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(REPORTABLE)

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7574 OF 2014

M/S. S.E. Graphites Private Limited  ..…Appellant(s)  

Versus

State of Telangana & Ors. ….Respondent(s)

WITH  Civil Appeal Nos.10433/2014, 2084/2015, 4098/2016, 4099/2016,  8452/2016,  10670/2016,  3349/2018  and S.L.P. (C) Nos. 19961/2015, 6880/2019

J U D G M E N T

A.M. Khanwilkar, J.

Civil Appeal Nos.7574/2014, 10433/2014, 2084/2015 and Civil Appeal No.5345 of 2019 (Arising out of S.L.P. (C) No.6880 of 2019)

1. Leave granted in SLP (C) No.6880 of 2019.

2. These Civil Appeals emanate from the orders passed by the

Appellate Authority rejecting the appeal preferred by the

concerned appellant(s) under the provisions of APGST Act, 1957

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or AP VAT Act, 2005 or Telangana State VAT Act, 2005, as the

case  may  be, on the ground that the appellant­assessee  had

failed to comply  with the pre­condition of producing proof of

payment of tax admitted to be due or of such installments as may

have been granted and/or the proof of payment of twelve and a

half percent (12.5%) of the difference of the tax assessed by the

assessing authority and the tax admitted by the appellant for the

relevant assessment year in respect of which the appeal has been

preferred by the concerned appellant­assessee, warranting

rejection of the appeal in terms of the second proviso of Section

19  and  proviso of  Section  21 (2) of the  APGST  Act, 1957  or

second proviso of Section 31 and proviso of Section 33 (2) of the

AP VAT Act, 2005. Similar position obtains regarding the

provisions of Telangana State enactments.  

3. The  High  Court  dismissed the  writ  petitions filed  by the

concerned appellant following the decision of the coordinate

bench of the High Court in  Ankamma Trading Company Vs.

Appellate  Deputy  Commissioner (CT),  Guntur  & Anr.1  and

other decisions taking the same view, despite the appellant

1 (2011) 44 VST 189 (AP)

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pointing out to the High Court that the decision in  Ankamma

Trading Company  (supra) has been impliedly overruled by the

Supreme Court in  M/s. Innovatives Systems, Rep. by its

Managing  Partner Vs. State of Andhra  Pradesh,  Rep. by

Principal Secretary to Government2. In that case, this Court

after clearly noting that the  High  Court had relied  upon the

judgment and order passed by the Division Bench of the same

High Court [in Ankamma Trading Company (supra)] to dismiss

the  writ petition  preferred  by the appellant, yet proceeded to

allow the appeal filed by the appellant therein by setting aside the

decision of the High Court. The appellant in that case had filed

appeal within limitation period but deposited the twelve and a

half percent (12.5%) of the difference of the tax assessed by the

assessing authority in respect of which the appeal was preferred

after the expiry of the limitation period specified in the first

proviso of the concerned provision. This Court, nevertheless, held

that the appellant  having deposited the stipulated amount of

twelve and a half  percent  (12.5%) as directed by the Appellate

Deputy Commissioner (CT), the High Court ought to have

condoned the delay in complying with the direction given by the

2 Civil Appeal No.2230/2015 (arising out of SLP (C) No.1832/2015 decided  on February 23, 2015).

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Appellate Authority in that regard and thus restored the appeal

with a direction to the Appellate Authority to decide the appeal on

merits. Relying on the subsequent decisions of this Court in M/s.

IOT Infrastructure & Energy Services Ltd., Rep. by its

Deputy  Manager (Accounts) Vs. State of Andhra Pradesh

Rep. by its Principal Secretary to Government3  and  M/s.

Ranisati Trading Co. Rep. by its Managing Partner Vs.

Commercial Tax Officer, Gajuwaka Circle, Visakhapatnam

and Ors.4,  it  is urged by the appellant­assessee that the High

Court ought not to have disregarded those decisions on the

specious ground that the same cannot be treated as a binding

precedent and purportedly  having been  passed in exercise of

plenary powers under Article  142 of the Constitution of India.

Inasmuch as, looking at the decision in  M/s. Innovatives

Systems (supra) of this Court, there is hardly any doubt that the

effect of the said order is to impliedly overrule the principle

enunciated by the Division Bench of the High Court in

Ankamma Trading Company  (supra) or other decisions

following the same. For, this  Court had  unmistakably shown

3 (Civil Appeal No.12077/2016 decided on 14.12.2016) 4 (Civil Appeal No.5339/2017 decided on 17.04.2017)

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inclination to apply its mind to the merits of the said order before

it having granted leave to appeal against the same albeit it had

disposed of the matter by a brief judgment. Thus, additionally,

the doctrine of  merger  would come into play as exposited in

Kunhayammed and Ors. Vs. State of Kerala and Anr.5,

wherein a three­Judge Bench of this Court opined that once a

special leave petition has been granted, the doors of the appellate

jurisdiction of this Court have been let open and any order

passed thereafter would be an appellate order and would attract

the applicability of doctrine of merger. Further, it would not make

a difference whether the order is one of reversal or of modification

or  of  dismissal, or of  affirming the  order  appealed  against. It

would also not make any difference if the order is a speaking or a

non­speaking one.  

4. In addition, the appellant(s)­assessee(s) have relied on the

decisions of this Court in  Ranjit Impex Vs. Appellate Deputy

Commissioner and Anr.6, which has had an occasion to deal

with  more  or less similar  provision, if  not identically  worded,

being Section 51 of the Tamil Nadu VAT Act, 2006. Even there

5 (2000) 6 SCC 359  6 (2013) 10 SCC 655

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the  provision contained stipulation such as  the proviso of the

provisions under consideration pertaining to State of Andhra

Pradesh and State of Telangana. It is then urged that even the

Division  Bench of the  High  Court in the case of  Ankamma

Trading Company  (supra), in paragraph 25 has taken note of

the fact that the proviso of the concerned section does not

specifically mention the time within which such proof of payment

is to be produced but then went on to rely on the first proviso

dealing with the period of limitation within which the appeal is

required to be filed and the maximum period of delay which could

be condoned by the Appellate Authority, to hold that the deposit

specified in the second proviso should also be paid within such

time only. Else, it went on to hold that the Appellate Authority is

obliged to reject the  appeal or in  other  words,  not  admit the

same.  

5. The appellants  would urge that there is  well recognized

distinction between the factum of filing, institution and

presentation of the appeal and the factum of “entertaining” the

appeal or consideration thereof for admitting the same on merits.

If the provision had expressly stated that the “appeal when filed”

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should be “accompanied with” the receipt or proof of payment of

amount referred to in the second proviso, the interpretation

commended to the High Court could be sustained. However, the

High Court itself having recognized the fact that no specific

mention is  made about the time  within  which such  proof of

payment is to be produced, the corollary thereof is that the proof

of payment  is required to be produced by the assessee on the

“first date of hearing” of the appeal for admission or

consideration thereof on merits. The appellant has also relied on

couple of reported decisions to contend that the right of appeal,

though, it does not inhere in the party, but once such remedy is

provided then it cannot be whittled down by giving strict

interpretation to the second proviso. However, the just approach

would be to read the expression “not to be admitted” as “not to be

entertained” ­ if the dealer failed to produce proof of payment of

tax dues as per the second proviso of the concerned provision.

The thrust of the argument is that in cases where the appellant­

assessee has already paid the requisite amount referred to in the

second proviso of the concerned provision, before the appeal is

taken  by the  Appellate  Authority/Court for the “first time for

consideration” after its filing in the office of the Appellate

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Authority, that will be substantial compliance of the second

proviso. In such a case, the Appellate Authority would be obliged

to admit the appeal if it deserves consideration on merits and the

appellant­assessee cannot be non­suited on the ground that the

amount so paid is after the limitation period specified for filing of

an appeal.  

6. The respondent­State, on the other hand, has supported the

exposition in the case of Ankamma Trading Company (supra),

and would urge that the view taken in the said decision is the

only possible interpretation of the second proviso. In that, if the

amount specified in the second proviso is not deposited within

the period provided for filing an appeal and including for

condonation of delay, such appeal would be inflicted with

institutional defect and will have to be rejected on that count in

light of the mandate contained in the proviso of the concerned

provision. It is urged that the appellants have been ill­ advised to

invoke doctrine of merger. According to the respondent­State, on

a bare perusal of the decision of this Court in M/s. Innovatives

Systems  (supra),  and the other decisions passed following the

same would clearly indicate that it has been passed in the fact

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situation of the concerned case.  Notably, this  Court has not

interpreted the provisions under consideration or for that matter

explicitly overturned the principle expounded by the  Division

Bench in Ankamma Trading Company (supra). Whereas, a bare

reading of the provision makes it amply clear that it is a

mandatory provision.  Failure to comply with the stipulation  in

the second proviso would inevitably denude the Appellate

Authority from entertaining the same or so to speak, admitting

the same on  merits.  Heavy reliance has been placed on the

decision in the case of  M/s. Lakshmi Rattan Engineering

Works Ltd.  Vs.  Asst.  Commr.  Sales  Tax,  Kanpur & Anr.7,

wherein this Court was called upon to interpret Section 9 of the

relevant enactment. As per that provision, no appeal against an

assessment shall be entertained  unless it is accompanied by

satisfactory proof of the payment of the tax amount admitted by

the appellant to be due. The exposition in this decision, according

to the respondent­State, would admit of no other interpretation of

the second proviso as is held by the Division Bench of the High

Court in  Ankamma  Trading  Company  (supra). In that, the

Appellate Authority cannot exercise power to admit  the appeal

7 (1968) 1 SCR 505

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beyond the statutory period and since the pre­deposit is

quintessence, the requirement of pre­deposit within the

maximum period of limitation for filing the appeal including, for

condoning the delay in filing the same, would have bearing on the

second proviso of the concerned provision. Reliance is also placed

on the decision in Narayan Chandra Ghosh Vs. UCO Bank and

Ors.8,  which  has  had  an  occasion to interpret the  purport  of

Section 18 of the Securitisation and Reconstruction of Financial

Assets and Enforcement of Securities Interest Act, 2002 wherein

the Court noted that there is an absolute power to entertain an

appeal under Section 18 of the Act unless the condition

precedent, as stipulated, is fulfilled. The respondent­State would,

thus, contend that the  deposit even if  made  by the  assessee

before the rejection of the appeal (for non­compliance of the pre­

condition in terms of the proviso of the concerned provision), will

be of no avail to the assessee.  

7. We have heard the learned counsel for the parties. At the

outset, we deem it apposite to reproduce the relevant provisions

of the APGST Act, 1957 and AP VAT Act, 2005. Almost identical

provisions obtain in the Telangana State Acts. Section 19 and 21

8 (2011) 4 SCC 548

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of the APGST Act, 1957 and Section 31 and 33 of the AP VAT Act,

2005, read thus:  

“APGST Act, 1957 A.P. VAT Act, 2005 Section 19. Appeals.­(1) Any dealer objecting to any order passed or proceeding recorded by any authority under the provisions of the Act other than an order passed or proceeding recorded by an Additional Commissioner or Joint Commissioner, or Deputy Commissioner under sub­section (4C) of section 14 may within thirty days from the date on  which the order or proceeding was served on him, appeal to such authority as may be prescribed:

Provided that the appellate authority may within a further period of thirty days  admit  the appeal preferred after a period of thirty days if he is satisfied that the dealer  had sufficient  cause  for  not preferring the appeal within that period:

Provided further that an appeal so preferred shall not be admitted by the appellate authority concerned unless the dealer produces proof of payment of tax admitted to be due, or of such instalments as have been granted, and the proof of payment of twelve and half per cent of the difference of the tax assessed by the assessing authority and the tax admitted  by the  appellant, for the relevant assessment year, in respect of which the appeal is preferred.  

21. Appeal to the Appellate Tribunal.­(1) Any dealer objecting to an order passed or proceeding recorded­

31.  Appeal to  Appellate  authority.­ (1) Any VAT dealer or TOT dealer or any other dealer objecting to any order passed or proceeding recorded by any authority under the provisions of the Act other than an order passed or proceeding recorded by  an  Additional  Commissioner or Joint Commissioner or Deputy Commissioner may, within thirty days from the date of which the order or proceeding  was serve on him, appeal to such authority as may be prescribed:

Provided that the appellate authority may within a further period of thirty days  admit  the appeal preferred after a period of thirty days if he is satisfied that the VAT dealer or TOT dealer or any other dealer had sufficient cause for not preferring the appeal within that period:

Provided further that an appeal so preferred shall not be admitted by the appellate authority concerned unless the dealer produces proof of payment of tax admitted to be due, or of such instalments as have been granted, and the proof of payment of twelve and half per cent of the difference of the tax assessed by the authority prescribed and the tax admitted  by the  appellant, for the relevant tax period, in respect of which the appeal is preferred.  

33. Appeal to the Appellate Tribunal.­(1) Any dealer objecting to an order passed or proceeding recorded­

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(a) by  any  prescribed  authority on appeal under section 19, or  

(b)  by  an  Additional  Commissioner or Joint Commissioner or Deputy Commissioner suo motu under sub­section (4C) of section 14 or under  sub­section  (2)  of section 20, may appeal to the Appellate Tribunal  within sixty  days from the  date  on  which the  order  or proceeding was served on him.  

(2) The Appellate Tribunal may within a further period of sixty days admit the appeal after the period of sixty days specified in sub­section (1), if it is  satisfied that the dealer had sufficient cause for not preferring the appeal with that period.  

Provided that no appeal against the order passed under section 19 shall be  admitted  under  sub­section  (1) or sub­section (2), unless it is accompanied by satisfactory proof of the payment of fifty per cent of the tax as ordered by the Appellate Deputy Commissioner under section19:

Provided further that no appeal against the order passed under sub­ section (2) of section 20 shall be admitted under sub­section (1) or sub­section (2), unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due or in such instalments thereof as  might have become payable as the case may be, and twenty five per cent of the difference of the tax ordered by the revisional authority under sub­ section (2) of section 20 and the tax admitted by the appellant:

(a) by any authority prescribed, on appeal under section 31, or  

(b) by the Additional Commissioner, or Joint Commissioner or Deputy Commissioner under section 21 or 32 or 38; or  

(c) by any authority following the ruling or order passed under section 67;

May appeal to the Appellate Tribunal within sixty days from the date on which the order or proceeding was served on him.  

(2) The Appellate Tribunal may within a further period of sixty days admit the appeal preferred after the period of sixty days specified in sub­ section (1), if it is satisfied that the dealer  had sufficient  cause  for  not preferring the appeal within that period:

Provided that no appeal against the order passed under section 31 shall be admitted  under sub­section  (1) or sub­section (2) of this section unless it is accompanied by satisfactory proof of the payment of fifty per cent of the tax, penalty, interest or any other amount as ordered  by the  appellate authority under section 31.”

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Provided also that the assessing authority shall refund the said amount of twelve and half per cent or twenty five  per  cent  or fifty  per cent of the difference of tax assessed by the assessing authority or revisional authority as the case may be and the tax admitted and paid by the appellant,  with simple interest calculated at the rate of 18 per cent per annum if the refund is not made within 60 days from the date of receipt of the order passed under section 19 or section 21.  

(emphasis supplied) 8. These provisions have been interpreted by the Division

Bench of the  High  Court in the case of  Ankamma Trading

Company (supra). We are essentially concerned with the second

proviso of Section 19 and Section 31 of the respective enactment;

and first proviso of Section 21(2) and Section 33(2) of the

respective enactment. Upon reading the Section under

consideration as a whole, it is evident that the first proviso in the

concerned Section (Section 19 and Section 31, as the case may

be)  pertains to limitation  period “for filing”  of  an  appeal;  and

discretion of the Appellate Authority to condone the delay in filing

of such appeal, up to a  maximum period specified therein.

Indeed, the second proviso is part of the same Section. However,

it is an independent condition and in one sense, mutually

exclusive condition mandating or enjoining the appellant to

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produce proof  of  payment of tax dues  in respect of  which the

appeal is preferred. That obligation, in our opinion, can be

discharged until the appeal is considered for admission and/or

condonation of delay in filing of the appeal, as the case may be,

by the Appellate Authority for the first time. We are inclined to

take this view as even the High Court  in  Ankamma Trading

Company (supra) had justly noted that the said proviso does not

provide for any specific period within which the tax dues should

be paid. Moreover, there is no express stipulation to deposit the

tax dues in respect of which the appeal is preferred, at the time of

its filing, institution or presentation as such. In the absence of

such a clear stipulation, it must necessarily follow that it is open

to the assessee to file the appeal within the statutory period of

limitation provided therefor and later on, deposit the specified tax

dues but before the appeal is taken up for consideration by the

Appellate Authority for the first time – be it for condonation of

delay in filing the appeal and/or to admit it on merits or

otherwise. The proof of such payment having been made could be

produced thereat. Failing which, the Appellate Authority will have

no other option but to reject the appeal on that count. The

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Appellate Authority has no power to extend the time to deposit

the specified tax dues.  

9. Suffice it to observe that,  stricto sensu,  the said proviso is

not a provision of pre­deposit at the stage of filing, institution or

presentation of the appeal as such; but is a provision stipulating

payment of tax dues as a pre­requisite or  sine qua non  for

consideration of appeal on merits or otherwise and/or for

condonation of delay in filing the same, as the case may be, for

the first time. If we may say so, it is also to impose fetter on the

Appellate Authority from admitting the appeal for consideration

on merits. It is well recognized that filing, institution or

presentation of appeal in the office of the Appellate Authority is

an independent event than the appeal being taken up for

consideration “for the first time” for being admitted on merits or

otherwise and/or for condonation of delay in filing it, as the case

may be. There is no reason to interpret the stated proviso in any

other manner  lest, inevitably, it  would result in re­writing  the

same and entail in doing violence to the legislative intent.

Presumably, this  Court in  M/s. Innovatives  Systems  (supra),

and other decisions rendered following the same, therefore, was

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persuaded to allow the appeal preferred by the assessee and to

relegate the parties before the Appellate Authority for

consideration of the appeal for admission on merits.  

10. Concededly, this  Court  was conscious of the  decision in

Ankamma Trading  Company  (supra). In that, the judgment

under challenge before it in the concerned appeal was founded on

the view already taken by the coordinate bench of the same High

Court [including in  Ankamma Trading  Company  (supra)]. It

has  been so recorded  by this  Court. In that sense, the legal

position expounded in  Ankamma Trading  Company  (supra),

stood impliedly overruled, even though that decision  has not

been adverted to or expressly overruled by this Court.  

11. The argument of the respondent proceeds that the decision

in  M/s. Innovatives Systems  (supra), neither refers to any

specific provision nor has it expressly over turned the decision of

the  Division  Bench of the  High  Court in  Ankamma Trading

Company  (supra).  Thus,  it  cannot be considered as a binding

precedent. We are not impressed by this submission. Indeed, the

decision of this Court in M/s. Innovatives Systems (supra), is a

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brief judgment. That, however, would make no difference. For, it

is  well  established that  once a special leave petition has been

granted, the doors for the exercise of appellate jurisdiction of this

Court have been let open. Resultantly, the order impugned before

the Supreme Court became an order appealed against and any

order passed thereafter would be an appellate order and attract

the doctrine of merger despite the fact that the order is of reversal

or of modification or of affirming the order appealed against and

including is a speaking or non­speaking one. This legal position

has been restated in  Kunhayammed  (supra).  Having said this,

we must reject  the argument of the respondent­State  that  the

decision of this Court in M/s. Innovatives Systems (supra), and

other decisions following the same, cannot be considered as

binding precedent.

12. In addition, the appellant­assessee has rightly placed

reliance on the decision of this Court in Ranjit Impex (supra). In

that case, the  Court considered almost similar stipulation in

Section 51 of the Tamil Nadu VAT Act, 2006. Indeed, the second

proviso therein uses the expression no appeal shall be

“entertained”, unlike the expression used in the provisions under

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consideration that the appeal so preferred “shall not be

admitted”.  We  are conscious  of the fact that the first  proviso

pertaining to maximum period of delay to be condoned by the

Appellate Authority, also uses the expression “admit the appeal”.

That expression “admit”, however, must be read to mean filing,

institution or presentation of the appeal in the office of the

Appellate Authority. Whereas, the expression “admitted” used in

the  second proviso  will  have to  be  construed as  analogous  to

expression “entertained”. We are inclined to take this view as the

setting in which the provisions under consideration appear leaves

no manner of doubt that it is ascribable to the event of taking up

the appeal for  consideration, for the  first time, to admit it  on

merits or otherwise and/or for condonation of delay in filing the

appeal, as the case may be. Before that event occurs, it is open to

the  appellant to  deposit the tax dues  in respect  of  which  the

appeal is preferred and produce proof of such deposit before the

Appellate Authority.

13. This view is reinforced from the exposition of this Court in

Ranjit  Impex  (supra),  wherein  the view taken by the Division

Bench of the High Court of Madras that the proof of deposit of tax

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has to be produced at the time when the appeal is taken up for

consideration, but not at the time of filing or presentation of the

appeal, has been upheld.  

14. Even the decision of this Court in  M/s. Lakshmi Rattan

Engineering  Works Ltd.  (supra), heavily relied upon by the

respondent­State, does not militate against the view taken by us ­

that the true purport of  the said proviso  is that  the Appellate

Authority shall proceed with the consideration of appeal for

admission for hearing on merits or otherwise and/or for

condonation of delay in filing appeal, as the case may be, if the

proof of payment of the specified tax dues referred to in the said

proviso  is produced by the appellant on the  first date of such

consideration of the appeal. Similarly, the case of  Narayan

Chandra Ghosh  (supra), will be of no avail to the respondent,

wherein the Court opined that there is an absolute bar to

“entertain” an appeal under Section 18 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Securities

Interest Act, 2002, unless the conditions and stipulation are

fulfilled. Inasmuch as, the second proviso under consideration

does not require payment of tax dues referred to therein, at the

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time of  filing,  institution or presentation of the appeal but the

proof of such payment has been made, is required to be produced

before the Appellate Authority at the first hearing of the appeal;

failing  which  the  Appellate  Authority  would  be  well  within its

jurisdiction to reject it rather duty bound not to proceed with the

appeal on merits and to reject the same at the threshold on the

ground of an institutional defect.  

15. For the view that we have taken, it is wholly unnecessary to

deal with the other reported decisions relied upon by the parties

or to deal with other arguments which have no bearing on the

conclusion reached by us.  

16. Reverting to the factual position in the appeals under

consideration, admittedly, the appellant­assessee had deposited

the specified tax dues before the date on which appeal preferred

by  them was taken up  for  consideration  for the first time  for

admission on  merits. In such a situation, the stated proviso

becomes unavailable to reject the appeal on the ground of

institutional defect. In this view of the matter, all these appeals

must succeed.

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17. While parting, we may observe that taking advantage of the

interpretation given by us, it is possible that some unscrupulous

litigant (assessee) may file an appeal within the limitation period

but keep it under defect so that the same does not proceed for

consideration before the Appellate Authority. To obviate such a

mischief, we hold and direct that the Appellate Authority shall be

obliged to take  up every  singular  appeal for consideration for

admission on merits and/or for condonation of delay in filing the

appeal for the first time, no later than thirty days from the date of

its filing, institution or presentation in the office of the Appellate

Authority. This direction shall be complied with by all concerned

meticulously,  without any exception. That is the only  way to

secure the interests  of the  Revenue  and  at the same time to

effectuate the purpose underlying the proviso regarding the

deposit of specified amount of tax dues.   

18. Resultantly, the impugned judgment of the High Court is set

aside and instead the writ petition(s) are allowed by setting aside

the order passed by the Appellate Authority, rejecting the

concerned appeals on the ground of non­compliance of the stated

proviso of the provisions  under consideration. The concerned

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appeals shall stand restored to the file of the Appellate Authority.

The same shall proceed for consideration in accordance with law.

All pending  applications  are also  disposed  of.  No order as to

costs.

                                       Civil Appeal Nos.4098/2016 & 4099/2016

19. These appeals  were heard analogously  with  Civil Appeal

No.7574/2014. In this set of appeals, admittedly, the appellant­

assessee  deposited  the  amount after the  appeal filed  by them

came to be rejected by the Appellate Authority. In that sense, the

appellant­assessee failed to produce proof of payment of tax dues

in respect of which the appeal was preferred before the Appellate

Authority when their appeal was taken up for consideration for

admission. In Civil Appeal No.7574/2014, we have held that it is

open to the assessee to deposit the amount before the event of

first date of hearing of the appeal for admission and/or for

condonation of delay in filing the appeal. Resultantly, the deposit

made after rejection of the appeal  will be of no avail to the

appellant­assessee, in light of the mandate of the stated proviso

under consideration.

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20. In view of the above, these appeals must fail and the same

are therefore, dismissed. All pending applications are also

disposed of. No order as to costs.  

Civil Appeal No.8452/2016

21. This appeal was analogously heard along with Civil Appeal

No.7574/2014. In the present appeal, the State has challenged

the judgment and order passed by the High Court in Writ Petition

No.22337 of 2015 and, in particular, the liberty granted to the

respondent (writ petitioner) to pay the requisite amount after

expiry of the limitation period prescribed under Section 33 of AP

VAT Act, 2005 and on such deposit being made, the Appellate

Authority is directed to consider the appeal on merits.  

22. The background in which such direction came to be issued,

can be discerned from the appeal filed by the State. To wit, the

respondent, who was dealing in works contracts and was

registered under APGST Act, 1957, was assessed by the

appropriate  authority  but that  assessment  was  revised by  the

Commercial  Tax Officer by passing a revision order dated 25th

March, 2013. Against that decision, respondent­assessee

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preferred appeal before the State Sales Tax Appellate Tribunal.

During the pendency of the said appeal, respondent filed a writ

petition to challenge the orders passed by the Commercial Tax

Officer  dated 27th  February,  2013 and 25th  March, 2013. That

writ petition has been disposed of by the High Court vide

impugned judgment, with liberty to comply with the condition of

paying the tax dues in terms of the second proviso of the

concerned provision within a period of six weeks from the date of

receipt of the copy of order and  upon such compliance, the

Appellate Authority would decide the pending appeal on merits.  

23. Having regard to the exposition in Civil Appeal No.7574 of

2014, decided today, it must follow that if the appeal filed by the

respondent is still pending and has not been taken up for

consideration so far by the Appellate Authority, only then it

would be open to the respondent to deposit the requisite amount

and produce the proof of such deposit before the Appellate

Authority. If, however, the appeal has already been taken up for

consideration for being admitted on merits or otherwise and by

that date the respondent had not deposited the requisite amount

as prescribed in terms of stated proviso, the Appellate Authority

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would be well within its jurisdiction and rather duty bound to

reject the appeal on the ground of an institutional defect. That is

a matter to be considered by the Appellate Authority. Besides this

observation, nothing more is required to be stated in this appeal

filed by the State.  

24. We dispose of the appeal in the aforementioned terms with

no order as to costs. All pending applications are also disposed

of.  

Civil Appeal No.5343 of 2019 (Arising out of SLP (C) No.19961/2015)

25. Leave granted.  

26. This appeal takes exception to the judgment and order

dated 31st October, 2014 passed by the High Court of Judicature

at Hyderabad for the State of Telangana and the State of Andhra

Pradesh in Writ Petition No.837 of 2014, whereby the writ

petition filed by the assessee challenging the order passed by the

second respondent­Appellate Authority dated 31st  December,

2013 came to be rejected. The appeal was dismissed on the sole

ground that the appellant had failed to pay the required twelve

26

and a half percent (12.5%) disputed tax in terms of Section 31 of

AP VAT Act, 2005. Initially, the Commercial Tax Officer passed

an assessment  order  on  11th  June,  2012.  The  appellant filed

appeal against the said assessment order on 11th July, 2012. The

appellant was called upon by the Appellate Authority vide

communication dated 12th  July,  2012 to make good the short

payment of pre­deposit in the sum of Rs.1,35,00,512/­ as also

the institution fee. The appellant filed response to the said

communication contending that there was input tax credit to the

account of the appellant in the sum of Rs.1080,01,63,420/­ and

that amount  would arise only in respect of the tax paid on

taxable purchases effected within the State. Despite that factual

aspect brought to the notice of the first Appellate Authority, it

rejected the appeal for non­payment of pre­deposit amount vide

order dated 24th July, 2012. This was an ex­parte order.  

27. The appellant then filed representation to the assessing

authority for issuing tax credit  certificate for  giving  necessary

adjustments against the taxes payable for 04/2010 to 06/2011

and pointing out the order of the Tribunal dated 18th  October,

2011 which was communicated long back but not implemented

thus far. The appellant, therefore, submitted new representation

27

to the assessing authority on 15th  September, 2012. The

Commercial  Tax Officer eventually, issued a certificate on 12th

October, 2012 certifying that the appellant has input tax credit of

Rs. 92,01,606/­,  eligible to be refunded either in cash or

adjusted.  On 13th  October,  2012, the  Commercial Tax  Officer

issued proceedings holding that the appellant has an excess tax

credit of Rs.66,46,284/­ for adjustment or refund.  

28. The appellant being aggrieved by the orders passed by the

Appellate  Deputy  Commissioner rejecting  appeal  on 24th  July,

2012 on the ground of  non­payment of requisite  disputed tax

amount, filed second appeal before the Sales Tax Appellate

Tribunal.  That  came  to  be  allowed by  setting  aside the  order

rejecting the first appeal and instead directing the first Appellate

Authority to restore the appeal and hear the appellant, as the

order dated 24th July, 2012 was an ex parte order passed without

hearing the appellant.  

29. In remanded proceedings,  appellant filed evidence  before

the first Appellate Authority on 21st July, 2013 and requested to

consider the evidence and give adjustment of the excess payment

due to the appellant as certified by the assessing authority.

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Thus, the appellant requested the Appellate Authority to accept

the tax credit certificates and take the appeal on file for disposal

on merits. Despite production of the said certificates, the

Appellate Deputy Commissioner once again called upon the

appellant to pay the balance amount towards pre­deposit, vide

communication dated 15th May, 2013. In response thereto, the

appellant filed representation reiterating its earlier stand.

Nevertheless, the Appellate  Deputy  Commissioner once again

rejected the appeal on 31st December, 2013, for non­payment of

pre­deposit amount primarily relying upon the judgment of

Ankamma Trading Company (supra). Eventually, the appellant

challenged the aforementioned  decision by filing  writ petition

No.847 of  2013. That writ petition has been dismissed by the

High Court on the basis of the exposition in Ankamma Trading

Company (supra).

30. The principal grievance of the appellant is that after

remand, the first Appellate Authority failed to consider the

specific stand taken by the appellant that it  was entitled to

adjustment of the amount mentioned in the tax credit certificate

and if so done the appellant had complied with the pre­condition

29

of deposit of twelve and a half percent (12.5%) of the amount in

respect of which the appeal was filed by the appellant before the

first Appellate Authority. Although, this plea  was specifically

taken before the Appellate Authority, the judgment of the

Appellate Authority has not analysed the same at all. Instead, it

proceeded to dismiss the appeal merely by relying on the

exposition in  Ankamma Trading Company  (supra). Similarly,

even the High Court after recording this argument of the learned

counsel for the appellant, has not analysed the same and

mechanically rejected the writ petition on the ground that

appellant had failed to comply with the pre­condition of deposit.

This approach of the High Court as well as of the first Appellate

Authority is the subject matter of assail in the present appeal.  

31. We have heard the counsel for the parties. As regards the

legal position expounded in  Ankamma Trading Company

(supra), we have already answered the same in  Civil Appeal

No.7574/2014 decided today. That appeal was heard along with

all connected matters. In the present case, however, the

additional point which arises is whether the appellant was

entitled for adjustment of the amount mentioned in the tax credit

30

certificate issued in favour of the appellant. Admittedly, the

appellant had specifically taken that plea before the first

Appellate Authority. However, as already mentioned hitherto the

first Appellate Authority failed to analyse that aspect ­ which it

was expected to do, in terms of the earlier order passed by the

second  Appellate  Authority and even otherwise. Further, this

grievance was specifically made before the High Court in the writ

petition filed by the appellant as is noticed from the impugned

judgment, the relevant  portion  of the judgment recording the

argument of the appellant, reads thus:  

“……… Aggrieved thereby, the present Writ Petition is filed. Sri Tejprakash Toshniwal, Learned Counsel for the petitioner, would submit that in M/s. Ideal Detonators Pvt. Ltd. v. Commercial Tax Officer, the Supreme Court had directed the Appellate Deputy Commissioner to revive the earlier order and dispose of the same on merits, after due notice to the parties; in Fytochem Formulations Ltd. v. Commercial Tax Officer, a Division Bench of this Court had held that it is incumbent on the Commercial Tax Officer to decide the representation submitted by the petitioner; and, in case the petitioner  is entitled to the excess amount, then a certificate/endorsement should be issued to him, so that the amount can be adjusted towards pre­ deposit of 12.5% at the time of admission of the appeal; the  Commercial  Tax  Officer  was  directed to decide the representation; and, in case the petitioner’s representation was accepted by the  Commercial  Tax Officer, the 2nd  respondent was directed to admit the appeal. Learned Counsel would also rely on Chander Prakash Goyal v. State of Haryana, in this regard……………..”

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32. However, even the High Court has not answered this

specific plea urged by the appellant, in the impugned judgment.

If the appellant is right in contending that the appellant is

entitled for an adjustment of amount and if so done, there would

be no need for the appellant to deposit twelve and a half percent

(12.5%) amount as required by the second proviso of Section 31

of the Act. The appellant had relied on the decisions of this Court

to buttress that argument. However, the same has remained to

be analysed and considered even by the High Court.  

33. In that view of the matter, we deem it appropriate to set

aside the impugned judgment and relegate the parties before the

High Court for reconsideration of the Writ Petition No.837/2014

afresh on its own merits in accordance with law and including in

light of decision of this  Court in  Civil Appeal  No.7574/2014

decided today. All contentions available to both sides in the

remanded writ petition are left open to be considered on its own

merits and in accordance with law.  

34. Accordingly, this appeal is allowed. The impugned

judgment and order passed by the High Court dated 31st

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October,  2014 in  Writ  Petition  No.837/2014 is set  aside  and

instead the writ petition is restored to the file of the High Court

for fresh consideration in light of the observations made hitherto.

All contentions available to the parties are left open. All pending

applications are also disposed of. No order as to costs.   

Civil Appeal No.10670/16

35. This appeal was heard analogously with Civil Appeal

No.7574/2014. It has been preferred by the assessee. The

respondent  No.2 passed an order dated  24th  February, 2015,

levying a penalty under Section 53(3) of the AP VAT Act, 2005

amounting to Rs.67,57,696/­, being equivalent to 100% of  the

tax due. The appellant relies on a certificate dated 4th April, 2015

issued by respondent No.1 and stated on oath that a tax credit

carry forward of Rs.10,63,683/­ by end of May, 2014 is available

to the appellant. In the appeal preferred by the appellant against

the order imposing additional tax and penalty filed on 7th April,

2015,  the appellant  specifically took a plea that the  input tax

credit and alleged variations between purchase and sales

transactions recorded in the books of account vis­à­vis the

returns  filed under the AP VAT have been wrongly disallowed.

33

Notably, the appellant filed an affidavit stating that a tax credit of

Rs.10,63,683/­ is available to the appellant after filing the

monthly return for May, 2014 and that such credit has not been

adjusted to any other tax liability and thus prayed that the said

credit  may be adjusted towards  the  twelve and a half  percent

(12.5%) of Rs.67,57,696/­, which comes to Rs.8,44,712/­.

Despite this specific stand taken by the appellant on affidavit, the

respondent No.3 issued notice claiming that the appeals filed by

the  appellant  were  not  compliant  with Section 31  for  want  of

proof of  payment  of twelve  and  a  half  percent (12.5%)  of the

disputed tax and penalty. Later on, respondent No.3 rejected the

appeal on 5th June, 2015 on the ground that the appellant had

failed to produce the proof of payment of twelve and a half

percent (12.5%) of the disputed tax and penalty.  

36. It is noticed from the narration of facts in the appeal that

the appellant was then advised to deposit the twelve and a half

percent (12.5%) disputed tax which it did on 30th January, 2016

and 30th  March, 2016, in installments. The appellant had also

filed writ petition under Article 226 of the Constitution of India

being Writ Petition No.393 of 2015 and assailed the order passed

by the Appellate Authority, rejecting its appeal on the ground of

34

institutional defect due to non­production of proof of payment of

disputed tax. The  High  Court relying  on  Ankamma Trading

Company (supra), rejected the writ petition filed by the appellant.

 37. Being  aggrieved, the  appellant  has  preferred this appeal.

Upon perusal  of  order passed by the Appellate Authority, it is

noticed that even the  Appellate  Authority rejected the appeal

without taking notice of the prayer made by the appellant on oath

that a tax credit of Rs.10,67,683/­ is available to the appellant

and that such credit has not been adjusted towards any other tax

liability and can be adjusted towards the twelve and a half

percent (12.5%) of disputed tax amount of Rs.67,57,696/­, which

comes to Rs.4,44,712/­ only. The order of the Appellate

Authority, as communicated to the appellant, reads thus:  

“The appeal petition along  with stay petition (main appeal & penalty appeal) are returned as the same are not in accordance in terms of second provision to sec.31(1) of read with Rule 38 of the AP VAT, 2005 for the reason.  

“Provided further that an appeal so preferred shall not be admitted by the appellate authority concerned unless the  dealer  produces  proof  of  payment  of tax admitted to  be  due  or  of such instalments  as  have been granted and the proof of payment of 12.5% of the difference of the tax assessed and the tax admitted by the appellant, for the relevant tax period, in respect of which the appeal is preferred.”

35

Further they have not filled the challan for appeal fee in original and also  medical certificate for delay in submission of the appeal.  

Hence, in view of the above, the admission of the two appeals stand rejected.”   

38. Even the High Court has failed to consider this aspect of the

matter. Whereas, if the representation/request made by the

appellant is just and deserved to be accepted, the appellant

would be right in contending that no payment towards the

amount specified in the stated proviso under consideration was

required to be made by the appellant and for that reason, the

appeal preferred by the appellant ought to proceed for

consideration for admission on merits. In that,  upon accepting

the representation to adjust the tax credit of Rs.10,63,683/­, a

certificate/endorsement could be issued to the appellant by the

department so that the said amount is adjusted towards payment

of specified amount of tax dues including twelve and a half

percent (12.5%). There is force in this submission. However,

instead of  examining  this  plea raised by the appellant in this

appeal, we deem it proper to relegate the parties before the High

Court to consider the same on its own merits, in accordance with

law. We do not wish to dilate on any other contention  in this

36

judgment.  We  leave all  questions and contentions, available to

both sides,  open  to be decided by  the High Court  on  its  own

merits.

 39. In view of the above, we set aside the impugned judgment of

the High Court and relegate the parties before the High Court by

restoring the Writ Petition No.31393 of 2015, for fresh

consideration  thereof  by the  High Court  on its  own merits in

accordance with law. All pending applications are also disposed

of. No order as to costs.   

Civil Appeal No.3349/2018

40. This appeal was tagged along with the Civil Appeal

No.7574/2014 and other connected matters. However, in those

cases, the High Court had rejected the writ petition on the sole

ground that the concerned writ petitioner had failed to comply

with the condition of deposit prescribed in terms of stated proviso

of the provision(s) under consideration. In none of these cases,

the High Court considered the matter on merits regarding the

challenge to the original assessment order. In the present appeal,

the  appellant  cannot  be  heard  to  agitate the  question already

37

decided in Civil Appeal No.7574/2014 as nothing has been

brought to our notice to show that the appellant had deposited

the specified tax dues, in respect of which the appeal was filed,

before the first date of consideration of the appeal by the

Appellate Authority.  

41. However,  as the High Court  has dealt  with merits of the

challenge to the original order, in exercise of writ jurisdiction and

as no argument was advanced by either party in that regard, we

deem it appropriate to delink this appeal and direct that  it be

heard separately on the challenge to the original order passed by

the first Appellate Authority. Appeal to proceed accordingly.

     ……………………………..J       (A.M. Khanwilkar)

     ……………………………..J       (Ajay Rastogi)

New Delhi; July 10, 2019.

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