Judicial exercise of pre-deposit discretion requires a prima facie case assessment before insisting on payment in appeal.

Section 73(4) of the Gujarat Value Added Tax Act, 2003 requires tax payment before an appeal is entertained, but its proviso allows the appellate authority to waive payment, accept a lesser amount, or call for security for recorded reasons. That discretion must be exercised judicially, including consideration of whether the appellant has shown a strong prima facie case. As no consideration of the merits or prima facie defence was reflected before the pre-deposit direction was made, the insistence on a pre-deposit was held unjustified. The pre-deposit order was quashed and the appeal restored for decision on merits.

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Issues: Whether the order directing pre-deposit of Rs. 10 lakh as a condition for entertaining the statutory appeal under the Gujarat Value Added Tax Act, 2003 was sustainable in law.

Analysis: Section 73(4) of the Gujarat Value Added Tax Act, 2003 ordinarily requires payment of tax before an appeal is entertained, but its proviso permits the appellate authority to waive payment, accept a smaller sum, or require security for recorded reasons. The discretion is not mechanical; it must be exercised judicially after considering whether the appellant has made out a strong prima facie case. The record did not show any consideration of the merits or the appellant's prima facie defence before the pre-deposit direction was made. In those circumstances, insisting on pre-deposit was held to be unjustified.

Conclusion: The pre-deposit order was unsustainable in law and was quashed, and the appeal was restored to the first appellate authority for decision on merits.

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