2019 (11) TMI 1089 - HC - Service Tax

Compliance with the pre-deposit - time limit for making pre-deposit - HELD THAT - Nothing has been pointed out in this application by way of any annexure to show the financial difficulty of the petitioner to pay the aforesaid pre-deposit amount. No Balance Sheet, Financial Statement has been annexed with the application. Bare assertion has been made that there is a financial difficulty to pay the aforesaid pre-deposit amount. It ought to be kept in mind that after the amendment brought in Section 35F of the Central Excise Act, 1944, the statute has already waived 92.5% of the demand of the tax and the penalty. Thus, after the said amendment there is no question whatsoever arises of preferring waiver application to deposit the pre-deposit amount @ 7.5% of the total amount of duty - In fact, the waiver applications were generating more litigation and therefore, the amendment has been brought into force so as to reduce or curtail the discretionary power vested with the CESTAT. Moreover, validity of this Section has also been upheld. Application dismissed.

Summary

Issues:
1. Application for payment of pre-deposit amount in installments.
2. Challenge to Order-In-Original before CESTAT.
3. Financial difficulty in paying pre-deposit amount.
4. Amendment in Section 35F of the Central Excise Act, 1944.

Analysis:
1. The petitioner sought permission to pay a pre-deposit amount of ?5,82,88,503 in two installments as per the court's order. The court had granted time until 15th November 2019 to deposit 7.5% of the total duty amount.

2. The challenge before CESTAT pertained to an Order-In-Original from 31st October 2017, demanding ?77,71,80,036 as service tax along with penalties amounting to ?54,78,10,695, to be paid with interest. The appeal required a pre-deposit amount of ?5,82,88,503.

3. The court noted that the petitioner did not provide evidence of financial difficulty in paying the pre-deposit amount. No financial statements were annexed to demonstrate the claimed hardship, only a bare assertion was made. The court highlighted the waiver of 92.5% of the demand post-amendment in Section 35F of the Central Excise Act, reducing the need for waiver applications and discretionary powers.

4. Post-amendment, the statute waived a significant portion of the tax and penalty demands, diminishing the necessity for waiver applications and reducing discretionary powers at CESTAT. The court emphasized that the amendment aimed to minimize litigation arising from waiver applications and upheld the validity of the amended Section 35F. Consequently, the court dismissed the application, finding no grounds to entertain it.