Pre-deposit requirement relaxed in VAT appeal: court accepted a reduced deposit and allowed the appeal to proceed on compliance.

Section 62(5) of the Punjab Value Added Tax Act, 2005 required prior deposit of 25 per cent of the disputed tax, penalty and interest as a condition for maintaining the appeal. The HC did not examine the merits of the assessment or demand, but in writ jurisdiction it relaxed the pre-deposit requirement in the interest of justice and directed the appellate authority to accept a reduced deposit of Rs. one crore as sufficient compliance. The appeal was permitted to proceed on merits once that substituted deposit was made.

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Issues: Whether the statutory pre-deposit requirement for maintaining the appeal could be relaxed and a lesser amount accepted in place of deposit of 25 per cent of the assessed tax, penalty and interest.

Analysis: The appeal under section 62 of the Punjab Value Added Tax Act, 2005 was subject to the mandatory requirement under section 62(5) of furnishing proof of prior deposit of 25 per cent of the amount in dispute. The Court did not enter into the merits of the assessment or the correctness of the demand, but in exercise of writ jurisdiction and in the interest of justice it considered it appropriate to direct acceptance of a reduced pre-deposit of Rs. one crore as sufficient compliance for the purpose of the appeal.

Conclusion: The pre-deposit condition was modified in favour of the petitioner and the appellate authority was directed to accept Rs. one crore instead of insisting upon 25 per cent of the assessed amount.

Final Conclusion: The writ petition was disposed of with partial relief by substituting the statutory pre-deposit with a lower amount, while leaving the appeal to be decided on merits upon compliance.

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