The court may allow the substitution of cash or bank guarantees with immovable property as security for pre-deposit requirements in tax appeals to ensure the case is decided on its merits.

ORAL ORDER

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr. Hiren J. Trivedi for the applicants and learned Assistant Government Pleader Ms. Shrunjal Shah for the opponent.

2. These applications are preferred with a prayer to modify the Judgement and Order dated 15.02.2024 passed in Tax Appeal No. 743 of 2023 and allied appeals regarding pre-deposit requirement to 20% of the refund granted and it is further prayed to allow the benefit of 10% withheld refund amount in view of the facts and averments made in the application and further affidavit filed by the applicants.

3. Learned advocate Mr. Trivedi for the applicant has relied upon further affidavit filed by the applicant on 18.04.2026 and affirmed on 20.04.2026 wherein, it is stated as under:

“2. I state that in the case of sister concern of the applicant i.e. M/s Vinayak Trexim, in identical facts, the Hon'ble Value Added Tax Tribunal (hereinafter referred to as 'VAT Tribunal') fixed an amount of Rs. 20,00,000/- (Rs. Twenty Lakhs only) as pre-deposit, which comes to 15.46% of total tax demand of Rs. 1,29,33,880/-. Further, this Hon'ble Court in Tax Appeal No.5 & 6 of 2019, while confirming the order of the VAT Tribunal, further granted benefit of 10% per cent of provisional refund lying with the department, and after adjusting Rs. 14,45,970/-, directed the applicant to finally pay Rs. 6,00,000/- (Rupees Six Lacs only) as pre-deposit.

3. I state that in the case of the applicant, the total pre-deposit for years 2011-12, 2012-13, 2013-14 & 2014-15 as fixed by the Hon'ble VAT Tribunal is totally Rs. 4,38,92,140/-. I further state that the Father of the deposing Director is the owner of the property situated at V/2660, Lower Ground and Upper Ground Floor, Roshanpura, Nai Sarak, Delhi-110006. That the valuation of the said property done by a government approved valuer as on 16.08.2025 is Rs. 5,11,94,000/- (Rs. Five Crore Eleven Lakhs and Ninety-Four Thousand only). Annexed hereto and marked as "Annexure-I" is the copy of valuation report along with ownership documents. I further state that currently the said property is mortgaged as collateral security for a Bank Guarantee (BG) of Rs. 60,00,000/- (Rs. Sixty Lakhs only) issued by HDFC Bank Ltd., Delhi. That for this BG, 25% security margin is covered by fixed deposit and thus the charge on the said property is only for Rs. 45,00,000/- (Rs. Forty-Five Lacs only). Annexed hereto and marked as "Annexure-II" is the copy of sanction letter dated 31.01.2026 of renewal of the above-mentioned BG of Rs. 60,00,000/-.

4. I state that in the present appeal, for the purpose establishing its Bonafide, the applicant had volunteered and caused bank guarantee of Rs. 90,00,000/- issued by Axis Bank Ltd. bearing No. 00070100008198 Dated 22-01-2026/007 in favor of the First Appellate Authority. I further state that by returning the afore-mentioned BG of Rs. 90,00,000/- to Axis Bank and using the funds which would be freed from it, the applicant would clear the charge on the above-mentioned property in full. Thus, the said property would then be completely free from all encumbrances.

5. I state that the value of the property covers much more than the amount of pre-deposit as fixed by the Hon'ble VAT Tribunal. I also state that we the Directors of the applicant company are ready and willing to offer the captioned property as security towards pre-deposit. I further state and submit that this Hon'ble Court has accepted tangible securities in the form of immovable properties towards pre-deposit in multiple tax matters before. That the applicant shall file an undertaking in respect of the said property (free of all encumbrances) as security against