2019 (8) TMI 492 - HC - Service Tax

Maintainability of appeal - non-compliance with the pre-deposit - Section 35F of the Central Excise Act, 1944 - HELD THAT - The only relief we can give to the appellant is that provided they deposit 50% of the amount representing 7.5% of the total tax effect in cash with the authority and provided they secure the balance amount by furnishing a bank guarantee to the satisfaction of the tribunal, the tribunal will proceed to hear out the appeal in accordance with law. Compliance of this order should be made by the appellant within eight weeks from date - Appeal disposed off.

Summary

Issues:
1. Appellant aggrieved by the tribunal's order directing pre-deposit of 7.5% of the total tax effect.
2. Interpretation of Section 35F of the Central Excise Act, 1944 regarding the mandatory deposit requirement.
3. Relief granted to the appellant by the High Court.

Analysis:

1. The appellant challenged the tribunal's order requiring a pre-deposit of 7.5% of the total tax effect amounting to ?64,60,75,741. The appellant contended that the pre-deposit amount was too high and harsh for them, seeking relief from the court.

2. The High Court referred to Section 35F of the Central Excise Act, 1944, which mandates a 7.5% deposit pending appeal. In light of this provision, the court considered the circumstances and modified the pre-deposit requirement for the appellant.

3. The High Court provided relief to the appellant by allowing them to deposit 50% of the amount representing 7.5% of the total tax effect in cash with the authority. Additionally, the appellant was directed to secure the balance amount by furnishing a bank guarantee to the satisfaction of the tribunal. The court specified that upon compliance with this order within eight weeks, the tribunal would proceed to hear the appeal in accordance with the law.

4. Consequently, the appeal (CEXA 5 of 2017) and the stay application (GA NO. 972 of 2017) were disposed of by the High Court in line with the modified pre-deposit conditions set for the appellant. The judgment aimed to balance the legal requirement of pre-deposit under Section 35F with the practical considerations and circumstances faced by the appellant, providing a feasible solution for both parties involved in the dispute.