Whether pre condition of pre deposit is mandatory for admission of appeal under Maharashtra Value Added Tax Act (MVAT)
The right of appeal is neither fundamental nor constitutional right. It is statutory right and is creature of statutes and subject to prescribed conditions and restrictions. As per section 26 of Maharashtra Value Added Tax act, dealer has right to file appeal to the prescribed first appellate authority against There is also provision to file second appeal to the Maharashtra Sales Tax Tribunal against first appeal order. In this article conditions for filing of appeal for the period prior and after 15-04-2017 have been discussed with specific reference to recent judgment of Bombay High Court in the case of M/s United Projects.
Up to 14-04-2017 dealer was required to file appeal within limitation period prescribed under section 26 of the act. As per section 26(6) of the act, as regard to orders passed prior to 15-04-2017, there was no requirement of payment of part payment pertaining to disputed dues, for filing appeal to the appellate authority and However, part payment required to be made if appellant desire stay to the recovery of disputed dues. There was no fixed part payment for stay and the appellate authority and Tribunal have discretion to decide quantum of amount of part payment. Thus , there was no need to pay any amount for filing and admission of appeal against order passed prior to 15-04-2017.
The Government has amended section 26 of the act and inserted subsection (6A), (6B) to the section 26 wef 15-04-2017. After this amendment dealer has no right to file appeal without payment of any pre deposit. As per amended provisions of section 26(6A) and 26 (6B) of the act unless payment of specified amount out of disputed dues is not made appeal shall not be entertained and admitted. Accordingly, pre deposit of 10 % of disputed tax of any order is the precondition for filing of an appeal. Amended provisions made applicable to the appeals filed against orders which are passed on or after 15-04-2017 .
In view of above referred amendment requirement of mandatory pre deposit is introduced . Therefore, the appellant was required to pay amount as specified in section 26 (6A) and 26 (6B) for filing and admission of appeal. Normally, amount of pre deposit(part payment) was 10 % of disputed tax. The first appellate authority and the Tribunal have no discretion in fixing amount of part payment for admission of appeal in respect of orders passed on or after 15-04-2017. Thus, requirement of payment of prescribed pre deposit (part payment) is mandatory for filing of an appeal. After payment of such amount stay was granted for recovery of remaining disputed dues.
In the case of M/s Anshul Impex pvt ltd assessment order was passed on 30-11-2014 for the FY 2010-2011 and review proceeding was initiated on 13-04-2017 and review order was passed on 27-07-2017. Being aggrieved by the review order first appeal was filed with the Maharashtra sales Tax Tribunal without payment of prescribed part payment (10 % of disputed tax). Tribunal has refused to entertain appeal on the ground of non payment of pre deposit (10 % of disputed tax). Writ petition was filed to Hon Nagpur Bench of Bombay High Court with prayer to direct Tribunal to admit the appeal.
On 26th June 2018, a Division Bench of this Court at Nagpur in case of Anshul Impex Private Ltd Vs. State of Maharashtra (Sales Tax Appeal No.2 of 2018 in a Judgment delivered on 28th September, 2018) held that the amended section 26(6B)/(c) of the MVAT Act requiring appellant to deposit 10% of the disputed tax is not applicable to the appellant therein as lis had commenced in the year 2011 while the amendment was prospective w.e.f. 15th April 2017. The said Division Bench accordingly held that the Tribunal had committed an error in dismissing the appeal filed by the petitioner therein as not maintainable for non payment of amount i.e. 10% of the amount assessed. The Hon’ble Supreme Court by an order dated 11th March 2019 dismissed the Special Leave Petition filed by the State of Maharashtra against the said Judgment delivered by the Nagpur Bench of this Court in case of Anshul Impex Private Ltd (supra).
After the above referred judgment, in 2019 Government has inserted explanation after 26(6)(c) wef 15-04-2017 which read as under .
In section 26 of the Value Added Tax Act, after subsection (6C), the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 15th April, 2017, namely – “Explanation.- For the removal of doubts, it is hereby clarified that, the provisions of sub-sections (6A), (6B) and (6C) shall be applicable for any appeal, against all such orders, referred to in those subsections, irrespective of the period to which the order, appealed against, relates or irrespective of the date on which the proceedings in respect of such order have commenced.
In view of this explanation , payment of prescribed amount (10 % of disputed tax ) continue to be mandatory for filing of an appeal before first appellate authority and Tribunal, against the order passed on or after 15-04-2017 , irrespective of period to which order, appealed against relate or the date on which proceeding in respect of such order has commenced. In view of said amendment ration of Judgment in the case of Anshul Impex Pvt Ltd is not applicable. Accordingly, if proceeding was initiated for any tax period before 15-04-2017 and order is passed on or after 15-04-2017 , then amended provisions will apply and payment of pre deposit will be mandatory for filing of appeal.
In the case of M/s United projects ( WP 2883 of 2018 decided on 14-10-2019 Bombay High Court) assessment order was passed on 13-10-2017 , proceeding of which was initiated on 18-07-2016, for the period FY 2013-2014. The first appellate authority has refused to admit appeal for failure to pay mandatory fixed part payment ( 10 % of disputed tax ). Thereafter, present writ petition was filed with prayer to direct the appellate authority to admit the appeal without part payment.
On 14th October 2019, Hon Division bench of Bombay High Court, after adverting to the Judgment of the Nagpur Bench in case of Anshul Impex Private Limited (supra) and various other Judgments formulated three questions of law for opinion of the larger bench and expressed its inability to agree with the view taken by the Nagpur Bench in case of Anshul Impex Private Limited (supra) and referred various issues to the larger bench.
The Hon Larger bench of Bombay High Court has delivered judgment on 12-07-2022 and observed that provisions of sections 6A, 6B and 6C of section 26 of the said MVAT Act apply to all these appeals that are filed under section 26 against the order passed on or after 2017 amendment which has been brought into force w.e.f. 15th April, 2017 and the newly inserted provision by way of 2017 amendment thus would apply to the order passed on or after 15th April, 2017 irrespective of the period of assessment to which the order appealed against relates or irrespective of the date on which the proceedings in respect of such lis has commenced. It is further observed that the explanation to section 26 of the MVAT Act introduced by the Maharashtra Tax Laws (Amendment and Validation) Act, 2019 does not take away the right of the assessee to file an appeal without statutory deposit in respect of the orders passed for any period prior to 15th April, 2017.
Hon High Court held that “ It is declared that the explanation inserted in 2019 amendment w.e.f. 15th April, 2017 would apply to those orders which are passed after 15th April, 2017and not to the prior orders. All earlier orders are governed by the original provisions of Section 26(6) and not by the amendment. Both the provisions i.e. old Section 26(6) and the amendment introduced by Sub Section 6A, 6B and 6C to Section 26 and the explanation thereto will apply and co-exist.”
In view of above referred judgment of Larger bench of Bombay High Court in the case of M/s United Project and explanation inserted after section 26(6C) of the Mvat act, it is clear that under section 26(6) of the act dealer has right to file appeal without part payment ( 10 % of disputed tax ) against the orders passed before 15-04-2017. ( Example- 1 Assessment order passed on 31-03-2016 in respect of period FY 11-12. Example 2. First appeal order passed on 31-03-2017 in respect of period FY 09-10. Example 3- Rectification order passed on 13-04-2017 u/s 24 for the period Fy – 2012-2013). However, dealer is required to make part payment if desire to stay the recovery of disputed dues in all above cases. It is also clear that in respect of order passed on or after 15-04 -2017 , irrespective of period of order or date of commencement of such proceeding , dealer has no right to file appeal unless make payment of prescribed pre deposit( 10 % of disputed tax ) (Example1- -Notice for review issued on 31-03-2016 and review order passed on 31-03-2018 in respect of period FY 11-12. Example2- first appeal order for the period FY 09-10 passed on 31-03-2022.). It is pertinent to note that the first appellate authority and the Tribunal have no discretion in reducing such prescribed part payment for the purpose of admission of appeal.
M M Kanadje Author can be reached via Email email@example.com
appeal can file without paying predeposit against commissioner of customs order