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Judgment
Mohit S. Shah, J.—These Tax Appeals arise from common judgment and order dated 13.5.2009 of the Gujarat Value Added Tax Tribunal in Second Appeal Nos. 251 and 252 of 2009 by which the Tribunal partly allowed the appeal and set aside the order dated 27.3.2009 of the First Appellate Officer - Deputy Commissioner, VAT, but while remanding the matter back to the First Appellate Officer for fresh and appropriate consideration after providing opportunity to the appellant for producing documents and giving opportunity of hearing to the appellant and decide on merits as per provisions of law, the Tribunal also directed the appellant to deposit a sum of Rs. 25 lakhs towards the tax liability and a further sum of Rs. 10,000/- for each appeal by way of costs i.e. total Rs. 20,000/- as costs for the two appeals. The Tribunal granted stay against recovery of the dues on the basis of the order of the Assessing Officer, subject to compliance with the above conditions. The Tribunal further directed that if the appellant would ultimately fail, then the appellant shall pay the remaining amount of tax with interest at the rate prevalent on the relevant date u/s 47(4A) of the Gujarat Sales Tax Act, 1969 on the remaining amount of sales tax and the appellant shall also pay interest at the rate of 12% per annum on the amount of penalty and/interest from the date of the order of the Tribunal i.e. 13.5.2009.
By order dated 9.7.2009, we had issued notice for final disposal, subject to the condition that the appellant deposited Rs. 20,000/- for each appeal i.e. Rs. 40,000/- in the aggregate.
We have heard Mr Mihir Joshi, learned Senior Counsel with Mr Niral Mehta for the appellant and Mr Nikunt Raval, learned AGP for the respondents.
Mr Joshi states that the appellant has already deposited Rs. 40,000/- in the aggregate before the Registrar of this Court towards costs as required by the order dated 9.7.2009 in these appeals.
The following substantial question of law is raised in the memo of appeals:
Whether the order passed by the learned Tribunal dated 13.5.2009 directing payment of Rs. 25 lakhs in addition to the cost of Rs. 10,000/- as a condition for restoring of the first appeal filed by the appellant, which had been dismissed for non-prosecution of its Counsel on account of illness, is not unjustified and illegal as being unreasonable, onerous and effectively rendering the remedy of appeal otiose and nugatory in the facts of the case?
At the hearing of the appeals, Mr Joshi has also raised a further question as to whether the Tribunal substantially erred in law in imposing further condition that in case the appellant ultimately fails, over and above paying the amount of tax with interest as per the provisions of the Gujarat Sales Tax Act, the appellant shall also pay interest at the rate of 12% per annum on the amount of penalty and/interest from the order of the order of the Tribunal.
Mr Joshi has submitted that in the first place when the Tribunal was satisfied that the matter was required to be remanded because the appellant would have suffered huge tax liability and liability for payment of interest and penalty on account of illness of its Accountant when the matter was before the Assessing Officer and also on account of non-appearance of its advocate at the time of hearing of the appeal, the Tribunal ought not to have imposed any condition beyond the condition of imposing costs of Rs. 10,000/- in each appeal. It is submitted that the appellant has already paid the total tax amount of Rs. 17,28,715/- along with the returns on due dates and that the additional liability of Rs. 75,93,681/- imposed upon the appellant by the Assessing Officer is only on the ground of non-production of ''C'' forms and ''H'' forms. It is stated by the learned Counsel that the documentary evidence in the form of ''C'' forms and ''H'' forms was produced before the Tribunal and reference to the same is also made in para 5 of the impugned order of the Tribunal. Hence, the Tribunal ought not to have stipulated such an onerous condition of deposit of Rs. 25 lakhs towards tax liability.
It is further submitted by the learned Counsel for the appellant that the last condition imposed by the Tribunal in the impugned order is also contrary to law. Even if the appellant were to fail ultimately at the conclusion of the assessment proceedings then the appellant would certainly be liable to pay simple interest at 18% p.a. in accordance with the statutory provisions, but the condition imposed by the Tribunal that the appellant would also be liable to pay further compound interest at the rate of 12% on the amount of interest and also on the amount of penalty, runs counter to the statutory provisions contained in Section 47(4A) and Section 45 of the Gujarat Sales Tax Act.
It is further submitted by the learned Counsel for the appellant that when the documentary evidence was not produced before the Assessing Officer nor before the First Appellate Officer, the Tribunal ought to have remanded the matter to the Assessing Officer before whom the appellant shall produce all the documentary evidence in the form of ''C'' forms and ''H'' forms and other material, if required.
On the other hand, Mr Nikunt Raval, learned AGP has opposed the appeals and submitted that the appeals do not raise any substantial question of law. It is also submitted that when the tax liability of the appellant as per the assessment order is about Rs. 75 lakhs, and with interest and penalty, the total liability works out to Rs. 1.53 crores, the Tribunal was justified in directing the appellant to deposit a sum of Rs. 25 lakhs as a condition of remand.
Having heard the learned Counsel for the parties, we find that the appellant was certainly negligent in not ensuring that some representative appeared before the Assessing Officer, even if the Accountant was not well. Even after passing of the assessment order when the appeal was filed, negligence is attributable to the advocate for the appellant appearing before the First Appellate Officer. It is unfortunate that the appellant did not make sure that some representative of the appellant-company ought to have appeared before the First Appellate Officer even if the advocate for the appellant was negligent. For these reasons, we cannot find fault with the order of the Tribunal in imposing costs while passing the order of remand. But there appears to be some substance in the submission of the learned Counsel for the appellant that when its case was that the tax liability was imposed upon it only on account of non-production of ''C'' forms and ''H'' forms, which were very much available with the appellant - company and which were produced before the Tribunal, the Tribunal ought not to have imposed such an onerous condition of depositing Rs. 25 lakhs towards tax liability when its tax liability of Rs. 17 lakhs and odd amount was already discharged and according to the appellant no further amount was payable once ''C'' forms and ''H'' forms already produced by the appellant before the Tribunal would be accepted by either the Assessing Officer or the First Appellate Officer to whom the matter is remanded.
We also find some substance in the submission on behalf of the appellant that when the matter is remanded to the Assessing Officer or the First Appellate Officer, ultimately if the appellant would fail, the appellant would be liable to pay the amount of tax with interest in accordance with the provisions of Section 47(4A) of the Gujarat Sales Tax Act and also penalty in accordance with the provisions of Section 45 of the Act. The question whether the Tribunal could have imposed a further condition that in case of the ultimate failure of the assessee, compound interest also could be charged on the interest u/s 47(4A) as well as interest on penalty could be charged, does require serious consideration. In the facts and circumstances of the case, however, we are not inclined to express any final opinion on the question except to state that such a condition was not required to be imposed in the facts and circumstances of the case where the tax liability on the appellant was imposed on account of non-production of ''C'' forms and ''H'' forms before the Assessing Officer and before the First Appellate Officer and the said documentary evidence was already produced in the second appeal before the Tribunal.
Accordingly, the appeals are allowed.
(i) The impugned order of the Tribunal shall stand modified to the extent that the appellant shall pay total costs of Rs. 75,000/- for both the appeals inclusive of Rs. 40,000/- deposited before this Court and Rs. 20,000/- required to be deposited as per the orders of the Tribunal. Since Rs. 40,000/- is already deposited, the balance amount of Rs. 35,000/- shall be deposited before the Assessing Officer. The entire amount of Rs. 75,000/- shall be treated as costs to be paid by the appellant on account of negligence on its part in not appearing before the Assessing Officer and First Appellate Officer.
(ii) The amount of Rs. 40,000/- deposited with the Registry shall be remitted to respondent No. 2 by account payee cheque and the balance amount of Rs. 35,000/- shall be deposited on or before 3rd August 2009 by account payee cheque.
(iii) However, that part of the order of the Tribunal by which the appellant is directed to deposit Rs. 25 lakhs is set aside. So also the final paragraph in the Tribunal''s order imposing the conditions that in case the appellant were to ultimately fail, then the appellant shall also pay interest at the rate of 12% per annum on the amount of penalty and/interest from the date of the order of the Tribunal is set aside with a clarification that the appellant will be liable to pay all the amounts of tax, interest and penalty, if any, as may be determined in accordance with law. We decline to answer the question about legality or otherwise of the power of the Tribunal to impose such conditions.
(iv) The matter shall go back to the Assessing Officer before whom the appellant shall appear on 3rd August 2009 at 11-00 AM which will be the formal date on which the Assessing Officer will give the appellant the next date of hearing.
The appeals are accordingly allowed.
Direct service is permitted.