Assessee Can’t Be Penalized for Non-constitution of Tribunal, Demand of 50% Amount Unjustified Being Not Its Fault | HC

Case Details: Shree Agrawal Enterprises v. State of U.P. - [2023] 157 taxmann.com 368 (Allahabad)

Judiciary and Counsel Details

• • Ajay Bhanot, J.
  • Rishi Raj Kapoor for the Petitioner.

Facts of the Case

In the present case, the assessee wanted to challenge the order passed by the first appellate authority but the second appeal would lie before the appellate tribunal which has not been made functional. It filed petition before the High Court since the right of second appeal was denied on account of the failure of the Government to constitute the tribunal.

It was also contended that inconsistency arose among interim orders passed by High Court in different cases as regards amount of pre-deposit. One line of interim orders contemplated deposit of 30% of tax amount out of which 10% deposited before first appellate authority was liable to be adjusted. However, another line of interim orders contemplated deposit of 50% of tax amount.

High Court Held

The High Court noted that assessee cannot be faulted for what is essentially a failure of Government. By imposing a demand of 50%, assessee would be penalized for no fault of theirs as Statute contemplates deposit of 10% plus 20% of disputed tax liability before first and second appellate authorities respectively.

The High Court further noted that the assessee should deposit 20% of disputed tax liability in addition to earlier deposit of 10% of disputed tax amount before assessing authority. The Court also stayed the recovery proceedings of balance amount till decision of instant writ petition subject to aforesaid deposit and listed the matter on 15-1-2024.

List of Cases Referred to

• • Supdt. of Taxes v. Onkarmal Nathmal Trust 1976 taxmann.com 35 (SC) (Para 4)
  • Kent Cables (P.) Ltd. v. State of U.P. [Writ Tax No. 1372 of 2019, dated 19-12-2019] (para 7)
  • Tulsi Steels v. State of U.P. [Writ Tax No. 953 of 2022, dated 19-7-2022] (para 8)
  • Nandan Sales Corporation v. State of U.P. [Writ Tax No. 903 of 2023, dated 25-7-2023] (para 9)
  • Virender Kumar Projects (P.) Ltd. v. State of U.P. [2023] 153 taxmann.com 447/99 GST 536/2023 (77) G.S.T.L. 223/(2023) 9 Centax 252 (All.) (para 10)
  • Cohesive Infrastructure Developers (P.) Ltd. v. Central Board of Indirect Taxes and Customs [2023] 156 taxmann.com 652/(2023) 12 Centax 300 (Patna) (para 13)
  • PCPL and RK- JV a Joint Venture v. State of Bihar [2023] 150 taxmann.com 410/2023 (74) G.S.T.L. 165 /98 GST 276/(2023) 6 Centax 164 (Patna) (para 14)
  • Siliguri Municipality v. Amalendu Das [1984] 146 ITR 624 (SC) (para 15)
  • Vishnu Traders v. State of Haryana 1995 Supp (1) SCC 461 (para 16)
  • Bir Bajrang Kumar v. State of Bihar AIR 1987 SC 1345 (para 17)
  • Vinod Trading Co. v. Union of India (1982) 2 SCC 40 (para 18).