Madhya Pradesh High Court
M/S Saisun Outsourcing Service Pvt. ... vs Union Of India on 30 May, 2024
Author: Vivek Agarwal
Bench: Vivek Agarwal
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VIVEK AGARWAL
&
HON'BLE SHRI JUSTICE DEVNARAYAN MISHRA
ON THE 30 th OF MAY, 2024
WRIT PETITION No. 12552 of 2024
BETWEEN:-
M/S. SAISUN OUTSOURCING SERVICE PVT. LTD.
THROUGH ITS MANAGING DIRECTOR SHRI SHAILESH
RAJPAL S/O SHIV PRASAD RAJPAL AGED 44 YEARS, 240
RAJPAL TOWER NEAR GULZAR HOTEL MAHANADDA
NAGPUR ROAD JABALPUR (MADHYA PRADESH)
.....PETITIONER
(BY SHRI ABHISHEK OSWAL - ADVOCATE FOR THE PETITIONER)
AND
1. UNION OF INDIA THROUGH PRINCIPAL
SECRETARY (FINANCE) NORTH BLOCK NEW
DELHI (DELHI)
2. CUSTOMS, EXCISE AND SERVICE TAX,
APPELLATE TRIBUNAL WEST BLOCK NO. 2, R.K.
PURAM NEW DELHI (DELHI)
3. COMMISSIONER, CGST CENTRAL EXCISE AND
SERVICE TAX GST BHAWAN, NAPIER TOWN,
JABALPUR (MADHYA PRADESH)
.....RESPONDENTS
(BY SHRI ABHIJEET SHRIVASTAVA - SENIOR ADVOCATE)
This petition coming on for admission this day, Justice Vivek Agarwal
passed the following:
ORDER
Order dictated in open Court.
This writ petition is filed taking an exception to the requirement of pre-
deposit as contained in Section 35F of the Central Excise Act, 1944 (hereinafter
referred to as the 'Act' for short), which is applicable to Service Tax also.
Learned counsel for the petitioner places reliance on the judgment of a
Coordinate Benches in Madhya Pradesh Power Transmission Company
Limited vs. Customs Excise and Service Tax Appellate Tribunal in W.P.
No.9371/2008, decided on 20.10.2010 and also the judgment of Division Bench
i n Mukesh Kalway v. Customs Excise and Service Tax Appellate
Tribunal in W.P. No.18742/2015 dated 14.07.2016, to submit that in both the
cases cited above, Hon'ble Coordinate Benches have directed the respondent
no.1 to hear and decide the appeal pending before the respondent no.1, without
insisting for pre-deposit of the tax for hearing of the appeal.
Shri Abhijit Shrivastava, Senior standing counsel for Central Excise, in
his turn, places reliance on the judgment of another Division Bench of this
Court in W.P. No.5220/2016 (M/s. G.L. Sharma and Sons vs. the
Commissioner) decided on 22.03.2016, wherein, Hon'ble Division Bench has
held that "Notably, no plea of undue hardship was raised by the petitioner
before the Commissioner to invoke the proviso to sub-section (1) of section
35F of the Act."
"The sole contention of petitioner before Appellate Authority as well as
before this Court is that the amounts have already been deposited by M.P.
Housing Board. It was not necessary for the petitioner to comply with the
requirement of pre-deposit." Under such facts and circumstances, request of
the petitioner therein was rejected.
In the present case, petitioner's contention is that in his bank accounts, a
paltry sum is lying and therefore, he is not in a position to fulfill the
requirements of Section 35F of the Act.
Reliance is also placed on the book titled "Treatise on Service Tax" Law,
Practice and Procedure with Notification and Circulars, Volume-1, 18 th Edition,
September, 2014, by Sunil B. Gabhawalla Chartered Accountant and reading
Chapter 43, Clause 43.5.1.2. It is submitted that "However, the appellate
authority may dispense with the requirement of pre-deposit on an application
made by the appellant if in the opinion of the appellate authority, pre-deposit
may cause undue hardship to the appellant. Where an application for waiver of
pre-deposit is filed, the appellate authority shall try to dispose off the
application within a period of 30 days from the date of filing." Thus, placing
reliance on the aforesaid, it is submitted that the petitioner be given a liberty to
approach the competent authority to move an application before CESTAT to
waive the requirement of pre-deposit.
It appears from the provisions which exist as on today that Section 35F
of the Act, prior to amendment, which was carried out vide Act 25 of 2014,
Section 105 which came into effect from 06.08.2014 reads as under:-
"[35F. Deposit of certain percentage of duty demanded
or penalty imposed before filing appeal.--The Tribunal or
the Commissioner (Appeals), as the case may be, shall not
entertain any appeal,--
(i) under sub-section (1) of Section 35, unless the
appellant has deposited seven and a half per cent. of the
duty, in case where duty or duty and penalty are in
dispute, or penalty, where such penalty is in dispute, in
pursuance of a decision or an order passed by an officer
of Central Excise lower in rank than the Commissioner
of Central Excise;
(ii) against the decision or order referred to in clause (a)
of sub-section (1) of Section 35-B, unless the appellant
has deposited seven and a half per cent. of the duty, in
case where duty or duty and penalty are in dispute, or
penalty, where such penalty is in dispute, in pursuance
of the decision or order appealed against;
(iii) against the decision or order referred to in clause (b)
of sub-section (1) of Section 35-B, unless the appellant
has deposited ten per cent. of the duty, in case where
duty or duty and penalty are in dispute, or penalty,
where such penalty is in dispute, in pursuance of the
decision or order appealed against:
Provided that the amount required to be deposited under this
section shall not exceed rupees ten crores:
Provided further that the provisions of this section shall not
apply to the stay applications and appeals pending before any
appellate authority prior to the commencement of the Finance
(No. 2) Act, 2014.
Explanation.--For the purposes of this section "duty
demanded" shall include,--
(i) amount determined under Section 11D;
(ii) amount of erroneous Cenvat credit taken;
(iii) amount payable under Rule 6 of the Cenvat Credit Rules,
2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit
Rules, 2004.]"
Prior to the aforesaid amendment dated 06.08.2014, earlier Section 35F
of the Act was amended by Act 22 of 1995 (w.e.f. 26.05.1995) and thereafter,
by Act 14 of 2001, Section 130 (w.e.f. 11.05.2001) and by Act 22 of 2007,
Section 131 (w.e.f. 11.05.2007).
Section 35F of the Act, before substitution by Act 25 of 2014, stood as
under:-
"35F. Deposit, pending appeal of duty demanded or penalty
levied.-- Where in any appeal under this Chapter, the
decision or order appealed against relates to any duty
demanded in respect of goods which are not under the
control of central excise authorities or any penalty levied
under this act, the person desirous of appealing against such
decision or order shall, pending the appeal, deposit which the
adjudicating authority the duty demanded or the penalty
levied:
Provided that where in any particular case, the Commissioner
(Appeals) or the Appellate Tribunal is of 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:"
Thus, it is evident that the proviso prior to 06.08.2014 provided that
where in any particular case, the Commissioner (Appeals) or the Appellate
Tribunal is of 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 interest of revenue.
Thus, it is evident that Shri Abhishek Oswal is citing a book published by
Bharat Publication and written by Sunil B. Gabhawalla, Chartered Accountant
which has apparently not taken into consideration the provisions as contained in
Section 35F of the Central Excise Act, 1944 w.e.f. 06.08.2014, but to the
provisions which were holding field earlier. Therefore, neither the aforesaid
book by Sunil B. Gabhawalla nor the judgments cited by Shri Abhishek Oswal
will be of any assistance to him.
Therefore, since the provision contained in Section 35F as is effective
from 06.08.2014, makes only two exceptions namely that the extent of pre-
deposit shall not exceed rupees ten crores and that the provisions of this
Section shall not apply to the stay applications and appeals pending before any
appellate authority prior to the commencement of the Finance (No.2) Act, 2014,
no third exception can be carved out on the basis of repealed provisions of the
said Act, therefore, the request of the petitioner to waive requirement of pre-
deposit and for permission to file an application for waiver before the Appellate
Tribunal, fails and is dismissed.
Thus, in view of the amended provisions contained in Section 35F of the
Central Excise Act, 1944, it is held that amended provision being not peri-
materia to earlier provisions as were existing prior to 06.08.2014 will not have
any application to the cases originating from the proceedings after 06.08.2014.
Accordingly, the petition fails and is dismissed. There cannot be any
liberty given to the petitioner to file any application before the CESTAT for
waiving of the pre-deposit.
At this stage, Shri Abhishek Oswal, learned counsel submits that some
time limit be fixed for deciding the appeal.
This prayer is not opposed by Shri Abhijit Shrivastava, if petitioner
fulfills the requirement of pre-deposit within a period of 60 days from today,
then CESTAT is requested to make an endeavour to decide the appeal within
further period of 120 days.
Certified copy as per rules.
(VIVEK AGARWAL) (DEVNARAYAN MISHRA)
JUDGE JUDGE
HK
