2025 (1) TMI 261 - HC - VAT / Sales Tax

Maintainability of appeal - requirement of 7.5% pre-deposit as a condition for appeal can be waived or interfered with by the court - HELD THAT - It is clear from Manoranjan Chakraborty 2000 (11) TMI 1079 - SUPREME COURT that the provisions were upheld by the Supreme Court. So much so, there was no exercise of power under article 142 in the Constitution to do complete justice, to permit the respondent to pay any lesser amount than 50%. Nevertheless, the Court said, it was clear that if gross injustice is done and it can be shown for good reason Court should interfere then notwithstanding alternative remedy, a writ Court can in an appropriate case exercise its jurisdiction to do substantive justice. Conclusion - Statutory pre-deposit requirements are generally binding unless gross injustice is clearly demonstrated. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the requirement of a 7.5% pre-deposit as a condition for appeal can be waived or interfered with by the court.
• Whether the adjudicating authority can demand tax for periods covered by discharge certificates without revocation by the Designated Committee.
• Whether the principles established in the case of Manoranjan Chakraborty and other precedents apply to the current case.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Waiver of Pre-deposit Requirement

• Relevant Legal Framework and Precedents: The legal framework involves the statutory requirement of a 7.5% pre-deposit for appealing tax adjudications. Precedents include the Supreme Court's decision in State of Tripura v. Manoranjan Chakraborty and Vijay Prakash D. Mehta v. Collector of Customs (Preventive).
• Court's Interpretation and Reasoning: The court examined whether it had the jurisdiction to waive the pre-deposit requirement. The court referenced Manoranjan Chakraborty, where it was established that while statutory provisions must generally be complied with, courts can intervene to prevent gross injustice.
• Key Evidence and Findings: The petitioner provided audited balance sheets indicating financial incapacity to meet the pre-deposit requirement.
• Application of Law to Facts: The court acknowledged the financial difficulties faced by the petitioner but emphasized that the statutory requirement of pre-deposit is generally non-negotiable unless gross injustice is demonstrated.
• Treatment of Competing Arguments: The petitioner argued for a waiver based on financial incapacity and referenced precedents that allowed for judicial discretion. The respondent maintained that statutory provisions should be upheld, citing Vijay Prakash D. Mehta, which supports the mandate of pre-deposit.
• Conclusions: The court concluded that it would not interfere with the pre-deposit requirement, as the petitioner did not demonstrate gross injustice warranting judicial intervention.

Issue 2: Validity of Adjudication Despite Discharge Certificates

• Relevant Legal Framework and Precedents: The issue revolves around the legal authority of adjudicating bodies to demand taxes for periods covered by discharge certificates. The precedent from Padmavathi Srinivasa v. Joint Commissioner of GST & Central Excise was considered.
• Court's Interpretation and Reasoning: The court considered whether the adjudicating authority overstepped its jurisdiction by demanding taxes for periods already covered by discharge certificates, which were not revoked by the Designated Committee.
• Key Evidence and Findings: The petitioner had obtained discharge certificates for the relevant periods, and there was no evidence of revocation by the Designated Committee.
• Application of Law to Facts: The court found that without revocation of the discharge certificates, the adjudicating authority lacked the jurisdiction to demand additional taxes for the covered periods.
• Treatment of Competing Arguments: The petitioner argued that the discharge certificates should prevent further adjudication. The respondent contended that the adjudicating authority acted within its rights based on an investigation report.
• Conclusions: The court sided with the petitioner, indicating that without revocation of discharge certificates, further tax demands for the covered periods were inappropriate.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "If gross injustice is done and it can be shown for good reason the court should interfere, then notwithstanding alternative remedy, a writ court can in an appropriate case exercise its jurisdiction to do substantive justice."
• Core Principles Established: The court reaffirmed that statutory pre-deposit requirements are generally binding unless gross injustice is clearly demonstrated. It also reinforced the principle that discharge certificates must be respected unless revoked by the Designated Committee.
• Final Determinations on Each Issue: The court decided not to interfere with the pre-deposit requirement, emphasizing compliance with statutory provisions. It also indicated that the adjudicating authority cannot demand taxes for periods covered by unrevoked discharge certificates.