Pre-deposit under VAT not mandatory: HC

Tribune News Service

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Chandigarh, December 23

The Punjab and Haryana High Court today made it clear that the condition of 25 per cent pre-deposit before filing appeal under Punjab VAT Act was not always mandatory. Waiver could be granted by the appellate authorities in appropriate cases.

The ruling came in the case of Punjab State Power Corporation Ltd. and more than 300 other cases. The assessees had approached the high court against the decisions of appellate authorities and Punjab VAT Tribunal.

The court was told that it dismissed appeals filed by the assessees against assessment orders on the ground that the same could not be heard without complying with the condition of depositing 25 per cent of the additional demand.

The assessees had then challenged the constitutionality of Section 62(5) of Punjab VAT Act, whereby the department was asking for payment of 25 per cent as a condition for hearing appeal, even if the assessment as made on alleged arbitrary and whimsical basis.

Appearing on behalf of the petitioners, senior advocate KL Loyal and Sandeep Loyal pleaded that the condition of pre-deposit was arbitrary and harsh. As such, it could not be treated as constitutional. The plea taken by the petitioner was that the assessment orders were passed arbitrarily.

The orders were rather passed with the purpose of harassing the dealers, forcing them to part with money which could eventually be set aside by the higher courts. It was also stated that the provision of law had given an unchecked tool to the assessing authorities, which could pass the orders even with malafide intentions.

The high court found that the provisions of law were constitutional and the legislature was within its right to prescribe conditions for hearing of appeal including pre-deposit of 25 per cent. But, in an appropriate case the appellate authority was not bereft of powers to grant stay where it found that assessee has a strong prima facie case.

This judgment comes as a relief to assessees across the state, who have been initiating proceedings against the authorities concerned for allegedly passing arbitrary orders.