A three-judge bench of the Bombay High Court comprising Justice R.D. Dhanuka, Justice Nitin W. Sambre, and Justice Abhay Ahuja has upheld the validity of the provisions of section 129E of the Customs Act mandating pre-deposit on appeals and observed that the fiscal legislation can very well stipulate as a requirement of law a mandatory pre-deposit as a condition precedent for an appeal to be entertained by the appellate authority.
The petitioners/assessee filed the first quarterly returns for the period 2013-2014 under the Maharashtra Value Added Tax Act, 2002. The assessment proceedings were initiated by the Deputy Commissioner of Sales Tax, Issue-Based Audit, Mumbai. The assessing officer passed an assessment order. The petitioner filed a stay application on Form No. 311 of the MVAT Act, 2002 before the Joint Commissioner of State Tax (Appeals), Mumbai. It is the First Appellate Authority. The petitioners also filed an appeal on Form No. 301 before the State First Appellate Authority.
Holding that theright of appeal can be made conditional, the bench observed that “with conditions similar to the one inserted by the 2017 amendment in issue, by way of an amendment made with retrospective effect, even if the same adversely affects such a right, much after the ‘lis’ has begun, containing express words or by necessary implications.”
“In our view learned Advocate General is right in his submission that the statute always makes the ‘right of appeal’ available, if any and if at all, in a package which includes various facets of such a right such as limitation, overall extent and scope of such a right, will include various aspects thereof, such as the available grounds, conditions subject to which it can be exercised. The Right of Appeal at the pre-amendment stage was available in a package which is now altered and at the post-amendment stage it is very much continued, but in a different package with a right of appeal vested at the pre-amendment stage continues,” the bench said.
“A very wide discretion conferred upon the Appellate Authority to direct the deposit from 0% to 100% of the disputed amount as a condition precedent is taken away which not only saves valuable time but also the energy not only of the assessee but also of the Courts or Appellate Authority in deciding the stay application or the proceedings arising out of such applications. It also saves money of the assessee as well as revenue in pursuing such applications or opposing thereof. Filing of such appeals to the considerable extent would be reduced which would help in reducing the arrears of other pending proceedings,” the bench added.
Upholding the provision, the bench further observed that “In the event of the assessee not succeeding in the appeals before the Appellate Authority after deposit of such 10% as precondition deposit, the revenue would be protected atleast to the extent of such 10% amount, if the financial condition of the assessee is precarious at the time of disposal of such appeal. The amount of precondition deposit in various Acts is much more than 10% and the validity thereof has been upheld by the Supreme Court on the ground that such provisions of pre-condition of deposit are not onerous and are reasonable.”
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