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STATE OF GUJARAT Versus SHANTI EXPORTS LTD

2016 (8) TMI 424 - GUJARAT HIGH COURT

Stay of demand - validity of consolidated order passed by the Tribunal – failure to make pre-deposit – scope of jurisdiction – Held that: - while considering the issue of pre-deposit, the learned Tribunal cannot travel its scope beyond this issue and cannot decide the case on merits without deciding the question of pre-deposit. The learned Tribunal has committed serious error of jurisdiction – impugned order set aside – matter remanded back – appeal disposed off. - TAX APPEAL NO. 345 of 2015 - D .....

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al No. 405 of 2010 is concerned. 2. The background of the facts are that the subject matter property of one M/s. Arunoday Mills Ltd., came to be purchased in auction by the respondent - M/s. Shanti Exports Pvt. Ltd., as the said company could not meet with the financial liability of IDBI Bank. M/s. Arunoday Mills Ltd., was provided a financial assistance by IDBI Bank and the said Company was unable to discharge the loan liability. Resultantly, the Bank had to take recourse to a public auction of .....

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letter dated 08.02.2007. The case of the appellant - State is that for the financial year 2005-06 in the case of M/s. Arunoday Mills Ltd., the Assessing Officer had framed an assessment and a demand of Rs.1,16,30,773/- came to be raised vide order dated 30.11.2008. The said assessment order was challenged by the respondent herein as it has stepped into the shoes of M/s. Arunoday Mills Ltd., qua the property before the first appellate authority and the first appellate authority without entering .....

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ok up the said Second Appeals along with another Second Appeal No. 407 of 2010 by clubbing together and by consolidated order dated 26.02.2015 has disposed of all the three appeals by common order and all the three appeals came to be partly allowed. 2.1. So far as Second Appeal No. 405 of 2010 is concerned, the order passed by the first appellate authority came to be set aside and the respondent herein i.e. the original appellant is held liable to pay an amount of tax deferred by the erstwhile o .....

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rst appellate authority as it appears and, therefore, since the merit has been examined by the learned Tribunal while dealing with Second Appeal No. 405 of 2010, feeling aggrieved by the same, the present appellant - State has preferred the present Tax Appeal against that part of the order whereby the case is not believed by the department. The present Tax Appeal on 09.06.2015 is entertained by this Court and vide said order, the following substantial question of law has been framed for consider .....

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10 is circumscribed to consider the issue relating to nonpayment of predeposit and in the case on hand, the learned Tribunal has dealt with the Second Appeal on merit and, therefore, has contended that it has travelled beyond the scope of jurisdiction. The learned AGP for the appellant - State has submitted that it is a settled proposition of law propounded by series of decisions that if the first appellate authority has dismissed the appeal on the issue of predeposit, the merit of case is not t .....

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f this Court in Tax Appeal No. 711 of 2013 dated 30.08.2013 in the case of State of Gujarat v. Tudor India Ltd., wherein, it has been specifically held that if the Tribunal is confronted with the situation whereby the issue with respect to nonpayment predeposit under Section 73(4) of the Gujarat Value Added Tax Act is arising, then, it is not open for the learned Tribunal to go into the merits of the case as if a substantive appeal is to be heard. The learned AGP for the appellant - State furthe .....

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der consideration of this Court is regarding nonpayment of predeposit issue. The learned AGP for the appellant - State has as such not drawn attention of the Court to the merit of the matter in so far as it relates to Second Appeal No. 405 of 2010. 4. To meet with the contention, when it has been inquired, the respondent though served has not appeared through their representative and hence the Court is constrained to examine the issues which have been posted before the Court in the context of su .....

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hich an appeal has been preferred: [Provided that an appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order ( a) without penalty of tax with penalty (if any) or, as the case may be, of the penalty, or (b) on proof of payment of such smaller sum as it may consider reasonable, or (c ) on the appellant furnishing in the prescribed manner, security for such amount as the appellate authority may direct .] 4.1. The said statutory provis .....

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the first appellate authority has dismissed the first appeal. If we refer to Second Appeal No. 405 of 2010, the same is essentially against the said order dated 29.04.2009.The said appeal came to be filed in view of the fact that there was a liability crystallized for the assessment period of 200506 under the provisions of Gujarat Value Added Tax Act as well as under the Central Sales Tax Act and, therefore, it appears that appeal came to be filed, but nonetheless the issue involved in appeal is .....

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30.08.2013, it has been specifically spelt out and held while entertaining the Second Appeal, the scope of inquiry was related to issue of nonpayment of predeposit and not the merit. The relevant observations contained in the said order are worth to be taken note of and, therefore, reproduced hereinafter : 4. A plea however was taken that the Joint Commissioner of Commercial Tax in the first appeal order made on 4th August 2008 rejected the appeal of the appellant on the ground of nonpayment of .....

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order came to be challenged before the Tribunal, the Tribunal instead of addressing the issue of predeposit, has chosen to decide the matter on merits. 7. As we have noticed in number of matters, this unacceptable trend of deciding the appeals on merit, even when the first appellate authority has rejected the case of assessee on the ground of predeposit, instead of considering the request of deposit of predeposit, such determination of the entire appeal by the Tribunal at the such juncture, in .....

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either side approaches the second appellate authority, there does not arise any question of circumventing the very stage and exercise the powers of first appellate authority. We say so as the Statute provides that even on adjudication of the issue on merit by the first appellate authority, either side is entitled to challenge such reasonings before the second appellate authority. Not only the parties and the second appellate authority would be deprived of the reasonings of the first appellate a .....

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decision of the Apex Court in case of Benara Valves Limited v. Commissioner of Central Excise, reported in 2006 [204] ELT 513 (SC). 8.1 If either side approaches the Tribunal, being aggrieved by the order of either grant or rejection of requirement of predeposit, it is open for the Tribunal to take into consideration the law on the subject and decide the validity of the order of directing or not directing the amount of predeposit. However, that would not ipso facto entitle the Tribunal to give a .....

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002. The Tribunal was hearing an appeal against an order dated 23rd April 2002 passed by the Commissioner of Central Excise [Appeals]. By that order, the Commissioner [Appeals] had merely dismissed the appeal because predeposit was not made. The Commissioner [Appeals] had not gone into the merits. Therefore, the only question before the Tribunal was whether predeposit was required or not. The Tribunal has chosen to go into the merits and decided the appeal on merits also. This should not have be .....

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Tribunal so as to emphasis the requirement of not permitting any such short circuiting of the process at any stage. We have chosen not to enter the arena of merit of the case at all as is apparent from the discussion held herein above. 8.4 With this, the present appeal is directed to be remitted back to the Tribunal to decide the issue of predeposit and on deciding the same to the first appellate authority which shall decide the same on merit in accordance with law. Needless to say that the law .....

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Court worth to be taken note of. Hence, the relevant extract of the said decision contained in para 3 and 4 are reproduced hereinafter : 3. We are of the opinion that the Tribunal committed serious error in examining the appellant s grievances on the merits of the order of assessment. The order of assessment was passed by the adjudicating authority, which was appellable by way of first appeal before the Appellate Commissioner. Section 73(4) of the Gujarat Value Added Tax Act, 2003, requires tha .....

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ent of such small sum as it may consider necessary or (c) on the appellant furnishing in the prescribed manner security or such as the appellate authority may direct. 4. In view of section 73(4) of the Act, therefore, such appeal could not have been entertained unless in terms of proviso, the appellate authority for reasons recorded in writing relaxed the requirement of full predeposit. In the present case, the Appellate Commissioner exercised such powers and required the appellant to deposit 25 .....

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on to reject such an appeal for noncompliance with such requirement was correct or not. 4.3. Even in the said decision, case of Tudor India Ltd., (supra) has also been extensively dealt with. 4.4. In another decision delivered by the Division Bench of this Court in Tax Appeal No. 78 of 2014 dated 21.03.2014, similar view has been taken relying upon various other decisions by substituting the order of the learned Tribunal and the appeal was placed back before the learned Tribunal for fresh consid .....

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