M/S Punjab Traders vs. State Of Punjab And Others
Original PDF →Facts
The petitioner, M/s Punjab Traders, is aggrieved by orders dated 22.11.2021 passed by the First Appellate Authority, which dismissed their appeals filed under Section 62 of the Punjab Value Added Tax Act, 2005 (PVAT Act). These appeals were against assessment orders creating demands of ₹75,43,797/- for 2013-2014, ₹1,00,29,274/- for 2014-2015, and ₹1,25,12,197/- for 2015-2016. The appeals were dismissed for non-compliance with the pre-deposit requirement of 25% under Section 62(5) of the PVAT Act. The petitioner's subsequent appeals to the VAT Appellate Tribunal were also dismissed on 27.05.2022, relying on the Apex Court judgment in M/s Tecnimont Pvt. Ltd. Vs. State of Punjab. The Tribunal granted a conditional opportunity to deposit 25% by 28.07.2022. Recovery notices were subsequently issued. The present writ petition challenges these orders and notices.
Held
The Court acknowledged the petitioner's grievance regarding the classification aspect and their willingness to deposit 25% of the tax due. The Court noted that the total tax due, after considering the additional demand, amounted to approximately ₹91 lakhs. The Court decided that since the matter requires adjudication on its merits, it would be appropriate to allow the petitioner to deposit a sum of ₹25 lakhs by 18.12.2023. Upon such deposit, the three appeals before the First Appellate Authority would be restored to its Board for decision on merits. Consequently, the orders dated 22.11.2021 would cease to remain in force. The Court clarified that if the deposit is not made by the stipulated date, the earlier order would continue to be in force, and the writ petition would be deemed dismissed. The Court also granted a stay on recovery proceedings until the First Appellate Authority decides the appeals, provided the deposit is made.
Key Issues
1. Whether the petitioner is entitled to a decision on merits of their appeals before the First Appellate Authority, despite not having made the pre-deposit of 25% as mandated by Section 62(5) of the PVAT Act, considering the nature of the dispute relates to classification and the petitioner's willingness to deposit 25% of the tax due? Petitioner's arguments: The petitioner contends that the Apex Court's observations in M/s Tecnimont (supra) indicate that the High Court's jurisdiction is not curtailed and that the Appellate Authority might not have implied power to grant solace. They argue that the issue concerns classification and the sustainability of the demands. They rely on a Coordinate Bench decision in CWP No.7811 of 2023 (Federal Agro Industries Pvt. Ltd. Vs. State of Punjab) which allowed appeals on merits upon depositing 25% of the additional tax demand, excluding penalty and interest. They also refer to a Tribunal decision in Revision No.5 of 2015 (M/s R.R. Wine Traders, Nangal Vs. State of Punjab) regarding the liability of distilleries versus L-1 licensees. Revenue's arguments: The judgment records no specific arguments from the respondents.
Sections Cited
Section 62, Section 62(5)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
authenticity of this order/judgment Chandigarh
CWP-26878-2023
-2- reliance upon the judgment of the Apex Court in M/s Tecnimont Pvt. Ltd. Vs. State of Punjab (2019) 69 GSTR 193 SC. The Tribunal, however, also granted the benefit as such that in case the appellant deposits the 25% by 28.07.2022, the appeal would be heard by the First Appellate Authority and in case of failure to make the pre-deposit the appeal would be deemed to have dismissed. The petitioner is alleged to have filed the rectification application before the Tribunal which is not functional presently. In pursuance of the said demands, recovery notices dated 09.10.2023 and 18.10.2023 (Annexure P-29) have also been issued, which are subject matter of challenge in the present appeal.
Counsel for the petitioner has referred to the observations of the Apex Court in M/s Tecnimont (supra) to submit that the juri iction of this Court has not been curtailed and only the Appellate Authority would not have implied power to grant such solace. It is, accordingly, submitted that the issue in question as such is regarding the classification aspect and, therefore, whether the amount claimed under the assessment orders are liable to be sustained or not. It is, accordingly, pointed out that in similar circumstances the Coordinate Bench in CWP No.7811 of 2023 ‘Federal Agro Industries Pvt. Ltd. Vs. State of Punjab and others’ decided on 24.04.2023 had directed that the petitioner were entitled for the decision of the appeal on merits, if 25% of the additional demand of tax was deposited without insisting upon the petitioner to deposit penalty and interest.
Reference is accordingly made to the decision of the Tribunal in Revision No.5 of 2015 ‘M/s R.R. Wine Traders, Nangal Vs. State of Punjab’ decided on 27.10.2016 (Annexure P-32) in this context that the NAVEEN NAGPAL 2023.12.05 10:18 I attest to the accuracy and authenticity of this order/judgment Chandigarh
CWP-26878-2023
-3- amount was to be paid by the Distilleries and not by the L-1 licensees which is case of the petitioner herein.
We have perused the assessment order also and it is pointed out that from the additional demand created the tax due would be to the tune of `20,03,665/- for the first assessment year and `29,36,830/- for the second assessment year and for the third assessment year `41,77,695/-, totaling approximately to `91 lakhs.
It is submitted that the petitioner is willing to deposit the 25% against the said amount to fulfill the criteria of pre-deposit of 25% of the tax due.
Notice of motion.
Mr.Saurabh Kapoor, Addl.A.G., Punjab accepts notice on behalf of the respondents.
Keeping in view the above, we are of the considered opinion that since the matter would have to be adjudicated upon and whether the amount claimed as such is sustainable by the authorities, it would be appropriate if the petitioner deposits a sum of `25 lakhs by 18.12.2023. In case the amount is deposited, the three appeals shall be restored to the Board of the First Appellate Authority who shall decide the same on merits. Resultantly, order dated 22.11.2021 (Annexures P-17 to P-19) will no longer remain in force. It is, however, made clear that in case the amount is not deposited by the petitioner, the said order shall continue to remain in force and the present writ petition would be deemed to have been dismissed. Needless to say that if the amount is deposited by the said date, there shall be stay on the recovery proceedings till the decision of the appeals by the First Appellate Authority.
NAVEEN NAGPAL 2023.12.05 10:18 I attest to the accuracy and authenticity of this order/judgment Chandigarh
CWP-26878-2023
-4-
With the abovesaid observations the present writ petition stands disposed of. (G.S. SANDHAWALIA) JUDGE
2023
(LAPITA BANERJI) Naveen
JUDGE
Whether speaking/reasoned : Yes
Whether Reportable :
No
NAVEEN NAGPAL 2023.12.05 10:18 I attest to the accuracy and authenticity of this order/judgment Chandigarh
Reproduced from the public record of the Punjab and Haryana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.