The statutory requirement of predeposit under Section 73(4) of the Gujarat Value Added Tax Act, 2003, must be adhered to, and the first appellate stage should not be bypassed.

Akil Kureshi, J.

1. Heard learned counsel for the parties for final disposal of the appeal on the following substantial question of law :

“Whether in an appeal filed by the assessee questioning the decision of the Appellate Authority to demand a portion of tax by way of predeposit, the Value Added Tax Tribunal can go into the merits of the order of assessment without deciding the question of predeposit ?”

2. On the short ground of propriety of the Tribunal in deciding the question on merits when the sole question before the Tribunal in appeal filed was regarding the predeposit, we are inclined to quash the order. Our reasons are as follows.

3. The appellant has challenged the judgment of the Value Added Tax Tribunal (hereinafter referred to as 'the Tribunal') dated September 05, 2013 in Second Appeal No.675 of 2011. Such appeal was filed questioning the judgment of the Deputy Commissioner of Commercial Tax, Appeals 6, Bhavnagar, dated July 16, 2011. Such order was passed on an application for waiver of pre deposit pending an appeal before the said authority. The Appellate Authority insisted that the appellant must deposit the entire amount of the assessed tax by way of predeposit. Since the appellant was unable to do so, the appeal was not entertained.

4. It was this order which the appellant challenged before the Tribunal. The scope of appeal before the Tribunal, thus, was whether the Joint Commissioner of Commercial Tax was justified in insisting that the appellant should deposit 100% of the amount by way of predeposit. In the process of hearing the appeal, the Tribunal decided several issues pertaining to validity of the assessment order and allowed the appeal in part. The Tribunal passed the following order :

“9. This appeal is partly allowed. The disallowance of Input tax credit is hereby confirmed and accordingly the levy of tax as well as the interest is also confirmed. So far as the levy of penalty is concerned, the matter is remanded back to the assessing officer to examine the whole issue and pass fresh order after giving an opportunity of being heard to the appellant, in light of the directions given hereinabove.”

5. It is against this order that the appellant has filed this Tax Appeal. In our opinion, the Tribunal committed serious error in examining the validity of the assessment order in an appeal concerning the question of predeposit. The Tribunal was called upon to decide whether the appellant, to maintain its appeal before the Appellate Commissioner, should be asked to deposit the entire amount of tax by way of pre deposit or only part thereof or none at all. The Tribunal had to answer such question as found appropriate. In our opinion, the Tribunal under no circumstances could have bypassed the first appellate stage and decided the appeal as if it was a second appeal on merits before the Tribunal. Till the issue of appropriate amount to be deposited by way of predeposit was sorted out and such amount was deposited by the appellant, the appeal before the Deputy Commissioner was not even properly instituted. In a recent judgment dated January 30, 2014, in somewhat similar background, this Court in the case of Anilkumar v. State of Gujarat while dealing with Tax Appeal No.688 of 2013 with Civil Application No.422 of 2013, observed as under :

“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 that no appeal against the order of assessment shall ordinarily be entertained by the Appellate Commissioner, unless such appeal is accompanied by proof of payment of tax in respect of which the appeal has been preferred. Proviso to section 73(4), however, provides that the appellate authority may, if it thinks fit, for reas