State cannot insist for Furnishing Security over 20% demand paid towards stay under KVAT Act: Kerala HC [Read Judgment]

Ignorance of Law - KVAT

Recently, in M/s Mobile Bazar v. CTO & Anr, the Kerala High Court held that the direction to furnish security for the balance amount over the 20% already deposited by the assessee is invalid in view of section 55(4) of the Kerala Value Added Tax Act.

The provision was newly inserted through the Finance Act, 2016 as per which the assessee can obtain stay against the revenue recovery proceedings till the disposal of first appeal by depositing 20% of the disputed tax amount.

The petitioners were aggrieved by the direction of the VAT authorities demanding security for the balance amount over the 20% directed to be deposited. The assessee contended that no further security is needed since they have already paid 20% of the demand.

“If the same has been made, then, as per the proviso to sub section (4) of Section 55 of the Kerala Value Added Tax Act, 2003, there can be no further proceedings taken. The impugned orders, to the extent directing furnishing of security for the balance amount, would stand set aside. As a consequence, the recovery also would be set aside, as of now, subject to the decision in appeal.”

Read the full text of the Judgment below.

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