2025 (5) TMI 1812 - HC - VAT / Sales Tax

Jurisdiction or power to entertain an appeal without the statutory pre-deposit being made by the appellant - 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 the 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. 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 firm 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 31.01.2025 subject to the statutory deposit.

Summary

The core legal questions considered by the Court in this matter include:

1. Whether the appellate authority under the Assam Value Added Tax Act, 2003, specifically Section 79(5), has jurisdiction or power to entertain an appeal without the statutory pre-deposit being made by the appellant.

2. Whether the writ jurisdiction under Article 226 of the Constitution of India can be exercised to grant relief to the petitioner by allowing pre-deposit belatedly and directing the appellate authority to hear the appeal afresh.

3. The applicability of equitable principles in cases involving statutory pre-deposit requirements and the scope of judicial interference when an appeal is dismissed for non-compliance with such statutory conditions.

4. The extent to which precedents, including decisions of the Hon'ble Apex Court and Division Benches of this Court, influence the interpretation and application of Section 79(5) and related procedural mandates.

Issue-wise Detailed Analysis

Issue 1: Jurisdiction of Appellate Authority to Entertain Appeal Without Pre-Deposit

Legal Framework and Precedents: Section 79(5) of the Assam Value Added Tax Act, 2003, mandates that an appeal before the Commissioner of Taxes (Appeal) shall be entertained only upon proof of payment of the prescribed pre-deposit amount. The Hon'ble Apex Court in Tecnimont Pvt. Ltd. Vs. State of Punjab (2021) 12 SCC 477 clarified that the appellate authority does not possess jurisdiction to waive or dispense with this statutory pre-deposit requirement. Earlier decisions such as State of AP Vs. P Laxmi Devi (2008) 4 SCC 720 and Har Devi Asnani Vs. State of Rajasthan (2011) 14 SCC 160 recognized that while appellate authorities cannot waive pre-deposit, superior courts may exercise equitable jurisdiction in genuine hardship cases.

Court's Interpretation and Reasoning: The Court acknowledged the binding nature of the Apex Court's ruling in Tecnimont, emphasizing that the appellate authority correctly dismissed the appeal due to non-compliance with Section 79(5). The Court recognized that the statutory provision is a condition precedent for entertaining appeals, and the appellate authority's hands are tied in this regard.

Application of Law to Facts: The petitioner failed to make the pre-deposit within the stipulated time, leading to dismissal of the appeal by the appellate authority. The Court found no illegality or jurisdictional error in this procedural enforcement.

Treatment of Competing Arguments: The petitioner's counsel argued for equitable relief based on precedents allowing extension or waiver in hardship cases. The respondent's counsel relied on the strict interpretation in Tecnimont, asserting no power exists to waive pre-deposit at the appellate level. The Court balanced these views by recognizing the statutory mandate while considering equitable relief under writ jurisdiction.

Conclusion: The appellate authority cannot entertain an appeal without pre-deposit as per Section 79(5). However, this does not preclude the High Court's intervention under Article 226 in appropriate cases.

Issue 2: Exercise of Writ Jurisdiction to Allow Pre-Deposit and Re-Hearing of Appeal

Legal Framework and Precedents: The Court referred to the principle established in JSB Cement LLP Vs. State of Assam and Ors. (2019) SCC Online Gau 5983, where the Division Bench held that writ courts may intervene when the pre-deposit requirement is arbitrary or exorbitant, applying equitable principles to extend time or reduce the deposit. The Apex Court in P Laxmi Devi and Har Devi Asnani also recognized the writ jurisdiction as a recourse in genuine hardship.

Court's Interpretation and Reasoning: The Court noted that while the appellate authority correctly dismissed the appeal for non-compliance, the petitioner's readiness to make the pre-deposit and the principle of equity justified judicial intervention. The Court emphasized that such intervention does not negate the statutory provision but ensures fairness and access to justice.

Key Evidence and Findings: The petitioner expressed willingness to comply with the pre-deposit requirement if allowed additional time. The Court found no evidence of mala fide or abuse of process by the petitioner.

Application of Law to Facts: The Court exercised its power under Article 226 to set aside the appellate order dated 31.01.2025, subject to the petitioner making the statutory deposit within 30 days. The appellate authority was directed to hear the appeal afresh upon compliance.

Treatment of Competing Arguments: The petitioner's plea for equitable relief was balanced against the respondent's insistence on strict statutory compliance. The Court found that the petitioner's case fell within the ambit of equitable relief as recognized in precedent.

Conclusion: The writ jurisdiction can be exercised to allow the petitioner to make the pre-deposit belatedly and secure a fresh hearing of the appeal, provided the statutory conditions are subsequently fulfilled.

Issue 3: Applicability of Equitable Principles in Tax Appeal Procedures

Legal Framework and Precedents: The principle of equity as applied in tax litigation was highlighted through the decisions in JSB Cement LLP and the Apex Court's earlier rulings. Equity allows courts to prevent injustice arising from rigid application of procedural rules, especially where statutory provisions do not explicitly prohibit such relief.

Court's Interpretation and Reasoning: The Court reiterated that equitable relief is not to undermine the statutory scheme but to complement it by ensuring that procedural non-compliance does not result in disproportionate hardship or denial of justice. The Court emphasized that such relief is exceptional and must be exercised cautiously.

Application of Law to Facts: Given the petitioner's readiness to comply and absence of arbitrariness in the pre-deposit amount, the Court found it appropriate to apply equity to allow a fresh hearing.

Conclusion: Equitable principles are applicable in cases involving pre-deposit requirements, enabling courts to mitigate harsh consequences while respecting legislative intent.

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."

"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 firm 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 31.01.2025, subject to the statutory deposit... The petitioner shall appear before the appellate authority within a period of 30 (thirty) days from the date of this order along with a copy of this order passed today and on such appearance and furnishing of statutory deposit, the appellate authority shall afresh take the matter for hearing on a date, which is convenient to the appellate authority."

Core principles established include:

• The appellate authority under the Assam VAT Act cannot entertain appeals without statutory pre-deposit as prescribed under Section 79(5).
• Writ jurisdiction under Article 226 can be invoked to allow belated pre-deposit and fresh hearing in genuine cases, applying equitable principles.
• Equitable relief does not override statutory mandates but serves to prevent injustice arising from procedural non-compliance.
• Such relief is conditional and subject to compliance within a stipulated timeframe, failing which the original dismissal order revives.

Final determinations on each issue are that the appellate authority acted within its jurisdiction in dismissing the appeal for non-deposit; however, the High Court exercised its writ jurisdiction to set aside that dismissal and directed a fresh hearing upon compliance with the statutory deposit requirement, thereby balancing statutory compliance with equitable justice.