Judicial exercise of pre-deposit discretion requires a prima facie case assessment before dismissing a tax appeal.

The appellate discretion to require pre-deposit under the Gujarat Value Added Tax Act must be exercised judicially, after considering whether the appellant has a strong prima facie case. A mechanical insistence on deposit without examining the merits of the challenge is an improper exercise of discretion and is unsustainable. The pre-deposit direction and the resulting dismissal of the second appeal for non-compliance could not stand, and the appeal was restored for decision on merits.

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Issues: Whether the Tribunal was justified in directing the assessee to deposit Rs. 10 lakh as a pre-condition for hearing the second appeal and in dismissing the appeal for non-compliance.

Analysis: Section 73(4) of the Gujarat Value Added Tax Act, 2003 permits an appellate authority to insist on payment of tax or a smaller sum while entertaining an appeal, but the discretion must be exercised judicially. The authority must consider whether the appellant has made out a strong prima facie case before fixing a pre-deposit condition. A mechanical insistence on pre-deposit, without any discussion of the merits of the challenge, can defeat a meritorious appeal and amounts to an improper exercise of discretion.

Conclusion: The insistence on pre-deposit without considering the prima facie case was unjustified, and the subsequent dismissal of the second appeal for non-compliance could not stand. The orders were liable to be quashed and the appeal restored for decision on merits.

Ratio Decidendi: The discretion to impose pre-deposit under the appellate provision must be exercised judicially after considering the appellant's prima facie case, and a mechanical pre-deposit order without such consideration is unsustainable.

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