2023 (3) TMI 935 - HC - GST

Seeking waiver of pre-deposit of 7.5% of duty for maintaining an appeal - petitioner claims that the interest of the revenue is fully protected as the petitioner is entitled to the refund of CENVAT credit which has not been processed yet - HELD THAT - This Court is unable to accept that the petitioner can set off its obligation to make a pre-deposit against its claim for the refund of CENVAT credit. However, there are merit in the contention that the petitioner s remedy of an appeal would be rendered illusory in the given circumstances where the petitioner does not have the liquid funds to make the said deposit. After some arguments, learned Counsel appearing for the petitioner states that the petitioner would make a deposit equal 2.5% of the liability instead of 7.5% to maintain the appeal against the order-in-original dated 26.11.2021 - it is considered apposite to direct that if the petitioner deposits an amount equivalent to 2.5% of its liability, the petitioner s appeal against the order in original would not be rejected solely for want of the requisite pre-deposit. Petition disposed off.

Summary

Issues:
Petition seeking waiver of pre-deposit of 7.5% of duty for appeal against order-in-original dated 26.11.2021.

Analysis:
The petitioner filed a petition seeking waiver of pre-deposit of 7.5% of duty to maintain an appeal against the order-in-original dated 26.11.2021. The petitioner argued that the revenue's interest is safeguarded as they are entitled to a refund of CENVAT credit pending processing. The petitioner contended that the demand was raised erroneously due to the misunderstanding that they could not benefit from abatement because of certain CENVAT credits utilized. Reference was made to a favorable decision in a related case, highlighting the petitioner's strong case on merits. However, the petitioner faced financial constraints due to ongoing proceedings under the Real Estate (Regulation & Development) Act, 2016, and lacked funds for the pre-deposit. The petitioner suggested using available CENVAT credits to offset the pre-deposit obligation, which was not accepted by the Court. Recognizing the petitioner's inability to make the required deposit, the Court directed a reduced deposit of 2.5% of the liability to maintain the appeal, ensuring the appeal would not be rejected solely due to the lack of pre-deposit.

The Court acknowledged that the petitioner's remedy of appeal would be futile if the full pre-deposit was insisted upon, given their financial constraints. The Court's decision to allow a reduced deposit addressed the practical challenge faced by the petitioner in pursuing the appeal. Notably, the Court refrained from commenting on the merits of the case, focusing solely on the issue of the pre-deposit requirement. The petition was disposed of based on the terms outlined, ensuring the petitioner's appeal could proceed without being rejected for non-compliance with the pre-deposit condition. All pending applications were also resolved as part of the judgment.