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TMI Blog2016 (8) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... ackground of the facts are that the subject matter property of one M/s. Arunoday Mills Ltd. , came to be purchased in auction by the respondent M/s. Shanti Exports Pvt. Ltd. , as the said company could not meet with the financial liability of IDBI Bank . M/s. Arunoday Mills Ltd. , was provided a financial assistance by IDBI Bank and the said Company was unable to discharge the loan liability. Resultantly, the Bank had to take recourse to a public auction of the property of the Company by way of issuing a public advertisement. A bid was invited for the purpose of purchase of movable and immovable assets of M/s. Arunoday Mills Ltd., on as is where is and whatever there is basis . The respondent herein was found to be the highest bidder whose bid came to be accepted and the property of the Company was sold to the respondent herein by executing a deed of sale on 12.07.2007. The terms and conditions of the sale came to be provided by IDBI Bank vide its letter dated 08.02.2007. The case of the appellant State is that for the financial year 2005-06 in the case of M/s. Arunoday Mills Ltd. , the Assessing Officer had framed an assessment and a demand of Rs.1,16,30,773/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced herein after : Whether the Tribunal has erred in adjudicating Second Appeal on merits despite the fact that the first appellate authority has dismissed the appeal solely on the ground of predeposit. 3. Mr. Tirthraj Pandya, learned Assistant Government Pleader has contended that the learned Tribunal has committed error of jurisdiction inasmuch as the scope of original Second Appeal No. 405 of 2010 is circumscribed to consider the issue relating to nonpayment of predeposit and in the case on hand, the learned Tribunal has dealt with the Second Appeal on merit and, therefore, has contended that it has travelled beyond the scope of jurisdiction. The learned AGP for the appellant State has submitted that it is a settled proposition of law propounded by series of decisions that if the first appellate authority has dismissed the appeal on the issue of predeposit , the merit of case is not to be examined at all. It has also been contended that qua the merit of the main appeal, no effective adjudication has taken place inasmuch as no proper opportunity to deal with the merit was given, but in essence, the learned AGP for appellant State has submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entertain an appeal against such order ( a) without penalty of tax with penalty (if any) or, as the case may be, of the penalty, or (b) on proof of payment of such smaller sum as it may consider reasonable, or (c ) on the appellant furnishing in the prescribed manner, security for such amount as the appellate authority may direct .] 4.1. The said statutory provisions deal with the question of predeposit while entertaining the appeal and the concerned appellate authority is vested with the power to waive predeposit amount while entertaining the appeal. Keeping this provision in mind, if we revert back to the case on hand, we may see that the appellate authority has under an order dated 29.04.2009 disposed of the appeal on the ground that despite having been granted opportunity, partial amount of deposit has been paid and, therefore, vide the said order, the first appellate authority has dismissed the first appeal. If we refer to Second Appeal No. 405 of 2010, the same is essentially against the said order dated 29.04.2009.The said appeal came to be filed in view of the fact that there was a liability crystallized for the assessment period of 200506 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad of determining issue of predeposit which was at large before it. However, so as to ensure that a dent is made in such practice followed consistently that we have chosen to remand this matter. Once, when assessee chooses not to comply with the requirement of making predeposit or contest the matter on the ground of predeposit and either side approaches the second appellate authority, there does not arise any question of circumventing the very stage and exercise the powers of first appellate authority. We say so as the Statute provides that even on adjudication of the issue on merit by the first appellate authority, either side is entitled to challenge such reasonings before the second appellate authority. Not only the parties and the second appellate authority would be deprived of the reasonings of the first appellate authority but chance of either sides of availing the opportunity of appeal on merit also gets marred by this process. Even if it is felt by the Tribunal that the issue is covered by the decision of the higher forum, it can always direct the parties to agitate these aspects before the concerned authority [first appellate authority here]. 8. We also need to take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.4 With this, the present appeal is directed to be remitted back to the Tribunal to decide the issue of predeposit and on deciding the same to the first appellate authority which shall decide the same on merit in accordance with law. Needless to say that the law on the subject shall govern the decisions of these authorities, while deciding both the issues ie., predeposit so also on the question of merit. 4.2. In addition to the aforesaid decision, in yet another decision of the Division Bench of this Court was also confronted with the said situation in respect to the nonpayment of predeposit issue only, wherein also in the case of Tax Appeal No. 688 of 2013 , the Court has observed like this in order dated 30.01.2014 which is also in the opinion of this Court worth to be taken note of. Hence, the relevant extract of the said decision contained in para 3 and 4 are reproduced hereinafter : 3. We are of the opinion that the Tribunal committed serious error in examining the appellant s 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 Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally held by the Court that while considering the issue of predeposit , the learned Tribunal cannot travel its scope beyond this issue and cannot decide the case on merits without deciding the question of predeposit . Here in this case, it clearly appears to the Court that the learned Tribunal has committed serious error of jurisdiction and on this ground alone, the proposition of law as stated herein above, compels this Court to set aside the impugned order. 6. Since this Court is not called upon to examine the merit of the main issue which is reflected in the order of the learned Tribunal, the Court has not touched the aspect of merit and, therefore, only on this solitary issue of nonpayment of predeposit based upon which the learned Tribunal has exercised jurisdiction which has been examined by this Court in the context of substantial question of law framed and, therefore, considering the set of circumstance, we are of the opinion that the learned Tribunal has committed error in exercising jurisdiction travelling beyond the scope of the proceedings before it. 7. In view of the aforesaid circumstance, the present Tax Appeal is allowed. The order of the learned Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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