2023 (5) TMI 862 - HC - Central Excise

Seeking waiver of requisite pre-deposit in terms of Section 35-F of the Central Excise Act 1944 - financial hardship - HELD THAT - The reason assigned in the writ petition is only of financial crises during Covid-19 Pandemic period. Documents like balance sheet filed along with the petition would show that the petitioner is in profit after the Covid -19 Pandemic period. In the case of Ganesh Yadav Vs. U.O.I, 2015 (7) TMI 304 - ALLAHABAD HIGH COURT it was held that the Allahabad High Court held that the words in the amended Section 35F indicated that on and after the date of its enforcement an Assessee in appeal was required to deposit the stipulated percentage of duty and if it failed to do so, the CESTAT shall not entertain the appeal. The amended Section 35A would, therefore, apply to all appeals filed on and from the date of the enforcement of the amended Section 35F of the CE Act. The prayer made by learned counsel for the petitioner of waiver of mandatory pre-deposit cannot be accepted and, therefore, the prayer made by learned counsel for the petitioner is rejected. However, considering the alternate prayer made by learned counsel for the petitioner for extension of time for depositing the amount of pre-deposit before the Customs, Excise Service Tax Appellate Tribunal is concerned, though in this petition only the notice/information of defect is put to challenge and no subsequent order is placed on record, considering the submission of learned counsel for petitioner of facing difficulties during Covid-19 Pandemic period, with a view to provide an opportunity to contest the appeal on merits, the alternate prayer made by learned counsel for the petitioner is allowed and the time for mandatory deposit is extended - Accordingly, three months further time is granted to the petitioner to deposit the amount of mandatory pre-deposit before the Tribunal, from the date of passing of this order. Petition disposed off.

Summary

Issues involved:
The issues involved in the judgment are the petitioner seeking relief through a writ petition under Article 226 of the Constitution of India to quash a Defect Notice issued by the Tribunal, seeking waiver of pre-deposit for appeal, and financial hardship faced by the petitioner post-Covid-19 pandemic.

Relief sought and Background:
The petitioner, a statutory body created under Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973, was issued a show cause notice for short payment of service tax. An order was passed demanding a substantial amount of service tax, interest, and penalty. The petitioner appealed before the Tribunal, but the issue arose due to non-payment of the mandatory pre-deposit as required by law.

Petitioner's Arguments:
The petitioner argued financial hardship post-Covid-19 pandemic, leading to a cash crunch, inability to pay outstanding loans, and clear bills of creditors. The petitioner contended that the demand in the order was erroneous and sought a waiver of the pre-deposit to contest the appeal on merits. The petitioner also requested an extension of time for depositing the pre-deposit amount.

Respondent's Opposition:
The respondent opposed the petition, stating that it was not maintainable as it only sought waiver of the mandatory pre-deposit. The respondent highlighted that the notice challenged was a Defect Notice and cited previous decisions where similar requests were denied by the High Court.

Court's Decision:
The Court noted the provision under Section 35-F of the Act of 1944, which mandates a pre-deposit before entertaining an appeal. Despite the financial hardship claimed by the petitioner, the Court found that the petitioner was profitable post-Covid-19 period. Citing previous judgments, the Court rejected the request for a waiver of the pre-deposit.

Conclusion and Order:
The Court rejected the plea for waiver but granted an extension of three months for the petitioner to deposit the mandatory pre-deposit before the Tribunal. The Court emphasized that if the pre-deposit is made within the specified time, the appeal will be heard on merits. The writ petition was disposed of accordingly.