CWP No. 4272 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. CWP No. 4272 of 2009 Date of decision 5 .8.2009 M/s Femina Jewellery Pvt. Ltd. ... Petitioner Versus State of Punjab and another ... Respondents. CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JASWANT SINGH Present: Mr. Aman Bansal,Advocate for the petitioner Ms.Sudeepti Sharma, DAG Punjab 1.Whether Reporters of local papers may be allowed to see the judgement ? 2. To be referred to the Reporter or not ? 3. Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. This order shall dispose of Civil Writ petition Nos.4272 and 7315 of 2009 as the issue raised in both the petitions is common. Facts are being taken from CWP No. 4272 of 2009. The prayer made in the instant petition filed under Article 226 of the Constitution is for declaring the provisions of Section 62(5) of the Punjab Value Added Tax Act, 2005 as unconstitutional and ultra vires to the Constitution being illegal and arbitrary to the extent that there is no provison for exemption of prior deposit of 25% for filing the appeal by those persons/ dealers whose entire goods are lying in the custody of the department. In the alternative directions have been sought to respondent CWP No. 4272 of 2009 2 no.1 to incorporate the proviso to Section 62(5) of the Punjab Value Added Tax Act, 2005 (for brevity 'the Act') providing that exemption would be given to the dealers/ persons whose entire goods are lying in the custody of the department and also providing for entertainment of the appeal of the petitioner without insisting on deposit of 25% amount as the goods are lying in the custody of the department. A further prayer for setting aside the order dated 10.12.2008 passed by Assistant Excise and Taxation Commissioner Information Collector Centre – respondent no.2. has been made. Brief facts of the case are that the petitioner company has its registered office at Delhi and used to sell the goods at various places but prior to that the customers of the petitioner firm used to see the sample as it is common in all trade. On 27.11.2008 the Manager/officials of the petitioner firm were carrying the goods (samples of artificial jewellery) from Amritsar to Delhi. The car was stopped and goods were shown to the revenue officials but they alongwith police officials threatened and made demand of Rs. 50,000/- and stated that otherwise they were to detain the goods. The officials of the petitioner firm explained that the goods are not for sale/ trade and those were mere samples. As the officials of the petitioner firm failed to comply with their conditions, respondent no. 3 illegally detained the goods in an arbitrary manner and issued a show cause notice dated 27.11.2008 (P.1) asking the petitioner firm to appear on 30.11.2008 or on any date prior to that day. It is averred that the respondents very cleverly in impugned order stated that no one appeared on behalf of the petitioner firm on 30.11.2008 when in fact the Accountant of the petitioner firm had appeared on 28.11.2008 before respondent no.3 and explained in detail that the goods were not for trade and these were merely CWP No. 4272 of 2009 3 samples. Respondent no.3 vide order dated 10.12.2008, assessed penalty of Rs. 1,58,139/- ( Rs. 1,46,425/- under Section 51(7)(c) of the Act and further VAT of Rs. 11,714/- u/s 51(12) of the Act). Petitioners met the Assistant Excise and Taxation Commissioner- respondent no.2 and explained the entire incident as well as the demand of respondent no.3 to him. Respondent no.2 assured to look into the matter but surprisingly a notice was received by the petitioner firm to appear on 10.12.2008 (P.2). It is averred in the petition that for filing statutory appeal, the petitioner has to deposit 25% as per the provisions of the Act which the petitioner is not able to deposit as he has already suffered a loss due to the act of the respondents as the goods of the value of Rs. 2,98,850/- are lying in the custody of the respondents. It is urged that as the entire goods are lying in the custody of the department, they are entitled for exemption and the petitioner firm should not be burdened with another liability. Learned counsel has thus submitted that the penalty order dated 10.12.2008 is not sustainable in the eyes of law. It would be necessary to read Section 62(5) of the Act which reads thus: “ 62.(5) No appeal shall be entertained, unless such appeal is accompanied by satisfactory proof of prior minimum payment of twenty five percent of the total amount of tax, penalty and interest, if any.” Learned counsel for the petitioner has submitted that intention of the legislature is not to deny justice to the persons who are not able to make payment of advance deposit. He has submitted that the case of the petitioner is entirely different as the provision concerning prior deposit has been incorporated due to adequate security but in a case where the entire goods CWP No. 4272 of 2009 4 are lying in the custody of the department, they are entitled for exemption and should not be burdened with another liability. Learned State counsel has submitted that it is mandatory for the petitioner firm to deposit 25% of the penalty amount for entertainment of the appeal as this proviso is applicable in all cases without any exception. She has further submitted that Appellate Authority has no discretion to entertain the appeal without deposit of 25% of the amount of penalty, tax and interest as provided by Section 62(5) of the Act. Having heard the learned counsel for the parties at some length and perusing the paper book with their able assistance, we find merit in the submissions made by the learned counsel for the petitioner firm. It is admitted position that the entire goods of the value of Rs. 2,98,850/- have been detained by the respondents and are lying in their custody whereas the tax assessed is Rs. 1,58,139/- which is far less than the value of the goods detained. At the rate of 25% the amount of tax, penalty etc. would be less than Rs. 40,000/- whereas the jewellery worth Rs. 2,98,850/- is lying in custody. The valuable goods stand already detained. If in such a situation, the petitioner firm is insisted upon to make pre- deposit of 25% of the amount of tax assessed before filing of the appeal it would mean burdening it with another liability. The gold jewellery being worth more than four times the requirement of the provision is deemed to be complied with. In the facts and circumstances of the case, we allow the writ petitions and direct the respondents that the condition of pre-deposit of 25% of the total tax assessed shall not be insisted upon in the case of the petitioner firm. The appeal filed by the petitioner firm shall be entertained by the Appellate Authority without any pre-deposit of 25% of the amount CWP No. 4272 of 2009 5 assessed and decided on merit. A copy of the order be placed on the file of connected petition. (M.M.Kumar) Judge (Jaswant Singh) 5.8.2009 Judge okg