2024 (9) TMI 930 - HC - Service Tax

Maintainability of appeal - appeal rejected on the ground of non-payment of pre-deposit - HELD THAT - It is found that factually, the payment of pre-deposit was made on 14.12.2023 and an e-mail was also sent to the appellate authority of the fact payment of pre-deposit, however, the order impugned does not take into consideration the said aspect of pre-deposit having already been made and the Appeal has been rejected. There is a basic error crept in the order impugned. Once the pre-deposit has been made and the same is already accepted, the Appeal could not have been rejected. Merely because the pre-deposit had not been submitted at the time of filing the Appeal, it cannot be said that the pre-deposit cannot be made after filing of the Appeal. The same has been deposited before adjudication and therefore, the appeal is required to be examined on merits. The condition of pre-deposit is to be understood as a pre-requisite for the purpose of adjudication of an appeal. Section 35-F of the Act which requires deposit of certain percentage of duty demanded or penalty imposed before filing of an appeal. Since the pre-deposit has been made in the present case, the appellate authority having knowledge of the pre-deposit already made could not or ought not have dismissed the appeal solely on the ground that at the time of filing of appeal, pre-deposit has not been made. The same has been deposited before adjudication of the appeal. Therefore, the appeal is required to be examined on merits. The impugned order set aside - petition allowed.

Issues:
1. Non-payment of pre-deposit leading to rejection of appeal.
2. Dismissal of appeal due to failure to make pre-deposit at the time of filing.
3. Interpretation of Section 35-F of the Central Excise Act, 1944 regarding pre-deposit requirements.
4. Examination of whether pre-deposit made before adjudication allows for appeal to be considered on merits.

Analysis:
1. The writ petition was filed by a partnership firm aggrieved by the rejection of their appeal by the Office of the Commissioner (Appeals) Central Goods and Services Tax Appeals due to non-payment of pre-deposit. The petitioner contended that they made the payment as soon as a new password was issued but their appeal was still dismissed based on the lack of pre-deposit at the time of filing.

2. The respondents argued that the appeal was rightly dismissed as the pre-deposit was not made at the time of filing, citing Section 35-F of the Central Excise Act, 1944, which mandates a deposit before entertaining an appeal. They claimed that the appeal lacked the mandatory pre-deposit and thus could not be considered on its merits.

3. Upon considering the submissions, the court found that the pre-deposit was indeed made before adjudication, and an email was sent to the appellate authority informing them of the payment. The court noted that the order dismissing the appeal failed to acknowledge the pre-deposit made and thus erred in rejecting the appeal solely based on the timing of the pre-deposit.

4. The court emphasized that the pre-deposit requirement should be viewed as a pre-requisite for adjudication, not solely for filing the appeal. Since the pre-deposit was made before adjudication in this case, the appellate authority should have considered the appeal on its merits instead of dismissing it based on the timing of the pre-deposit at the time of filing. Consequently, the court allowed the writ petition, setting aside the impugned order and directing the appellate authority to reconsider the appeal on its merits.

5. The judgment clarifies the importance of understanding the timing and purpose of pre-deposit requirements under Section 35-F of the Central Excise Act, ensuring that appeals are not dismissed solely based on procedural grounds when the substantive requirements have been fulfilled.

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