N.K. Metals vs Asst. Commissioner of Sales Tax and Others

The petitioner in this writ petition under Article 226 of the Constitution of India has prayed for issuance of a writ of certiorari or any other appropriate writ or order or direction calling for the records and proceedings pertaining to the order passed on 12th September, 2014, by the Third Bench of the Maharashtra Sales Tax Tribunal at Mumbai in VAT Appeal No. 592 of 2014. Mr. Upadhyay, learned counsel appearing on behalf of the petitioner / original appellant would submit that the order of the Assessing Authority and equally the First Appellate Authority does not take into account a very vital fact that the department proceeded against the petitioner / original appellant by terming it as a hawala dealer. However, this conclusion is reached by referring to a list which has been published on the website of the department listing certain dealers and some transactions. No independent enquiry and after giving an opportunity to the petitioner has been held. The petitioner is a genuine businessman and has not indulged in any hawala transactions. The fact that he has been called upon to produce documents denotes as to how the department has prejudged the matter and is now completing a formality. There being such strong prima facie case the Tribunal should not have maintained the order of the First Appellate Authority directing the petitioner to make payment of Rs.1,24,071/- for the assessment period 2009-2010.

We are not impressed by any of these submissions of Mr. Upadhyay. The matter has been brought before us at an interim stage. An assessment order was passed by the Assessing Authority in which a set off of Rs.1,24,071/- for the period 1st April, 2009 to 31st March, 2010, has been withdrawn and the tax liability equal to the amount of set off has been determined. There is an interest levied and penalty as well.

As against this total demand of Rs.3,31,927/-, the First Appellate Authority, as a pre condition for granting stay of recovery proceedings pending appeal, directed the petitioner to deposit the basic tax liability determined at Rs.1,24,071/-. There is a prima facie finding rendered by the First Appellate Authority and which stands confirmed by the Tribunal.

The Tribunal in paragraphs 6 and 7 of the order under challenge records that prima facie there is a hawala transaction. There is a mismatch in the documents. As far as opportunity not being provided to the petitioner / original appellant, prima facie, the record indicates that notice in Form-603 was served before the assessment order was passed. The petitioner did not turn up to clarify the transactions viz. the purchases made from the dealers. The notice was issued along with list of 14 dealers who were declared as hawala.

Mr. Upadhyay would submit that on lack of opportunity, there is an erroneous finding inasmuch as in the written arguments on stay application, the petitioner has pointed out that he was called upon to produce the documents which he did produce. However, the officer did not look into the same. The officer has not rejected the evidence produced nor has remarked that the documents are not genuine. If they are not such, then, it cannot be claimed to be a hawala transaction.

We do not wish to express any opinion on such contention and at the interim stage. That would prejudice either sides. If the proof has been produced and not looked into or the documents are rejected without any application of mind, then the Tribunal will definitely look into this grievance of the petitioner. We have no doubt in our mind that merely because the basic tax is secured by deposit, the petitioner will not get adequate and reasonable opportunity to prove its case.

It is the Tribunal''s prima facie finding and which will definitely not bind it when it hears the appeal on merits. All that we hold is that if the prima facie finding is that there was a mismatch in the documents then prima facie they have been looked into and that prima facie conclusion reached is not to the satisfaction of the petitioner, will not enable it to claim total dispensation of the condition of pre deposit of the tax liability and to claim an unconditional stay of recovery pending appeal. The appeal is the second appeal now. The appeal against conditional order right upto the Tribunal and now a writ petition in this Court is only prolonging the compliance with the condition. We have no doubt in our mind that if the First Appellate Authority is furnished proof of compliance with the above condition, it will decide the appeal uninfluenced by any prima facie conclusions and tentative findings.

In the light of the aforesaid, we do not think that this is a fit case for interference in writ jurisdiction, which is discretionary and equitable. The writ petition is thus dismissed.

However if the petitioner / original appellant complies with the condition imposed within a period of four weeks from the date of receipt of a copy of this order and furnishes proof of deposit, the First Appellate Authority would then decide the appeal on merits and in accordance with law. While deciding the appeal, the First Appellate Authority should not influence itself either by its own prima facie conclusions or that of the Tribunal or rejection of this writ petition. The First Appellate Authority may consider giving this appeal a priority after compliance is reported and decide it expeditiously. It may dispose of the same within a period of three months from the date compliance is reported.