JUDGMENT :

Dhananjaya Y. Chandrachud, J

1. Leave granted.

2. This appeal arises from a judgment and order of the High Court of Judicature at Bombay dated 8 November 2019.¹[WP No. 8834 of 2018]

3. The issue, which arises in the appeal, is whether amounts which have been deposited under protest prior to an order of assessment can be adjusted against the mandatory pre-deposit required for filing an appeal under Section 26(6A) of the Maharashtra Value Added Tax Act 2002²[“MVAT Act”].

4. The appellant is a public limited company which engages in the manufacture and sale of oleo-chemicals and personal care products. Between 15 November 2016 and 22 November 2016, an investigation was carried out by the officers of the Sales Tax Department at the premises of the appellant. A notice to show cause was issued on 22 November 2016, to which the appellant filed a reply contesting the proposed tax liabilities. On 8 December 2016 and 11 January 2017, the appellant made a protest payment of Rs 3,64,24,388, comprising an amount of Rs 2,32,37,249 towards tax and Rs 1,31,87,139 towards interest for Assessment Year³[“AY”] 2013-14. On 30 October 2017, a notice to show cause was issued to the appellant in relation to the imposition of penalty, to which the appellant submitted its reply.

5. On 15 April 2017, Sections 26(6A), 26(6B) and 26(6C) were introduced into the MVAT Act by Maharashtra Act XXXI of 2017 mandating a pre-deposit for the filing of appeals. For AY 2013-14, an order of assessment was passed on 26 December 2017 under the Maharashtra Tax on the Entry of Goods into Local Areas Act 2002, imposing a tax demand of Rs 10,44,54,708, together with the penalty in an equivalent amount, besides a demand for interest of Rs 7,09,06,928. The total dues under the assessment order were, thus, in the amount of Rs 27,98,36,344. After adjustment of the amounts paid, under protest, by the appellant, the amount held to be payable was Rs 24,34,11,956.

6. An appeal was filed against the order of assessment, which was rejected by the appellate authority. The appellant was informed by the Joint Commissioner of Sales Tax (HQ) 1 by a letter dated 4 June 2018 that the payments which were made under protest could not be considered towards pre-deposit for the purpose of Section 26(6A). A petition under Article 226 of the Constitution was instituted to challenge the letter dated 4 June 2018.

7. Arguments were heard and the petition was reserved for judgment on 14 February 2019. By a judgment delivered nearly seven months thereafter, on 8 November 2019, the Division Bench of the High Court has dismissed the petition. The High Court has held that once an order of assessment has been passed, any amounts which have been paid albeit under protest, would have to be adjusted against the total tax liability and the demand to follow. Hence, the view of the High Court was that the appellant was duty bound to deposit 10 per cent of the total tax demand after adjusting the amount which had already been paid under protest, prior to the order of assessment.

8. The correctness of the view of the High Court turns upon the interpretation of Section 26(6A) of the MVAT Act, which reads as follows:

“6A) No appeal against an order, passed on or after the commencement of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017 (Mah XXXI of 2017), shall be filed before the appellate authority in first appeal, unless it is accompanied by the proof of payment of an aggregate of the following amounts, as applicable,-

(a) in case of an appeal against an order, in which claim against declaration or certificate, has been disallowed on the ground of non-production of such declaration or, as the case may be, certificate then, amount of tax, as provided in the proviso to sub-section (6),

(b) in case of an appeal against an order, which involves disallowance of claims as stated in clause (a) above and also tax liability on other grounds, then, an amount equal to 10 per cent of the amount of tax, di