2015 (10) TMI 2606 - HC - VAT and Sales Tax

Pre-deposit - whether the Tribunal was justified in reducing the amount of pre-deposit as directed by the first appellate authority as a condition precedent for hearing the appeal? - Held that - It is well settled that the powers to direct payment of predeposit are discretionary powers and such discretion is required to be exercised by the concerned authority in a reasonable manner. Having regard to the finding recorded by the Tribunal whereby it has recorded a prima facie view in favor of the assessee it cannot be said that the discretion exercised by it in refusing the amount of pre-deposit is in any manner unreasonable or arbitrary so as to give rise to any question of law. As regards the contention that the Tribunal has not examined the facts of the case from the aspect of financial hardship as rightly pointed out by the learned counsel for the respondent sub-section (3) of section 73 of the Act does not contemplate financial hardship as one of the factors to be taken into consideration for the purpose of waiver of predeposit. Appeal dismissed - decided against Revenue.

Summary

Issues:

1. Whether the Tribunal erred in granting stay against recovery till the disposal of appeal by the first appellate authority?

Analysis:

1. The appellant, the State of Gujarat, challenged an order passed by the Gujarat Value Added Tax Tribunal in Second Appeal No.53 of 2014. The Tribunal allowed the appeal by setting aside the order of the Deputy Commissioner and sent the matter back for further consideration. The Deputy Commissioner had directed the respondent to make a pre-deposit of 10% of the total demand, which was not done, leading to the dismissal of the appeal.

2. The Assistant Government Pleader argued that the Tribunal had more or less decided the matter on merits by referring to a previous decision and reducing the pre-deposit amount. The Tribunal had initially directed a pre-deposit of a certain amount, of which only a portion was deposited by the respondent. The Tribunal waived the balance amount and restored the appeal with a reduced pre-deposit amount.

3. The respondent's advocate contended that the Tribunal's order was just and legal, with no need for interference. It was argued that the Tribunal's decision did not need to consider financial hardship as a factor for reducing the pre-deposit amount, citing a previous court decision on the matter.

4. The High Court analyzed the submissions and the orders of the Tribunal and the first appellate authority. It noted that the main issue was whether the Tribunal was justified in reducing the pre-deposit amount set by the first appellate authority. The Court observed that the Tribunal had found a strong prima facie case in favor of the assessee, leading to the decision to restore the matter for further consideration.

5. The Court emphasized that the power to direct pre-deposits is discretionary and must be exercised reasonably. Given the Tribunal's prima facie view in favor of the assessee, the Court found no arbitrariness in the decision to reduce the pre-deposit amount, dismissing the argument of unreasonableness.

6. Regarding the lack of examination of financial hardship, the Court pointed out that the relevant section of the Act does not require consideration of financial hardship for waiving pre-deposit. Therefore, it concluded that the Tribunal's order did not have any legal flaw warranting interference or raising a substantial question of law.

7. Consequently, the appeal was dismissed as it failed to establish any legal infirmity in the Tribunal's decision, and no substantial question of law was found to justify interference.