2022 (4) TMI 134 - HC - Central Excise

Maintainability of appeal - seeking waiver from making mandatory pre-deposit of 7.5% required to institute an appeal before the CESTAT - Section 86 of the Finance Act, 1994 - It is contended that the huge quantum of pre-deposit due from the petitioner is too onerous and makes it practically impossible for the petitioner to pursue its statutory remedy - HELD THAT - When the pre-deposit required for preferring the appeal in the instant case was ₹ 18,06,057/-, petitioner has already deposited ₹ 12,15,000/- and the balance is only ₹ 5,56,057/- which has not been deposited, since the petitioner claims to be in penury. A perusal of the statutory provisions will reveal that the amendment to section 35F of the Central Excise Act r/w Section 86 of the Finance Act, 1994, clearly manifest the intention of the legislature that the waiver of pre-deposit, which was being resorted to, quite often by the courts of law, needed to be amended to make the pre-deposit mandatory. Thus, after the Amendment Act came into force, no discretion is available with the courts of law to waive the mandatory requirement of pre-deposit of 7.5% even if it is assumbed to be onerous in the circumstances of the case - When the Statute does not provide for waiver of a pre-deposit, it is impermissible for this Court to act contrary to the legislative intention merely on the plea of financial hardships. If such pleas are entertained, and directions are issued for waiving the pre-deposit, there will be no end to such demands. Further if orders are issued, contrary to the Statute the same will destroy the very scheme of the Statute including the consequent amendment. It is appropriate to refer to the decision of the Supreme Court in OIL NATURAL GAS CORP. LTD. VERSUS GUJARAT ENERGY TRANSMISSION CORPORATION. LTD. AND ORS. 2017 (3) TMI 1628 - SUPREME COURT , wherein it was observed that the High courts cannot disregard the statutory mandates. The writ petition is dismissed.

Summary

Issues:
Petitioner seeks relief from predeposit under Section 86 of the Finance Act, 1994 for appealing before CESTAT. The main issue is whether the mandatory pre-deposit of 7.5% required for instituting an appeal can be waived considering financial constraints.

Analysis:
The petitioner, engaged in laying power lines, challenged an order imposing service tax and penalty. The petitioner contended that the pre-deposit required was financially burdensome, seeking relief from the High Court. The petitioner had deposited a partial amount but found it impractical to pay the remaining balance.

The petitioner relied on precedents to argue that Article 226 could be invoked to seek relief from the mandatory pre-deposit. However, the respondent contended that post the 2014 amendment to Section 35F of the Central Excise Act, the power to waive pre-deposit was no longer available. The respondent cited Supreme Court decisions emphasizing non-interference with statutory mandates.

The Court noted that the amendment made pre-deposit mandatory, eliminating the discretion to waive it. Referring to the Dish TV India case, it was established that post-amendment, no waiver of pre-deposit was permissible. The Court highlighted that going against the statute would disrupt the legislative scheme.

Citing the Supreme Court's decision in Oil and Natural Gas Commission vs. Gujarat, the Court emphasized the importance of adhering to statutory mandates. Even though previous cases acknowledged rare instances for interference with statutory mandates, the Court refused to waive the pre-deposit in this case.

Ultimately, the Court dismissed the writ petition but granted the petitioner liberty to pay the balance pre-deposit within a month. The Court directed that if the payment was made and the appeal was in compliance with the law, the Tribunal would consider and decide the appeal on its merits.