Pre-deposit requirement in tax appeal can be met by bank guarantee when cash deposit is onerous and security remains adequate.

The Karnataka Value Added Tax appeal pre-deposit requirement was treated as capable of being met by a bank guarantee where insisting on cash deposit was considered onerous and adequate security could be secured without affecting the appellate process. The dispute on tax liability was left for adjudication on merits, and the appellate remedy remained intact pending decision in accordance with law. Complete waiver of the statutory condition was not granted, but interim relief was given by allowing substitution of the cash deposit with a bank guarantee.

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Issues: Whether the statutory requirement of depositing 30% of the disputed tax amount for maintaining the appeal under the Karnataka Value Added Tax Act, 2003 should be waived or suitably modified in the facts of the case.

Analysis: The reassessment was under challenge before the appellate authority, and the dispute regarding tax liability itself was left open for adjudication on merits. The only question for consideration was the nature of interim protection to be granted pending appeal. The amount required to be deposited under the statutory scheme was substantial, and the petitioner was a public sector undertaking. In those circumstances, the Court treated a bank guarantee as sufficient security in place of cash deposit, while keeping the appellate remedy intact and directing the appeal to be decided in accordance with law.

Conclusion: The petitioner was not granted complete waiver of the statutory condition, but was permitted to furnish a bank guarantee instead of depositing the required amount, and the relief was therefore partly in favour of the petitioner.

Ratio Decidendi: In appropriate cases, the statutory condition of pre-deposit for an appeal may be satisfied by a bank guarantee where the Court finds the cash deposit onerous and adequate security can be secured without prejudicing the appellate proceedings.

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