DETERMINATION OF QUANTUM OF PRE DEPOSIT IN A STAY PETITION

[Mr. M. GOVINDARAJAN]

The provisions of indirect tax laws provide for filing appeal against the order of lower authorities. It is also prescribed while filing appeal before the appellate authority the assessee is to deposit the tax/duty awarded along with interest and penalty imposed on the assessee and the proof for the payment of the same is to be attached in the appeal petition.  The appellant is to file stay petition before the appellate authority with the prayer to stay the operation of the lower authority and to pray for waiver of pre deposit of the tax/duty with interest and penalty. The appellate authority may on hearing the grievances of the appellant may waive the deposit fully or partly or confirm the full payment or part payment.   Once the appellate authority directs to deposit a particular amount within the time stipulated the same is to complied with otherwise the appeal will automatically be dismissed. 

For example the proviso to Section 35F of the Central Excise Act provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue.

The waiver of pre deposit is not a matter of right.   It is also not a concession to be doled out by the authorities as per their whims and fancies.  It cannot be a sweet wish of any statutory authority.   The grant of waiver is to be backed by reasons keeping in view of facts of each case.   There is no formula prescribed either in the Act or in the rules for the quantification of such amount.  There is no cut and dried short cut of universal application of rule.

In ‘Ravi Gupta V. Commissioner, Sales Tax’ – 2009 (3) TMI 200 - SUPREME COURT OF INDIA it was held that there can be no rule of universal application in such matters (quantification of pre deposit) and the order has to be passed keeping in view the factual scenario involved.  Where denial of interim relief may lead to public mischief, grave irreparable private injury or shares citizens’ faith in the impartiality of public administration, interim relief can be given.

In ‘Security Engineering Products V. CESTAT’ – 2013 (9) TMI 845 - PUNJAB AND HARYANA HIGH COURT the appellant filed against the order of CESTAT directing to deposit Rs.42,00,000/- against the demand of Rs.1,24,93,030/- in respect of school dual desks manufactured by the appellant.  The appellant before the Tribunal sought stay on recovery of the demand raised by the department on the contention that during the period of dispute they were eligible of exemption under the Notification No. 50/2003-CE and therefore they are not liable to pay duty.  It was further explained that intimation letter in compliance with the notification along with all the details was furnished to the Department. On the other hand the department refused the same as not received the intimation as alleged by the appellant.   The unit of the appellant was not eligible for exemption regarding payment of duty as the unit was not existing prior to 7.1.2003 and had also not undertaken substantial expansion of the installed capacity by not less than 25% on or after 7.1.2003 in terms of the notification of the government under which relief was being claimed by the appellant.

The Tribunal considering the circumstances and facts of the case held that it was not a case of ‘total waiver’.  Hence it directed the appellants to deposit Rs.42,00,000/- within a period of eight weeks from the date of the order.

Before the High Court the appellant contended that the communication regarding the availing of the exemption under the said Notification was sent through Sector Officer, Central Excise, Una (H.P.) to the Divisional office, Shimla but even then the claim of the appellant unit for total waiver was discarded.   The Revenue contended the appellant had not made due compliance with terms and conditions of Notification Nos. 49-50/2003-CE prior to 7.1.2003 and thus it was found that no case of total waiver was made out.

The High Court held that while going through the factual matrix and the chain of events, the appellant has not been able to show that there is any case of ‘public mischeif’ or ‘grave irreparable personal injury’ or there is likely to be dwarfing of citizens’ faith in the impartiality of public administration.  The Tribunal had very convincingly and clearly made it ‘not to be a case of total waiver’.  The High Court further held that when no factual or legal infirmity has been found in the impugned order the tribunal by the appellant and even in proceedings before the High Court, no case for interference with the impugned order is made out particularly when the Appellate Tribunal had, after going through the complete record and attending circumstances, come to a firm finding that it was not a case of complete waiver.  The High Court dismissed the appeal.