2020 (1) TMI 891 - HC - VAT and Sales Tax

Appellate Authority's Discretion in Tax Appeals Upheld: Pre-deposit Requirement Clarified

M/s. Airolam Limited Versus State Of Gujarat

The judgment in this case involved Tax Appeals challenging an assessment order under the Value Added Tax Act. The appellant, a registered dealer, was ... Non-compliance with the pre-deposit - Whether the Gujarat VAT Tribunal was justified in holding that it cannot travel beyond the direction to pre-deposit 20% of the tax issued by the first appellate authority under sub-section (4) of section 73 of the Gujarat Value Added Tax Act, 2003 on the application made by the appellant for waiver of pre-deposit? HELD THAT:- On perusal of sub-section (4) of Section 73 of the GVAT Act, it is clear that before filing the appeal against the order of assessment or before the Tribunal challenging the order of appeal, unless the appeal is accompanied by the satisfactory proof of payment of tax in respect of which the appeal has been preferred, no appeal would be entertained by the Appellate Authority. Proviso to sub-section (4) of Section 73, provides that the Appellate Authority in its discretion, if it thinks fit, for reasons to be recorded in writing, may entertain the appeal, subject to conditions - the aforesaid analysis of Sub-section (4) of Section 73 stipulates that the Appellate Authority has a discretion either to insist for pre-deposit or to direct the appellant to pay lessor amount or smaller amount and the tax payable as per the order under Appeal and/or to furnish security in lieu of payment of tax as the Appellate Authority may thinks fit on the basis of the facts of the case. It is obvious that the Tribunal could not have stated that it cannot travel beyond the direction passed by the First Appellate Authority with regard to the condition of pre-deposit for entertaining the appeal as per the provision Sub-section (4) of Section 73 of the GVACT Act. Therefore, the question is answered in affirmative in favour of the appellant assessee. The Tribunal is now required to again consider the aspect whether any case is made out by the appellant herein for the purpose of waiver of the pre-deposit amount or lessor amount towards pre-deposit or not - appeal disposed off. Issues:Appeal against order of assessment, pre-deposit under Section 73 of VAT Act, interpretation of Section 73(4) of GVAT Act.Analysis:The judgment involves Tax Appeals under Section 73 of the Value Added Tax Act, 2003, challenging the common order passed by the Gujarat Value Added Tax Tribunal. The appellant, a registered dealer, was aggrieved by the assessment order raising demands under the VAT Act and the CST Act. The First Appellate Authority dismissed the appeal for non-payment of pre-deposit under Section 73(4) of the VAT Act, leading the appellant to file Second Appeals before the Tribunal.The Tribunal, considering the non-payment of pre-deposit, passed directions for payment under both Acts. However, the appellant raised grievances against the Tribunal's finding that it cannot go beyond the First Appellate Authority's direction regarding pre-deposit as per Section 73(4) of the VAT Act. The judgment delves into the interpretation of Section 73(4) of the GVAT Act, emphasizing the discretion of the Appellate Authority to entertain appeals based on payment proofs or security.The judgment clarifies that the Appellate Authority has the discretion to insist on pre-deposit, direct a smaller amount, or require security based on the circumstances of the case. It highlights that the Tribunal erred in stating it cannot go beyond the First Appellate Authority's direction on pre-deposit. Consequently, the substantial question of law was answered in favor of the appellant, and the appeals were disposed of accordingly.The judgment directs the Tribunal to reconsider whether the appellant qualifies for waiver of the pre-deposit or a lesser amount, indicating that the Tribunal has the discretion to demand suitable security in lieu of the pre-deposit amount. The Civil Applications related to the main Tax Appeals were also disposed of in light of the orders passed.