M/S Punjab State Warehousing Corporation Nawanshahar vs. State Of Punjab And Another

Held

The High Court held that the appeal was without merit. The Court noted that the Assessing Authority had raised a demand of ₹3,82,63,175/- along with interest and penalty for the assessment year 2008-09. The appeal against this assessment order was dismissed by both the first Appellate Authority and the Tribunal due to the non-fulfillment of the pre-deposit condition under Section 62(5) of the Punjab Value Added Tax Act, 2005. The Tribunal had correctly observed that the deposit of 25% of the tax was a condition precedent for entertaining the appeal. Since the appellant failed to deposit the required 25% of the additional demand as directed by the authorities, the Tribunal's decision to dismiss the appeal on that ground was justified. The Court found no illegality or perversity in the Tribunal's findings and concluded that no substantial question of law arose. Consequently, the appeal was dismissed.

Facts

M/s Punjab State Warehousing Corporation (the appellant) procured paddy from farmers and gave it to rice millers for milling. The agreement stipulated that 67% of the shelled rice would be returned to the appellant, with the bye-products retained by the millers. For the assessment year 2008-09, the Assessing Authority raised a demand of ₹3,82,63,175/- for reversal of Input Tax Credit (ITC) on bye-products, along with interest and penalty. The appellant appealed to the Deputy Excise and Taxation Commissioner (Appeals), who dismissed the appeal for non-compliance with Section 62(5) of the Punjab Value Added Tax Act, 2005, directing the appellant to deposit 25% of the additional demand. The appellant then appealed to the Value Added Tax Tribunal, which also dismissed the appeal for non-deposit of the 25% pre-deposit, though it granted three months to make the deposit. The appellant filed the present appeal before the High Court.

Key Issues

1. Whether the Tribunal was justified in directing the appellant to deposit 25% of the tax, despite the appellant incurring huge losses and being unable to deposit the amount, as per Section 62(5) of the Punjab VAT Act, 2005? 2. Whether the Assessing Authority was justified in reversing Input Tax Credit on account of purchase tax under Section 19(4) of the Punjab VAT Act on closing stock of wheat and rice? 3. Whether the Assessing Authority was justified in reversing Input Tax Credit on retention of bye-products by the Rice Millers under Rule 21(6) of the Punjab VAT Rules, 2005? The appellant argued that the Tribunal erred in dismissing the appeal for non-compliance with Section 62(5) of the Act, which required a 25% pre-deposit, especially considering the appellant's financial difficulties. The respondents (State of Punjab and another) did not present any arguments as recorded in the judgment.