Gujarat HC Quashes VAT Tribunal’s Pre-Deposit Order

Tha Vrajlal Tribhovandas, Sole Proprietor Hitesh Pravinchandra Shelani Vs. State of Gujarat & Anr. (Gujarat High Court)

In the case THA Vrajlal Tribhovandas vs State of Gujarat & Anr., the Gujarat High Court set aside two orders passed by the Gujarat Value Added Tax Tribunal regarding a pre-deposit requirement. The petitioner, a trader in cotton and agricultural commodities, had challenged an audit assessment that significantly increased their tax dues. The VAT Tribunal, while hearing the revision application, had directed the petitioner to pre-deposit ₹29 lakh. When the petitioner failed to comply, the Tribunal dismissed the application. The petitioner argued before the High Court that no pre-deposit is mandated under Section 75 of the Gujarat VAT Act for admitting a revision application.

The High Court cited its earlier decision in M/s Laxmi Dye Chem vs. State of Gujarat, which clarified that Section 75 of the VAT Act does not provide for a pre-deposit requirement. Therefore, the court quashed the VAT Tribunal’s orders and restored the revision application for fresh consideration. The Tribunal was directed to hear the case on its merits without insisting on any pre-deposit within three months. The High Court did not comment on the merits of the case but focused solely on the procedural aspect concerning the pre-deposit.

Petitioner is represented by you Advocate Apurva N Mehta.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

[1] By way of this petition under Article 226 of the Constitution of India, the petitioner has approached this Court for quashing and setting aside the judgement and orders dated 25^th August 2023 and 29^th September 2023 passed by the Gujarat Value Added Tax Tribunal (for short, “the VAT Tribunal”), whereby the petitioner was directed to pre-deposit of Rs.29,00,000/- (Rupees Twenty Nine Lakh only) within a period of one month and thereafter, dismissed the Revision Application for non-compliance of direction of pre-deposit of Rs.29,00,000/-.

[2] The brief facts of the case can be stated as under:

[2.1] The petitioner is into the business of trading in cotton and other agricultural commodities. The petitioner is duly registered as a dealer under the provisions of the Gujarat Value Added Tax Act, 2003 (for short, “the VAT Act”).

[2.2] The case of the petitioner for the period from 1^st April 2017 to 30^th June 2017 was selected for audit / scrutiny assessment by the Assessing Officer. The Assessing Officer passed an assessment order on 2^nd December 2020 raising additional dues of Rs.7,31,790/-inclusive of interest as well as penalty.

[2.3] The aforesaid audit assessment order 2^nd December 2020 was taken into revision by the respondent No.2 under Section 75 of the VAT Act who issued relevant Notice in Form 503. The petitioner objected to the said revisional proceedings and submitted the necessary documents. However, the respondent No.2 passed the revision order dated 2^nd January 2023 revising the assessment order dated 2^nd December 2020 passed by the Assessing Officer and thereby, raised additional dues of Rs.2,41,48,734/- inclusive of interest.

[2.4] Being aggrieved and dissatisfied with the aforesaid, the petitioner has approached the VAT Tribunal by way of revision under Section 75(1)(b) of the VAT Act. The VAT Tribunal, vide order dated 25^th August 2023, directed the petitioner to deposit an amount of Rs.29,00,000/- as pre-deposit. The matter was kept for reporting compliance on 29^th September 2023.

[2.5] On 29^th September 2023, the petitioner brought to the notice of the VAT Tribunal that there is no provision for directing pre-deposit so far as admission of a revision application under Section 75 of the VAT Act is concerned. However, the VAT Tribunal dismissed the revision application vide judgement and order dated 29^th September 2023 for non-compliance of the direction towards pre-deposit.

[3] Being aggrieved and dissatisfied with the aforesaid, the petitioner has approached this Court with this petition.

[4] We have heard learned advocate Mr. Apurva Mehta for the petitioner and learned advocate Mr. Raj Tanna for the respondents.

[5] As the issue involved in this petition with regard to whether the VAT Tribunal was justified in directing the petitioner to pre-deposit the outstanding tax amount in the revisional proceedings filed under Section 75 of the VAT Act is already decided by this Court in the case of M/s. Laxmi Dye Chem vs. State of Gujarat [R/Special Civil Application No.10040 of 2023 and allied matter decided on 6^th December 2023]. This Court, after having considered the provisions of Sections 73, 74 and 75 of the Gujarat Value Added Tax Act, 2003, held as under:

“[9] On conjoint reading of the above provisions of the GVAT Act, it is clear that the provisions of Section 75 of the GVAT Act would be applicable in case of an application made to the Tribunal against an order of the Commissioner, not being an order passed under sub-section (2) of Section 73 of the GVAT Act in second appeal under Clause (a) of sub­section (1) of Section 75 of the GVAT Act. Therefore, it is clear that any application made to the Tribunal under Section 75(1)(b) of the GVAT Act would be an application challenging the order against which no appeal is filed under Section 73 of the GVAT Act, which is not an appealable under Section 74 of the GVAT Act as well as no application before the Tribunal could be filed against any order passed by the  Commissioner under Section 75(1)(a) of the GVAT Act.

[10] On bare perusal of Section 75 of the GVAT Act, it does not provide for passing any order of pre-deposit as it is provided under Section 73(4) of the GVAT Act. Therefore, the impugned order of the Tribunal dated 21^st March 2023 is beyond the scope of Section 75 of the GVAT Act insisting for pre-deposit to entertain the revision applications filed by the petitioner.

[11] Both these petitions, therefore, deserve to be allowed and are accordingly allowed. Accordingly, the impugned order dated 21^st March 2023 passed by the Tribunal, being contrary to the provisions under Section 75 of the GVAT Act, is hereby quashed and set aside. As a consequence, the order dated 30^th June 2023 passed by the Tribunal for non­compliance of order dated 21^st March 2023 is also required to be quashed and set aside, and is, accordingly, quashed and set aside. The Revisions Applications Nos.28 and 29 of 2021 filed by the petitioner are ordered to be restored to the file of the Tribunal.”

[6] The aforesaid proposition of law in the case of M/s. Laxmi Dy Chem (supra) could not be disputed by the learned A.G.P. and the facts of the present case and the facts in the case of M/s. Laxmi Dy Chem (supra) are identical in nature and similar and thereby, following the aforesaid proposition of law, present petition deserves to be allowed without further going into the merits of the case.

[7] Accordingly, present petition is allowed. The impugned order dated 25^th August 2023 passed by the VAT Tribunal is hereby quashed and set aside. Consequential order dated 29^th September 2023 passed by the VAT Tribunal for non-compliance of order dated 25^th August 2023 is also required to be quashed and set aside and is accordingly quashed and set aside. The Revision Application filed by the petitioner is ordered to be restored to the file of the VAT Tribunal and the VAT Tribunal shall decide the same strictly in accordance with law within a period of three months from the date of receipt of a copy of this order. Needless to say that this Court has however not gone into the merits of the case.