Hare Krishna Enterprises vs. State Of Karnataka

The petitioner, apart from calling in question the Tribunal’s common order dated 03.03.2022, had challenged the validity of the provisions of Section 63(4) of the KVAT Act as arbitrary and unconstitutional, but consequent to this Court’s orders dated 13.04.2022 and 20.04.2022, the prayers in this regard stand deleted. As such, the question that remains for consideration is whether there must be interference with the Tribunal’s common order refusing to grant waiver of pre-deposit. The Tribunal has opined that waiver of

Sri Sandeep Huilgol, the learned counsel for the petitioner, submits that the petitioner’s grievance as against the order-in-original is essentially because the petitioner is denied the benefit of input tax credit [ITC] on the ground that the Returns in Form VAT 100 are filed belatedly, but 1 This petition is disposed of by the order dated 07.03.2009. - 5 - the question whether ITC could be denied when the Returns are filed belatedly is pending consideration before the Hon’ble Supreme Court in Civil Appeal No.4936/2016. If the Hon’ble Supreme Court holds that the benefit of ITC will not be available to an assessee who has filed belated Returns, the petitioner’s grievance will fail and therefore the appeals before the Tribunal under Section 63 of the KVAT Act would also fail. With the afore as prefatory submissions, Sri Sandeep Huilgol submits that this Court must grant waiver of the pre-deposit as contemplated under Section 63(4) of KVAT Act and grant further liberty to the petitioner to seek deferment of the appeals by the Tribunal under Section 63(5) of the KVAT Act.

Sri.Sandeep Huilgol submits that the Assessing Officer does not dispute that the petitioner has paid taxes for the purchase during the relevant period viz., from February 2014 to September 2015

Sri Sandeep Huilgol further submits that unless there is a final decision on the question whether the benefit of ITC should be denied because Returns are filed belatedly, there would be multiple proceedings in the present instance, and such final decision could only be with the decision of the Hon’ble Supreme Court in the pending proceedings in

Sri Sandeep Huilgol argues that this Court, in deciding on the petitioner’s request for waiver of pre-deposit under Section 63(4) of the KVAT Act, must consider the afore circumstances and decide on the petitioner’s further request for deferring the proceedings in STA Nos.74, 75 and 76 of 2021 under Section 63(5) of the KVAT Act. In comparable circumstances, this Court has granted certain waiver and in this regard, he places reliance upon the decision of this Court in W.P.No.16323/20162 and 2 This petition is disposed of on 24.03.2016. - 8 - W.P.No.9511/20213 with caveat that this Court, while considering the question of waiver of pre- deposit for stay under Section 62 of the KVAT Act in these cases, has granted such waiver in the light of the fact that the petitioners in such cases were public undertakings.

Sri Hema Kumar K., the learned Additional Government Advocate for the respondents on the other hand, submits that the stipulation under Section 63(4) of the KVAT Act for pre-deposit is part of the scheme of appeal as contemplated under Sections 62 and 63 of the KVAT Act. He emphasizes that for an appeal under Section 63 of the KVAT Act, no pre-deposit is contemplated, and deposit is envisaged only for considering the request for stay. However, in the case of the second appeal under Section 63 of the KVAT Act, pre-deposit is made a condition for filing an appeal with discretionary juri iction in the Tribunal to grant stay insofar as 3 This petition is disposed of on 23.06.2021. - 9 - the remaining amount in demand under Section 63(7) of the KVAT Act. This Court, in the light of this scheme, may not grant any waiver.

Sri Hemakumar K relies upon the decision of this Court in W.P.No.44778/2019 to persuade this Court to opine that pre-deposit of 30% of tax or other amounts is mandatory and cannot be waived. He relies upon paragraph 4 of this order which reads hereunder: “Section 63[7][a] of the Act contemplates that the Appellate Tribunal may, in its discretion, stay payment of seventy percent of the tax or other amount disputed, if the appellant makes payment of the thirty percent of the tax or other amount disputed along with the prescribed form of appeal. This payment of 30% of the tax or the other amount disputed is mandatory and the same cannot be waived of, as claimed by the petitioner. Hence, there is no substance in the writ petition to set aside the order impugned.”

This Court must at the very outset observe that the Tribunal will have to examine the question whether the petitioner must be denied the benefit of ITC only because the Returns are filed belatedly in the light of the law that prevails as of the date of its decision. Further, the petitioner’s request for deferment under Section 63(5) of the KVAT Act is premature as such request can be made only when the appeals are registered and admitted by the Tribunal. Redoubtably, the appeals would be registered and admitted only when there is pre- deposit in compliance with the provisions of Section 63(4) of the KVAT Act. As such, this Court must consider, as first mentioned, whether there must be

It is seen from the different decisions relied upon by Sri Sandeep Huilgol, including the decision in Bharat Earth Movers Limited, Bangalore v. State of Karnataka and Others4 and in writ petition No.16323/2016 that in the cases of public undertakings the requirement of pre-deposit is modulated providing for lesser percentage with further directions to furnish bank guarantee. These decisions have prevailed without challenge, and it follows from this that this Court in exercise of juri iction under Article 226 of the Constitution of India has modulated the requirement of pre-deposit depending on the facts and circumstances of the case. The modulation is in due deference to the statutory provisions and also to ensure that the appellate remedy is adequately exhausted. In fact, in 4 (2016) 84 Kar.L.J. 332

The petitioner’s first appeal under Section 62 of the KVAT Act is decided in the backdrop of the questions whether the petitioner must be allowed the benefit of output tax as also the benefit of ITC when Returns in Form VAT 100 are filed belatedly after departmental inspection, and the petitioner is allowed the benefit of output tax but not the benefit of ITC

It is contended on behalf of the petitioner [a dealer] that it has paid taxes for the purchase during the relevant period viz., from February 2014 to September 2015 and these amounts have also been remitted by the concerned manufacturer/distributor and hence, there is no evasion of tax. These assertions are not contested. The petitioner, though after departmental inspection,

On careful consideration of these circumstances, and this Court’s opinion on modulating the requirement of pre-deposit under Section 63(4) of the KVAT Act in the light of the earlier decision of this Court, this Court is of the considered view that the petitioner, which cannot be granted complete waiver, must deposit 50% (15% of the amount in demand) of the requirement of pre-