Reasonable pre-deposit in tax appeals cannot be excessive when revenue is already secured by attached property.

Section 73(4) of the Gujarat Value Added Tax Act, 2003 allows the appellate authority to require tax payment, a lesser sum, or security, but any pre-deposit must be fixed on a reasonable assessment of the facts and the revenue interest. Where the assessee had already complied with the first appellate pre-deposit and attached property valued well above the demand secured the revenue, insisting on a further Rs. 3 crore deposit at the second appellate stage was excessive and unnecessary. The direction was therefore held unsustainable and set aside, and no further pre-deposit was required.

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Issues: Whether the Tribunal was justified in directing a pre-deposit of Rs. 3 crore at the second appellate stage when the first appellate authority had already fixed and secured a substantially lower pre-deposit and the petitioner's attached property sufficiently safeguarded the revenue.

Analysis: Section 73(4) of the Gujarat Value Added Tax Act, 2003 permits the appellate authority to insist on payment of tax or to allow the appeal on payment of a smaller sum or on furnishing security. The amount of pre-deposit must therefore be fixed on a reasonable assessment of the facts and the revenue interest to be protected. Here, the petitioner had already complied with the pre-deposit directed by the first appellate authority, and the attached property was valued far in excess of the demand. In these circumstances, the insistence on a further deposit of Rs. 3 crore was excessive and unnecessary, particularly when the appeal itself remained pending for adjudication on merits.

Conclusion: The direction to deposit Rs. 3 crore was unsustainable and was set aside. No further pre-deposit was required.

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