Himachal Pradesh HC Quashes Cheque Dishonour Proceedings Arising from VAT Penalty as not legally enforceable debt

The Himachal Pradesh High Court quashed a cheque dishonour complaint arising from cheques issued towards tax and penalty imposed under the HP VAT Act. The underlying detection order had already been quashed by the Tax Tribunal for violation of the rule against bias. The Court held that the cheques were not issued in discharge of a legally enforceable liability and that Section 138 could not be used to recover the disputed VAT penalty.