“Assessee Entitled To Hearing If Pre-Deposit Is Made”: Gauhati High Court Grants Fresh Hearing

The Bench of Justice Arun Dev Choudhury observed that “This court though cannot find fault with the appellate authority in non-entertaining the appeal due to non-compliance of Section 79(5), however this court in exercise of its power under Article 226 of the Constitution of India, in the given fact, is inclined to grant the benefit of hearing to the assessee/petitioners in the given fact of the case that the statutory deposit has already been made”.

Section 79(5) of the Assam Value Added Tax Act, 2003 provides that an appeal cannot be entertained by the Appellate Authority unless it is accompanied by proof of payment of at least 25% of the disputed tax, any penalty imposed, and accrued interest.

Facts of the case:

The assessee/petitioner was assessed under the Assam Value Added Tax for the years 2006-2007, 2007-2008, and 2008-2009. Aggrieved by the assessment, the assessee filed an appeal before the Commissioner of Taxes (Appeal), Guwahati. As the assessee failed to make the required deposit under Section 79(5) of the Assam Value Added Tax Act, 2003, the appeals were dismissed on 13.06.2016. Thereafter, the assessee from the period of 21.06.2012 to 22.11.2016 on different occasions deposited an amount of Rs. 36305140/- being the 32% of the disputed tax, interest and penalty assessed. The assessee also approached the Commissioner of Tax requesting to consider their case which was rejected by an order dated 13.10.2016. The assessee has filed the writ petition before the Gauhati High Court challenging the order passed by the Commissioner of Taxes (Appeals).

The assessee after relying upon the case of JSB Cement LLP vs State of Assam and Ors. [(2019) SCC Online Gau 5983] and Tecnimont Pvt. Ltd. v. State of Punjab [(2021) 12 SCC 477] submitted that applying the equitable principle, a direction can be issued to the appellate authority to hear the appeals of the assessee/petitioners as the assessee/petitioners have already made deposit of 25% as mandated under Section 79(5) of the Act.

The department after relying upon the case of Tecnimont Pvt. Ltd. vs State of Punjab [(2021) 12 SCC 477] submitted that the appellate authority shall not have power to waive such a statutory prescription of deposit of 25% and therefore, there no illegality has been committed by the authorities and that being the position this court may not like to exercise of its certiorari jurisdiction in interfering with such a decision.

Observations of the High Court:

The bench after referring to the earlier decision of the Apex Court in the case of State of AP v. P Laxmi Devi [(2008) 4 SCC 720] and Har Devi Asnani v. State of Rajasthan [(2011) 14 SCC 160], reiterated that in genuine cases of hardship the recourse would still be open to the person concerned.

The Court stated that it would be completely different thing to say that the appellate authority itself can grant such a relief for the reason that such exercise would make provision itself unworkable and render the statutory intendment nugatory. Such determination was considered by a Division Bench in JSB Cement LLP vs State of Assam and Ors. [(2019) SCC Online Gau 5983] and held that when in case of requirement of pre-deposit is found to be arbitrary or exorbitant, only then the writ court can interfere and accordingly applying the principle of equity the Division Bench extended time of deposit of 20% of the statutory deposit under Section 79(5) of the Act, 2003 and directed the respondents to hear the appeal on merit.

“This court though cannot find fault with the appellate authority in non-entertaining the appeal due to non-compliance of Section 79(5), however this court in exercise of its power under Article 226 of the Constitution of India, in the given fact, is inclined to grant the benefit of hearing to the assessee/petitioners in the given fact of the case that the statutory deposit has already been made,” added the bench.

In view of the above, the bench allowed the petition and directed the assessee to appear before the appellate authority for a fresh hearing.

Counsel for Petitioner/Assessee: N. Gogoi, ML Gope, N Hawelia, R Singha and N Bordoloi

Counsel for Respondent/ Department: B Choudhury

Case Title: Megha Assam Pvt. Ltd. and Anr. v. State of Assam and Ors.

Case Number: Case No.: WP(C)/7223/2016