Appellate authority cannot waive pre-deposit under Section 33(5) but court can direct appeal hearing without precondition

M/s Anand Rathi Commodities International Private Limited, M/s Xage Communication India Private Limited, SKS Overseas Private Limited, and Buniyad International Versus The State of Haryana and others.

M/s Anand Rathi Commodities International Private Limited, M/s Xage Communication India Private Limited, SKS Overseas Private Limited, and Buniyad ... Issues Involved:

1. Constitutionality of Section 33(5) of the Haryana Value Added Tax Act, 2003.
2. Requirement of pre-deposit of surety bond or bank guarantee under Section 33(5) of the HVAT Act.
3. Financial incapacity of the petitioner companies to furnish security.
4. Quashing of orders by the Joint Excise and Taxation Commissioner (Appeals) and the Haryana Tax Tribunal.
5. Applicability of Supreme Court judgments and previous High Court decisions.
6. Ex-parte assessment orders and procedural compliance under the HVAT Act.

Detailed Analysis:

1. Constitutionality of Section 33(5) of the Haryana Value Added Tax Act, 2003:

The petitioners initially sought to challenge the constitutionality of Section 33(5) of the HVAT Act. However, this prayer was not pressed by the petitioners in light of the Supreme Court's judgment in M/s Tecnimont Private Limited vs. State of Punjab and others (2021) 12 SCC 477, which upheld similar provisions under the Punjab VAT Act.

2. Requirement of Pre-Deposit of Surety Bond or Bank Guarantee:

The petitioners argued that their financial incapacity prevented them from fulfilling the requirement of furnishing a bank guarantee or surety bond as mandated by Section 33(5) of the HVAT Act. They relied on the Supreme Court's judgment in M/s Tecnimont Private Limited, which indicated that appellate authorities do not have the power to waive such preconditions but that High Courts can provide relief in cases of extreme hardship.

3. Financial Incapacity of the Petitioner Companies:

The petitioners presented evidence, including affidavits and financial statements, demonstrating their inability to furnish the required security. The court noted that the net worth of the petitioner companies was significantly less than the demand raised, rendering them incapable of providing the surety bonds or bank guarantees.

4. Quashing of Orders by the Joint Excise and Taxation Commissioner (Appeals) and the Haryana Tax Tribunal:

The petitioners sought quashing of the orders passed by the Joint Excise and Taxation Commissioner (Appeals) and the Haryana Tax Tribunal, which dismissed their appeals due to non-furnishing of adequate security. The court found that while the appellate authorities acted within their statutory limits, the High Court under Article 226 of the Constitution could direct the appeals to be heard without insisting on preconditions.

5. Applicability of Supreme Court Judgments and Previous High Court Decisions:

The petitioners cited various Supreme Court judgments, including Commissioner of Income-Tax, Delhi vs. Bansi Dhar and Sons (1986) 1 SCC 523 and Government of Andhra Pradesh vs. Smt. P. Laxmi Devi (2008) 4 SCC 720, to support their plea for relief from the onerous conditions of Section 33(5). The court acknowledged these precedents and emphasized that in cases of extreme hardship, the High Court could intervene to provide relief.

6. Ex-Parte Assessment Orders and Procedural Compliance:

The petitioners also challenged the ex-parte assessment orders, claiming procedural lapses, including non-service of mandatory notices under Section 15(2) of the HVAT Act. The court held that these procedural issues could be raised before the appellate authority, thus not requiring immediate intervention.

Conclusion:

The High Court directed the Joint Excise and Taxation Commissioner (Appeals), Faridabad, to hear the appeals without insisting on the precondition of furnishing a surety bond or bank guarantee, considering the financial incapacity of the petitioners. The court remanded the matters for expeditious disposal within three months and allowed the writ petitions. The other procedural issues related to ex-parte assessment orders were left to be contested before the appellate authority. All pending applications were disposed of without costs.