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

Held

The Court held that the Tribunal was justified in directing the appellant to deposit 25% of the additional tax demand as a pre-condition for hearing the appeal, in accordance with Section 62(5) of the Punjab Value Added Tax Act, 2005. The Court noted that the first appellate authority had already granted partial protection by requiring only 25% to be deposited. The appellant's failure to comply with this reasonable direction led to the dismissal of its appeal by the first appellate authority and subsequently by the Tribunal. The Court found no illegality or perversity in the Tribunal's findings and concluded that no substantial question of law arose. Therefore, the appeals were dismissed. The issue regarding the reversal of Input Tax Credit under Section 19(4) was not directly decided on merits as the appeal was dismissed on the procedural ground of non-compliance with the pre-deposit requirement.

Facts

The appellant, M/s Punjab State Warehousing Corporation, Ropar, filed an appeal against an order of the Value Added Tax Tribunal, Punjab. The Assessing Authority had raised a demand of ₹77,63,681/- on account of reversal of Input Tax Credit (ITC) on bye-products retained by millers, along with interest and penalties totaling ₹67,41,795/-. The appellant appealed to the Deputy Excise and Taxation Commissioner (Appeals), who directed a pre-deposit of 25% of the additional tax demand for the appeal to be heard. The appellant failed to comply, leading to the dismissal of its appeal. The Tribunal also dismissed the appellant's further appeal, granting two months to make the 25% pre-deposit, failing which the earlier order would stand. The appellant then 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 demand, despite the appellant incurring losses and being unable to deposit the amount, as per Section 62(5) of the Punjab Value Added Tax 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 bye-products retained by millers? The appellant argued that the Tribunal erred in directing the deposit of 25% of the tax demand, citing financial hardship due to losses. The appellant contended that the Assessing Authority was not justified in reversing ITC on bye-products. The respondents (State of Punjab and another) argued that compliance with Section 62(5) of the Act, requiring pre-deposit for hearing an appeal, was mandatory. The judgment does not explicitly record arguments from the respondents regarding the reversal of ITC.