Validity of Section 62(5) of the Punjab Value Added Tax Act: Impact on Right to Appeal

Exploring the recent Supreme Court judgment on the validity of Section 62(5) of the Punjab Value Added Tax Act and its effects on the right to appeal in tax matters. The decision holds significance for individuals and businesses navigating tax disputes in India, shedding light on the balance between tax obligations and the right to seek recourse through appeals.


  • The High Court examined the validity of Section 62(5) of the Punjab Value Added Tax Act, 2005.
  • The issue revolved around the imposition of pre-deposit for filing an appeal under Section 62(5).
  • The Court considered the constitutional validity of the provision and its impact on the right to appeal.
  • The Court analyzed the rationale behind the pre-deposit requirement and its reasonableness.
  • The judgment raised important questions about access to justice and financial constraints on appellants.
  • The High Court’s decision in Civil Writ Petition No.26920 of 2013 was a focal point of this part of the judgment.
  • Petitioner, Punjab State Power Corporation Limited, filed appeals under Section 62 of the PVAT Act for assessment years disputing additional demands.
  • Applications for stay of tax recovery and dispensing with pre-deposits were filed due to tight financial position.
  • Appellate authority directed a 25% deposit of additional demand failing which appeals would be dismissed.
  • ETO imposed penalties and interest under PVAT Act raising substantial demands.
  • Petitioner’s challenges were rejected by the court directing appeal as a remedy.
  • Petitioner voluntarily paid taxes for the assessment years, seeking adjustment against additional demands.
  • The Tribunal agreed to adjust voluntarily paid taxes but required a 25% deposit as per previous cases.
  • Punjab State Power Corporation Limited operates as a statutory body under Electricity Acts, engaged in electricity supply.
  • Representatives attended proceedings and provided explanations during assessment.

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  • The High Court framed questions related to the validity of Section 62(5) of the PVAT Act and its impact on the right to appeal.
  • The High Court also questioned the fairness and reasonableness of the 25% pre-deposit condition for hearing first appeals.
  • The central issue revolved around whether the State had the power to enact such a provision and if it infringed upon Article 14 of the Indian Constitution.
  • CWP No.26920 of 2013 was considered the lead matter for the petitions challenging Section 62(5).
  • The facts of the lead petition were detailed by the High Court in para 2 of its decision.

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  • The Judge may, in his discretion, dispense with the deposit of the appeal amount if it causes undue hardship to the appellant.
  • Fifty percent of the deficit duty must be deposited by the party concerned before a reference is made by the registering officer.
  • An appeal against a rateable value or tax fixed under the Act must be accompanied by the amount claimed from the appellant deposited with the Commissioner.
  • No appeal shall be entertained if not filed within thirty days from the date of communication of the order appealed against.
  • Satisfactory proof of a minimum payment of twenty-five percent of the total amount of additional demand must accompany the appeal.
  • The appellant must have paid the tax for an appeal against an order under Section 46.
  • Orders passed by the Tribunal, Commissioner, Deputy Excise and Taxation Commissioner, or designated officer, if not challenged, shall be final.
  • Appeal hierarchy: Excise and Taxation Officer -> Deputy Excise and Taxation Commissioner -> Commissioner -> Tribunal.
  • Orders passed by Deputy Excise and Taxation Commissioner or the Commissioner are further appealable to the Tribunal.
  • The High Court held that the State is empowered to enact Section 62(5) of the Act, and the provision is legal and valid.
  • The condition of 25% pre-deposit for hearing the first appeal is considered not onerous, harsh, unreasonable, and not violative of Article 14 of the Constitution of India.
  • It is well within the power of the State Legislature under Entry 63 of List II read with Entry 44 of List III of the Seventh Schedule to the Constitution to impose such conditions.
  • The provision requiring pre-deposit does not nullify the right of appeal as discretion is given to the appellate judge to dispense with the compliance of this requirement if necessary.
  • The statutory provision regulating the exercise of the right of appeal aims to prevent delay in the payment of taxes while still allowing for the right to appeal.
  • Any requirement for discharging a liability or fulfilling a condition to avail the right of appeal is considered valid legislation with no contravention of Article 14.
  • The decisions in Seth Nand Lal, Shyam Kishore, P. Laxmi Devi, Har Devi Asnani, and S.E. Graphites dealt with cases where the statute did not confer discretion to the Appellate Authority.
  • The decision in Seth Nand Lal considered undue hardship caused by the requirement of pre-deposit, as arbitrariness violates Article 14 of the Constitution.
  • Specific powers are required for passing orders affecting the rights of a party.
  • The inherent powers of the court are complementary to the powers expressly conferred under the Code, but they should not conflict with the Code’s provisions or the legislature’s intentions.
  • The court is free to exercise inherent powers for the purposes mentioned in Section 151 of the Code if it does not conflict with the Code or the legislature’s intentions.
  • The inherent powers cannot be used if the Code contains specific provisions to address the situation.
  • The decisions of the Court are classified into two categories based on the width and extent of the concerned provisions.
  • District Judge may have the power to utilize Order 41 Rule 5 of the CPC in appeals under Section 169 of the Act
  • Reference made to the case of Punj Sons (P) Ltd. v. Municipal Corporation of Delhi where this view was taken by a learned Single Judge of the Delhi High Court
  • The Appellate Authority cannot grant relief on its own; it would go against the statutory intendment.
  • Any exercise by the Appellate Authority to grant relief would render the provision unworkable.
  • The conclusions drawn by the High Court on questions (a) and (b) are accepted.
  • The High Court’s view on question (c) is set aside.
  • The appeals by the assesses are dismissed.
  • The State’s appeals against the High Court’s decision on question (c) are allowed.
  • No costs are imposed.

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Case Number: C.A. No.-007358-007358 / 2019

Click here to read/download original judgement

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