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Mandatory pre-deposit for filing appeals under Service Tax, Excise and Customs The Dilemma Continues

Central Excise - By: - Bimal jain - Dated:- 13-8-2015 Last Replied Date:- 2-9-2015 - Dear Professional Colleagues, Mandatory pre-deposit for filing appeals under Service Tax, Excise and Customs - The Dilemma Continues We are sharing with you an important judgement of the Hon ble High Court of Allahabad in the case of Ganesh Yadav Vs. Union of India [2015 (7) TMI 304 - ALLAHABAD HIGH COURT] on the following issue: Issue: Whether mandatory pre-deposit provision under Section 35F of the Central Exc .....

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ber 19, 2013, a Show Cause Notice ( SCN ) was issued to the Petitioner demanding Service tax on stated services. Later on, the Department vide Adjudication Order dated March 31, 2015 confirmed the demand of Service tax along with interest and penalty ( Adjudication Order ). Effective from August 6, 2014, Section 35F of the Central Excise Act, 1944 ( the Excise Act ) [as applicable for Service Tax vide Section 83 of the Finance Act, 1994 and for Customs vide Section 129E of the Customs Act, 1962] .....

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ct to a ceiling of ₹ 10 Crore. The Petitioner has filed Writ Petition before the Hon ble High Court of Allahabad challenging the constitutional validity of substituted Section 35F of the Excise Act and for restraining the Department from enforcing the mandatory requirement of a pre-deposit of 7.5% of the duty demanded in pursuance of the Adjudication Order. Held: The Hon ble High Court of Allahabad while upholding the constitutional validity of Section 35F of the Excise Act held as under: .....

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nless the pre-deposit is made to the stipulated extent; Further, the second proviso to Section 35F of the Excise Act, is a clear indicator that the Parliament has exempted the requirement of complying with the pre-deposit as mandated by Section 35F(1) of the Excise Act as amended only in the case of those stay applications and appeals which were pending before any Appellate Authority prior to the commencement of Finance (No. 2) Act, 2014; Consequently, both by virtue of the opening words of Sect .....

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14; Nevertheless, under Article 226 of the Constitution, the Hon ble High Court has jurisdiction, in an appropriate case, to dispense with requirement of pre-deposit and the said power is not taken away; Thus, the Hon ble High Court held that the Petitioner is not justified in urging that the amended provisions of Section 35F of the Excise Act would not apply merely on the ground that the SCN was issued prior to the enforcement of the Finance (No. 2) Act, 2014. Important to Note: Here, it would .....

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ll rights of appeal then in force are preserved to parties thereto till rest of career of suit; hence, right of appeal is governed by law prevailing at date of institution of suit or proceeding, and not by law that prevails at date of its decision or at date of filing of appeal; Since lis in question had commenced in 2012 i.e., prior to introduction of amendment to Section 35F of the Excise Act effective from August 6, 2014, assessee's right of appeal as per erstwhile provisions of law would .....

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ion of mandatory pre-deposit in Section 129E of the Customs Act, 1962 [i.e., before amendment made on August 6, 2014 by Finance (No. 2) Act, 2014], then same would be governed by erstwhile provisions and accordingly, mandatory pre-deposit would not apply thereto. Here, it is pertinent to note that second proviso to substituted Section 35F of the Excise Act makes the legislative intent clear that in case of appeals filed on or after August 6, 2014, the substituted provisions are sought to be appl .....

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