Bombay Sweets & Co. Ltd.
President, Appeal Tribunal, Customs, Excise & VAT
Md. Ruhul Amin CJ
Mohammad Fazlul Karim J
M.M. Ruhul Amin J
Bombay Sweets & Company Limited…………………………………Petitioner
President, Appeal Tribunal, Customs, Excise and VAT and another….Respondents
August 9, 2007.
Dr. M. Zahir, Senior Advocate, instructed by Md. A.K.M. Shahidul Hug, Advocate-on-record-For the Petitioner.
Md. Abdur Razzaq, Senior Advocate, instructed by A.S.M. Khalequzzaman, Advocate-on-record-For the Respondent No. 2.
Md. Syed Mahbubur Rahman, Advocate-on-Record-For the Respondent No. 1.
Civil Petition for Leave to Appeal No. 576 of 2005
(From the Judgment and Order dated January 13, 2004 passed by the High Court Division in Writ Petition No.1161 of 1998).
Md. Ruhul Amin CJ.- This petition for leave to appeal is directed against the judgment dated January 13, 2004 of a Division Bench of the High Court Division in Writ Petition No.1161 of 1998 discharging the Rule obtained seeking direction on the respondents to show cause as to why the Appeal No. CEVT/Case (VAT) 126 of 1996 filed before the Tribunal (writ respondent No.1) shall not be deemed to have been allowed with the expiry of 6 (six) months time from the date of acceptance of the appeal on 26.5.1997 as provided in sub-section (4) of Section 42 of the VAT Act, 1991 and further as to why direction shall not be given to respondent No.1 not to proceed with the said appeal other than allowing the same.
2. Facts in the background whereof the writ petition was filed, in short, are that the writ petitioner carries on business of manufacturing various kinds of ‘chips’, ‘chanashur’ and ‘lachha semai’ and for the purpose of those products the petitioner imports polypropyline film (PP Film) from foreign countries, that the imported P.P. film is converted into packets and the petitioner’s products are packed therein and those packed products are sold in the wholesale/retail market, that when the P.P. films are imported by the writ petitioner through bonded werehouse system he pays VAT at the time of taking delivery of those P.P. films from the werehouse, that in the early part of 1995 an audit team from the Directorate of inspection (Customs, Excise and VAT) audited the records of the writ petitioner and found everything in order, that later on another audit team seized petitioner’s documents and other papers and after seven months submitted the report to the writ respondent No.2-The Commissioner of Customs, Excise & VAT, Dhaka South, Dhaka and in the said report it was alleged that during the period between July 1991 and December 1994 the writ petitioner used about 47.00 kgs of P.P. films without paying VAT and on the basis of report so received by the writ respondent No.2 show cause notice was issued to the writ petitioner on January 7, 1996 stating that the petitioner received illegally rebate of Tk.10,77,381.00 and did not pay Tk.1,41,83,583.00 as VAT, that in the show cause notice there was no mention about imposition of penalty, that the writ petitioner submitted reply to the show cause notice denying the allegations brought against him, that the petitioner asserted that the claim of the authority is barred by limitation as the demand was made on January 7, 1996 for the dues from July 1991 to December 1994 since as per provisions of section 55 of the VAT Act, 1991 claim was required to be made within 3 (three) years from the date when the payment became due, that the respondent No.2 gave personnel hearing to the writ petitioner and he explained the allegations of the Directorate of Inspection and asserted those as baseless since VAT was paid regularly, that the respondent No.2 rejected the contention of the writ petitioner on, November 25,1996 and made direction for payment of Tk.1,41,83,583.00 as unpaid VAT and Tk. 2,82,29,279.00 as penalty, that the petitioner was directed to pay the VAT within 7 (seven) days and the penalty immediately, that as against the order of the respondent No.2 an appeal was filed before the writ respondent No.1 as per provisions of Section 42 of the VAT Act, that the appeal-was filed on December 8. 1996, that the appeal was filed with an application seeking waiver of the deposit required to be made as per provision of Section 42 (2) of the VAT Act, that on December 20,1996 the petitioner received a notice from the Customs Authority to pay Tk. 4,23,43,914.02 by 17.12.96, that the said demand was challenged by filing Writ Petition No. 3718 of 1996 and at the time of issuance of the Rule the High Court Division stayed operation of the demand for payment as claimed by the notice dated December 20, 1996, that the petitioner received a notice on April 29, 1997 about the fixing of the date of hearing of the appeal on May 18,1997 and that the said date being a holiday the appeal was fixed for hearing on May 26, 1997 and on that date the appeal was not disposed of that the appeal was admitted for hearing on April 29, 1997, that the petitioner received notice dated June 5, 1997 containing direction to attend hearing of the appeal on July 10, 1997 and on that day the petitioner was directed to furnish the bank guarantee for Tk. 5,00,000.00 by July 24,1997, that the petitioner received the order for furnishing the bank guarantee on July 21, 1997 and that in compliance of notice the petitioner furnished the bank guarantee, that petitioner received notice dated July 21, 1997, that the appeal would be heard on April 20, 1998 and on that date it was submitted by the petitioner that as per provisions of Section 42(4) of the VAT Act, 1991 the mandatory period for disposal of the appeal within 6 (six) months having had expired the appeal shall be deemed to have been allowed, that later on the appeal was again fixed for hearing on April 27,1998 and on that date an application was filed stating that since the appeal was not disposed of within 6 (six) months and the said period of 6 (six) months having had expired on November 25, 1997 from the acceptance of the appeal on May 26, 1997, hearing of the appeal ought to be discontinued but the same contention of the writ petitioner was not accepted by the appellate authority, that it was also contended by the writ petitioner, that if the appeal considered to have been accepted on furnishing of the bank guarantee on July 24,1997 then too 6 (six) months expired on January, 23,1998.
3. It was the contention of the writ petitioner as there is no mention as to consequence for non deposit of demanded of VAT or penalty as per provision of Section 42(2) of the VAT Act and that statutory period for disposal of the appeal having had expired the only conclusion that follow is that the appeal has been allowed and as such tribunal had no jurisdiction to proceed with the hearing of the appeal. It was also the contended since the appellate authority did not dispose of the appeal in violation of the provisions of law as in section 42(4) of the VAT Act the imposition of penalty and demand of VAT was illegal. Further contended was that the claim made by the authority was barred as per provisions of Section 55 of the VAT Act and that the appeal having had accepted for hearing on furnishing of the bank guarantee the question of furnishing bank guarantee beyond statutory period became redundant.
4. The Rule was opposed by the respondent No. 2.
5. The High Court Division on consideration of the Provision of the VAT Act observed “From a reading of sub section (2) of Section 42 of the Act, as it stood originally it appears that the power was given to the respective appellate authority to accept and hear an appeal either on depositing 50% of the penalty imposed and on furnishing bank guarantee for the rest of 50% and even without making any deposit either or the demanded VAT or penalty if it appeared to it that making of such deposit would cause hardship to the appellant. But by Finance Act, 1996 the said power or discretion given to the appellate authority was done away with and deposit of 50% of the demanded VAT or the penalty imposed was made mandatory for filing an appeal before the Appellate Tribunal against an order of the Commissioner. It further appears that by subsequent amendments only ratio of deposit was reduced but keeping it mandatory to make the deposit for maintaining and hearing an appeal We are of the view that in order to get the benefit of subsection (4) of Section 42 of the VAT Act the appeal must be in form. When the statue, namely, sub-section (2) of section 42 of the Act made it compulsory to deposit 50% either of the demanded VAT or the penalty in order to prefer and appeal before the Tribunal can it be said that in the absence of such deposit the appeal was in form; in other words maintainable? Our answer is in the negative. Therefore, the petitioner cannot by any logic reap the benefit of sub-section (4) of section 42 of the Act……….We are of the view that since the Tribunal has no authority or jurisdiction to relax the mandatory deposit of 50% either of the demanded VAT or the penalty the order passed by the Tribunal was of little legal consequence and, as such, the petitioner cannot thrive upon it to get the benefit of sub-section (4) of Section 42 of the Act. And since at the relevant time deposit of 50% either of the demanded VAT or the penalty was compulsory to maintain and hear an appeal which the petitioner did not, the legal consequence would be that the appeal would be incompetent, or in other words not in form and, therefore, it does not matter whether any consequence has been provided for in the statute for such non-deposit Since the appeal itself was not in form, the question of having allowed the same pursuant to the provision of sub-section (4) of Section 42 of the Act does not arise at all. But since the Tribunal exercised jurisdiction not vested in it directing the writ petitioner to furnish bank guarantee which it complied with and the Tribunal also proceeded with the hearing of the appeal may be under misconception of law, we are inclined to give the petitioner a chance to get the appeal heard on merit by making 50% deposit either of the demanded VAT or Penalty imposed on it by respondent No. 2, i.e., the Commissioner of Customs, Excise and VAT, Dhaka South, Dhaka pursuant to the provisions of sub-section (2) of Section 42 of the VAT Act as prevalent at the relevant time as has been quoted hereinbefore”.
6. On the aforesaid findings and observations the High Court Division discharged the Rule with direction to the writ petitioner to deposit either 50% of the demanded VAT or the Penalty pursuant to the order passed by the respondent No.2 on November 25, 1996 (Annexure-D to the writ petition) within 3 (three) months from the date of receipt of the judgment and if the petitioner makes the deposit the Tribunal shall dispose of the appeal within the statutory period in accordance with law.
7. It appears that the petitioner for leave to appeal has been filed against the operative portion of the judgment of the High Court Division directing the writ petitioner to deposit 50% of the demanded VAT or the Penalty in the light of the order dated November 25, 1996 of the Commissioner of Customs, Excise and VAT, Dhaka South, Dhaka within 3 (three) months and in case of making the deposit by the writ petitioner for disposal of the appeal by the respondent No.1 i.e. appellate Tribunal.
8. We have heard the learned counsel and perused the materials on record.
9. We do not find any justification or legally sound ground for filing the petition for leave to appeal impugning the judgment of the High Court Division. The contentions made in the grounds raising which leave petition filed have been addressed by the High Court Division and in our view the findings and decisions made by the High Court Division in respect of the contentions of the writ petitioner are legally sound and as such we do not find any ground to interfere with the judgment of the High Court Division.
In the background of the discussion made hereinabove we find no merit in the petition.
Accordingly, the petition is dismissed.
Source: V ADC (2008) 478