M/S. Telangana State Co-Operative vs. Assistant Commissioner

Held

The Court dismissed WP No. 12015 of 2020. It held that the TVAT Act, 2005, specifically Section 31(1) and its proviso, requires a pre-deposit and does not permit adjustments of net credit carry-forward amounts. The petitioner cited no authority for their contention that such adjustments are mandatory. Therefore, the Appellate Deputy Commissioner (4th respondent) did not err in rejecting the appeal for non-compliance with the pre-deposit requirement. The Court also dismissed WP No. 12009 of 2020. It found force in the respondents' contention that the petitioner had an alternative remedy of appeal under Section 31(1) of the TVAT Act against the penalty order dated September 25, 2019. However, the petitioner did not file an appeal at all, and by July 30, 2020, more than 60 days had elapsed since the order. Therefore, the challenge to the omission of the first proviso to Section 31(1) was of no avail. The Court held that the petitioner did not avail the alternative remedy and the case did not fall within any exceptions to the rule of entertaining writ petitions when an alternative remedy exists. The question regarding the validity of Act 26 of 2017 was left open to be adjudicated in separate proceedings.

Facts

The petitioner, Telangana State Cooperative Marketing Federation Limited, is challenging two orders. In WP No. 12015 of 2020, the petitioner challenges an order by the Appellate Deputy Commissioner (4th respondent) dated February 29, 2020, which rejected their appeal at the admission stage for the tax period 2006-07 (TVAT). This rejection was based on the petitioner's failure to furnish proof of payment of 12.5% of the disputed tax difference as required. In WP No. 12009 of 2020, the petitioner challenges a penalty order passed by the Assistant Commissioner (1st respondent) on September 25, 2019, for the same tax period, amounting to Rs. 40,72,699. The petitioner argues this penalty order is barred by limitation. The respondents are the tax authorities of Telangana and HDFC Bank.

Key Issues

1. Whether the appeal rejection order by the 4th respondent in WP No. 12015 of 2020, for failing to deposit 12.5% of the disputed tax difference, is sustainable in law, considering the petitioner's contention that a net credit carry-forward amount should have been adjusted? (Section 31(1) of the TVAT Act, 2005) 2. Whether the penalty order dated September 25, 2019, in WP No. 12009 of 2020, is barred by limitation, and if the omission of the first proviso to Section 31(1) of the TVAT Act, 2005, which allowed condonation of delay by the first appellate authority, makes the Section 5 of the Limitation Act, 1963 applicable? Petitioner's arguments: In WP 12015/2020, the petitioner contends that a net credit carry-forward amount of Rs. 1,27,55,130 should have been adjusted towards the pre-deposit requirement. In WP 12009/2020, the petitioner argues the penalty order is time-barred, and the omission of the first proviso to Section 31(1) of the TVAT Act, 2005, by Act 26 of 2017, should allow the application of the Limitation Act, 1963, for condoning delays. They also seek suspension of a garnishee notice issued under Section 79 of the Telangana Goods and Services Tax Act, 2017. Respondents' arguments: In WP 12015/2020, the respondents rely on the Supreme Court judgment in M/s S.D. Graphites Private Limited v. State of Telangana & Others, holding that the Appellate Authority has no power to extend time for deposit. In WP 12009/2020, the respondents argue that even if the omission of the first proviso is held invalid, a delay of over 60 days has occurred, which is not condonable, and the petitioner failed to avail the alternative remedy of appeal.