Holding

The appellate authority may, at its discretion and after recording reasons, dispense with the pre‑deposit under Section 43(5); the order is a stay, and on the facts the Tribunal must hear the appeal on merits without further deposit.

Summary

Ravi Gupta, a dealer registered under the Delhi Sales Tax Act, 1975 and the Central Sales Tax Act, 1956, faced a tax demand of about Rs.8.3 crore for failing to furnish mandatory declaration forms. He appealed before the Appellate Tribunal (VAT Delhi) and sought relief under Section 43(5) of the Delhi Sales Tax Act to dispense with the pre‑deposit requirement, which the Tribunal had fixed at Rs.3 crore. After the appellant neither produced the forms nor made the deposit, the Tribunal dismissed the appeals as not entertainable. The Supreme Court held that an order under Section 43(5) is essentially a stay order and that the appellate authority has discretion to waive the pre‑deposit, considering prima facie case, balance of convenience and irreparable loss. Since the appellant had deposited Rs.1 crore as directed, the Court directed the Tribunal to hear the appeal on its merits without further deposit, and disposed of the civil appeal without costs.

Issues considered

Whether the appellate authority must insist on the pre‑deposit under Section 43(5) as a condition precedent to entertain an appeal.
Whether an order passed under Section 43(5) constitutes a stay order and what principles govern the grant of such a stay.
Whether the Tribunal erred in dismissing the appeal as not entertainable for non‑production of declaration forms and non‑deposit.

Legislation cited

Subjects

pre‑depositSection 43(5)stay orderappellate discretionsales taxdeclaration formsDelhi Sales Tax ActCentral Sales Tax Actinterim reliefbalance of convenienceprima facie case

Judgment

[2009] 5 S.C.R. 110
_,
~
A RAVI GUPTA
v.
COMMISSIONER SALES TAX, DELHI AND ANR.
(Civil Appe!al No. 1965 of 2009)
MARCH 27, 2009
B -.
[DR. ARIJIT PASAYAT AND ASOK KUMAR
GANGULY, JJ.]

Delhi Sales Tax Act, 1975- s. 43 (5)- Nature and scope
c of - Demand of tax under the Act and Central Sales Tax Act
on account of failure to produce declaration forms - Appeal
before Appellate Tribunal - Dismissed as not entertainable
-
as neither the documents were furnished nor pre-deposit
made - Held: Order in terms of s. 43(5) is essentially an order
D of stay - While granting stay, though discretion is available,
the same has to be exercised judiciously - On facts, since t
the assessee deposited the amount as directed by Supreme
Court at admission stage, direction to Tribunal to hear the
matter on merits - Central Sales Tax Act, 1956.
E
Interlocutory Order-- Stay order- Grant/denial of - When
- Discussed.

Demand of tax was made by respondent-Revenue
on the ground that assessee did not furnish requisite
F declaration forms. Appellate authority affirmed the order.
Assessee filed appeal before Appellate Tribunal, Value "
Added Tax, Delhi. He also filed application uls 43(5) of
Delhi Sales Tax Act, 11975 to dispense with pre-deposit
which is condition precedent for entertaining the appeal.
G Tribunal directed pre-deposit of 3 crores. Despite the time
given, when the as;sessee neither produced the
documents nor did hu deposit the amount as directed,
the appeals were dismissed as not entertainable. Hence ...-~
the present appeal.
H 110
RAVI GUPTA v. COMMISSIONER SALES TAX, DELHI 111
ANDANR.
't,
Disposing of the appeal, the Court A
., HELD: 1. The appellate authority has a discretion not
to insist on payment as a condition precedent to entertain
the appeal, for which the reasons have to be recorded in
·writing. The order in terms of Section 43(5) of Delhi Sales
B
Tax Act, 1975 is essentially an order of stay. Three things
" are to be considered by the Tribunal, while dealing with
the application for dispensing with the pre-deposit. They
are: the prima facie case, balance of convenience and
irreparable loss. [Para7] [116-C-D]
c
-< 2. It is true that on merely establishing a prima facie
case, interim order of protection should not be passed.
But if on a cursory glance, it appears that the demand
raised has no leg to stand, it would be undesirable to
require the assessee to pay full or substantive part of the D
_.. demand. [Para 1OJ [116-GJ

3. In matters relating to grant of stay pending
disposal of the matters, though discretion is available, the
same has to be exercised judiciously. Petitions for stay
E
should not be disposed of in a routine manner unmindful
of the consequences flowing from the order requiring the
assessee to deposit full or part of the demand. There can
be no rule of universal application in such matters and
the order has to be passed keeping in view the factual
y scenario involved. Merely because this Court has F
indicated the principles that does not give a license to the
-;
I,
forum/authority to pass an order which cannot be
sustained on the touchstone of fairness, legality and
public interest. Where denial of interim relief may lead to
p!,!blic mischief, grave irreparable private injury or shake G
a citizens' faith in the impartiality of public administration,
t-· interim relief can be given. [Paras 8 and 1OJ [116-D-E; G-
-/
H; 117-A~BJ

Sil/iguri Municipality an.d Ors. v. Amalendu Das and Ors. H
112 SUPREME COURT REPORTS [2009] 5 S.C.R.

A AIR 1984 SC 653:; Mis Samarias Trading Co. Pvt. Ltd. v. S.
Samuel and Ors. AIR 1985 SC 61 and Assistant Collector
of Central Excise v. Dunlop India Ltd. AIR 1985 SC 330,
Relied on.

4. In the instant case the only plea which the
8
appellant was pressing into service was that if
declaration forms are produced, the ultimate demand
would not exceed Rs. 15 lakhs. As ample opportunity has
been granted to the appellant to produce the declaration
forms, that apparently has not been done. It was directed
C by this court while issuing notice on Special Leave
Petition that on payment of Rs. 1,00,00,000/-, realization
of the balance payment shall be stayed until further
orders. Since the amount has been deposited, it is
directed that the1 Tribunal shall hear the appeal on merits
D without insisting on any further deposit in terms of
Section 43(5). [Para 11 and 12] [117-C-E]
Case Law Reference:
AIR 1984 SC 653 Relied on. Para 9
E
AIR 1985 SC 61 Relied on. Para 9
AIR 1985 SC 330 Relied on. Para 9
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
F 1965 of 2009.

From the Judgment & Order dated 29.05.2006 of the High
Court of Delhi at New Delhi in Writ Petition (Civil) No. 9446/
2006.

G Nikhil Nayyar, TVS Raghavendra Sreyas and Ambuj
Agarwal for the Appellant. ,

\--
..
AK. Panda, Varuna Bhardari Gugnani, Anil Katiyar for the
Respondents.
H
RAVI GUPTA v. COMMISSIONER SALES TAX, DELHI 113
ANDANR.

The Judgment of the Court was delivered by A

DR. ARIJIT PASAYAT, J. 1. Leave granted.

2. Challenge in this appeal is to the order passed by a
Division Bench of the Delhi High Court dismissing the Writ
~
Petition (C) No. 9446 of 2006 filed by the appellant. B

3. The factual position is almost undisputed and needs to
be noted in brief.

The appellant is a dealer registered under the Delhi Sales
Tax Act, 1975 (in short the 'Act') and Central Sales Tax Act,
c
1956 (in short the 'CST Act'). Assessments were completed
by the Assessing Officer for the assessment years 1999-2000,
2000-2001 and 2001-2002 under the Act and CST Act. The
total demand raised was in the neighbourhood of Rs.8.3 crores.
_). The major portion of the demand was raised on the ground that D
the assessee did not furnish the requisite declaration forms i.e.
Form No.ST-1 under the Act and Form C and Form E-1 under
the CST Act. The Assessing Officer was of the view that ample
opportunity was granted to the appellant to produce the
declaration forms which it failed to furnish. Therefore, the E
demands were raised. Before the First Appellate Authority, the
. appellant prayed for further time to produce the declaration
forms which was declined. There was no appearance when the
matter was fixed before the first Appellate Authority. Since the
y appellant failed to get any relief from the first Appellate Authority, F
it moved the Appellate Tribunal, Value Added Tax, Delhi (in
short the 'Tribunal') in six appeals. Alongwith the appeal an
application in terms of Section 43(5) of the Act was filed to
dispense with the pre-deposit which is condition precedent for
entertaining the appeal. G
...
-i
At the first instance, the Tribunal after considering the rival
stands, more particularly, that the declaration forms would be
produced directed the payment of Rupees three crores in
respect of the demands raised on the Act and the CST Act.
H
114 SUPREME COURT REPORTS [2009] 5 S.C.R.

A Questioning the correctness of the order, appellant filed a Writ
Petition before the Delhi High Court which was numbered as
WP (C) No.11822 of 2.005. The High Court by order dated
26.9.2005 disposed of the writ petition with the following
directions:
B
"Considering the facts and circumstances of the
case, we allow thie petitioner a final opportunity of six
weeks to place all such documents and the statutory forms
before the appellate authority to satisfy that the petitioner
is entitled to such benefit in the rate of tax. In case the
c petitioner is able to produce such evidence before the
appellate authority, in terms of this order, it will be
considered by the appellate authority and appropriate
orders shall be passed by the appellate authority in terms
of sub clause (5) of Section 43 of the Act by making a
D review of the order which is under challenge in this writ
petition. The petitioner shall produce the aforesaid
evidence before the appellate authority within six weeks.
In case the petitioner is not able to produce such
evidence, they shall be liable to make the pre-deposit in
E terms of this order. As and when an order under Section
43 sub-section (5) is passed by the appellate authority the
petitioner shall abide by same."

As the appellant did not produce the records, the Tribunal
F held that the appellant was required to deposit Rupees three
crores as directed earlier. Therefore, it was held that because
of such non-production and non-deposit of a sum of Rs.3 crores
as directed earlier, the appeals were not entertainable.
Questioning the correctness of the order, Writ Petition (C)
G No.9446 of 2006 was filed which was dismissed by the
impugned order on the ground that the appellant had not
complied with the earlier order and, therefore,4he Tribunal was
left with no option but to dismiss the appeals as i:iot
entertainable.
H 4. In support of the appeal, learned counsel for the
RAVI GUPTA v. COMMISSIONER SALES TAX, DELHI 115
AND ANR. [DR. ARIJIT PASAYAT, J.]
appellant submitteci that the Tribunal and the High Court failed A
to appreciate that large number of declaration forms from
various parties were to be collected and because of situation
beyond control of the appellant, the forms could not be
produced and if the forms are taken into account the ultimate
-t.... liability would be not more than Rupees 15 lakhs. B
5. Learned counsel for the respondents supported the
judgment of the High Court stating that in spite of several
opportunities the appellant has failed to produce the declaration
. forms and no further opportunity was necessary to be granted.
•· c
6. Section 43 so far as it is relevant reads as follows:

"..... .43(5)- No appeal against an order of assessment
with or without penalty or against an order imposing the
penalty shall be entertained by an appellate authority unless D
J such appeal is accompanied by a satisfactory proof of the
payment of tax with or without penalty or, as the case may
be, of the payment of the penalty in respect of which the
appeal has been preferred:

Provided that the appellate authority may, if it thinks E
fit, for reasons to be recorded in writing, entertain an
appeal against such order-

(a) without payment of the tax and penalty, if ariy, or as the
-.r case may be, of the penalty, on the appellant furnishing in F
the prescribed manner security for such amount as it may
direct; or

(b) on proof of payment of such smaller sum, with or without
security for such amount of tax or penalty which remains
unpaid, as it may direct: G
....
~ Provided further that no appeal shall be entertained
by the appellate authority unless it is satisfied that such
amount of tax as the appellant may admit to be due from
him has been paid." H
116 SUPREME COURT REPORTS [2009] 5 S.C.R.

A 7. The first proviso consists of two parts. In a given case
the appeals can be entertained by the Tribunal, for reasons to
be recorded in writing, without insisting on payment of tax and
penalty as the case may be, of the penalty on the appellant
furnishing security in the prescribed manner for such amount
B as it may direct. The other category which is applicable to the
pr$entcase relates to direc:tion for deposit of smaller sum with ·
or without security for such amount of tax or penalty which
remains unpaid, as it may direct. In other words, the appellate
authority has a discretion not to insist on payment as a condition
c precedent to entertain the appeal, for which the reasons have
to be recorded in writing. The order in terms of Section 43(5)
is essentially an order of·stay. Three things are to be
considered by the Tribunal while dealing with the application
for dispensing with the pre deposit. They are: the prima facie
case, balance of convenience and irreparable loss.
D
8. Principles relating to grant of stay pending disposal of
the matters before the concerned forums have been considered
in several cases. It is to be noted that in such matters though
discretion is available, the same has to be exercised judicially.
E
9. The applicable principles have been set out succinctly
in Silliguri Municipality and Ors. v. Amalendu Oas and Ors.
(AIR 1984 SC 653), Mis Samarias Trading Co. Pvt. Ltd. v. S.
Samuel and Ors. (AIR 198S SC 61) and Assistant Collector
F of Central Excise v. Dunlop India Ltd. (AIR 1985 SC 330). '
10. It is true that on mere,ly establishing a prima facie case,
interim order of protection should not be passed. But if on a
cursory glance it appears that the demand raised has no leg
to stand, it would be undesirable to require the assessee to pay
G full or substantive part of the demand. Petitions for stay should
not be disposed of in a routine manner unmindful of the ~

consequences flowing from the order requiring the assessee \>-

to deposit full or part of the demand. There can be no rule of
universal application in such matters and the order has to be
H passed keeping in view the factual scenario involved. Merely
RAVI GUPTA v. COMMISSIONER SALES TAX, DELHI 117
AND ANR. [DR. ARIJIT PASAYAT, J.]
because this Court has indicated the principles that does not A
give a license to the forum/authority to pass an order which
cannot be sustained on the touchstone of fairness, legality and
public interest. Where denial of interim relief may lead to public
mischief, grave irreparable private injury or shake a citizens'
faith in the impartiality of public administration, interim relief can B
be given.

11. In the instant case the only plea which the appellant was
pressing into service was that if declaration forms are produced
the ultimate demand would not exceed Rs.15 lakhs. As is rightly C
contended by learned .counsel for the respondents, ample
opportunity has been granted to the appellant to produce the
declaration forms. That apparently has not been done. The
appellant has produced certain records to submit that the
declaration forms can be produced at the present juncture.
While issuing notice on Special Leave Petition on 13.6.2006 D
it was directed that on payment of Rs.1,00,00,000/- realization
of the balance payment shall be stayed until further orders. It is
accepted that the amount has been deposited.
12. Considering the facts of the case, we direct that the E
Tribunal shall hear the appeal on merits without insisting on any
further deposit in terms of Section 43(5). It is made clear that
we have expressed no opinion on the merits of the case. It is
for the appellant to satisfy the Tribunal the reason for which the
declaration forms could not be produced earlier and if the F
Tribunal is satisfied with the genuineness of the stand it shall
dispose of the appeals in accordance with law.

13. The appeal is disposed of with no order as to costs.
K.K.T. Appeal disposed of G

'/