Is filing an appeal a cumbersome task?

1. Introduction

law, an appeal is a process for requesting a formal change to an official decision. Very broadly speaking there are appeals on the record and de novo appeals. In de novo appeals, a new decision maker re-hears the case without any reference to the prior decision maker. In appeals on the record, the decision of the prior decision maker is challenged by arguing that he or she misapplied the law, came to an incorrect factual finding.

The Result of an appeal can be:

· Affirmed: Where the reviewing court agrees with the result of the lower court’s ruling(s).

· Reversed: Where the reviewing court disagrees with the result of the lower court’s ruling(s), and overturns their decision.

· Remanded: Where the reviewing court sends the case back to the lower court.

Through this article, I will throw some light on the provisions related to filling of an appeal by a dealer in case of Haryana VAT.

2. When can dealer file an appeal?

If any dealer feels that he has not been fairly treated, he may prefer an appeal against the original order and the said appeal shall lie,-

a. if the order is made by any authority or officer who is lower in rank to Joint Excise and Taxation Commissioner or such other officer as the State Government may, by notification in the Official Gazette, appoint;

b. if the order is made by any authority or officer who is not lower in rank to Joint Excise and Taxation Commissioner or such other officer as the State Government may, by notification in the Official Gazette, appoint;

c. If the order is made by the Commissioner to the Tribunal.

It is to be noted that an original order means an order passed under this Act except an order passed on appeal or on revision.

3. Where an appeal can be filed?

3.1 Appeals to Appellate Authority:

a. Dealer is required to file an appeal to appellate authority within 60 days from the date of such order against which an appeal is filed. The appellate authority shall ensure before entertaining the appeal that the appellant has paid the amount of tax admitted to be due and interest thereon, and a bank guarantee or adequate security to the satisfaction of the assessing authority as may be prescribed for the amount in dispute has also been furnished.

b. The memorandum of appeal to the appellate authority shall be in Form VAT-M1 verified in the manner specified therein.

c. The memorandum in Form VAT-M1(2 copies) shall be accompanied by three copies of the order appealed against, one of which shall be authenticated or certified; unless the omission to furnish copies of the order appealed against is explained to the satisfaction of the appellate authority.                                                                                                      

4. Appeal to Tribunal:

a. No appeal preferred to the Tribunal by any authority under the Act shall be entertained unless appeal is filed within a period of 180 days from the date of the order appealed against.

b. The memorandum of appeal to the Tribunal shall be in Form VAT-M2 verified in the manner specified therein.

c. The memorandum in Form VAT-M2 shall be accompanied by four spare copies thereof, five copies of the order appealed against, one of which shall be authenticated or certified, and five copies of the original order one of which shall be authenticated or certified unless the omission to furnish copies of the order appealed against is explained to the satisfaction of the appellate authority.

4. Who can present memorandum of Appeal?

Either appellant himself or his authorized agent can file an appeal to the appellate authority. Such person can also send the appeal through post and in that case, date of appeal shall be date of receipt of that appeal in the office of the appellate tribunal.

5. Grounds for Rejection of Appeal:

The appeal may be summarily rejected if the appellant fails to comply with any requirements of rule 63 of HVAT Rules or any other ground which the appellate authority may consider sufficient and which shall be reduced into writing by the appellate authority. However, a reasonable opportunity of being heard will be granted to appellant or his authorized agent, as the case, before rejection of the appeal

6. Hearing:

If the appellate authority does not reject the appeal, it shall fix a date for its hearing ordinarily not less than 10 days from the date on which intimation thereof has been sent to the appellant or his authorized agent. The appeal shall be decided after notice to the authority against whose order the appeal has been made and after considering any representation or cross objection that may be made by it either in person or through any of its subordinate or through an authorized representative of the State Government and after affording an opportunity to the appellant or his authorized agent of being heard.

The appellate authority may, before deciding the appeal hold such further inquiry or direct it to be held by the authority against whose decision the appeal has been preferred, as may appear necessary to the said appellate authority, and may pass an order in accordance with the provisions of section 31 (8).

7. To whom the order passed in appeal needs to be communicated?

A copy of every order passed by the appellate authority under section 33 of the Haryana Value Added Tax Act, 2003, shall be supplied to, the appellant, the authority against whose order the appeal was preferred and, the authority who passed the original order.

8. Appeal under Other Laws:

8.1  Appeals under CST Act:

As suggested by name CST is the central concept and levied by Central government, but collected and administered by State Government. Assessing officer assessing local sales tax is also responsible for assessing central sales tax.

In general there are two types of disputes in respect of which appeals are filed under CST. Dispute arises whether a particular transaction is ‘stock transfer’ or a ‘sale’. Transfer of goods to other State is regarded as stock transfer by the dealer while the assessing authority treats it as a sale for the purpose of levying State Vat. In such case, the dealer has to pay sales tax (VAT) to the State government from where such transaction has commenced irrespective of the fact that he has already paid sales tax (VAT) in other State after transferring the goods on stock transfer basis. Thus, he has to pay tax twice. Certain times disputes arise because sales tax authority of one State treats the transaction as ‘sale’ (and not stock transfer) while other Sales tax assessing authority also treats the transaction as ‘sale’. Naturally, both State Governments cannot tax the same transaction.

In such cases, so far, there was no mechanism to resolve the disputes and only option was to approach Supreme Court. Hence, Supreme Court suggested that a mechanism should be evolved to resolve such disputes.

Hence, CST Appellate Authority has been constituted to resolve disputes relating to stock transfer or consignment transfer of goods of inter-state.

8.1.1 No appeal if dispute relating to value: 

However, it is to be noted that the dispute relating to valuation of sale will not go to CST Appellate Authority. Only disputes whether a particular transaction is interstate sale or stock transfer (i.e. taxability under CST Act) will go to CST Appellate Authority.

8.1.2 Fees for filing appeal:

As per section 20(4) of CST Act appeal must be filed in quadruplicate along with the fees of Rs. 5,000.

8.1.3 Scope of further appeal: 

There is no provision for appeal against the order of CST Appellate Authority. However, writ jurisdiction of High Court or SLP to Supreme Court is always an option.

8.2  Appeals under Service Tax Law:

8.2.1 Appeal in case of adjudication by Commissioner:

Dealer is required to file an appeal to CESTAT under section 86(1) of the Finance Act, 1994 (“the Act”) in case adjudication order is passed by Commissioner. The commissioner may pass the adjudication order in respect of the following matters:-

(a) Original adjudication of demand under section 73 of the Act;

(b) Imposition of penalty under section 83A of the Act; and

(c) Review of order passed by adjudicating authority lower than Commissioner.

It authorizes an officer to file an appeal with Commissioner (Appeals) under section 84 of the Act.

8.2.2 Appeal before Commissioner (Appeals)

Appeal before Commissioner (Appeals) can be made against order of any Central Excise Officer subordinate to Commissioner in respect of demand, interest or penalty or denial of refund of service tax. There is a prescribed form for filing an appeal and it should be duly verified. However filing of an appeal is limited by time, i.e. it must be filed within two months from date of receipt of order (previously it was three months). Commissioner (Appeals) has the power to condone the delay of up to one month. The procedures and powers will be similar to those under Central Excise.

The appeal should be in form ST-4. Procedure of appeals will be similar to procedure under Central Excise, including provisions of pre-deposit of taxes, authorised representative etc. Appeal against order of Commissioner (Appeals) lies with CESTAT.

8.2.3 Appeal to Tribunal:

Appeal to CESTAT (Tribunal) can be made against order of Commissioner passed by him under section 73, 83A or 84 of the Act or order of Commissioner (Appeals) passed by him under section 85 of the Act [order in appeal from order of AC/DC] by Dealer or the department. Appeal has to be filed within three months from date of receipt of order by Dealer. Condonation of delay in filing an appeal will be granted on showing sufficient cause.

If an appeal is filed by the dealer appeal has to be accompanied with prescribed fees. Fees are payable for filing miscellaneous applications also. Fees payable are prescribed in section 86(6) of the Act.

Procedure by CESTAT will be similar to procedure under Central Excise, including provisions of pre-deposit of taxes, authorised representative, and reference to High Court etc.

The appeal of dealer should be in form ST-5 in quadruplicate and should be accompanied by equal number of copies of order appealed against it. One of the copies should be certified copy of order.

8.3  Central Excise Law:

Excise and Customs Act have made elaborate provisions for appeals against adjudication orders passed by excise/customs authorities. There is only one appeal in case of orders of Commissioner, while in case of other orders (i.e. orders of Superintendent, Assistant Commissioner, Dy. Commissioner, Jt. Commissioner, and Additional Commissioner), first appeal is with Commissioner (Appeals) and other with Tribunal. In some matters, revision application lies with Government against order of Commissioner and Commissioner (Appeals).

Tribunal is final fact-finding authority and no further appeal lies against facts as found by Tribunal (CESTAT). In case of order of Tribunal relating to classification or valuation, appeal lies with Supreme Court. In other matters, appeal can be made to High Court only if substantial question of law is involved.

Refer Picture 1 for provisions of appeal

Case laws:

8.1 Where there is no return filed, even in those cases deposit of 20% of assessed tax is condition precedent for maintaining appeal.

Section 9(1) or 9(1B) of the U.P. Sales Tax Act, 1948 restricts the deposit to 20 per cent of the assessed tax (a figure which can be treated as an ad hoc statutory quantification, on an average, of the tax demand in such cases). It empowers the appellate authority to waive or relax the requirements of clause (b).

Hon’ble Court held that the appellate authority would be in a position to judge the extent to which the circumstances of a particular case is a real dispute in the appeal and to insist upon the deposit of such percentage of the assessed tax, as it may consider appropriate.  If the intention of the legislature were only that, the deposit should be confined only to the admitted tax in all cases, the second part of cl. (b) referring to deposit of 20 per cent of the assessed tax.  Therefore, the deposit contemplated under clause (b) covers cases where no returns have been filed and no admission of any turnover has come from the dealer.

Commissioner of Sales Tax V. Atma Ram Misra (1990) 77 STC 245 (SC)

8.2 Prior payment of tax is required for entertaining an appeal.

The dealer satisfies the appellate authority as to his inability to deposit the assessed tax with interest which refers to his paying capacity, the authority is within his discretion to grant stay pending appeal for illegality of demand not a sufficient cause for stay, under Proviso to section 39(5) of Haryana General Sales Tax Act, 1973.

Hon’ble Court held that the prayer was made to grant stay on the ground that petitioner has not collected any additional tax from the customers and is unable to deposit the amount of additional demand created by patently illegal order. The legality of the additional demand created could not be made the basis for insisting to entertain the appeal without prior payment.

State of Haryana V. Maruti Udyog Ltd. (2001) 124 STC 285 (SC)

8.3 No appeal can be dismissed on the ground that no appeal was preferred against the earlier decisions of the High Court.

The contention is that the High Court had merely followed its judgments in the case of Sri Jagannath Roller Flour Mills v. State of Orissa (1987) 65 STC 384 (Ori).  Therefore, it is not open to the State now to contend in this case that the decision of the High Court was erroneous.

Hon’ble Court held that this appeal couldn’t be shut out on the preliminary ground that no appeal was preferred against the earlier decisions of the High Court. It is for the court to decide whether to entertain an appeal or not.  The point of law raised in this case is of general public importance and this appeal cannot be dismissed on the preliminary issue of maintainability.

Sales Tax Officer V. Shree Durga Oil Mills (1998) 108 STC 274 (SC)

8.4 No appeal can be filed against the claim rejected by the tribunal after re-consideration.

Dealer was denied the exemption by authorities under sales tax. Tribunal upheld the decision but remanded back the same for re-consideration. But the exemption was not granted. However, it was held that no appeal could be filed against such rejection.

Commissioner of Trade Tax V. Mansarover Bottling Co. Ltd. (2006)145 STC 659 (SC)

8.5 Dismissal of technical default.

The High Court was in error in dismissing the appeal before it on the ground that it was the judgment of the trial court and not its decree. High court would have removed the technicality by permitting the amendment of the memo of appeal.

State Of Madhya Pradesh V. State Bank Of Indore (2002) 126 STC 1 (SC)

8.6 Order of Tribunal condoning delay in filing appeal can be interfered with by High Court only if there is violation of Principles of Natural Justice.

There was a delay of 208 days in filing the appeal. The Tribunal having considered the reasons given in the application seeking condonation of delay found sufficient cause to condone the delay in filing the appeal and admitted the appeal. The High Court quashed the said order of the Tribunal on the ground that no sufficient cause was shown.

The reason for the delay in filing the appeal before the Tribunal was that after the Deputy Commissioner (Appeals), Lucknow Zone, disposed of the appeal, the order was dispatched to a different authority and at a different place, the State Representative at Agra who did not forward the same to the correct place and that resulted in the delay which was beyond the control of the appellants. On this ground, the Tribunal has rightly exercised its discretion to condone the delay. The order of the Tribunal is not shown to be perverse or suffering from the vice of violation of principles of natural justice. Order of High Court set aside.

Commissioner of Trade Tax V. U.P. Paper Corporation Pvt. Ltd. (2001) 123 STC 427 (SC).

9. Conclusion:

Appeal is the most important part of any legislation specially in my country like India as it insures that principle of natural justice are intact and department is not able to take any unilateral decision whatsoever. These days a number of litigations that travel through the process of appeal are increasing day by day. Various issues are taken up and classification and valuation are the two most litigative issues under the VAT regime. This is the reason, I have tried to cover important case laws that relate to appeal or pre deposit of tax and for the benefit of your all, I would like to summarize these ruling in the form of table.

CA. Rajat Mohan

www.fixet.in