Appellate Authority Cannot Override Mandatory Statutory Requirements Of Pre-Deposit To Maintain Appeal: SC [Read Judgment]

While upholding Section 62(5) of Punjab Value Added Tax Act, the Supreme Court observed that the Appellate Authority cannot override statutory requirement of pre-deposit when the statute mandates that no appeal can be entertained unless such requirement is satisfied.

Section 62 of Punjab Value Added Tax Act, 2005 deals with Appeal Jurisdiction of the First Appellate authority. Sub Section (5) provides that no appeal shall be entertained, unless such appeal is accompanied by satisfactory proof of the prior minimum payment of twenty-five per cent of the total amount of additional demand created, penalty and interest, if any

Disposing of the challenge against the said provision, the Punjab and Haryana High Court held that the State is empowered to enact Section 62(5) of the Act and the said provision is legal and valid. The condition of 25% pre-deposit for hearing first appeal is not onerous, harsh, unreasonable and violative of the provisions of Article 14 of the Constitution of India.The High Court, referring to Income Tax Officer v. M. K. Mohammed Kunhi, further held that the first appellate authority in its right to hear appeal has inherent powers to grant interim protection against imposition of such a condition for hearing of appeals on merits.

Referring to various judgments which dealt with pari materia provisions under various enactments, the bench of Justice Uday Umesh Lalit and Justice Indu Malhotra in Tecnimont Pvt. Ltd. vs. State of Punjab, observed:

The High Court rightly held Section 62(5) of the PVAT Act to be legal and valid and the condition of 25% of pre-deposit not to be onerous, harsh, unreasonable and violative of Article 14 of the Constitution of India. 

However, the bench observed that the High Court, of enabling the Appellate Authority to override the limitation prescribed by the statute and go against the requirement of pre-deposit.

Kunhi undoubtedly laid down that an express grant of statutory power carries with it, by necessary implication, the authority to use all reasonable means to make such grant effective. But can such incidental or implied power be drawn and invoked to grant relief against requirement of pre-deposit when the statute in clear mandate says – no appeal be entertained unless 25% of the amount in question is deposited? Would not any such exercise make the mandate of the provision of pre-deposit nugatory and meaningless?

In any case the principle laid down in Matajog Dobey states with clarity that so long as there is no express inhibition, the implied power can extend to doing all such acts or employing such means as are reasonably necessary for such execution. The reliance on the principle laid down in Kunhi cannot go to the extent, as concluded by the High Court, of enabling the Appellate Authority to override the limitation prescribed by the statute and go against the requirement of pre-deposit.

As stated in P. Laxmi Devi and Har Devi Asnani, in genuine cases of hardship, recourse would still be open to the concerned person. However, it would be completely a different thing to say that the Appellate Authority itself can grant such relief. As stated in Shyam Kishore any such exercise would make the provision itself unworkable and render the statutory intendment nugatory. 

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