1. The petitioner herein is challenging the order dated 17.01.2022 passed by the Gujarat Value Added Tax Tribunal, whereby it ordered the pre-deposit of tax of Rs. 7,12,00,000/- on the basis of the Revision order in Revision Application No. 44 of 2021 and in the matter of Second Appeal No. 579 of 2021.

2. The Tribunal, infact, had decided the Revision Petition at an interim stage and issued the direction to pay such a huge amount within a period of one month. The petitioner is aggrieved by the fact that it has a good case on merit and the orders of the Assessing Officer and the First Appellate Authority are based on assumption and presumption and lacks the factual basis.

3. The petitioner is a registered dealer under the Gujarat Value Added Tax Act, 2003 (‘the VAT Act’ hereinafter) and Central Sales Tax Act, 1956 (‘the CST Act’ hereinafter). The petitioner is engaged in the business of reselling motor cycles, scooter and their parts as well as having the service station of the two wheelers. The present petition concerns the Assessment year 2015-16. The purchases and the sales made by the petitioner were admitted in returns filed under the VAT Act and the CST Act.

3.1 The ex-parte Assessment Order passed by the Assistant Commissioner of State Tax, Godhara, Unit:-46, Panchmahal on 18.03.2020 for the Financial Year 2015-16.

3.2 The Assessing Authority issued notice for Assessment under section 34(2) of the VAT Act and the CST Act. The petitioner remained present and the adjournment was sought as there were serious medical issues on the date of hearing. Adjournment though was requested due to various personal circumstances however, the Assessing Officer was in a hurry to complete the assessment and the ex-parte order was passed on 18.03.2020, where it had not accepted the sales as per audited balance sheet received by him from the Income Tax Department and has taken the base of purchases made against the Form ‘C’, from the online data available on the commercial tax website. It also considered the same to be suppressed purchases without providing data and details. It eventually worked out the total sales at Rs. 70,01,58,500/- instead of Rs. 32,81,95,465/- and imposed the tax @ 15% of the turnover which was followed by demand of tax, interest and penalty.

3.3 The challenge was made before the Deputy Commissioner (Appeals) who granted the stay against the recovery of deposit by deposit of partial amount of Rs. 30,75,000/- against the total demand and the stay was granted.

3.4 The said authority canceled the stay order and passed a fresh order on 12.07.2021 and directed to pay the balance sum of total demanded amount of Rs. 26,20,35,862/-. The First Appellate Authority issued notice on 23.08.2021 in Form 503 and sought to revise the assessment. The Revision order was passed on 24.08.2021 and the total demand was enhanced to Rs.31,36,62,495/- and ordered the Assessing Authority to initiate recovery proceedings.

3.5 Thereafter, Second Appeal No. 579 of 2021 was preferred and the Revision Application No.44 of 2021 was preferred. The respondent authority initiated the recovery proceedings against the petitioner and hence, the petitioner made representation. The properties of the petitioner were attached by the respondent authorities and secured by assets worth approximately Rs. 61 Crore.

3.6 The VAT Tribunal passed an order on 17.01.2022 and directed the full amount of tax of Rs.7.12 Crore as a condition of pre-deposit to be payable within a period of one month on or before 28.02.2022.

3.7 The grievance on the part of the petitioner is that the VAT Tribunal decided the entire Revision Application and the Second Appeal at the pre-deposit stage of hearing. It adjudicated and decided that the petitioner had collected tax and not paid the Government Authority. The assessment by the Assessing Officer has been done ex-parte on the basis of assumption and presumption. The First Appellate Authority also had vacated interim protection despite having complied with the order of pre-deposit. The respondent authorities denied access to the remedies provided by law and have placed their onerous conditions.

4. The petitioner is before this Court seeking the following reliefs:-

“(A)Your Lordships may be pleased to admit and allow this writ petition.

(B) Your Lordships may be pleased to issue appropriate writ order or direction quashing and setting aside the impugned order dated 17-01-2022 of the Gujarat Vat Tribunal.

(B) Your Lordships may be pleased to issue appropriate writ order or direction quashing and setting aside the impugned order dated 17-01-2022 of the Gujarat Vat Tribunal.

(D) Pending admission hearing and final disposal of this petition Lordships, may be pleased to grant interim as well as Ad-interim reliefs and thereby stay the recovery as well as all the recover proceedings for the AY 2015-16 by the respondent authorities.

(E) Your Lordships may kindly be pleased to pass any other further orders as deemed fit just and proper in the facts of the circumstances of the case and in the interest of justice.”

5. On issuance of notice the respondents appeared. This Court while passing an order on 09.03.2022 directed the learned AGP to take instructions as to what type of property has been attached so far and the total valuation of the said property. This Court also protected the petitioner by directing the respondent not to take coercive action towards the recovery and the Tribunal had also been directed not to proceed to dismiss the Appeal on the ground that the order of pre-deposit had not been complied with.

6. The valuation from the Government Approved Valuer also has come on the record which shows the valuation of the properties as under:-

REPORT OF VALUATION OF IMMOVABLE PROPERTY

Land Value = Rs. 11,55,29,000/-

Construction & Interior Value = Rs. 48,00,00,000/

Amenity Value = Rs. 2,00,00,000/-

Total Value = Rs. 61,55,29,000/-

7. It is quite clear from the valuation report of the property of the petitioner being a commercial complex with land and super built up area on Survey No. 38/1 Paiki 1 and 38/1 Paiki 4, Godhara District Panchmahal at the total value of Rs.61,55,29,000/-. The Property under Valuation is under Lien of Bank of Baroda, Godhara Branch as per the Valuation Report Part-II. The current outstanding dues as per the said report to be repaid to the Bank on 15.06.2020 the valuer prepared this valuation report was Rs.2,86,78,674/-. It transpires from the said Part-II Valuation report that, the total area of the Commercial Complex with land and SBA (Super Built up Area) 1,20,000 sq. ft. on basement, ground floor, mezzanine floor (showroom and game zone), S.F, T. F, and F.F. land area: 1931.93 sq. meter (2310.58 sq. yd.). The outstanding dues of the Bank reduced to Rs. 42,16,294/- as per the statement prepared on 01.02.2022. There has been a substantial decrease in the outstanding dues of the Bank. It appears that the property which has been attached values to the tune of Rs. 61,55,29,000/- (rounded off). The liability of the petitioner as per the Bank statement is to the tune of Rs.42,00,000/-. The Bank has already created a lien over the property and therefore, the State is desirous of creating a second charge noticing the possible tax demand, penalty and interest.

8. As is apparent from the chronology of events, the Second Appeal No.579 of 2021 is pending and the base order is passed ex-parte with the property being in attachment of the State and the requirement of the pre-deposit is to the tune of Rs.30,75,000/- as has been directed by the First Appellate Authority on 24.03.2021.

9. Section 73 under Chapter 9 provides for Appeal, Revision, Reference and depreciation. Sub-section (4) of Section 73 provides that the appeal ordinarily shall not be entertained by the Appellate Authority unless such appeal is accompanied by satisfactory proof of payment of tax in respect of which the appeal is preferred. The proviso authorizes the Appellate Authority to entertain appeal against such order without payment of tax with penalty or of penalty or on proof of payment of such smaller sum as may be considered reasonable or on Appellate furnishing in the prescribed manner the security for which the amount which the Appellate Authority may direct. The First Appellate Authority having quantified the amount of pre-deposit as Rs.30,75,000/-. The subsequent demand raised by the Tribunal to the tune of Rs.7.12 Crore.

10. Here, as can be noticed from the order of the First Appellate Authority it has while quantifying the amount of Rs.30.75 Lakh already given the reasoning for such an amount to be paid by the petitioner. However, when it came to the Tribunal in the Second Appeal, it has directed the petitioner to deposit Rs.7.12 Crore which is the sum on higher side. The petitioner has pleaded his limitation to pay the amount and the pandemic due to Covid-19 virus is also another reason for him to show his inability to deposit the amount of pre-deposit.11. Noticing the fact that the base order has been passed exparte and thereafter, the challenge had been made to the First Appellate Authority and then there is a pendency of Second Appeal before the Second Appellate Authority, the matter would require adjudication at the hands of the Appellate Forum and at the same time the requirement of deposit of predeposits in accordance with the law as quantified by the First Appellate Authority is already deposited before the Authority concerned. Without endorsing to the action of the Tribunal the amount of Rs.7.12 Crore directed to be deposited as predeposit may not be insisted upon in wake of these glaring facts, the property which is attached is valued at Rs.61 Crore and therefore also, the revenue’s interest is protected aptly.

11. Noticing the fact that the base order has been passed exparte and thereafter, the challenge had been made to the First Appellate Authority and then there is a pendency of Second Appeal before the Second Appellate Authority, the matter would require adjudication at the hands of the Appellate Forum and at the same time the requirement of deposit of predeposits in accordance with the law as quantified by the First Appellate Authority is already deposited before the Authority concerned. Without endorsing to the action of the Tribunal the amount of Rs.7.12 Crore directed to be deposited as predeposit may not be insisted upon in wake of these glaring facts, the property which is attached is valued at Rs.61 Crore and therefore also, the revenue’s interest is protected aptly.

12. The learned advocate Mr.Vakil has on instructions submitted that so long as the Second Appeal of the petitioner is decided on merit after following duly the procedure, he, for present, would not insist on the attachment to the removed. Even otherwise, the Second Appeal since is pending requires the redressal at the earliest. The dues of the Bank since have now been reduced to Rs.42,16,294/-. There is nothing to prevent the State to create a charge on the property by sending a request to the Office of Sub-Registrar for the same purpose.

13. Resultantly, these petitions are allowed quashing and setting aside the order dated 17.01.2022 of the VAT Tribunal. As rightly held by the Tribunal the asset value of approximately Rs.60 Crore is attached by the department and the payment of Rs.30,75,000/- at the stage of First Appellate Authority is already deposited. No further pre-deposit would be necessary to be imposed.

14. The Tribunal observed that petitioner had sold the motorcycles of approximately Rs.61.70 Crore in the financial year 2015-16 against the transaction, the tax authority demanded Rs.11.96 Crore. The tax collected by the petitioner from the consumers since had not been deposited in the Government Treasury within the stipulated time period. It concluded that the petitioner used huge public money which was collected directly from the consumer and was not paid to the Government Treasury for a long time.

15. The Tribunal directed the payment of Rs.7.12 Crore towards the pre-deposit within a period of one month. While considering this aspect, the Tribunal has over-looked the fact that the petitioner never had an opportunity to argue this case and the matter had proceeded ex-parte even when the base order was passed. It is averred to be presumptive in nature by the petitioner in the present petition as well as in the Appeals preferred before the First and the Second Appellate Authorities. Therefore, to direct the amount of Rs.7.12 Crore as pre-deposits surely would warrant interference of this Court.

16. Resultantly, this petition is allowed. The amount of predeposit, which has already been deposited by virtue of the First Appellate Authority’s direction shall continue to be retained by the State and will be adjusted against the tax liability which shall be decided after according opportunity to the parties in accordance with the law. The pending Second Appeal being Second Appeal No. 579 of 2021 be co-operated by the petitioner and the same shall be completed within a period of three months from the date of receipt of a copy of this order.

17. The respondent-State shall create charge on the property which has a lien of the Bank by specifying the requisite details before the concerned authority. Let that task be completed, without fail, within two weeks from the date of receipt of a copy of this order. The petitioner shall file an undertaking not to create any further liability and charge on the same property.

18. Over and above the regular mode of service, direct service through e-mode on registered email is also permitted.