VVF (India) Limited Vs State of Maharashtra & Ors (Supreme Court of India)
The appeal arose from a judgment of the Bombay High Court dated 8 November 2019, concerning whether amounts deposited under protest before an assessment order can be adjusted toward the mandatory pre-deposit required for filing an appeal under Section 26(6A) of the Maharashtra Value Added Tax Act, 2002 (MVAT Act). The appellant, a company engaged in manufacturing and selling oleo-chemicals and personal care products, underwent an investigation by the Sales Tax Department in November 2016. A show cause notice was issued, and the appellant made a protest payment of Rs 3,64,24,388 in December 2016 and January 2017, comprising tax and interest for Assessment Year 2013-14.
In 2017, Sections 26(6A), 26(6B), and 26(6C) were introduced into the MVAT Act, mandating a pre-deposit as a condition for filing appeals. For AY 2013-14, an assessment order was passed on 26 December 2017 imposing a tax demand of Rs 10,44,54,708, an equivalent penalty, and interest of Rs 7,09,06,928, totaling Rs 27,98,36,344. After adjusting the protest payment already made, the balance payable was calculated at Rs 24,34,11,956.
The appellant filed an appeal against the assessment order. However, by letter dated 4 June 2018, the Joint Commissioner of Sales Tax informed the appellant that the protest payments could not be considered toward the pre-deposit required under Section 26(6A). The appellant challenged this conclusion in a writ petition. The High Court dismissed the petition, holding that once an assessment order is passed, protest payments must be adjusted against tax liability, and therefore the appellant had to pay 10% of the demand remaining after such adjustment.
