Facts of the Case

This batch of writ petitions before the Bombay High Court, led by Bharat Udyog Ltd. and Anr. vs State of Maharashtra, challenged the constitutional validity of Section 26(6A), (6B) and (6C) of the Maharashtra Value Added Tax Act, 2002, inserted retrospectively from 15.04.2017, mandating pre-deposit for filing appeals. The provision's retrospective reach had earlier been upheld by a Full Bench of the Bombay High Court in United Projects vs State of Maharashtra, but the Supreme Court, in State of Telangana & Ors. vs Tirumala Constructions, set aside that Full Bench ruling and held that the Maharashtra Legislature lacked competence to retrospectively amend the pre-deposit requirement after the GST regime commenced on 01.07.2017. With this position settled, the present batch of petitioners, who had not yet filed their statutory appeals, sought permission to approach the Appellate Authority/Tribunal with applications for condonation of delay and waiver of pre-deposit.

Issues Involved

  1. Whether the substantive challenge to the pre-deposit requirement under Section 26(6A)-(6C) MVAT Act stood settled by the Supreme Court's ruling in Tirumala Constructions.
  2. Whether the petitioners, who had not filed statutory appeals, should be permitted to do so with applications for delay-condonation and pre-deposit-waiver.
  3. Whether demand notices issued to some petitioners warranted interim protection pending filing of appeals.

Petitioner's Arguments

  • The pre-deposit issue stood concluded by the Supreme Court's decision in State of Telangana & Ors. vs Tirumala Constructions, which held the retrospective Maharashtra amendment void for lack of legislative competence.
  • The petitioners had not yet filed appeals before the Appellate Authority/Tribunal and sought four weeks to do so, along with applications for condonation of delay and waiver of pre-deposit.
  • Demand notices had been issued to some petitioners, and interim protection was needed pending the filing of appeals.

Respondent's Arguments

  • The State, represented by the Additional Government Pleader, did not dispute that the Supreme Court's ruling in Tirumala Constructions had settled the pre-deposit controversy.

Court Order-Findings

  • The Court held that the finality reached on the pre-deposit issue by the Supreme Court's decision in Tirumala Constructions warranted accepting the petitioners' request to approach the Appellate Authority/Tribunal.
  • Petitioners were permitted to file appeals along with applications for condonation of delay and waiver of pre-deposit within four weeks; the Appellate Authority/Tribunal was directed to consider and decide these in accordance with law.
  • All contentions of the parties on the proposed appellate proceedings were expressly kept open.
  • The department was directed not to take further steps on the demand notices for four weeks, purely to enable the petitioners to approach the appellate forum, without this being construed as any expression on the merits.

Important Clarification

  • Once the Supreme Court has settled that a State's retrospective pre-deposit amendment under the erstwhile VAT law is void for want of legislative competence post-GST, assessees who had not filed appeals can seek condonation of delay and waiver of pre-deposit before the appellate forum, rather than re-litigating validity in writ.
  • A short-term stay on recovery pending the filing of such appeals is a procedural accommodation only and carries no finding on the merits of the underlying demand.

Sections Involved

  • Section 26(6A), (6B), (6C), Maharashtra Value Added Tax Act, 2002 - retrospectively inserted pre-deposit requirement for filing first and second appeals.
  • Central Goods and Services Tax and Maharashtra Goods and Services Tax Act, 2017 - GST legislation that subsumed the 2002 Act from 01.07.2017, forming the basis on which the retrospective amendment was held incompetent.

Decision-In Favour of

Disposed of with directions, in favour of the Assessees. Petitioners were permitted to file appeals with condonation and pre-deposit-waiver applications, and recovery was stayed for four weeks, though no final view was expressed on the merits of the individual demands.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

Court: High Court of Judicature at Bombay
Case No.: Writ Petition No. 15338 of 2023 and batch
Coram: Hon'ble Mr. Justice G. S. Kulkarni and Hon'ble Mr. Justice Jitendra Jain
Date of Decision: 20.12.2023

Link to Download the Order

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