2001 (2) TMI 1016 - HC - VAT and Sales Tax

Summary

Issues:
Petition for modification of Sales Tax Tribunal's order and mandamus for appeal hearing without pre-deposit of tax under Haryana General Sales Tax Act, 1973.

Analysis:
1. The petitioner, a registered dealer, challenged additional tax demand of Rs. 11,13,372 through an appeal under section 39(1) of the Act, seeking exemption from payment of tax. Respondent No. 3 partially accepted the request, requiring a pre-deposit of Rs. 2,78,343. Dissatisfied, the petitioner appealed to the Tribunal, which directed payment of Rs. 1 lakh and a surety bond for the balance amount as a condition for appeal hearing.

2. The petitioner invoked writ jurisdiction under article 226, alleging errors by respondent No. 3 and the Tribunal in not considering its financial weakness. Respondents contended the petitioner's unit was still operational and justified the pre-deposit condition based on financial stability.

3. The Court analyzed section 39(5) of the Act and relevant precedents, emphasizing the statutory conditions for appeals. It highlighted that the right of appeal is not inherent and can be subject to conditions imposed by the statute, including pre-deposit requirements unless the dealer proves inability to pay.

4. Referring to the Supreme Court's decision in State of Haryana v. Maruti Udyog Ltd., the Court clarified that the appellate authority cannot delve into the merits of the case while considering exemption from tax payment under section 39(5).

5. Upon reviewing the orders of respondent No. 3 and the Tribunal, the Court found the reasons for the pre-deposit condition valid, especially considering the petitioner's substantial closing stock that could cover its liability. Consequently, the Court dismissed the writ petition but allowed the petitioner time to comply with the payment condition for the appeal to proceed.

In conclusion, the Court upheld the statutory conditions for appeals, emphasizing the need for dealers to meet pre-deposit requirements unless they demonstrate financial incapacity. The judgment underscored the importance of statutory provisions and the limited scope for interference in appellate decisions, particularly when financial resources are available to meet tax liabilities.