2015 (2) TMI 616 - HC - VAT and Sales Tax

Validity of Tribunal s order - Whether the Tribunal erred in adjudicating on merits despite first Appellate Authority adjudicated only on the issue of pre-deposit - Following decision of State of Gujarat Versus Gujarat Ambuja Export Limited 2015 (2) TMI 480 - GUJARAT HIGH COURT and JYOTI TRADERS Versus STATE OF GUJARAT 2015 (2) TMI 592 - GUJARAT HIGH COURT - Tribunal has committed error in examining the matter on merits instead of examining the question for pre-deposit and, therefore, the order passed by the Tribunal would be required to be quashed and set aside with the further direction that the appeal stands restored to the Tribunal for fresh consideration - Decide in favour of Revenue.

Summary

Issues Involved:
1. Whether the Tribunal erred in adjudicating on merits despite the first Appellate Authority adjudicating only on the issue of pre-deposit?

Issue-Wise Detailed Analysis:

1. Whether the Tribunal erred in adjudicating on merits despite the first Appellate Authority adjudicating only on the issue of pre-deposit?

The core issue in this appeal is whether the Tribunal was correct in adjudicating the appeal on its merits when the first Appellate Authority had only dealt with the issue of pre-deposit. The facts reveal that the Assistant Commissioner of Commercial Tax assessed an outstanding tax amount with a penalty totaling Rs. 1,09,561/-. The respondent appealed against this assessment and sought a stay to waive the pre-deposit condition. The first Appellate Authority dismissed the appeal due to non-compliance with the pre-deposit condition. However, the Tribunal, in the second appeal, proceeded to examine the merits of the case rather than focusing on the pre-deposit issue.

The Court noted that similar questions had been addressed in previous cases, such as Tax Appeal No.1317 of 2014 and Tax Appeal No.1353 of 2014. In these cases, it was established that the Tribunal should first decide on the pre-deposit issue. The Tribunal's role is to determine whether the first Appellate Authority erred in insisting on a pre-deposit. If the pre-deposit condition is met, the matter should be remanded to the first Appellate Authority for a decision on the merits. The Tribunal should not bypass this process and directly address the merits of the appeal.

The Court cited several precedents, emphasizing that the Tribunal committed a serious error by examining the merits of the appeal without addressing the pre-deposit issue first. The statutory requirement under Section 73(4) of the Gujarat Value Added Tax Act, 2003, mandates that an appeal cannot be entertained unless the pre-deposit condition is either fulfilled or waived by the appellate authority for reasons recorded in writing.

In the cited case of Benara Valves Limited v. Commissioner of Central Excise, the Supreme Court underscored the importance of adhering to the pre-deposit requirement. Similarly, in Commissioner of C.Ex., Chandigarh v. Smithkline Beecham Co. Health C. Limited, the Supreme Court held that the Tribunal should not decide on the merits if the pre-deposit issue has not been resolved.

The Court concluded that the Tribunal erred in adjudicating the appeal on merits without first addressing the pre-deposit issue. Consequently, the Tribunal's order was quashed and set aside. The appeal was restored before the Tribunal for fresh consideration, focusing on the pre-deposit issue in line with the observations made by the Court. The Court also directed that a copy of the order be communicated to each member of the Tribunal, including the President, to ensure compliance with the legal procedure in future cases.

Conclusion:

The appeal was allowed to the extent that the Tribunal's order was set aside, and the matter was remanded for fresh consideration by the Tribunal, focusing on the pre-deposit issue. The Tribunal was directed to adhere to the legal procedure and not bypass the pre-deposit requirement before addressing the merits of the appeal.