Pre-deposit waiver and attached property as security: HC requires appeal to be heard on merits without further deposit.

Under the Gujarat VAT Act, an appeal ordinarily requires pre-deposit, but the proviso allows entertainment on furnishing security of the amount directed. The Gujarat HC held that where attached properties already secured the revenue and were worth more than the demand, the department's interest was adequately protected and further pre-deposit was unnecessary. The Tribunal erred by not applying the relevant pre-deposit and stay considerations and by directing recovery through sale of attached stock, which went beyond the limited issue before it. The appeals were therefore to be restored and heard on merits, treating the attachment as sufficient security.

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Issues: Whether the appeals could be restored and heard on merits without insisting on pre-deposit, in view of the attachment of properties as security under section 73 of the Gujarat Value Added Tax Act, 2003, and whether the Tribunal's order directing recovery through sale of attached stock could be sustained.

Analysis: Section 73(4) of the Gujarat Value Added Tax Act, 2003 ordinarily requires payment of tax before an appeal is entertained, but the proviso permits the appellate authority to entertain the appeal on furnishing security of such amount as may be directed. The attached properties were stated to be worth far more than the demand at the time of attachment, and the Court found that the department's interest was sufficiently secured. The Tribunal failed to examine the relevant considerations governing pre-deposit and stay, and instead travelled beyond the limited question by directing recovery through sale of attached stock. The Court also found that the petitioner had a prima facie case and that the appeals ought not to have been dismissed for non-payment when adequate security already existed.

Conclusion: The impugned order could not be sustained, and the appeals were required to be heard on merits without insisting on any pre-deposit, treating the attachment as sufficient security.

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