2017 (11) TMI 484 - HC - Indian Laws

Requirement of pre-deposit under Section 12 (3) in U.P. Entertainment and Betting Tax Act, 1979 - Held that - Looking to the peculiar nature of the dispute and also the factum that petitioners appeal could not be entertained by appellate authority for want of compliance of Section 12 (3) and also considering interim order passed by this Court in the appeal, we provide, if petitioners have complied interim orders, appellate authority shall permit petitioners to deposit deficient one-third amount, if any, within one month and if certain condition is complied with by petitioners, their appeal shall be decided as expeditiously on merits by appellate authority. Subject to aforesaid directions, challenge by petitioners to the validity of Section 12 (3), as inserted by Amendment Act, 2009, in Act, 1979 fails.

Issues Involved:
1. Validity of sub-section 3 of Section 12 of the U.P. Entertainment and Betting Tax Act, 1979, as amended by the U.P. Entertainment and Betting Tax (Amendment) Act, 2009.
2. Requirement of pre-deposit of one-third of the disputed tax amount before entertaining an appeal.
3. Petitioners' request to quash the order rejecting their appeals for non-deposit of one-third of the disputed amount.

Issue-wise Detailed Analysis:

1. Validity of Sub-section 3 of Section 12:
The petitioners challenged the validity of sub-section 3 of Section 12, arguing that it imposes an onerous and arbitrary condition for pre-deposit of one-third of the disputed amount before an appeal can be entertained. They contended that such a provision is patently arbitrary and violative of Article 14 of the Constitution, as it renders the remedy of appeal practically impossible for the assessee. The petitioners relied on judgments such as Aanant Mills Company Limited Vs. State of Gujarat, Seth Nand Lal Vs. State of Haryana, and Mardia Chemicals Limited Vs. Union of India to support their contention that the right of appeal is a part of judicial review and should not be hindered by such conditions.

2. Requirement of Pre-deposit:
The court examined the statutory provisions and judicial authorities on the subject. It noted that the Act, 1979 was enacted to consolidate and amend laws relating to tax on entertainment, amusement, and certain forms of betting in the State of U.P. The court highlighted that the right of appeal is not inherent but is conferred by statute, and the legislature can impose conditions for exercising such a right. The court referred to judgments such as Aanant Mills Company Limited Vs. State of Gujarat and Vijay Prakash D. Mehta and another Vs. Collector of Customs, which upheld the validity of similar provisions requiring pre-deposit before entertaining an appeal. The court concluded that the condition of pre-deposit of one-third of the disputed amount does not render the right of appeal nugatory or confiscatory and is not arbitrary or ultra vires.

3. Petitioners' Request to Quash the Order:
The petitioners also prayed for quashing the order passed by the State of U.P., which rejected their appeals for non-deposit of one-third of the disputed amount. The court considered the peculiar nature of the dispute and the interim orders passed during the appeal. It directed that if the petitioners complied with the interim orders, the appellate authority should permit them to deposit the deficient one-third amount within one month. If this condition is met, the appellate authority should decide the appeals on merits as expeditiously as possible.

Conclusion:
The court dismissed the writ petitions, upholding the validity of Section 12 (3) as inserted by the Amendment Act, 2009. It directed that the petitioners be allowed to deposit the deficient amount within one month, subject to compliance with interim orders, and that their appeals be decided on merits by the appellate authority. The interim order, if any, stood vacated.

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