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Anamoly - Pre-deposit

Service Tax - By: - CA Akash Phophalia - Dated:- 21-5-2016 Last Replied Date:- 31-5-2016 - Power corrupts and absolute power corrupts absolutely. In order to control the misuse of such powers, all statutes provides right of appeal. But in order to ensure that the right of appeal couldn t be misused there is a provision of pre-deposit most of the statutes. Before 6-8-2014 Before amendment in Section 35F of Central excise Act 1944, it states that where an application for appeal needs to be filed t .....

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o make a pre-deposit of 7.5%/10% of the duty demanded or penalty levied or the both. Although he basic reason of bringing this amendment is to reduce litigations and to provide a uniform remedy to pre-deposit to each person. However, such an amendment has left many questions and answers to some of such questions are still not found. In the foregoing paragraphs we will discuss the various situations which would arise due to amendment. Effect on Existing cases The first and foremost question arisi .....

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o the provisions which were in force before amendment. Maximum limit of pre-deposit Another question that flashes in mind is that whether the amount of pre-deposit could be any amount or there is any upper limit on the amount of such pre-deposit. The answer to this question again lies in the proviso to the said section itself. The said proviso states that the maximum amount of pre-deposit could not exceed rupees ten crores. Thus, in any case the amount of pre-deposit is rupees ten crores. Whethe .....

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the court of law may order for filing of appeal without such pre-deposit in order to meet the ends of justice. However, till the writing up of this article neither any such case was decided nor there is any provision which provides relief against such mandatory pre-deposit. Another noticeable point is that in case appeal is filed for refund, the provision of pre-deposit will not be applied as this provision is applicable only in case of demand from the assessee not in the case of refund to the .....

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The cause of action arose after 6-8-2014 and the appeal was filed after 6-8-2014. Here answer to the second point is very simple as the amended provision will be applied. As the cause of action and the appeal both arose after the date of amendment and hence the amended provision will be applicable. In other words, the assessee had to make mandatory pre-deposit before filing of appeal. Now for the pint no (a) above there is controversy. The cause of action arose before the amendment but the appe .....

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the petitioner would have to deposit the amount of 7.5% of the tax confirmed against him, as a condition for pursuing the appellate remedy before the Tribunal. I note in this connection for pursuing the appellate remedy before this Tribunal. I not in this connection that recently, a Division Bench of High Court of Telengana & Andhra Pradesh has taken a view that, in so much as the lis in the question had commenced prior to the introduction of the amendment to the Finance Act, 1994 with effec .....

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the settled law that the institution of a suit carries with it an implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit and, further, that the right of appeal that is vested is to be governed by the law prevailing at the date of institution of the suit or proceeding, and not by the law that prevails at the date of its decision or at the date of filing of appeal……… Hence, the court was of the view tha .....

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