Pre-deposit discretion in VAT appeals must account for prima facie case and denial of effective hearing during lockdown.

In a VAT appeal, the appellate authority must exercise pre-deposit discretion judicially by considering the appellant's prima facie case and whether an effective hearing was denied during the COVID-19 lockdown; here, the Tribunal failed to address those factors adequately. The direction insisting on pre-deposit was therefore set aside, the matter was remanded for fresh consideration on merits, and the appellant's available input tax credit was treated as continuing to operate as pre-deposit.

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Issues: Whether the Tribunal was justified in directing pre-deposit without properly considering the appellant's prima facie case and the absence of effective opportunity of hearing during the COVID-19 lockdown period.

Analysis: The appeal concerned the insistence on pre-deposit at the appellate stage in a VAT dispute arising from reassessment proceedings. The record showed that the reassessment was made on the basis of earlier provisional material and that the appellant had been deprived of an effective hearing because the proceedings were affected by the lockdown period. The Tribunal was required to consider whether the circumstances disclosed a strong prima facie case and whether the quantum of pre-deposit was justified in light of the carried forward input tax credit and the earlier deposit already made. The Court found that the Tribunal had not adequately addressed these aspects before sustaining the pre-deposit direction.

Conclusion: The direction insisting on pre-deposit was set aside, the matter was remanded for fresh consideration on merits, and the appellant's available input tax credit was treated as continuing to operate as pre-deposit.

Ratio Decidendi: While deciding the maintainability of an appeal and the condition of pre-deposit, the appellate authority must exercise discretion judiciously by considering the appellant's prima facie case and the surrounding circumstances, including denial of effective hearing.

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