2014 (11) TMI 619 - HC - Central Excise

Waiver of pre-deposit - validty of order of tribunal seeking pre-deposit of duty - principle of natural justice - Held that - No reason has been recorded by the appellate tribunal while deciding the application for waiver of pre-deposit/grant of stay and, therefore, the same has been in violation of principles of natural justice. In view of the law laid down by the Apex Court in the case of DCM Financial Services Ltd. v. J.N. Sareen & Anr., 2008 (5) TMI 613 - SUPREME COURT OF INDIA and also to the fact that the decision cited by the learned counsel for the department has been considered by the Madras High Court and the question has been referred to the Larger Bench and the issue is pending before the Larger Bench, we are of the view that the writ petition filed by the petitioner is maintainable. It is true that deposit of money demanded by the respondents is a condition precedent as per Section 35F of the Act. However, the same can be waived or dispensed with only if deposit of the money is going to cause undue hardship to such a person and a prima facie case has been made out - Matter remanded back - Decided in favour of assessee.

Issues:
1. Maintainability of the writ petition challenging the order of the appellate authority.
2. Rejection of the application for waiver of pre-deposit by the appellate tribunal.
3. Violation of principles of natural justice in the impugned order.
4. Consideration of prima facie case and undue hardship in granting stay.

Issue 1 - Maintainability of the writ petition:
The petitioners challenged the order of the appellate authority before the appellate tribunal under Section 35B of the Central Excise Act, 1944. They also filed an application under Section 35F for dispensation of pre-deposit. The appellate tribunal rejected the application for stay, leading to the petitioners filing a writ petition. The petitioners argued that the impugned order was a non-speaking order, lacking reasons, and thus violated principles of natural justice. The respondents contended that the writ petition was not maintainable, citing various judgments in support. The court considered the importance of reasons in decision-making, emphasizing that reasons provide a live link between conclusions and evidence, ensuring transparency and fairness. The court held that the writ petition was maintainable as the impugned order lacked reasons, violating natural justice principles.

Issue 2 - Rejection of the application for waiver of pre-deposit:
The appellate tribunal rejected the petitioners' application for waiver of pre-deposit, stating that no case for grant of stay was made out. The petitioners argued that they had a strong prima facie case and insisted that the pre-deposit of penalties would cause undue hardship. The court emphasized the need for a reasoned order, highlighting that the tribunal should pass a detailed order considering the prima facie case and undue hardship. The court quashed the impugned order and remanded the matter back to the appellate tribunal for a fresh consideration on merits, expecting a detailed order.

Issue 3 - Violation of principles of natural justice in the impugned order:
The court reiterated that reasons in any order are part of natural justice, ensuring fair decision-making. Lack of reasons in the impugned order led to the court quashing it and remanding the matter for a detailed consideration. The court emphasized that every judicial order must be supported by reasons recorded in writing to maintain transparency and fairness in decision-making.

Issue 4 - Consideration of prima facie case and undue hardship in granting stay:
The court emphasized the importance of considering the prima facie case and undue hardship in granting stay applications. It highlighted that the tribunal should pass reasoned and detailed orders, ensuring a fair assessment of the circumstances. The court directed the appellate tribunal to consider the petitioners' application afresh on merit and pass a detailed order on the prima facie case and undue hardship promptly.

In conclusion, the writ petition was allowed, and the impugned order was quashed due to the violation of natural justice principles. The matter was remanded back to the appellate tribunal for a fresh consideration, emphasizing the importance of reasoned and detailed orders in decision-making processes.

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