2019 (7) TMI 589 - SC - VAT and Sales Tax

Maintainability of appeal - pre- deposit or not - second proviso of Section 19 and proviso of Section 21 (2) of the APGST Act, 1957 or second proviso of Section 31 and proviso of Section 33 (2) of the AP VAT Act, 2005 - rejection of appeal on the ground that the appellant-assessee had failed to comply with the precondition of producing proof of payment of tax admitted to be due or of such installments as may have been granted and/or the proof of payment of twelve and a half percent (12.5%) of the difference of the tax assessed by the assessing authority and the tax admitted by the appellant for the relevant assessment year in respect of which the appeal has been preferred by the concerned appellant-assessee - proviso is not a provision of pre-deposit at the stage of filing, institution or presentation of the appeal as such; but is a provision stipulating payment of tax dues as a prerequisite or sine qua non for consideration of appeal on merits or otherwise and/or for condonation of delay in filing the same, as the case may be. HELD THAT - The first proviso in the concerned Section (Section 19 and Section 31, as the case may be) pertains to limitation period for filing of an appeal; and discretion of the Appellate Authority to condone the delay in filing of such appeal, up to a maximum period specified therein. Indeed, the second proviso is part of the same Section. However, it is an independent condition and in one sense, mutually exclusive condition mandating or enjoining the appellant to produce proof of payment of tax dues in respect of which the appeal is preferred. That obligation can be discharged until the appeal is considered for admission and/or condonation of delay in filing of the appeal, as the case may be, by the Appellate Authority for the first time. We are conscious of the fact that the first proviso pertaining to maximum period of delay to be condoned by the Appellate Authority, also uses the expression admit the appeal . That expression admit , however, must be read to mean filing, institution or presentation of the appeal in the office of the Appellate Authority. Whereas, the expression admitted used in the second proviso will have to be construed as analogous to expression entertained . We are inclined to take this view as the setting in which the provisions under consideration appear leaves no manner of doubt that it is ascribable to the event of taking up the appeal for consideration, for the first time, to admit it on merits or otherwise and/or for condonation of delay in filing the appeal, as the case may be. Before that event occurs, it is open to the appellant to deposit the tax dues in respect of which the appeal is preferred and produce proof of such deposit before the Appellate Authority. Reverting to the factual position in the appeals under consideration, admittedly, the appellant-assessee had deposited the specified tax dues before the date on which appeal preferred by them was taken up for consideration for the first time for admission on merits. In such a situation, the stated proviso becomes unavailable to reject the appeal on the ground of institutional defect. In this view of the matter, all these appeals must succeed. We hold and direct that the Appellate Authority shall be obliged to take up every singular appeal for consideration for admission on merits and/or for condonation of delay in filing the appeal for the first time, no later than thirty days from the date of its filing, institution or presentation in the office of the Appellate Authority. This direction shall be complied with by all concerned meticulously, without any exception. Appeals shall stand restored to the file of the Appellate Authority.

Summary

Issues Involved:
1. Compliance with precondition of producing proof of payment of tax dues for admission of appeal.
2. Interpretation of relevant provisions under APGST Act, 1957, AP VAT Act, 2005, and Telangana State VAT Act, 2005.
3. Applicability of the doctrine of merger and binding precedents.
4. Adjustment of input tax credit against pre-deposit requirements.
5. Timeliness of appeal consideration by the Appellate Authority.

Detailed Analysis:

1. Compliance with Precondition of Producing Proof of Payment of Tax Dues for Admission of Appeal:
The appeals were dismissed by the Appellate Authority because the appellant-assessee failed to produce proof of payment of the tax admitted to be due or twelve and a half percent (12.5%) of the difference between the tax assessed and the tax admitted by the appellant. The Supreme Court held that the appellant could deposit the specified tax dues before the appeal is considered for admission on merits or for condonation of delay. The Court clarified that the provision requiring proof of payment is not a pre-deposit requirement at the time of filing the appeal but a prerequisite for consideration of the appeal on merits.

2. Interpretation of Relevant Provisions:
The Court analyzed Sections 19 and 21 of the APGST Act, 1957, and Sections 31 and 33 of the AP VAT Act, 2005, noting that the second proviso does not specify a period within which the tax dues should be paid. The Court concluded that the payment could be made before the appeal is first considered for admission or condonation of delay. The Court emphasized that the provisions should not be interpreted to require payment at the time of filing the appeal, as this would rewrite the legislative intent.

3. Applicability of the Doctrine of Merger and Binding Precedents:
The Supreme Court addressed the argument that its previous decisions, including M/s. Innovatives Systems, impliedly overruled the High Court's decision in Ankamma Trading Company. The Court held that once a special leave petition is granted, the appellate jurisdiction is invoked, and any order passed thereafter is an appellate order, attracting the doctrine of merger. Therefore, the decisions in M/s. Innovatives Systems and other similar cases are binding precedents.

4. Adjustment of Input Tax Credit Against Pre-Deposit Requirements:
In some appeals, the appellant-assessee argued for the adjustment of input tax credit against the pre-deposit requirement. The Court noted that this issue was not adequately addressed by the Appellate Authority or the High Court. The Court remanded these cases for reconsideration, directing the High Court to analyze whether the appellant was entitled to such adjustments and if this would satisfy the precondition for admitting the appeal.

5. Timeliness of Appeal Consideration by the Appellate Authority:
The Court directed that to prevent misuse of the interpretation allowing payment before the first consideration of the appeal, the Appellate Authority must take up every appeal for consideration for admission on merits or for condonation of delay no later than thirty days from its filing. This ensures the interests of the Revenue are protected while allowing appellants a fair opportunity to comply with the preconditions.

Conclusion:
The Supreme Court set aside the High Court's judgment and restored the appeals for consideration by the Appellate Authority in accordance with the clarified legal position. The Court emphasized the need for timely consideration of appeals and allowed for the possibility of adjusting input tax credits against pre-deposit requirements, subject to proper analysis by the relevant authorities.