JUDGMENT : J.B. Pardiwala, J. 1. Rule returnable forthwith. Mr.Chintan Dave, the learned Assistant Government Pleader, waives service of notice of rule for and on behalf of the State of Gujarat. 2. By this writ-application under Article 226 of the Constitution of India, the writ-applicant, a Public Ltd. Company, has prayed for the following reliefs : “26 A. This Hon'ble Court may be pleased to issue a writ of certiorari or a writ in nature of certiorari or any other appropriate writ or order quashing and setting aside the orders of Hon. Tribunal dated 11.12.2018 (annexed at Annexure A) and 7.2.2019 (annexed at Annexure B) as well as order of the learned first appellate authority (annexed at Annexure M) and the matter may please be remanded to the learned first appellate authority for hearing on merits without insisting for any pre-deposit or security for admission and stay against recovery of dues; B. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to restrain the learned Respondent authorities from making coercive recovery pursuant to the assessment order passed for the year 2013- 14; C. Ex parte ad interim relief in terms of prayer B may kindly be granted; D. Such further reliefs as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioner shall forever pray.” 3. The subject matter of challenge is the order passed by the Gujarat Value Added Tax Tribunal dismissing the Second Appeal No.885 of 2018 preferred by the writ-applicant herein against the order passed by the Dy. Commissioner, State Tax, Appeal-5, Vadodara, as the First Appellate Authority. The controversy revolves around the failure on the part of the writ-applicant in making the pre-deposit. The order passed by the Tribunal in the Second Appeal No.882 of 2018 directing the writ-applicant to make a pre-deposit to the tune of Rs. 10 lakh reads as under : (5) Considering the rival submissions, facts and circumstances of the case, it appears that the First Appellate Authority has summarily dismissed the First Appeal for non-payment of pre-deposit to the tune of Rs.10,00,000/- without gone into the merits of the case. 10 lakh reads as under : (5) Considering the rival submissions, facts and circumstances of the case, it appears that the First Appellate Authority has summarily dismissed the First Appeal for non-payment of pre-deposit to the tune of Rs.10,00,000/- without gone into the merits of the case. It also appears that there is no substantive provision under the GVAT Act to issue the combine invoice by any one company putting the name of 2 companies- GSPCL and M/S. Nikko Resources under the Registration Certificate of GSPCL. The said question remains unanswered at both the end – appellant and revenue. Since the First Appeal is not decided on merits, therefore, in light of the decision of the Hon'ble High Court of Gujarat in the case of M/S. Tudor India Ltd., this Tribunal has very limited role to decide the amount of pre-deposit and to remand this matter back to the First Appellate Authority. (6) After considering the submission of both the parties and order of the First Appellate Authority, the direction given by the First Appellate Authority for amount of Rs.10,00,000/-, towards pre-deposit as against the total tax liability of Rs.4,06,54,904/-, interest of Rs. 2,78,48,609/- and penalty of Rs. 1,01,63,726/- we do not find any more space to change the order of the First Appellate Authority for the purpose of direction of pre-deposit. (7) Considering the above facts and circumstances, we confirm the direction of the First Appellate Authority of predeposit of Rs.10,00,000/-. The present Second Appeal is admitted and stay against recovery is granted on condition of appellant depositing Rs. 10,00,000/- towards pre-deposit within one month. On payment of the aforementioned amount of pre-deposit of Rs. 10,00,000/- the stay against recovery shall come into operation.” 4. As the writ-applicant was not able to pay the requisite amount towards the pre-deposit, ultimately, the Tribunal dismissed the Second Appeal vide order dated 7th February 2019. 5. Being dissatisfied with the order passed by the Tribunal dismissing the appeal for non-payment of the amount towards the pre-deposit, the writ-applicant is here before this Court with the present writ application. 6. It appears that the writ-applicant is a public limited company established under the laws of Canada. It is engaged in the business of exploration, development and production of oil and gas. It is a foreign company within the meaning of Section 592 of the Companies Act, 1956. 6. It appears that the writ-applicant is a public limited company established under the laws of Canada. It is engaged in the business of exploration, development and production of oil and gas. It is a foreign company within the meaning of Section 592 of the Companies Act, 1956. The writ-applicant has been duly registered under the Gujarat Value Added Tax Act, 2003(for short “the VAT Act”), as well as the Central Sales Tax Act, 1956 (for short “the Act”). 7. The Government of India entered into a Production Sharing Contract jointly with the Gujarat State Petroleum Corporation Ltd. and the writapplicant herein for the exploration and development of the Hazira field. The GSPC is a Government undertaking. The Government of Gujarat has a 90% shareholding in the GSPC. 8. It also appears that the writ-applicant herein entered into an agreement with the GSPC. Such agreement was in the form of a Joint Operating Agreement. The participating interest of the writ applicant came to be fixed at 33.33 %, whereas the interest of the GSPC was fixed at 66.67 %. 9. It is the case of the writ-applicant that the GSPC used to receive the total consideration of the sales made from the Hazira block, and the tax liability under the Act, 1969, as well as the VAT Act, used to be discharged by the GSPC on the total sale consideration. The writ-applicant used to periodically receive the disbursement from the GSPC out of the consideration received from the customers after the discharge of the tax liability. Such was the understanding from the year 1995, i.e. the first year of the production. 10. Mr.Sheth, the learned counsel appearing for the writ-applicant, invited our attention to the assessment order dated 12th February 2018. Mr. Sheth invited our attention, more particularly, to the following observations made by the Assessing Officer in the assessment order : “GSCP has given to the dealer an amount of Rs. 34,28,55,419 by way of sale price during the course of the year as mentioned above towards 33.33% share of the dealer. This amount has been added to the turnover as per the returns and VAT audit report and the total turnover for the purpose of this assessment has been determined as Rs.34,34,83,074. This matches with the sale price as disclosed in Schedule 21 of the Balance Sheet of the dealer. This amount has been added to the turnover as per the returns and VAT audit report and the total turnover for the purpose of this assessment has been determined as Rs.34,34,83,074. This matches with the sale price as disclosed in Schedule 21 of the Balance Sheet of the dealer. On such turnover, as shown in Part-2, total tax of Rs. 4,06,54,904/- has been assessed. The tax payable on such sales/sales invoices has been paid by GSPC. However since the dealer who is assessed has himself not paid such tax, deduction has not been given of such amount as tax paid.” 11. The principal argument of Mr. Sheth is that the entire tax liability under the Sales Tax Act and the VAT Act on the total consideration received with respect to the sales made in the Hazira block came to be discharged by the GSPC. According to Mr.Sheth, this fact is very much known to the Sales Tax Department as well as the Commercial Tax Department. However, for the reasons recorded by the Assessing Officer in the assessment order, referred to above, the liability to pay tax has been fixed upon the writ-applicant because the writ-applicant, on its own, failed to make the payment of tax keeping in mind his share of 33.33 %. 12. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether the order of pre-deposit to the tune of Rs.10 lakh is reasonable or sustainable in law? 13. In view of the facts recorded above and also the submissions canvassed by Mr.Sheth, the learned counsel appearing for the writ-applicant, the predeposit order is not sustainable in law. 14. Section 73(4) of the VAT Act, 2003 reads thus : “73. Appeal. 13. In view of the facts recorded above and also the submissions canvassed by Mr.Sheth, the learned counsel appearing for the writ-applicant, the predeposit order is not sustainable in law. 14. Section 73(4) of the VAT Act, 2003 reads thus : “73. Appeal. (4) No appeal against an order of assessment shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of payment of the tax in respect of which an appeal has been preferred: [Provided that an appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order- (a) Without payment of tax with penalty (if any) or, as the case may be, of the penalty, or (b) On proof of payment of such smaller sum as it may consider reasonable, or (c) On the appellant furnishing in the prescribed manner, security for such amount as the appellate authority may direct.]” 15. The aforesaid provision would make it clear that no appeal against an order of assessment shall ordinarily be entertained by an Appellate Authority if such an appeal is not accompanied by satisfactory proof of the payment of tax in respect of which an appeal is preferred. However, the proviso to clause 4 makes the picture further clear. It confers discretion upon the Appellate Authority in appropriate cases to entertain the appeal without the payment of tax with penalty or in an appropriate cases on proof of the payment of the smaller sum as the Appellate Authority may consider reasonable. It is very much necessary to clarify that, before the Appellate Authority or the Tribunal passes an order of pre-deposit, it is obliged to consider a prima facie case, which the appellant may be in a position to highlight. If a strong prima facie case is made out, then in such circumstances, there should not be any difficulty in entertaining the appeal even without insisting for the payment of tax with penalty or even a smaller sum. In the case on hand, we do not find any discussion as regards the prima facie case which has been put up by the writ-applicant. Straightway the order is passed for the purpose of pre-deposit. Such an approach may lead to injustice if a meritorious appeal is dismissed only on the ground of non-payment of the pre-deposit amount. In the case on hand, we do not find any discussion as regards the prima facie case which has been put up by the writ-applicant. Straightway the order is passed for the purpose of pre-deposit. Such an approach may lead to injustice if a meritorious appeal is dismissed only on the ground of non-payment of the pre-deposit amount. Therefore, in appropriate cases, the First Appellate Authority is expected to exercise its discretion judiciously and it should not insist for pre-deposit, if otherwise the appellant is able to make out a strong prima facie case in his favour. 16. The Supreme Court in the case of Hindustan Steels Limited Rourkela vs. A K Roy [ AIR 1970 SC 1401 ] has held that while considering the question of granting relief the Tribunal must exercise the discretion judicially in accordance with the well -recognised principles in that regards; it has to examine carefully the circumstances of the case and decide whether the case is one of those exceptions to the general rule. If the Tribunal, while exercising discretion, does not take note of the pertinent facts and circumstances or acts in breach of the principles laid down by the Supreme Court it would be a case of non -exercise of the discretion vested in it by law. 17. We could have observed many things in this regard so far as the merits are concerned. But, if we observe anything at this stage that may cause prejudice to the State. Therefore, we are of the view that this is a case in which there should not have been any order of payment towards the pre-deposit. 18. In the aforesaid context, we may refer to and rely upon a decision of the Bombay High Court in the case of Bhupendra Murji Shah v. Deputy Commissioner of Income Tax-15(1)(1) and others (Writ Petition No.2157 of 2018 and Writ Petition No.2160 of 2018, decided on 11th September 2018. The order reads thus : “2. It is undisputed that the petitioner has challenged the demand raised in the first petition No.2157 of 2018 in the sum of Rs.11,15,99,897/- for Assessment Year 2015-2016 by approaching the Commissioner of Income Tax (Appeals). Thus, an Appeal against the Assessment Order raising this demand is filed and is pending. 3. In the meanwhile, the petitioner approached the Assessing Officer/Deputy Commissioner of Income Tax, Circle 15(1) (1), Aayakar Bhavan, Mumbai. Thus, an Appeal against the Assessment Order raising this demand is filed and is pending. 3. In the meanwhile, the petitioner approached the Assessing Officer/Deputy Commissioner of Income Tax, Circle 15(1) (1), Aayakar Bhavan, Mumbai. He may have made an application and termed it as a request for stay, but what essentially he was worried and concerned about was that since the Appeal is pending and yet to be decided, nor was there any consideration of application for stay by Appellate Authority, this Deputy Commissioner will treat the petitioner/assessee as 'assessee in default'. Thereupon, he will recover the amount by coercive means. It is in these circumstances, this letter was addressed and we have carefully perused that letter. That records that the subject matter of tax is in dispute. The Assessment Order is challenged. The Appeal under Section 246-A of the Income Tax Act 1961 challenging the Assessment Order dated 30th December 2017, received on 1st August 2018 is pending. The request of the petitioner/assessee is that the demand be kept in abeyance till the disposal of this Appeal. 4. With marginal difference in the figures, the issue raised in the second petition No.2160 of 2018 is also identical. Both petitions are taken up together. It is not disputed before us that in terms of Chapter XX styled as Appeals and Revision, the order of the Assessment Officer is appealable under section 246 subsection (1). Once it is an appealable order and the Appeal has been filed, it is pending, then, the petitioner/appellant should have been given either an opportunity to seek a stay during the pendency of the appeal, which power is also conferred admittedly in the Commissioner or this Deputy Commissioner should have held the demand in abeyance as prayed by the petitioner/assessee. He does neither, but proceeds to communicate to the petitioner/ assessee that his application for stay is dismissed. The petitioner/ assessee should pay 20% of the outstanding amount as prescribed in some Circulars of the Revenue and particularly, dated 29th February 2016 and produce the challan and seek stay of demand again, failing which collection and recovery will continue. 5. We are not concerned here with the Circular of the Central Board of Direct Taxes. We are not concerned here also with the power conferred in the Assessing Officer of collection and recovery by coercive means. 5. We are not concerned here with the Circular of the Central Board of Direct Taxes. We are not concerned here also with the power conferred in the Assessing Officer of collection and recovery by coercive means. All that we are worried about is the understanding of this Deputy Commissioner of a demand, which is pending or an amount, which is due and payable as tax. If that demand is under dispute and is subject to the appellate proceedings, then, the right of appeal vested in the petitioner/assessee by virtue of the Statute should not be rendered illusory and nugatory. That right can very well be defeated by such communication from the Revenue/Department as is impugned before us. That would mean that if the amount as directed by the impugned communication being not brought in, the petitioner may not have an opportunity to even argue his Appeal on merits or that Appeal will become infructuous, if the demand is enforced and executed during its pendency. In that event, the right to seek protection against collection and recovery pending Appeal by making an application for stay would also be defeated and frustrated. Such can never be the mandate of law. 6. In the circumstances, we dispose both these petitions with directions that the Appellate Authority shall conclude the hearing of the Appeals as expeditiously as possible and during pendency of these Appeals, the petitioner/appellant shall not be called upon to make payment of any sum, much less to the extent of 20% under the Assessment Order/Confirmed Demand or claim to be outstanding by the Revenue.” 19. The issue of granting stay pending appeal is governed principally by the two circulars issued by the CBDT. The first circular was issued way back on 2nd February 1993 being instructions no.1914. The circular contained guidelines for staying the demand pending appeal. It was stated that the demand would be stayed if there are valid reasons for doing so and mere filing of appeal against the order of assessment would not be sufficient reason to stay the recovery of demand. The instructions issued under the office memorandum dated 29th February 2016 are not in super- session of the instructions no.1914 dated 2nd February 1993 but are in partial modification thereof. The instructions issued under the office memorandum dated 29th February 2016 are not in super- session of the instructions no.1914 dated 2nd February 1993 but are in partial modification thereof. The preamble of these instructions provide that in order to streamline the process of grant of stay of standardization of quantum of lump-sum payment to be made as a pre-condition for stay of demand of dispute before the Commissioner of Income Tax (Appeals), such modified guidelines were being issued. The relevant portion of these instructions read as under: “4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT(A), the following modified guidelines are being issued in partial modification of Instruction No.1914: (A) In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in para (B) hereunder. (B) In a situation where, (a) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.), or (b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.), the assessing officer shall refer the matter to the administrative Pr. CIT/CIT, who after considering all relevant facts shall decide the quantum/proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand. CIT/CIT, who after considering all relevant facts shall decide the quantum/proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand. (C) In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer. (D) The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition. If a reference has been made to Pr. CIT/CIT under para 4 (B) above or a review petition has been filed by the assessee under para 4 © above, the same shall also be disposed of by the Pr. CIT/CIT within 2 weeks of the assessing officer making such reference or the assessee filing such review, as the case may be. (E) In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia - (i) require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled; (ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assessee has not co-operated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; (iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of section 245.” 20. This circular thus lays down 15% of the disputed demand to be deposited for stay, by way of a general condition. The circular does not prohibit or envisage that there can be no deviation from this standard formula. In other words, it is inbuilt in the circular itself to either decrease or even increase the percentage of the disputed tax demand to be deposited for an assessee to enjoy stay pending appeal. The circular provides the guidelines to enable the Assessing Officers and Commissioners to exercise such discretionary powers more uniformly. 21. In the result, this writ application succeeds and is hereby allowed. The circular provides the guidelines to enable the Assessing Officers and Commissioners to exercise such discretionary powers more uniformly. 21. In the result, this writ application succeeds and is hereby allowed. The two impugned orders passed by the Tribunal dated 11th December 2018 and 7th February 2019 respectively including the order passed by the Appellate Authority are hereby quashed and set aside. 22. The appeal preferred by the writ-applicant herein stands restored before the First Appellate Authority. The First Appellate Authority shall now proceed to hear the appeal on merits. Rule is made absolute.