Statutory precondition for appeal admission bars merits review where tax deposit is not made and opportunities to comply are missed.

An appeal could not be admitted under section 38(3) unless the required tax had been deposited, so at the non-admission stage the merits of the assessment were irrelevant. The court distinguished rejection of an unadmitted appeal for failure to satisfy a statutory precondition from dismissal of an admitted appeal in default, where merits may later be reopened. As the assessee had been given opportunities to comply but did not deposit the tax, the Tribunal was justified in rejecting the second appeal summarily and in refusing to hear the assessee on merits.

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Issues: Whether the Tribunal was justified in rejecting the second appeal for non-deposit of tax and in declining to hear the assessee on merits notwithstanding that default.

Analysis: The statutory scheme contemplated two stages in an appeal: admission and hearing. Under section 38(3), an appeal could not be admitted unless the requisite tax had been deposited. At the stage of non-admission, the only matter for consideration was compliance with the deposit requirement, and the merits of the assessment did not arise. On the facts found, the assessee had been given opportunities to comply and had failed to do so. The Tribunal was therefore right in holding that the first appellate authority had not acted illegally in rejecting the appeal summarily for non-payment of tax. The distinction between dismissal of an admitted appeal in default and non-admission of an appeal for failure to satisfy the statutory condition was material; only in the former situation could merits be reopened in second appeal.

Conclusion: The Tribunal was justified in rejecting the second appeal and in rejecting the contention that the assessee should be heard on merits despite non-payment of tax. The answer was in the affirmative against the assessee and in favour of the department.

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