P&H HC Refuses to Waive Statutory Pre-Deposit for VAT Appeal Despite Plea of Financial Hardship [Read Order]

In a recent ruling, the Punjab and Haryana High Court refused to waive the statutory pre-deposit required for filing a VAT appeal and held that an appeal cannot be heard without following the mandatory condition, even if financial hardship is claimed.

The case related to 1000 Trees Housing Pvt. Ltd., a real estate developer under the Haryana VAT Act, 2003. An ex parte assessment order passed raising a demand of more than ₹4.50 crore. The petitioner filed an appeal and submitted a surety bond, but the same was rejected as it could not be verified.

The appeal was later dismissed on 8 April 2024 for not complying with Section 33(5) of the HVAT Act. A further appeal before the VAT Tribunal was also filed without security, leading the petitioner to approach the High Court.

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Before the High Court, the petitioner’s counsel argued that it was facing serious financial hardship and was not able to deposit the amount or furnish security. They also argued that the petitioner had a good case on merits and should not be left without remedy only due to pre-deposit.

The State’s counsel argued that the law clearly requires pre-deposit or adequate security and there is no power to waive it. They also produced records to show that the petitioner had large turnover and tax payments under GST showing that the claim of weak financial condition was not correct.

The Division Bench of Justice Lisa Gill and Justice Ramesh Chander Dimri observed that Section 33(5) of the HVAT Act clearly makes pre-deposit compulsory for entertaining an appeal. The court explained that the Supreme Court has already upheld such provisions and that appellate authorities have no discretion to waive them.

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The court also observed that in this case the petitioner failed to prove that it could not even furnish security. On these grounds, the court refused to interfere and dismissed the writ petition and gave liberty to the petitioner to comply with the law and take further steps as permitted.

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