KUCHHAL ENTERPRISES Vs. COMMISSIONER OF TRADE & TAXES

JUDGEMENT

(1.) HAVING heard learned counsel for the parties, we are inclined to frame the following substantial question of law: -

(2.) WITH the consent of the parties, we have heard arguments on the aforesaid question of law, which arises out of impugned order dated 16th May, 2014. The appellant -assessee was at the relevant time engaged in the business of lubricants as distributor of M/s. Hindustan Petroleum Corporation Limited, a Government of India undertaking. Entire purchases by the appellant -assessee were from the said corporation. As per the appellant -assessee and as noted in the impugned order (paragraph 2), M/s. Hindustan Petroleum Corporation Limited has issued a certificate that they had paid VAT on the entire sale consideration mentioned in their invoices and had not claimed any reduction or set off of tax liability on incentives or discounts, which were subsequently granted to the appellant -assessee. In these circumstances, learned counsel for the appellant -assessee relies upon decision of the Supreme Court in Andhra Agencies versus State of A.P., : (2008) 14 SCC 540 and submits that the tribunal was not justified in directing the appellant -assessee to deposit 10% of the penalty amount, even when Rs. 4,68,096/ - was still available with the respondent -Revenue as refund payable.

(3.) LEARNED counsel for the respondent -Revenue relies upon Section 10(1) and circular of the department to support their contention that adjustment was required in the case of M/s. Hindustan Petroleum Corporation Limited in view of discounts/incentives. She submits that tax may be refundable to M/s. Hindustan Petroleum Corporation Limited, but the appellant -assessee must pay the tax and interest at the first instance and this will also mean that the assessee should pay entire penalty. She submits that appeal should be only heard after full amount of tax, interest and penalty is paid as is normal and mandated. Only in exceptional cases, waiver should be granted.