2019 (5) TMI 241 - HC - Service Tax

Time limit for filing of Stay application before Commissioner (Appeals) - Whether the Central Excise Act, 1944 or the Finance Act, 1994 prescribes any time limit for filing the Stay application before Commissioner (Appeals)? Whether the Tribunal was justified in dismissing the appeal solely on the ground that there was a delay in filing the stay application before Commissioner (Appeals) even when admittedly the stay application had been filed six months before the date of hearing, and waiver of pre-deposit was specifically pleaded at the time of hearing before Commissioner (Appeals)? HELD THAT - Whenever the Parliament desired to make a precondition that the amount of duty and/or penalty should be deposited before the Appeal is filed, it is so provided in the legislation. Thus, in terms of Section 35F of the Act, so long as the appeal is not disposed of/ dismissed by the Appellate Authority, it is open to the party to file an application for dispensing with pre-deposit of duty and penalty pending the disposal of the appeal. Once such an application is filed pending the appeal then in terms of the second proviso to Section 35F of the Act, it has to be disposed of by the Appellate Authority whenever possible within 30 days of filing of such an application - There is no period of limitation provided in Section 35F of the Act to file an application for dispensing with pre-deposit of duty and penalty. Therefore, it is not open to read a provision of limitation where it is not found in the section. Undoubtedly, the right of an appeal can be conditional. However, the conditions for the appeal being entertained are to be imposed by legislation and not by executive fiat / action. The order of the Commissioner (Appeals) dated 10th December, 2015 and the impugned order of the Tribunal dismissing the appeal itself on the ground that the stay application has been filed belatedly in a pending appeal, is not sustainable. In the present facts, the application for dispensing with the requirement of pre-deposit under Section 35F of the Act was on record before Commissioner of Central Excise (Appeals) when he passed an order, dismissing the appeal. The issues decided in favour of the Appellant-Assessee and against the Respondent Revenue - matter is remanded to the Commissioner (Appeals) for fresh consideration.

Summary

Issues:
Challenging order of Customs, Excise and Service Tax Appellate Tribunal under Finance Act, 1994 and Central Excise Act, 1944. Admitting appeal on substantial questions of law regarding time limit for filing stay application before Commissioner (Appeals) and justification of dismissal based on delay in filing stay application.

Analysis:
The judgment concerns an appeal challenging an order passed by the Customs, Excise and Service Tax Appellate Tribunal under the Finance Act, 1994 and the Central Excise Act, 1944. The appeal was admitted based on substantial questions of law related to the time limit for filing a stay application before the Commissioner (Appeals) and the justification of dismissing an appeal due to a delay in filing the stay application. The appeal was taken up for final disposal on the same day it was admitted.

The facts of the case involve a service tax demand on the Appellant for renting out cars, confirmed by the Additional Commissioner of Central Excise. The Appellant filed an appeal with the Commissioner (Appeals) but did not provide evidence of depositing the tax and penalty as adjudicated. Subsequently, an application for dispensation of pre-deposit was filed during the appeal process. However, the Commissioner (Appeals) dismissed the appeal for failure to deposit tax and penalty. The Tribunal also dismissed the appeal based on non-compliance with Section 35F of the Act, citing a Supreme Court decision.

The Court analyzed Section 85 of the Finance Act, 1994 and Section 35F of the Act, emphasizing that the requirement to deposit duty or penalty pending appeal is distinct from depositing before filing the appeal. It clarified that there is no time limit specified in Section 35F to file an application for dispensing with pre-deposit. The Court highlighted that the right to file an appeal can be conditional but must be imposed by legislation, not executive action. It concluded that the orders of the Commissioner (Appeals) and the Tribunal were not sustainable as the application for dispensing with pre-deposit was pending before the appeal was dismissed.

Ultimately, the Court set aside the impugned orders and remanded the matter to the Commissioner (Appeals) for fresh consideration. It noted that the Appellant's stay application had not been examined on merits, and thus, the appeal and stay application were restored for a fresh decision in accordance with the law. The substantial questions of law were answered in favor of the Appellant, and the appeal was disposed of accordingly.