Pre-assessment protest payments can satisfy VAT appeal pre-deposit requirements where the appellate authority has discretion.

Amounts paid under protest before an assessment order may count as satisfactory proof of payment for the appellate pre-deposit requirement under Section 73 of the Gujarat VAT Act, especially where the disputed demand has not yet crystallised and the appellate authority retains discretion. The Gujarat HC distinguished recovery provisions governing undisputed assessments and accepted that substantial pre-assessment payments could be treated as compliance with the appeal condition. On the stated facts, the first appellate authority was not justified in summarily dismissing the appeals for non-compliance with pre-deposit, and the protest payments were sufficient to meet the statutory requirement.

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Issues: Whether amounts paid under protest before completion of assessment could be treated as satisfactory proof of payment for purposes of the statutory pre-deposit requirement under Section 73 of the Gujarat Value Added Tax Act, and whether the first appellate authority was justified in summarily dismissing the appeals for non-compliance with pre-deposit.

Analysis: The dispute concerned assessment demands where the appellants had already deposited a substantial sum under protest before the assessment orders were passed. The statutory text of Section 73(4) requires an appeal against an assessment order to be accompanied by satisfactory proof of payment of the tax in respect of which the appeal is preferred. On the facts, the tax liability arising from the assessment orders was approximately Rs. 204 crores, while Rs. 119 crores had already been paid under protest during investigation and before crystallisation of the demand. The Court held that the pre-deposit requirement had to be examined in the context of the disputed assessment itself, and that the amounts already deposited could be treated as payment towards the statutory requirement. The Court also held that the provisions relied upon for recovery and payment in an undisputed assessment setting did not control the appellate pre-deposit issue in these matters. The distinction drawn from the cited Maharashtra VAT decision was accepted because the Gujarat provision conferred discretion on the appellate authority.

Conclusion: The protest payments were rightly treated as sufficient compliance with the pre-deposit requirement, and the summary dismissal of the first appeals for want of pre-deposit was not justified.

Final Conclusion: The tax appeals were dismissed and the connected writ relief for lifting the bank attachment was granted, leaving the Tribunal's directions undisturbed on the peculiar facts of the case.

Ratio Decidendi: Where the statute requires an appeal against assessment to be supported by satisfactory proof of payment, substantial payments made under protest before assessment may be taken into account as compliance with the pre-deposit condition, particularly where the appellate authority retains discretion under the governing provision.

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