2014 (9) TMI 73 - HC - VAT and Sales Tax

Maintainability of appeal - Nonpayment of pre-deposit amount of 60% of the tax demanded - Held that - First Appellate Authority has dismissed the appeal preferred by the appellant on the ground of noncompliance of the order of pre-deposit and even the learned Tribunal has also dismissed the appeal solely on the ground of non-deposit of the amount of pre-deposit i.e. 20% of the total tax liability i.e. ₹ 16,73,500/- and in the facts and circumstances of the case considering the financial hardship pleaded by the appellant and so that the appeal preferred by the appellant is considered by the first Appellate Authority on merits, we are of the opinion that if the appellant is directed to deposit a total sum of ₹ 10,00,000/- as pre-deposit and on that the appeal preferred by the appellant is directed to be decided and disposed of by the first Appellate Authority on merits, it will meet the ends of justice and it will be in the fitness of things - Decided partly in favour of assessee.

Summary

Issues:
1. Nonpayment of pre-deposit amount of tax demanded.
2. Dismissal of appeal by the Tribunal based on non-deposit of pre-deposit.
3. Financial hardship of the appellant.
4. Appellant's request for reduction in pre-deposit amount.

Analysis:
The appellant challenged the order of the Gujarat Value Added Tax Tribunal, which dismissed the appeal due to nonpayment of the pre-deposit amount of 60% of the tax demanded. The total demand against the appellant included tax, interest, and penalty. The first Appellate Authority directed a pre-deposit of 20% of the total demand, but the appellant only deposited a small amount, leading to the dismissal of the appeal. The Tribunal then required a 60% pre-deposit, which the appellant failed to comply with, resulting in the dismissal of the appeal.

During the proceedings, the appellant, through their advocate, argued the illegality of the demand confirmed by the Assessing Officer and highlighted the appellant's poor financial condition, advanced age, and health issues, requesting a reduction in the pre-deposit amount. The respondent, representing the State of Gujarat, urged the court to consider the interests of the Revenue alongside the appellant's circumstances.

After hearing both parties, the High Court acknowledged the financial hardship pleaded by the appellant and decided that a pre-deposit of Rs. 10,00,000 would be appropriate, with the appellant required to deposit the balance amount within six weeks. The Court allowed the appeal in part, setting aside the Tribunal's and the first Appellate Authority's orders and remanding the matter to the first Appellate Authority for a decision on merits upon the appellant's compliance with the pre-deposit requirement.

The Court emphasized that failure to make the required pre-deposit within the specified timeframe would lead to consequences, and the first Appellate Authority would not be obliged to decide the appeal on merits in such a scenario. The judgment allowed the Tax Appeal to the extent of the revised pre-deposit amount, with no costs awarded in the case. Additionally, another related matter was disposed of in line with the decision on the Tax Appeal.