The system of obtaining/ accepting the types of securities and sureties that can be demanded in cases where appeals have been preferred before the Appellate Authorities has been discussed. In view of which, after taking into consideration, the provisions as enshrined in Section 33 of the HVAT Act r/w Rule 64, the matter regarding the demanding of an irrevocable bank guarantee by the assessing authorities from those dealers who prefer appeals against their orders before the first appellant authority and the additional demand created under dispute on one or the other reasons.
The provision of section 33 (5) clearly states that-
(i) The appellate authority shall ensure before entertaining the appeal that the appellant has paid the amount of tax admitted to be due and interest thereon,
(ii) A bank guarantee or adequate security to the satisfaction of the assessing authority, in the manner, as may be prescribed, for the amount in dispute has also been furnished.
After perusal of (i) above r/w Rule 64, the appellate authority is to ensure that the admitted tax and the interest thereon has been paid by the appellant before an appeal is heard by the appellate authority. But for the amount disputed in appeal the appellate authority is to comply with the provisions as in (ii) above. Here, the words "in the manner" and "as may be prescribed" are mentioned. Further, section 2 (za) contains the definition of the words "prescribed" which "means prescribed by rules made under this Act".
Section 33 (5) before substitution vide Act No. 10 of 2009 was as under:-
"No appeal preferred by an assessee to an appellate authority shall be entertained unless it is filed within sixty days from the date of the order appealed against and the amount of tax and interest admitted by the appellant to be due as a result of the said order has been paid by him."
From reading the above mentioned provisions, the following guidelines are issued:-
When any dealer is aggrieved by an order passed by an Assessing Authority or Revisional Authority and consequently prefers an appeal before the appellate authority under section 33 then:
The assessing authority shall ensure/secure the recovery of additional demand from the appellant in the following manner:-
1. He can preferably insist on demanding an irrevocable bank guarantee equivalent to the additional demand that has been created as a result of assessment or revisional proceedings which are under challenge in appeal.
2. In case the appellant dealer fails to furnish irrevocable bank guarantee/bank guarantee due to unforeseen circumstances, then only securities in the form of Surety bonds can be accepted with an undertaking by the tenderer of surety bond that the property/assets are free from all encumbrances.
The above guidelines are issued to ensure that the provisions of Section 33(5) are implemented in letter and spirit with the intentions that cannot be doubted, and the proceedings being followed under the provisions are absolutely transparent.
These guidelines should be followed meticulously and should be conveyed to all the officers in the State.
Memo 1179/ST-1 dated 25.7.2014