2023 (11) TMI 519 - HC - VAT and Sales Tax

Maintainability of appeal - appeal dismissed on the ground that appellant failed to pay the amount of pre-deposit ordered by the Tribunal - Section 73 of the GVAT Act - HELD THAT - The Tribunal has not given any cogent reason as to how the prima facie case of the appellant is considered while determining the amount of pre-deposit. This Court in case of Kavya Marketing 2022 (4) TMI 1202 - GUJARAT HIGH COURT has held We have noticed that while deciding the admission of appeals on merits, the first appellate authority summarily dismissed the appeal on the ground of non-payment of pre-deposit, and when such order is challenged in second appeal before the Tribunal, it is incumbent upon the Tribunal to examine the prima facie case and thereafter, to arrive at the decision with regard to insistence of payment of pre-deposit for entertainment of appeal. This Court has time and again in identical cases has held that Tribunal is obliged to consider a prima facie case, which the appellant may be in position to highlight. The interest of justice would be met if the appellant is directed to pay Rs. 15,00,000/- instead of Rs. 42,00,000/- in respect of all the three years in Six Appeals towards pre-deposits within a period of one month from today i.e. on or before 31.10.2023 - The appellant shall file a bond before the Assessing Officer to the satisfaction of the Assessing Officer with regard to the outstanding dues to be paid by the appellant to the effect that the appellant fails in the appeal filed by the Tribunal subject to further rights and contentions of the appellant in accordance with law, the appellant shall pay the amount of outstanding tax liability. All these appeals are partly allowed by remanding the matters back to the First Appellate Authority - The impugned orders are quashed and set aside.

Summary

Issues Involved:
1. Non-payment of pre-deposit ordered by the Tribunal.
2. Gross violation of principles of natural justice.
3. Determination of penalty levied by the Adjudicating Authority.
4. Tribunal's failure to consider prima facie case and financial difficulties of the appellant.

Summary:

Non-payment of Pre-deposit Ordered by the Tribunal:
The appellant-assessee filed appeals against the Gujarat Value Added Tax Tribunal's dismissal of their appeals due to non-payment of the pre-deposit ordered for the periods 2011-12, 2012-13, and 2013-14. The Tribunal had directed the appellant to pay Rs. 42,00,000/- as pre-deposit, but the appellant cited financial difficulties as the reason for non-payment.

Gross Violation of Principles of Natural Justice:
The appellant argued that the lower authorities failed to consider documentary evidence and dismissed the appeals solely on the ground of non-production of these evidences. The Tribunal's dismissal of the appeal for non-payment of pre-deposit was claimed to be in gross violation of principles of natural justice.

Determination of Penalty Levied by the Adjudicating Authority:
The appellant challenged the penalty of 150% levied by the Adjudicating Authority, which was confirmed by the Deputy Commissioner, State Tax, and upheld by the Tribunal.

Tribunal's Failure to Consider Prima Facie Case and Financial Difficulties:
The appellant contended that the Tribunal did not consider the prima facie case and financial difficulties, as their business had been closed since April 2016. The Tribunal's insistence on a high pre-deposit without considering the merits of the case was deemed erroneous.

Court's Decision:
The High Court found that the Tribunal did not provide cogent reasons for the pre-deposit amount and failed to consider the prima facie case of the appellant. Referring to the case of Kavya Marketing Vs. State of Gujarat, the Court emphasized that the appellate authority should exercise discretion judiciously and consider the prima facie case when determining pre-deposit.

Final Order:
The High Court directed the appellant to pay a reduced pre-deposit amount of Rs. 15,00,000/- within one month. The Court also instructed the First Appellate Authority to pass appropriate orders within three months, after giving the appellant an opportunity for a hearing. If the appellant fails to pay the directed amount, the Tribunal's impugned order will continue to operate. The appeals were partly allowed, and the matters were remanded back to the First Appellate Authority.