2026 (2) TMI 226 - HC - VAT / Sales Tax

Statutory pre-deposit under Haryana VAT Act: court refuses waiver but permits bank guarantee or adequate security.

Statutory pre-deposit under the Haryana Value Added Tax regime requires either cash deposit or submission of a bank guarantee/adequate security to the ... Statutory pre-deposit requirement u/s 33(5) of the Haryana Value Added Tax Act, 2003 - no inherent discretion in the appellate authority to waive pre-deposit - bank guarantee or adequate security as alternative to cash pre-deposit - financial hardship as ground for waiver of pre-deposit - reliance on precedent subject to facts and circumstances of each case - HELD THAT:- It is pertinent to note that in terms of Section 33(5) of Act 2003, it is open to the assessee to submit even a bank guarantee or adequate security to the satisfaction of assessing Authority in the manner prescribed for the amount in dispute. Petitioner had earlier deposited security before First Appellate Authority but the same could not be verified. In the given factual matrix, it is not possible to conclusively hold in present proceedings that financial status of the petitioner is not sound to the extent that it is even unable to furnish requisite security in terms of Section 33(5) of Act 2003. Reliance by petitioner on judgments of Hon’ble the Supreme Court in Indu Nissan Oxo Chemicals Ind. Ltd. [2007 (12) TMI 220 - SUPREME COURT] is of no avail as it is specifically held therein that there has to be due consideration of facts and circumstances of each individual case. It is recorded in order dated 01.11.2020, that petitioner was then ready to deposit 10% of total demand in terms of order of appellate Authority. Accordingly, writ petition was disposed of while giving liberty to petitioner to file an appeal within a period of two weeks with deposit of 10% of total demand. In the present case, as has been noted in the foregoing paras, we are unable to record a satisfaction in respect to undue financial hardship being faced by petitioner in the given factual matrix. We also do not find any merit in the argument raised by learned counsel for petitioner that merits of the matters should be considered which indicate that pre-deposit in this matter is uncalled for. No other argument has been addressed. Issues: Whether the Haryana VAT Tribunal (appellate authority) can be directed to entertain the first appeal challenging the assessment order dated 08.04.2024 without insisting on statutory pre-deposit in terms of Section 33(5) of the Haryana Value Added Tax Act, 2003.Analysis: The Court examined Section 33(5) of the HVAT Act which requires payment of admitted tax and furnishing of bank guarantee or adequate security before an appellate authority entertains an appeal. The Court considered Supreme Court precedent (Tecnimont Pvt. Ltd.) holding that the State is empowered to prescribe statutory pre-deposit and that the appellate authority has no discretion to waive the pre-deposit requirement. The petitioner claimed financial hardship and inability to furnish security; the State produced a financial report indicating substantial taxable turnover, tax payments and significant stakes in other real estate projects. The Court found that the petitioner failed to establish undue financial hardship on the facts of this case and that precedents relied upon by petitioner required case-specific satisfaction which was not demonstrated here. The Court also noted the option in Section 33(5) to furnish bank guarantee or adequate security and recorded that earlier submitted surety could not be verified.Conclusion: The petitioner's request for a direction to entertain the appeal without insisting on statutory pre-deposit under Section 33(5) HVAT Act is rejected; the statutory pre-deposit requirement applies and petitioner has not shown undue financial hardship to merit relief.