2019 (1) TMI 1217 - HC - VAT and Sales Tax

Maintainability of petition - Validity of Proviso to Section 20 Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991 - Validity of provisions of Rule 18 of Madhya Pradesh Motoryan Karadhan Rules, 1991 - appeals were dismissed by the Appellate Court for want of pre-deposit contemplated vide proviso to Section 20 of the 1991 Act and Rule 18 of Rules 1991 - principle of constructive res judicata. Held that - True it may be that the petitioner was not a party to the proceedings in Jabalpur Bus Operators Association 1993 (9) TMI 365 - MADHYA PRADESH HIGH COURT , wherein the constitutional validity of the Adhiniyam, 1991 was questioned. However, equally true it is that the challenge to the constitutional validity was by the Bus Operators Association in representative capacity; and it was open for the Association to have ever questioned the validity of proviso to Section 20 of Adhiniyam which lays down pre-deposit conditions. It is not open for the petitioner to question the validity of proviso to section 20 of Adhiniyam, 1991 and the relevant Rule 18 of the Rules. Since we are upholding the validity of proviso to Section 20 of Adhiniyam 1991 and provisions of Rule 18 of the Rules; and since the appeals preferred by the petitioners were dismissed for non-compliance of condition of pre-deposit, we direct that in case the petitioners deposit the amount contemplated in proviso to section 20 of the Adhiniyam, 1991 and Rule 18 of the Rules, within thirty days from the communication of this order, the Appellate Court shall entertain the appeals, and decide them on merits. Petition disposed off.

Issues Involved:
1. Validity of Proviso to Section 20 of Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991.
2. Validity of Rule 18 of Madhya Pradesh Motoryan Karadhan Rules, 1991.
3. Principle of constructive res judicata.
4. Pre-deposit requirements for appeals under the Adhiniyam, 1991.

Detailed Analysis:

1. Validity of Proviso to Section 20 of Madhya Pradesh Motoryan Karadhan Adhiniyam, 1991:
The petitioners challenged the validity of the proviso to Section 20 of the Adhiniyam, 1991, which mandates pre-deposit of tax and penalty as a condition for entertaining an appeal. The court noted that this provision aims to ensure the deposit of the amount claimed from an assessee in case of an appeal against the tax demanded. The court referenced various judgments, including *State of Haryana Vs. Maruti Udyog Ltd.*, to affirm that the right of appeal is a statutory creation and subject to conditions imposed by the statute. The court upheld the validity of the proviso, stating that it balances the interests of the aggrieved person and the state's need for speedy tax recovery.

2. Validity of Rule 18 of Madhya Pradesh Motoryan Karadhan Rules, 1991:
Rule 18, which outlines the procedural requirements for filing an appeal, including the necessity of pre-deposit, was also challenged. The court upheld Rule 18, emphasizing that procedural rules are essential for the orderly conduct of appeals and that the pre-deposit requirement is a legitimate condition imposed by the statute.

3. Principle of Constructive Res Judicata:
The respondents argued that the petition is barred by the principle of constructive res judicata, citing a previous case where the constitutional validity of the Adhiniyam, 1991, was upheld. The court agreed, stating that the Bus Operators Association had previously challenged the validity of the Adhiniyam in a representative capacity, and the current petitioners could not re-litigate the same issues. The court referenced multiple judgments, including *Smt. Somavanti and others Vs. State of Punjab*, to support the binding effect of previous decisions.

4. Pre-deposit Requirements for Appeals under the Adhiniyam, 1991:
The petitioners argued that the pre-deposit conditions are arbitrary and violate Article 14 of the Constitution by preventing them from effectively pursuing their legal rights. The court rejected this argument, referencing *Mardia Chemicals Ltd. Vs. Union of India*, where a similar pre-deposit requirement was deemed unreasonable. However, the court distinguished the present case, noting that the pre-deposit condition applies to appeals, not initial adjudication, and does not involve the confiscation of assets. The court concluded that the pre-deposit requirement is a valid statutory condition for maintaining an appeal.

Conclusion:
The court dismissed the petitions, upholding the validity of the proviso to Section 20 of the Adhiniyam, 1991, and Rule 18 of the Rules. The petitioners were directed to comply with the pre-deposit requirements within thirty days to have their appeals entertained and decided on merits by the Appellate Court. The petitions were disposed of without costs.

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