A Division Bench of the Gujarat High Court has recently reduced the pre-deposit from 20% of the tax amount to 15%, considering the inability of the petitioner-Vinod Kumar Dugar to pay the full amount.
Tushar Hemani, assisted by Hiren J Trivedi represented the assessee, the petitioner who is in the business of trading of various goods such as scraps, confectioneries, cosmetics, tobacco, etc. He had local registration and central tax registration as well. During the year under consideration, the petitioner worked out Input Tax Credit on purchases made from registered dealers under Section 11 of the Gujarat Value Added Tax Act, 2003.
It had been worked out on sales within the State of Gujarat and sales made outside the State under Section 3(a) of the Central Sales Tax Act, 1956. The petitioner had adjusted the output tax liability against the Input Tax Credit (ITC) available and submitted its return by working out the said procedure for the assessment year 2008-09.
According to Section 3(a) of the CST Act, A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase occasions the movement of goods from one State to another.
After a search and seizure conducted Notice had been issued in Form 303 for making assessment under Section 35 of the VAT Act and a show cause notice was issued wherein it was alleged that the petitioner was engaged in billing activities only.
Where after a dealer has been assessed under section 32, 33 or 34 for any year or part thereof, the Commissioner is empowered to serve a notice on the dealer if he/she has reason to believe that the whole or any part of the taxable turnover of the dealer in respect of any period has escaped assessment.
Alternate grounds to invoke Section 35 are that the dealer has been underassessed, been assessed at a rate lower than the rate at which it is assessable or wrongly been allowed any deduction therefrom or wrongly been allowed any tax credit therein.
After giving the dealer an opportunity of being heard and making such inquiry as he considers necessary, proceed to determine to the best of his judgment, the amount of tax due from the dealer in respect of such turnover which comes to his notice subsequently, and the provisions of this Act shall, so far as may be, apply accordingly.
This was challenged by preferring First Appeal before the Deputy Commissioner of Commercial Tax, Appeal-2, Ahmedabad. The petitioner was asked to pay a pre-deposit of 20% of the total demand under the VAT Act and under the CST Act, which the petitioner failed to pay and appeal was summarily dismissed on 17.04.2014.
The petitioner submitted that he was not in a position to pay the amount of pre-deposits and had also closed its business and shifted to Rajasthan owing to the fact that its registration had been canceled. He had also expressed his inability to pay this much of the amount due to the severe physical ailments and of spondylosis at L4 L5 level which compresses the existing nerve system. All other details are not necessary to be gone into. He has also given the details of ailment of his father and of a poor financial condition.
Observing “There had been no challenge to the direction of 15% of the tax amount during the pendency of the adjudication”, the authority concerned was directed to accept the pre-deposits of 15% of the tax demand, by the Gujarat High Court Bench of Justices Sonia Gokani and Sandeep N Bhatt.
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