1. Section 26 of Maharashtra VAT Act (MVAT Act) was amended by the State Legislature on 15 April 2017, by which condition of pre-deposit of certain percentage of disputed tax amount at the time of filing 1st and 2nd appeals was introduced.
2. Sub-sections (6A), (6B) and (6C) to Section 26 read as under:
“26. Appeals:-
….. ….. ….. ….. ….. ….. ….. …..
(6A) No appeal against an order, passed on or after the commencement of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017, shall be filed before the appellate authority in first appeal, unless it is accompanied by the proof of payment of an aggregate of the following amounts, as applicable,—
(a) in case of an appeal against an order, in which claim against declaration or certificate, has been disallowed on the ground of non-production of such declaration or, as the case may be, certificate then, amount of tax, as provided in the proviso to sub-section (6),
(b) in case of an appeal against an order, which involves disallowance of claims as stated in clause (a) above and also tax liability on other grounds, then, an amount equal to 10 per cent of the amount of tax, disputed by the appellant so far as such tax liability pertains to tax, on grounds, other than those mentioned in clause (a),
(c) in case of an appeal against an order, other than an order, described in clauses (a) and (b) above, an amount equal to 10 per cent. of the amount of tax disputed by the appellant,
(d) in case of an appeal against a separate order imposing only penalty, deposit of an amount, as directed by the appellate authority, which shall not in any case, exceed 10 per cent. of the amount of penalty, disputed by appellant:
Provided that, the amount required to be deposited under clause (b) or, as the case may be, clause (c), shall not exceed rupees fifteen crores.
(6B) No appeal shall be filed, before the Tribunal, against an order, which is passed on or after the commencement of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017, unless it is accompanied by the proof of payment of an aggregate of following amounts, as applicable,—
(a) in case of an appeal against an order, in which claim against declaration or certificate has been disallowed on the grounds of non-production of such declarations or, as the case may be, certificates then, amount of tax, as provided in the proviso to sub-section (6),
(b) in case of an appeal against an order, which involves disallowance of claims as stated in clause (a) above and also tax liability on other grounds, then, an amount equal to 10 per cent. of the balance amount of disputed tax, so far as such tax liability pertains to tax, on grounds, other than those mentioned in clause (a),
(c) in case of an appeal against an order, other than an order, described in clauses (a) and (b) above, an amount equal to 10 per cent. of the balance amount of disputed tax,
(d) in case of an appeal against any other order, an amount, as directed by the Tribunal :
Provided that, the amount required to be deposited under clause (b) or, as the case may be, clause (c), shall not exceed rupees fifteen crores.
Explanation.— For the purposes of clause (b) or clause (c) of sub-section (6B), the expression, “balance amount of disputed tax” shall mean an amount of disputed tax, which remains outstanding, after considering the amount paid, as directed by the appellate authority in first appeal under clause (b) or, as the case may be, clause (c), respectively of sub-section (6A).
(6C) The appellate authority or, as the case may be, Tribunal shall stay the recovery of the remaining disputed dues, in the prescribed manner, on filing of an appeal under sub-section (6A) or, as the case may be, sub-section (6B).”
3. The obvious and logical understanding was that the condition of pre-deposit is applicable in respect of appeals that arise in respect of assessment years falling on or after the date of amendment. However, the departmental authorities and tribunal is of the opinion that the condition of pre-deposit is applicable in respect of all appeals that are filed on or after the amendment date, irrespective of the fact that the appeals belong to old assessment years. Consequently, the issue was agitated before the Hon ‘ble Bombay High Court, Nagpur Bench in the case of M/s. Anshul Impex Private Limited Vs. State of Maharashtra [2018-VIL-520-BOM]. The Hon ‘ble Court held that in case the lis has arisen prior to introduction of the mandatory pre-deposit condition, the dealer is not required to make pre-deposit. Relevant paras of the Judgement are reproduced hereunder for ready reference –
15) In the appeal in hand, admittedly review proceedings in respect of assessment order passed on 30/10/2014 for the financial year 2010-11 were initiated on 13/4/2017, which came to be decided on 27/7/2017 while the amended provisions of Section 26(6B) of the Act of 2002 came into force with effect from 15/4/2017. In that view of the matter and on relying on the law laid down as above, we find that relevant date to hold applicability of amended provisions or otherwise shall be the date on which proceedings were initiated and not the date of decision.
19) The amended provisions of Section 26(6B) of the Act of 2002, which require consideration in the present appeal, are already reproduced above. Section 27 of the Act of 2002 refers to appeals. Sub-section 1(c) thereof contemplates that appeal from every order, not being an order mentioned in sub-section (2) of this Section and sub-section (2) of Section 85 passed under this Act or rules or notifications, shall lie, if the order is made by a Joint Commissioner or Additional Commissioner, Advance Ruling Authority or the Commissioner, to the Tribunal. As such, under Section 26(6) the appellate Authority or the Tribunal, as the case may be, may, while admitting the appeal, pending the disposal of the appeal, stay the order appealed against in full or part, subject to such conditions or restrictions as it may deem necessary including a direction for depositing of a part or whole of the disputed amount by the appellant. Thus, for filing appeal, there was no requirement to deposit any amount under sub-section (6) of Section 26 as it then stood and for grant of stay to disputed amount, orders were required to be passed by the Tribunal, while according to amended provisions of Section 26(6B), no appeal shall be filed before the Tribunal against an order, which is passed on or after the commencement of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017, unless it is accompanied by the proof of payment of an aggregate of following amounts as applicable –
(a) …
(b) ..
(c) in case of an appeal against an order, other than an order, described in clauses (a) and (b) above, an amount equal to 10 per cent of the balance amount of disputed tax.
(d) …
As such, we find that before amendment, there was no requirement to deposit any amount at the time of filing appeal, but it is only if stay was to be granted, some amount was to be deposited as per orders of the appellate Authority or as the case may be. Thus, to answer the first question formulated as aforesaid, we are required to consider if the amended provisions of Section 26(6B) of the Act of 2002 directing deposit of 10% of the disputed tax as a pre-condition for filing of appeal before Tribunal are applicable to appellant.
20) Perused of impugned judgment reveals that the order which was challenged before the Tribunal is dated 27/7/2017, i.e. after amended provision came into effect on 15/4/2017, thus the Tribunal held that appellant was statutorily bound to deposit an amount equal to 10 per cent of the balance amount of disputed tax as a pre-condition for admission of appeal. However, the Tribunal has failed to consider the fact of initiation of review proceedings on 13/4/2017 as stated above when admittedly amended provisions were not in force. Having considered the facts and for the reasons aforesaid, it is clear that amended Section 26(6B) of the Act of 2002 requiring appellant to deposit 10% of the disputed tax is not applicable to appellant since lis started in the year 2011 while effect of amendment is prospective with effect from 15/4/2017. Accordingly, question no.1 framed as aforesaid is replied holding that the Tribunal has committed an error in dismissing the appeal as not maintainable for non payment of amount aforesaid, i.e. 10% of the amount assessed.
4. In effect, the High Court held that the condition of mandatory pre-deposit is not applicable to the case in hand, since the assessment year in question was 2010-11 and lis started in the year 2011 i.e., prior to introduction of mandatory pre-deposit condition. Consequently, the appellant is governed by the un-amended provisions and not required to make any pre-deposit.
5. Special Leave Petition filed by the State of Maharashtra against the judgement of the Hon ‘ble Bombay High Court in the case of Anshul Impex Pvt. Ltd., has been summarily dismissed by the Hon ‘ble Supreme Court.
6. To overcome the judgement of the Hon ‘ble Bombay High Court in the case of Anshul Impex Pvt. Ltd., the State of Maharashtra amended Section 26 of Maharashtra VAT Act, 2005 by inserting an explanation as under –
“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 sub-sections, 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.”.
The explanation sought to clarify that sub-sections 6A, 6B and 6C shall apply for any appeal irrespective of the period to which the order pertains.
7. Subsequent to amendment, writ petitions were filed before the Bombay High Court at Bombay on the validity of the amendment, since the Tribunal did not entertain the appeals filed without pre-deposit. The Bench differed with the judgement of the Nagpur Bench in the case of Anshul Impex Pvt Ltd., and referred the following issues to the larger bench for decision –
(a) Whether the State of Maharashtra has legislative competence to enact the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017 and the Maharashtra Tax Laws (Amendment and ::: Uploaded on – 06/11/2019 ::: Downloaded on – 15/11/2019 11:25:51 ::: www.taxguru.in skn 32 WP 2883.2018.doc Validation) Act, 2019 to amend the provisions of the Maharashtra Value Added Tax Act, 2002 to incorporate mandatory pre-deposit for filing appeals against the assessment orders pertaining to all the goods after 16 September 2016 that is post 101 Constitutional Amendment Act, 2016?
(b) Whether Explanation to section 26 of the MVAT Act introduced with effect from 15 April 2017 by the Maharashtra Tax Laws (Amendment and Validation) Act, 2019 takes away the right of the assessee to file an appeal without statutory deposit in respect of orders passed for the assessment years prior to 15 April 2017 and whether the Explanation nullifies the decision of the Division Bench of this Court (Nagpur Bench) in the case of Anshul Impex Pvt. Ltd. v. State of Maharashtra in Sales Tax Appeal No.2/2018?
(c) Whether the decision of the Division Bench in the case of Anshul Impex Pvt. Ltd. v. State of Maharashtra laying down that right of filing appeal accrues on the date of order of assessment and requirement of mandatory pre-deposit introduced by way of amendment does not apply to the orders passed in the assessment years prior to 15 April 2017, is a correct proposition since the right of appeal can be made conditional by the Legislature with express indication and, therefore, the decision in the case of Anshul Impex Pvt. Ltd. v. State of Maharashtra requires reconsideration by the Larger Bench?
8. Since the issue as to whether the pre-deposit condition is applicable for the lis that has arisen prior to the amendment or not was referred to the larger bench, the dealers are left with no option but to deposit 10% of the disputed tax demand at the time of filing appeals, since department and/or tribunal is not accepting the appeals unless they are accompanied by 10% of the disputed tax demand, since the issue has not attained the finality.
9. The decision by the larger bench may take considerable amount of time. By the time, the judgement is delivered, all the lis that has arisen before the amendment result in orders and the dealers are required to file appeals by making pre-deposit of 10%. Consequently, even if the judgement of the larger bench comes in favour of the dealer, there will not be any tangible benefit to them, as far as the issue of pre-deposit is concerned. If the judgement decides that pre-deposit condition is not applicable to lis that has arisen prior to amendment, will the department refund the pre-deposit amount? Is it possible for the dealer to get refund of pre-deposit in reality?
10. With due respects, it appears that the justice delayed in this case will result in justice denied, as all the disputes prior to amendment result in orders and dealers file the appeals along with pre-deposit, by the time the judgement is delivered.
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