Constitutional validity of the second proviso to Section 58(1) TNVAT Act, 2006 schallenged before the Supreme Court

Constitutional validity of the second proviso to Section 58(1) TNVAT Act, 2006 schallenged before the Supreme Court

The Supreme Court of India (SC) heard the plea challenging the constitutional validity of the second proviso to Section 58(1) of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act)

M/s V.V.V. Sons Edible Oils Ltd. (appellant) challenged the validity of the second proviso to Section 51(1) and the second proviso to Section 58(1) of the TNVAT Act, before the Madurai Bench of the High Court of Judicature at Madras through a writ petition.

Under Section 51(1) of the TNVAT Act, the appellant was obliged at the first stage of appeal to deposit 25% of the difference in the amount of tax assessed by the assessing authority and the tax admitted by the appellant. However, as per the second proviso to Section 58(1) of the TNVAT Act, the appellant was bound to deposit the sum ordered by the appellate authority at the second appellate stage.

The Counsel appeared on behalf of the State submitted that the deposit of Rs. 13 Crores satisfies the requirements of deposit of 25% of the sum and nothing else is required to be done in the matter.

It was argued on behalf of the appellant, that they have challenged the validity of the second proviso to Section 58(1) of the TNVAT Act. It was further contended that if the appellant would not succeed at the first appellate stage then the question would arise regarding the appellant's liability to deposit the amount at the second appellate stage.

The constitutional validity of these two provisions was challenged through a writ petition and it had been negated by the HC. The appellant filed an appeal before the HC challenging the judgment and order dated 26 February 2020 passed by the (HC).

The matter was listed before the division bench of Justice Uday Umesh Lalit and Justice Vineet Saran. It was observed by the SC, "It must be noted that the matter insofar as the case of the present appellant is concerned, is still at the first appellate stage. In terms of the second proviso to Section 51(1) of the Act, the appellant would, therefore, be obliged to deposit 25% of the demanded sum. As observed by this Court in its order dated 4 September 2020, a sum of Rs. 13 Crores has already been deposited by the appellant before the authorities in question."

The appeal was disposed of by the SC and it further stated that in case the occasion to advance the submissions concerning the validity of the second proviso to Section 58(1) of the TNVAT Act arises, the appellant shall be at liberty to take appropriate measures.