2014 (8) TMI 256 - HC - VAT and Sales Tax

Waiver of pre-deposit - Consideration of appeal by Tribunal on merits Whether the Tribunal is justified in deciding the issue on merit when the Tribunal was required to decide whether insistence by the Commissioner to deposit twenty per cent tax demand by way of a pre-deposit was correct or not - Held that - Decision in ANILKUMAR Versus STATE OF GUJARAT 2014 (4) TMI 730 - GUJARAT HIGH COURT followed - In view of section 73(4) such appeal could not have been entertained unless in terms of proviso, the appellate authority for reasons recorded in writing relaxed the requirement of full pre-deposit The Tribunal ought to have placed appeal back to the Appellate Commissioner, on such condition that the Tribunal thought fit to impose on the appellant - without expressing any opinion on the Appellate Commissioner imposing the condition of part pre-deposit on the appellant, the Tribunal accepted the appellant s Second Appeal as if there was no intermediary stage of the appeal before the Appellate Commissioner or any requirement of pre-deposit under section 73(4) Assessee also contributed to the complication as he never prayed for setting aside the appellate order of imposing condition and subsequently, dismissing his appeal when he failed to fulfil such condition - The Tribunal could have either permitted the appellant to suitably amend the prayer or if the appellant was not willing to do so, dismiss his appeal as not maintainable - the Tribunal could not have by-passed the first appellate authority and statutory requirement of pre-deposit, unless it was waived by an order in writing - Earlier order of Tribunal quashed - Assessee directed to amend the appeal - Matter remitted back to Tribunal for fresh consideration - Decided in favour of Assessee.

Summary

Issues:
1. Challenge to the judgment of Gujarat Value Added Tax Tribunal.
2. Validity of the pre-deposit requirement by the Appellate Commissioner.
3. Tribunal's jurisdiction to entertain the appeal on merits without proper pre-deposit.

Analysis:
1. The appellant challenged the judgment of the Gujarat Value Added Tax Tribunal, which confirmed the disallowance of tax credit and the levy of tax, interest, and penalty. The appellant had failed to deposit the required amount during the appeal process, leading to the dismissal of the first appeal by the Commissioner. Subsequently, the Tribunal directed the appellant to deposit a sum, heard the issue on merit, and passed an order. However, the High Court noted that the Tribunal had erred in examining the appellant's grievances on the merits of the assessment order.

2. The main issue revolved around the validity of the pre-deposit requirement imposed by the Appellate Commissioner. The High Court emphasized the statutory provision under section 73(4) of the Gujarat Value Added Tax Act, 2003, which mandates that no appeal against the order of assessment shall ordinarily be entertained without proof of payment of tax. The Court highlighted that the Tribunal could not have entertained the appeal on merits without addressing the pre-deposit issue first. The Court quashed the Tribunal's judgment and nullified all directions, allowing the Appellate Commissioner to hear the appeal on merits without any further pre-deposit requirement.

3. The High Court criticized the Tribunal for bypassing the statutory requirement of pre-deposit and for not addressing the issue properly. It emphasized that the Tribunal should have either permitted the appellant to amend the prayer regarding the pre-deposit or dismiss the appeal as not maintainable. The Court clarified that the Tribunal's decision to examine the merits of the appeal without addressing the pre-deposit requirement was incorrect. The judgment of the Tribunal was quashed, and the case was disposed of accordingly, with directions for the Appellate Commissioner to hear the appeal on merits without any additional pre-deposit requirement.