Statutory pre-deposit controls sales tax appeals: stay cannot rest on prima facie merits, only inability to pay.

The statutory right of appeal under the Punjab General Sales Tax Act and Haryana General Sales Tax Act was treated as subject to the conditions imposed by the Legislature. The appellate authority could not grant stay or entertain the appeal on prima facie merits of the tax demand; relief depended only on proof that the dealer was unable to pay the assessed tax, penalty or interest, in which case reasons had to be recorded and the appeal could be admitted on full, partial, or no pre-deposit as permitted by the statute. Earlier decisions under different enactments were distinguished, and the contrary view that prima facie legality could justify stay was overruled. Exceptional relief could still be sought in writ jurisdiction under Article 226.

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Issues: Whether the appellate authority under section 20(5) of the Punjab General Sales Tax Act, 1948 and section 39(5) of the Haryana General Sales Tax Act, 1973 could grant stay or entertain the appeal on the basis of prima facie merits of the case, or whether relief could be granted only when the dealer satisfied the statutory condition of inability to pay the assessed tax, penalty or interest.

Analysis: The right of appeal under the taxing statutes was held to be a creature of statute and, therefore, subject to the conditions imposed by the Legislature. The provisions were construed as creating a clear bar against entertainment of the appeal without proof of payment, except where the authority was satisfied that the dealer was unable to pay, in which event the authority could record reasons and entertain the appeal without full pre-deposit or on part payment. The Court distinguished authorities under the Income-tax Act and the Delhi Municipal Corporation Act on the ground that those enactments contained different procedural settings, and held that those decisions did not support a general power in the appellate authority to examine prima facie legality of the tax demand for stay purposes. The view that the appellate or revisional authority should consider whether the tax was prima facie legal was overruled. The Court also held that, although the statutory appellate authority had no such power, the High Court could in rare and appropriate cases exercise writ jurisdiction under Article 226 of the Constitution of India to grant relief.

Conclusion: The appellate authority had no power to grant stay on the basis of prima facie merits; relief could be granted only within the statutory framework of inability to pay, while exceptional writ relief remained available to the High Court.

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