2022 (10) TMI 264 - HC - Service Tax

Maintainability of petition - improper pre-deposit made by petitioner while filing the appeal - Section 85 of the Finance Act, 1994 read with Section 35F of the Central Excise Act, 1944 - HELD THAT - This is a matter that requires to be resolved by the Central Board of Indirect Taxes and Customs (CBI C). From the affidavit filed by Mr. Lal, it appears that many appellants/assessees were paying the pre-deposit under Section 35F of the Central Excise Act, 1944 through service tax challans, whereas few appellants/assessees were using DRC-03 mode under CGST Act, 2017. Some appellants are filing appeals after making pre-deposit payments through DRC-30/GSTR-3B. This has very wide ramifications and certainly requires the CBI C to step in and issue suitable clarifications/guidelines/ answers to the FAQs. We would expect CBI C to take immediate action since the issue has been escalated by Mr. Lal over eight months ago. The respondent no.3 are directed to hear petitioner denovo and pass such orders as he deems fit on merits in accordance with law - petition disposed off.

Summary

Issues:
1. Improper pre-deposit made by petitioner leading to dismissal of appeals without considering merits.
2. Discrepancy in payment method under different tax laws - Central Excise Act, 1944, Finance Act, 1994, and CGST Act, 2017.
3. Lack of clarity on the acceptable payment method for pre-deposit.
4. Intervention required from the Central Board of Indirect Taxes and Customs (CBI & C) to resolve the payment method issue.
5. Quashing of impugned orders and direction for denovo hearing by respondent no.3.
6. Timeline set for disposal of appeals by respondent no.3 with specific procedural requirements.

Analysis:
1. The petitioner contested four orders dated 13th April 2022, passed by respondent no.3, highlighting the dismissal of appeals based on perceived improper pre-deposit. Despite complying with the pre-deposit requirement under Section 85 of the Finance Act, 1994, and Section 35F of the Central Excise Act, 1944, the appeals were rejected solely on the grounds of payment method, without specifying the correct procedure for deposit. This lack of clarity led to confusion and subsequent dismissal of the appeals without due consideration of the merits presented by the petitioner.

2. The confusion stemmed from the differing payment methods utilized by appellants/assessees for pre-deposit under various tax laws. While some used service tax challans under the Central Excise Act, 1944, others opted for DRC-03 mode under the CGST Act, 2017. This discrepancy raised the need for intervention from the CBI & C to provide clear guidelines on the acceptable payment methods for pre-deposit, ensuring uniformity and compliance across different tax regimes.

3. The Court acknowledged the necessity for the CBI & C to address the issue promptly, emphasizing the importance of issuing clarifications, guidelines, or FAQs to streamline the payment process for pre-deposit under different tax laws. The lack of a specific legal provision accepting pre-deposit under the Central Excise Act, 1944 through DRC-03 highlighted the urgent need for regulatory intervention to prevent similar discrepancies in the future.

4. In response to the situation, the Court quashed the impugned orders and directed respondent no.3 to conduct a denovo hearing, considering the petitioner's submissions on merits and issuing fresh orders accordingly. The Court set a timeline of six weeks for the disposal of appeals by respondent no.3, emphasizing the requirement for a reasoned order addressing all petitioner submissions and granting a personal hearing with advance notice.

5. The Court refrained from making any observations on the merits of the case but stressed the importance of resolving the procedural issues surrounding pre-deposit payments promptly. Additionally, the Court forwarded a copy of the order to the CBI & C, urging immediate action and necessary follow-up by the Principal Chief Commissioner, CGST and Central Excise to address the payment method discrepancies effectively.

By providing detailed analysis and highlighting the key issues addressed in the judgment, the Court emphasized the significance of regulatory clarity and uniformity in payment procedures to ensure fair and just resolution of appeals in tax matters.