2014 (8) TMI 258 - HC - VAT and Sales Tax

Demand of additional tax - Commissioner ordered pre-deposit of 20% of total demand for obtaining stay in the matter - Appeal dismissed for non complaince - tribunal allowed appeal in part by remanding matter relating to penalty to Assessing officer - Held that - Decision in ANILKUMAR Versus STATE OF GUJARAT 2014 (4) TMI 730 - GUJARAT HIGH COURT followed - Tribunal committed serious error in examining the appellants grievances on the merits of the order of assessment. The order of assessment was passed by the adjudicating authority, which was appellable by way of first appeal before the Appellate Commissioner. Section 73(4) of the Gujarat Value Added Tax Act, 2003, requires that no appeal against the order of assessment shall ordinarily be entertained by the Appellate Commissioner, unless such appeal is accompanied by proof of payment of tax in respect of which the appeal has been preferred. Proviso to section 73(4), however, provides that the appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order (a) without payment of tax, interest, if any or as the case may be, of the penalty, or (b) on proof of payment of such small sum as it may consider necessary or (c) on the appellant furnishing in the prescribed manner security or such as the appellate authority may direct. In view of section 73(4) of the Act, therefore, such appeal could not have been entertained unless in terms of proviso, the appellate authority for reasons recorded in writing relaxed the requirement of full predeposit - Commissioner did not committed any serious error in imposing the condition of pre-deposit - it would however, be open for the appellant to satisfy such condition even now for which purpose time is granted upto 31.8.2014. If so done, the Commissioner shall hear the appeals on merits - Decided conditionally in favour of assessee.

Summary

Issues:
1. Interpretation of statutory provisions regarding pre-deposit requirement for filing an appeal.
2. Jurisdiction of the tribunal to hear an appeal without compliance with pre-deposit conditions.
3. Applicability of proviso to section 73(4) of the Gujarat Value Added Tax Act, 2003.
4. Correct approach of the tribunal in hearing appeals and imposing pre-deposit conditions.

Issue 1: Interpretation of statutory provisions regarding pre-deposit requirement for filing an appeal:
The case involved an appeal filed before the Value Added Tax Tribunal against an order of the appellate commissioner dismissing the appeal for not fulfilling the pre-deposit condition. The tribunal proceeded to hear the appeal on the merits of the additions made by the Assessing Officer, bypassing the statutory requirement of pre-deposit. The High Court emphasized that under section 73(4) of the VAT Act, an appeal must be accompanied by depositing the tax unless waived by the Commissioner for reasons recorded in writing. The tribunal's erroneous approach was highlighted, stating that it should have first examined whether the Commissioner's insistence on a 20% deposit was justified. The tribunal could either confirm, modify, or set aside such an order, but it could not bypass the statutory first appellate authority.

Issue 2: Jurisdiction of the tribunal to hear an appeal without compliance with pre-deposit conditions:
The High Court pointed out that the tribunal's decision to hear the appeal on merits without addressing the pre-deposit condition imposed by the Commissioner was incorrect. The tribunal should have limited its scope to determining the validity of the Commissioner's order regarding the pre-deposit requirement. By bypassing the first appellate authority and waiving the pre-deposit condition without proper orders, the tribunal erred in its approach. The High Court emphasized that the tribunal's role was not to directly hear the appeal on merits but to ensure compliance with statutory requirements before proceeding further.

Issue 3: Applicability of proviso to section 73(4) of the Gujarat Value Added Tax Act, 2003:
The judgment highlighted the proviso to section 73(4) of the Act, which allows the appellate authority to entertain an appeal without full pre-deposit under certain conditions. The appellate authority can relax the requirement of full pre-deposit for reasons recorded in writing. In this case, the Appellate Commissioner had required the appellant to deposit 25% of the confirmed amount, leading to the dismissal of the appeal for non-compliance. The High Court reiterated that the tribunal's role was to assess the validity of such requirements set by the Commissioner before delving into the merits of the appeal.

Issue 4: Correct approach of the tribunal in hearing appeals and imposing pre-deposit conditions:
The High Court reversed the tribunal's judgment, emphasizing that the tribunal should not have bypassed the first appellate authority and the statutory requirement of pre-deposit without a proper waiver in writing. The tribunal's duty was to ensure compliance with procedural requirements before proceeding to hear the appeal on merits. The High Court quashed all directions given by the tribunal and focused on the validity of the pre-deposit condition imposed by the Commissioner. It granted the appellant time to fulfill the condition, failing which the appeals would be disposed of accordingly. The judgment reiterated the importance of adhering to statutory provisions and procedural requirements in tax appeals.

The High Court's detailed analysis of the issues involved in the judgment emphasized the correct interpretation of statutory provisions, the jurisdiction of the tribunal, the applicability of the proviso to section 73(4) of the Act, and the proper approach in hearing appeals and imposing pre-deposit conditions. The judgment serves as a reminder of the importance of procedural compliance and adherence to statutory requirements in tax appeals.