2013 (7) TMI 533 - HC - Central Excise

Requirement of pre-deposit Held that - As per the decision in the case of Scan Computer Consultancy v. Union of India 2006 (2) TMI 189 - HIGH COURT OF GUJARAT AT AHMEDABAD wherein it is held that mere default in making deposit as directed, the appellant does not stand to gain anything and only delays his right to have his case adjudicated. Nor does such a delay in making pre-deposit cause any prejudice to the revenue, in absence of any stay operating in favour of the petitioner. Condition of pre-deposit cannot be used by the appellate authority for the purposes of denying an appellant the right of adjudication which is otherwise statutorily granted In the instant case, Tribunal should hear the Tax Appeals on merits, on further condition that the appellants shall deposit further sum of ₹ 5 lakhs - Decided in favor of Assesse.

Summary

Issues:
Refusal of Tribunal to restore Tax Appeals, Function of Tribunal post High Court dismissal, Pre-deposit requirement impact on right of appeal, Belated compliance of pre-deposit, Restoration of appeal dismissed for non-compliance, Power of appellate authority to consider restoration.

Refusal of Tribunal to Restore Tax Appeals:
The judgment dealt with the refusal of the Tribunal to restore Tax Appeals of the appellants based on a common order dated September 25, 2012. The appellants had filed Tax Appeal Nos.2754 and 2755 of 2004 before the Tribunal and had sought waiver of pre-deposit, which was denied, requiring them to deposit Rs.25 lakh. Despite various attempts and appeals, the Tax Appeals were dismissed on October 21, 2010. The Supreme Court allowed withdrawal of Special Leave Petitions with liberty to approach the Tribunal for restoration, which the appellants did by depositing the entire amount. However, the Tribunal held that it was functus officio post High Court's dismissal of the appeals. The High Court, after considering various precedents, including the Delhi High Court's view, held that the appeals should be heard on merits due to the belated compliance with the pre-deposit requirement.

Function of Tribunal Post High Court Dismissal:
The judgment discussed the issue of whether the Tribunal retains jurisdiction to consider restoration applications after the High Court dismisses appeals. While the Delhi High Court's stance was that the Tribunal becomes functus officio post High Court's dismissal, the Gujarat High Court took a different view. It emphasized the importance of the right of appeal and considered the belated compliance with the pre-deposit requirement, ultimately deciding that the Tribunal should hear the Tax Appeals on merits.

Pre-Deposit Requirement Impact on Right of Appeal:
The judgment highlighted the significance of the pre-deposit requirement under the Central Excise Act, 1944, and its impact on the right of appeal. It acknowledged that the requirement of pre-deposit could potentially lead to the destruction of the assessee's right of appeal and result in adverse decisions without considering the merits of the case. The Court recognized the need for a balanced approach, where belated compliance with the pre-deposit requirement could be considered in the interest of justice to ensure appeals are heard on merits.

Belated Compliance of Pre-Deposit:
The judgment discussed the Court's consistent view that the right of appeal should not be easily taken away due to non-compliance with the pre-deposit requirement. While acknowledging the statutory nature of the pre-deposit condition, the Court also recognized the need for a more lenient approach towards belated compliance, especially when there is a valid explanation for the delay. The Court emphasized that the decision to hear appeals on merits should be guided by the interest of justice and the specific circumstances of each case.

Restoration of Appeal Dismissed for Non-Compliance:
The judgment referred to precedents such as the case of Scan Computer Consultancy v. Union of India and Hussein Haji Harun v. Union of India, which emphasized the power of the appellate authority to consider restoration of appeals dismissed for non-compliance with pre-deposit conditions. It highlighted that the absence of a specific provision permitting restoration should not be a barrier to considering such requests. The Court considered the appellants' continuous pursuit of remedies and the steps taken for restoration while imposing additional conditions for further deposits before the Tribunal.

In conclusion, the Gujarat High Court, in this judgment, addressed the issues surrounding the refusal of the Tribunal to restore Tax Appeals, the function of the Tribunal post High Court dismissal, the impact of the pre-deposit requirement on the right of appeal, belated compliance with pre-deposit conditions, and the restoration of appeals dismissed for non-compliance. The Court emphasized the importance of the right of appeal, balanced considerations for belated compliance, and the power of the appellate authority to consider restoration requests based on the specific circumstances of each case.