2025 (5) TMI 1979 - HC - GST

Pre-Deposit Requirements Under Assam VAT Act: Appellate Authorities' Jurisdiction Balanced with Equitable Relief for Compliant Petitioners

Diganta Duarah Versus The Union Of India And 4 Ors., The Principal Commissioner Central Goods And Service Tax Dibrugarh, The Commissioneer (Appeals) Guwahati, The Assistant Commissioner Central Goods And Service Tax Dibrugarh, The Deputy Commissioner Central Goods And Service Tax Dibrugarh.

The SC examined the jurisdictional limits of appellate authorities under the Assam VAT Act regarding statutory pre-deposit requirements. While affirming ... Dismissal of Appeal preferred by the petitioner - failure to submit the necessary pre-deposit as envisaged under Section 35F of the Central Excise Act, 1944 - HELD THAT:- The Hon’ble Apex Court in the case of Tecnimont [2019 (9) TMI 788 - SUPREME COURT] without any doubt, has laid down the proposition that the appellate authority shall not be within its jurisdiction to give a concession dehors the statutory prescription of deposit as a condition precedent for entertaining an appeal. However, the Hon’ble Apex Court in its earlier decisions in State of AP Vs P Laxmi Devi [2008 (2) TMI 850 - SUPREME COURT] and Har Devi Asnani Vs State of Rajasthan [2011 (9) TMI 957 - SUPREME COURT], held that in genuine cases of hardship, the recourse would still be open to the person concerned to approach superior Court, therefore, it would be completely different thing to say that the appellate authority itself can grant such a relief for the reason that such exercise would make provision itself unworkable and render the statutory intendment nugatory. Such determination was considered by a Division Bench in JSB Cement LLP [2019 (11) TMI 1430 - GAUHATI HIGH COURT] and held that when in case of requirement of pre-deposit is found to be arbitrary or exorbitant, only then, the writ Court can interfere and accordingly, applying the principle of equity, the Division Bench extended time of deposit of 20% of the statutory deposit under Section 79 (5) of the Act, 2003 and directed the respondents to hear the appeal on merit. In the considered opinion of this Court, the principle of equity as emphasized in the judgments of the Hon’ble Apex Court and the Division Bench, shall also be applicable in the given facts of the present case. This Court though cannot find fault with the appellate authority in non-entertaining the appeal due to non-compliance of Section 79 (5), however, as the petitioner is ready to pre-deposit the required amount and in exercise of power under Article 226 of the Constitution of India, this Court is inclined to grant the benefit of hearing to the petitioner in the given fact of the case. The present writ petition stands allowed by setting aside and quashing the impugned order dated 21.08.2024, subject to the statutory deposit. 1. ISSUES PRESENTED and CONSIDERED- Whether the appellate authority under the Assam Value Added Tax Act, 2003, can entertain an appeal without the petitioner making the prescribed pre-deposit under Section 79(5) of the Act.- Whether the appellate authority has jurisdiction or power to waive or relax the statutory requirement of pre-deposit as a condition precedent for hearing an appeal.- Whether the writ jurisdiction under Article 226 of the Constitution of India can be invoked to direct the appellate authority to hear the appeal despite non-compliance with the pre-deposit requirement.- The applicability and scope of equitable principles in cases involving statutory pre-deposit requirements for appeals.- The extent to which the Court can interfere with the appellate authority's order dismissing the appeal for non-compliance of pre-deposit.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Jurisdiction of the appellate authority to entertain appeal without pre-deposit under Section 79(5) of the Assam VAT Act, 2003The statutory framework under Section 79(5) mandates that an appeal before the appellate authority can only be entertained upon the appellant furnishing proof of payment of the prescribed pre-deposit. This provision is clear and unambiguous, establishing a mandatory condition precedent for filing an appeal.The Court referred to the decision of the Hon'ble Apex Court in Tecnimont Pvt. Ltd. Vs State of Punjab, which explicitly held that the appellate authority does not possess the jurisdiction to waive or relax the statutory pre-deposit condition. The Court emphasized that such jurisdictional limitation is intended to preserve the statutory scheme and prevent the appellate process from becoming unworkable or nugatory.The petitioner's failure to comply with the pre-deposit requirement under Section 79(5) led to dismissal of the appeal by the appellate authority, which was held to be legally valid and within jurisdiction.Issue 2: Power of the Court under Article 226 to intervene and grant equitable relief despite statutory pre-deposit requirementWhile the appellate authority lacks power to waive the pre-deposit, the Court considered whether it could exercise its writ jurisdiction under Article 226 to grant equitable relief in appropriate cases.The Court examined precedents, notably State of AP Vs P Laxmi Devi and Har Devi Asnani Vs State of Rajasthan, where the Hon'ble Apex Court recognized that in genuine cases of hardship or arbitrariness, the aggrieved party may approach the superior courts for relief. This does not imply that the appellate authority itself can dispense with the pre-deposit requirement, but that the High Court may intervene in exceptional circumstances.Further, the Division Bench decision in JSB Cement LLP Vs State of Assam was considered, which held that writ courts may interfere when the pre-deposit demanded is arbitrary or exorbitant, applying equitable principles to extend time or reduce the pre-deposit amount to ensure justice.In the present case, the petitioner expressed readiness to make the pre-deposit, and the Court found it appropriate to exercise its equitable jurisdiction to allow the appeal to be heard on merit after compliance with the statutory deposit, thus balancing the statutory mandate with principles of equity and justice.Issue 3: Treatment of competing arguments and application of law to factsThe respondent contended that the appellate authority acted within its jurisdiction and no illegality was committed. They relied on the Tecnimont decision to assert that the statutory pre-deposit condition is mandatory and cannot be waived.The petitioner relied on the equitable principles enunciated in JSB Cement LLP and Tecnimont to argue for relief in the form of direction to hear the appeal despite initial non-compliance.The Court acknowledged the correctness of the appellate authority's initial dismissal for non-compliance but emphasized that since the petitioner was now willing to comply, the Court could grant relief to allow the appeal to proceed on merits.The Court clarified that it was not expressing any opinion on the substantive merits of the appeal but was merely setting aside the dismissal order to enable fresh adjudication after statutory compliance.3. SIGNIFICANT HOLDINGS'The Hon'ble Apex Court in the case of Tecnimont (supra) without any doubt, has laid down the proposition that the appellate authority shall not be within its jurisdiction to give a concession dehors the statutory prescription of deposit as a condition precedent for entertaining an appeal.''However, the Hon'ble Apex Court in its earlier decisions... held that in genuine cases of hardship, the recourse would still be open to the person concerned to approach superior Court, therefore, it would be completely different thing to say that the appellate authority itself can grant such a relief for the reason that such exercise would make provision itself unworkable and render the statutory intendment nugatory.''When in case of requirement of pre-deposit is found to be arbitrary or exorbitant, only then, the writ Court can interfere and accordingly, applying the principle of equity, the Division Bench extended time of deposit of 20% of the statutory deposit under Section 79 (5) of the Act, 2003 and directed the respondents to hear the appeal on merit.''In the considered opinion of this Court, the principle of equity as emphasized in the judgments of the Hon'ble Apex Court and the Division Bench, shall also be applicable in the given facts of the present case.''This Court though cannot find fault with the appellate authority in non-entertaining the appeal due to non-compliance of Section 79 (5), however, as the petitioner is ready to pre-deposit the required amount and in exercise of power under Article 226 of the Constitution of India, this Court is inclined to grant the benefit of hearing to the petitioner in the given fact of the case.''Accordingly, the present writ petition stands allowed by setting aside and quashing the impugned order dated 21.08.2024, subject to the statutory deposit... It is also made clear that if the petitioner does not appear on the said date and does not make pre-deposit, the order that has been set aside, shall revive.'