2019 (1) TMI 1299 - HC - VAT and Sales Tax

Restoration of appeal - appeal was dismissed for non-compliance with pre-deposit - sub-section (4) of section 73 of the Gujarat Value Added Tax Act, 2003 - Stay of recovery - Held that - As is evident from the order dated 10.05.2018 passed by the Tribunal, the Tribunal had admitted the second appeal and had directed the petitioner to deposit rupees thirty lakhs for stay of recovery proceedings. Therefore, the question of dismissing the appeal on the ground of non-payment of pre-deposit would not arise. Since the Tribunal itself had directed the petitioner to deposit a sum of rupees thirty lakhs for the purpose of staying the recovery proceedings, the court is of the view that when the petitioner is coming forth to offer the land described hereinabove which worth approximately rupees two crore by way of security and is also ready and willing to execute a bond in respect of the said property, which is more than sufficient to secure the interest of the revenue and is also ready and willing to make a pre-deposit of rupees two lakhs, the interests of justice would be met with if the appeal is restored at the stage of the first appellate authority by directing the petitioner to make a pre-deposit of rupees two lakhs and to execute a bond in respect of the said property, together with an undertaking of the owner of the property to the effect that he shall not in any manner transfer, alienate or encumber the said property. The appeal is restored at the stage of appellate authority.

Summary

Issues: Challenge to orders by Tribunal and Deputy Commissioner of Commercial Tax, non-compliance with pre-deposit requirement, merits of the case, offer of security by petitioner.

Analysis:
1. The petitioner challenged the order passed by the Gujarat Value Added Tax Tribunal and the Deputy Commissioner of Commercial Tax seeking restoration of the appeal. The petitioner argued that the Tribunal had dismissed the appeal for not complying with the pre-deposit requirement, despite initially admitting the appeal and only requiring the deposit for stay of recovery proceedings.

2. The petitioner contended that the case's merits were in their favor, citing a previous Tribunal order. They proposed making a pre-deposit of rupees two lakhs and offering a non-agricultural land as security, free from encumbrances, with a market value of approximately rupees two crore, belonging to the director of the petitioner company.

3. The Assistant Government Pleader argued that the Tribunal's direction for a nominal deposit of rupees thirty lakhs was justified compared to the demand, and there was no need for interference with the orders.

4. The court noted that the Tribunal had directed the petitioner to deposit rupees thirty lakhs for staying recovery proceedings, not as a condition for admission of the appeal. Considering the petitioner's offer of substantial security and readiness to make a pre-deposit, the court found it sufficient to secure the revenue's interest and meet the ends of justice.

5. Consequently, the court allowed the petition, quashed the impugned orders, and restored the appeal at the appellate authority stage. The petitioner was directed to make a pre-deposit of rupees two lakhs, offer the specified land as security, and provide an undertaking against any transfer or encumbrance of the property within one week. No costs were awarded, and direct service was permitted.