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2014 Supreme(Guj) 478
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
AKIL KURESHI and SONIA GOKANI, JJ.
SHAKTIRAJ METAL (P) LTD – Appellant
Versus
STATE OF GUJARAT - Opponent
TAX APPEAL NO. 78 of 2014 With CIVIL APPLICATION NO. 63 of 2014 In TAX APPEAL NO. 78 of 2014
Decided On : 21/03/2014
Advocate Appeared:
MR MANISH K KAJI, ADVOCATE for the Appellant(s) No. 1
MR JAIMIN GANDHI, AGP for the Opponent(s) No. 1
The main legal point established in the judgment is the statutory requirement of predeposit before entertaining an appeal against the order of assessment, as per section 73(4) of the Gujarat Value Added Tax Act, 2003, and the importance of adhering to the prescribed procedures without bypassing the first appellate authority.
Headnote:
Tax Appeal - Value Added Tax - Section 73(4) of the Gujarat Value Added Tax Act, 2003 - The court discussed the provisions of section 73(4) of the Act, which requires proof of payment of tax for entertaining an appeal against the order of assessment. The court emphasized the requirement of predeposit before proceeding with the appeal and highlighted the need to adhere to the statutory procedures and not bypass the first appellate authority.
Fact of the Case:
The appellant, engaged in trading, challenged an assessment order disallowing certain claims for input tax credit. The Deputy Commissioner dismissed the appeal for non-payment of a sum of Rs. 10 lakh by way of predeposit. The tribunal directed the appellant to pay 20% of the tax amount and disposed of the matter on merits, bypassing the first appellate authority.
Finding of the Court:
The court found that the tribunal erred in examining the appellant's grievances on the merits of the order of assessment, as the scope of the appeal should have been limited to the question of the validity of the order requiring predeposit. The tribunal's decision to bypass the first appellate authority and waive the requirement of predeposit without passing any order to that effect was deemed incorrect.
Issues: The issues revolved around the tribunal's jurisdiction to entertain the appeal on merits without addressing the requirement of predeposit and the appellant's failure to comply with the predeposit condition imposed by the Deputy Commissioner.
Ratio Decidendi: The court emphasized the statutory requirement of predeposit before entertaining an appeal against the order of assessment, as per section 73(4) of the Act. It highlighted the need to adhere to the prescribed procedures and not bypass the first appellate authority. The court also referred to previous judgments emphasizing the importance of adhering to the requirement of predeposit and not deciding appeals on merits without addressing the predeposit issue.
Final Decision: The impugned order passed by the Gujarat Value Added Tax Tribunal was quashed, and the appeal was placed back before the tribunal for fresh consideration and disposal on the issue of predeposit. The Tax Appeal was disposed of, and the civil application for stay was disposed of accordingly.
SONIA GOKANI, J.
1. Present Tax Appeal is preferred against the order of the Gujarat Value Added Tax Tribunal (“the Tribunal” for short) dated 11.9.2013.
2. The appellant was carrying on business of trading in aluminum, iron and steel items and scrap thereof. The appellant had worked out output tax on sales made within the State of Gujarat and sales outside the State. Some adjustments were done on output tax liability against input tax credit made available to the appellant. Assessment order was passed on 29.3.2011 by the Assessing Officer disallowing certain claims of the appellant for input tax credit on the ground that vendor’s registration certificates were cancelled ab initio. He was also held liable to pay certain amount of tax without penalty and interest.
3. First Appeal was preferred before the Deputy Commissioner of Commercial Tax. Deputy Commissioner vide order dated 29.9.2011 dismissed the appeal for non payment of a sum of Rs. 10 lakh by way of predeposit. The tribunal passed the order directing the appellant to pay 20% of the tax amount which would come to Rs.1,79 lakhs(rounded off) within one month from the date of said order and granted stay against recovery of outstanding demands on condition of such deposit till the final disposal of the appeal.
3.1) It appears that the tribunal though passed the said order, also further directed the office to place such matter with other matters of “RC cancellation group”. At the time of issuance of notice, we noted that this is one of those cases, where the tribunal converted the assessee’s appeal against the order of predeposit into one on merits. We also had observed that in past when we came across such orders, & the same were remanded back to the tribunal for rehearing of the appeal only on the point of predeposit.
4. We have heard learned counsel Shri Kazi appearing for the appellant and also learned AGP Shri Jaimin Gandhi for the respondent State.
5. Learned AGP has urged that the tribunal’s reliance essentially is on the decision in case of M/s. Madhav Steel Corporation and when the challenge was made to such a decision of the Tribunal, this Court has not entertained the same. He therefore, has urged that no remand in the instant case be made. According to the learned counsel Shri Kazi the facts of this case cannot be equated with that of M/s. Madhav Steel Corporation and therefore, the Court may direct rehearing on the aspect of predeposit.
6. On thus hearing both the sides and on considering the facts what emerges is, after the order of assessment when the challenge was made before the Deputy Commissioner in the First Appeal, the Deputy Commissioner directed predeposit for sum of Rs. 10 lakh. Such order was challenged before the Tribunal by the present appellant. The Tribunal though had directed the appellant to pay 20% of the tax amount making such sum to be Rs.1.79 lakhs (rounded off) and the same was directed to be paid within a period of 30 days, however, curiously thereafter, without any request from either sides and also without reasonings, the Tribunal also directed the registry to place concerned matter along with the hearing of other group and disposed of the matter on merits. Tribunal thus has chosen to by pass the first appellate authority as is noticed in many other matters. Therefore, we are of the firm opinion that directions for rehearing on the aspect of predeposit in the instant case, shall need to be given, following the decision of this Court in case of Anil Kumar v. State of Gujarat passed in Tax Appeal No.688/2013 vide order dated 30.01.2014. It would be profitable to reproduce some of the relevant observations while remanding this case to the Tribunal for the aforesaid purpose of deciding the issue of predeposit :
“3. We are of the opinion that the Tribunal committed serious error in examining the appellants grievances on the merits of the order of assessment. The order of assessment was passed by the adjudicating authority, which was ap
