2023 (5) TMI 810 - AT - Service Tax

Statutory requirement of making the pre-deposit not satisfied - duty of excise by virtue of section 83 of the Finance Act - HELD THAT - The requirement of pre-deposit under section 35F of the Central Excise Act, as made applicable to service tax as they apply in relation to duty of excise by virtue of section 83 of the Finance Act, has not been complied with by the appellant. It would be seen from a bare perusal of section 35F of the Central Excise that after August 06, 2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 35F on August 06, 2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in NARAYAN CHANDRA GHOSH VERSUS UCO BANK 2011 (3) TMI 1478 - SUPREME COURT , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statute confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. It will also be appropriate to refer to a decision of the Delhi High Court in DISH TV INDIA LIMITED VERSUS UNION OF INDIA AND ORS. 2020 (8) TMI 183 - DELHI HIGH COURT , wherein the requirement of pre-deposit under section 129E of the Customs Act, came up for consideration. The High Court held that when the Statute itself provided wavier of pre-deposit to the extent of 90% or 92.5% of the duty amount and made it mandatory to deposit 7.5% or 10% of duty amount, the Courts cannot waive this requirement of deposit. The Madhya Pradesh High Court in ANKIT MEHTA VERSUS COMMISSIONER, CGST INDORE 2019 (3) TMI 1342 - MADHYA PRADESH HIGH COURT also dismissed the Writ Petition that had been filed against the order of the Tribunal dismissing the appeal for the reason that the required pre-deposit was not made. The contention that was advanced before the Tribunal and before the Madhya Pradesh High Court was that the appellant was not in a position to make the pre-deposit due to financial constraints. After examining the provisions of section 129E of the Customs Act, the Madhya Pradesh High Court held that This Court after careful consideration of the aforesaid judgments is of the opinion that section 129E does not empower the Tribunal or the Commissioner (Appeals) to waive the pre-deposit or to reduce the pre-deposit , this Court is also not inclined, keeping in view the aforesaid statutory provisions of law to waive or reduce the pre-deposit and, therefore, no case for interference is made out in the matter. The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Supreme Court, the Delhi High Court and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. Appeal dismissed.

Summary

Issues Involved:
1. Compliance with the statutory requirement of pre-deposit under Section 35F of the Central Excise Act.
2. Jurisdiction and powers of the Tribunal and Commissioner (Appeals) regarding waiver of pre-deposit.
3. Judicial precedents on the mandatory nature of pre-deposit for maintaining an appeal.

Issue 1: Compliance with the statutory requirement of pre-deposit under Section 35F of the Central Excise Act.

The statutory requirement of making the pre-deposit has not been satisfied. The appeal was filed on October 07, 2022, without making the statutory pre-deposit. Despite multiple opportunities and adjournments, the appellant neither appeared nor complied with the pre-deposit requirement.

Issue 2: Jurisdiction and powers of the Tribunal and Commissioner (Appeals) regarding waiver of pre-deposit.

Section 35F of the Central Excise Act, as amended on August 06, 2014, mandates a pre-deposit of a certain percentage of duty demanded or penalty imposed before filing an appeal. The Tribunal or the Commissioner (Appeals) shall not entertain any appeal unless the appellant has deposited the specified percentage. The Tribunal does not have the power to waive the requirement of pre-deposit post the amendment, unlike the situation prior to August 06, 2014.

Issue 3: Judicial precedents on the mandatory nature of pre-deposit for maintaining an appeal.

The Supreme Court in Narayan Chandra Ghosh vs. UCO Bank and Others emphasized that when a statute confers a right to appeal, conditions can be imposed for exercising such a right. Unless the condition precedent for filing an appeal is fulfilled, the appeal cannot be entertained. The Supreme Court reiterated these principles in Kotak Mahindra Bank Pvt. Limited vs. Ambuj A. Kasiwal & Ors. and Chandra Sekhar Jha vs. Union of India and Another.

The Delhi High Court in Dish TV India Limited vs. Union of India & Ors. and M/s Vish Wind Infrastructure LLP v/s Additional Director General (Adjudication) held that there is an absolute bar on the Tribunal to entertain any appeal unless the mandatory pre-deposit is made. The Madhya Pradesh High Court in Ankit Mehta v/s Commissioner, CGST Indore also upheld the mandatory nature of pre-deposit, dismissing the appeal for non-compliance.

Conclusion:

The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Supreme Court, the Delhi High Court, and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. Thus, for all the reasons stated above, the appeal stands dismissed.