order rejecting the application on the ground that Section 63(4) of the KVAT Act, is a mandatory provision and the question of Tribunal waving mandatory pre-deposit would not arise in the facts and circumstances of the case. Aggrieved by the impugned order, the petitioner is before this Court by way of the present petition.
A perusal of the material on record, including the application filed by the petitioner under Section 151 of CPC will indicate that it is the specific contention of the petitioner that due to non-payment of amount due by respondent No.4 - KHDP, the petitioner is not in a position to make 30% of the mandatory pre-deposit and as such the said mandatory pre- deposit may be waived in the facts and circumstances of the instant case.
Per contra, learned Additional Government Advocate has filed a memo along with a statement showing details of payment made to the petitioner including a sum of Rs.2,62,71,504/- said to have been paid by respondent No.4 to the petitioner during March, 2025. NC: 2025:KHC:15636
In view of the aforesaid facts and circumstances and in the peculiar/special facts and circumstances obtaining in the instant case, I deem it just and appropriate to set aside the impugned order and dispose of IA No.1 by directing the petitioner to make a pre-deposit of 15% of the tax amount within a period of six weeks from today and by issuing certain directions in this regard.
In the result, I pass the following: ORDER (i) The writ petition is hereby allowed. (ii) The impugned order at Annexure-K is hereby set aside. (iii) IA No.1 filed by the petitioner in STA No.39/2023 is hereby disposed of directing the petitioner to pay a sum of Rs.45,00,000/- before 3rd respondent within a period of six weeks from today. (iv) Immediately upon the petitioner making such deposit and producing proof of the same before the KAT, Bengaluru, the Tribunal shall admit the appeal and dispose NC: 2025:KHC:15636 of the appeal on merits in accordance with law.
(v) It is needless to state that the said amount deposited by the petitioner would subject to the final outcome of the appeal.
(vi) It is made clear that this order is passed in
the peculiar/special facts of circumstances of the instant case and the same shall not be treated as a precedent nor carry any presidential value for any purpose. (S.R.KRISHNA KUMAR) JUDGE AP List No.: 1 Sl No.: 4
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.