Freeze Corner vs Govt. Of Nct Of Delhi
2003 Latest Caselaw 786 Del

JUDGMENT

D.K. Jain, J.

1. The validity of a composite order, dated 13 June 2003, passed by the Commissioner Sales Tax, Delhi (hereinafter referred to as 'the Commissioner') disposing of the two revision petitions filed by the petitioner under Section 47 of the Delhi Sales Tax Act, 1975 (for short the Local Act) and Section 9(2) of the Central Sales Tax Act, 1956 ( for short the Central Act) is under challenge in this writ petition. By the impugned order the Commissioner has declined to interfere with the order passed by the first appellate authority, namely, the Additional Commissioner, whereby the petitioner was directed to deposit a sum of Rs.75 lakhs under the Local Act and Rs.2 lakhs under the Central Act, as a condition precedent for entertainment of their two appeals, in respect of assessment year 1999-2000.

2. Shorn of unnecessary details, the material facts giving rise to the writ petition are as follows:

On the basis of some incriminating documents recovered during the course of survey conducted by the Enforcement staff of the Sales Tax Department on 24 May 2000 at the business premises of the petitioner, in respect of the aforenoted year best judgment assessment was framed against the petitioner. While framing the assessment, the local registered dealer sales allegedly made by the petitioner to two concerns, namely, M/s. Vigyan Udyog Corporation and M/s. Sunrise Enterprises, were found to be not substantiated from the ST-II accounts of the said purchasing dealers. Consequently, the turnover of the petitioner for the relevant assessment year was enhanced which resulted in the levy of additional tax, interest and penalty in both the cases. The total additional demand so raised against the petitioner was Rs.1,25,97,280/- under the Local Act and Rs.16,71,595/- under the Central Act.

3. Aggrieved, the petitioner preferred appeals to the Additional Commissioner, along with applications for stay of the additional demand. Vide order dated 28 March 2003, the aforenoted direction was given by the first appellate authority. The direction was to be complied with by 29 April 2003. Against the said order, the petitioner preferred revision petitions. As noted above, the Commissioner has declined to intervene in the matter. However, while dismissing the revision petitions, time for reporting compliance with the order passed by the Additional Commissioner was extended to 25 June 2003. Hence the present petition.

4. We have heard Mr. Arvind Nigam, learned counsel for the petitioner and Mr. Rajesh Mahna, who has put in appearance on behalf of the respondents on advance notice.

5. It is submitted by Mr. Nigam that having regard to the fact that the petitioner had furnished the requisite declaration forms in support of the sales to M/s.Sunrise Enterprises and M/s.Vigyan Udyog Corporation, the factum of effecting sales to a registered dealer stood proved and if any discrepancy was found in the accounts rendered by the said two registered dealers, the petitioner cannot be held responsible. It is, thus, urged that the petitioner has a very strong case in its favor and, therefore, the authorites below should not have imposed any pre-condition for hearing the appeals. Learned counsel would also submit that the requirement of pre-deposit is an unreasonable restriction on the right of the petitioner to file appeals against illegal orders. Inviting our attention to the annual accounts of the petitioner, learned counsel contends that having regard to the financial status, the petitioner will not be able to comply with the stringent condition imposed by the first appellate authority rendering the valuable right of appeal illusory. In essence, it is submitted that the discretion to dispense with the pre-deposit has not been judiciously exercised. Mr. Mahna, learned counsel for the respondent, on the other hand, submits that having regard to the total additional demand of more than Rs.1 crore, condition imposed by the first appellate authority is very reasonable.

6. Section 43(5) of the Local Act stipulates that no appeal against order of assessment etc., shall be entertained unless the appeal is accompanied by satisfactory proof of payment of tax etc. However, proviso to the said Section confers a discretion on the appellate authority to entertain such an appeal, for the reasons to be recorded in writing, without insisting on deposit of the full amount . Thus, the requirement of deposit of the amount in dispute is a condition precedent for entertainment of appeal. The provision being mandatory, failure to make the deposit of the amount in question, renders the appeal incompetent, unless the appellate authority exercises its discretion to entertain the appeal without deposit or on some other conditions, as he may deem fit.

7. It is well settled that at the time of passing an order in terms of the said proviso, it is not proper for the appellate authority to embark upon detailed enquiry to find out whether the case of the appellant is on strong footing or not. What is required to be seen is whether the appellant has made out a prima facie case for grant of stay; the balance of convenience qua deposit or otherwise and irreparable loss, if any, to be caused if the stay is not granted or the condition imposed may not be such which would render the right of appeal illusory.

8. Testing the impugned order in the light of the above principles, we feel that the learned Commissioner has failed to take into consideration some vital facts. For instance, the three declaration forms issued by M/s.Vigyan Udyog Corporation, produced by the petitioner, have been ignored because these do not bear the signatures of the issuing authority, though these have his office stamp, and further there is some discrepancy in the quarterly return furnished by the said purchasing dealer. Admittedly it has not yet been verified from the office of the issuing Sales Tax Officer whether the forms were infact issued to the purchasing dealer or not. We say no more at this juncture, lest it may cause prejudice to either side.

9. We are of the view that on the facts of the case it would be just and fair if petitioners' both the appeals are entertained on their depositing a sum of Rs.25 lakhs on or before 30 September 2003. We order accordingly. We are informed that the appeals have already been dismissed for non-compliance with the order of pre-deposit. If the petitioner complies with this order, the appeals shall be restored and heard on merits.

10. The writ petition stands disposed of in the above terms.

Copies of the order be issued dusty to counsel for the parties.