Prospective pre-deposit amendment in service tax appeals leaves earlier filings under unamended discretion-based waiver rules.

An amendment introducing mandatory pre-deposit under Section 35F was treated as prospective from 06.08.2014, so service tax appeals filed earlier remained governed by the unamended regime. Under that earlier law, waiver or deposit conditions had to be decided by considering prima facie case, undue hardship, and protection of revenue. A non-speaking pre-deposit order that failed to address those factors was held to reflect non-exercise of discretion and was set aside, with remand for reconsideration under the correct statutory basis.

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Issues: (i) Whether the amended pre-deposit regime under Section 35F of the Central Excise Act applied to an appeal filed before 06.08.2014 in service tax proceedings; and (ii) whether the Tribunal's pre-deposit order, passed without considering the prima facie case and undue hardship, was liable to be set aside.

Issue (i): Whether the amended pre-deposit regime under Section 35F of the Central Excise Act applied to an appeal filed before 06.08.2014 in service tax proceedings.

Analysis: Section 83 of the Finance Act, 1994 made Section 35F of the Central Excise Act applicable to service tax matters. The amendment introducing mandatory pre-deposit was held to operate prospectively from 06.08.2014. Since the appeal had been filed before that date, the appellant's right of appeal remained governed by the unamended provision, under which waiver could be considered on undue hardship and revenue safeguard.

Conclusion: The amended pre-deposit requirement did not apply, and the appeal was governed by the unamended Section 35F.

Issue (ii): Whether the Tribunal's pre-deposit order, passed without considering the prima facie case and undue hardship, was liable to be set aside.

Analysis: The order directing deposit was a non-speaking order and did not show consideration of the merits of the dispute or the appellant's financial hardship. The Tribunal was required to exercise discretion under the unamended provision by balancing the interests of revenue with the appellant's right to have the appeal heard on merits. Failure to apply the correct legal regime and to assess the relevant factors amounted to non-exercise of discretion.

Conclusion: The pre-deposit order was liable to be set aside and the matter remitted for fresh consideration under the unamended provision.

Final Conclusion: The impugned pre-deposit direction was quashed, and the matter was sent back for reconsideration on the correct statutory basis, with liberty to the appellant to place materials on financial hardship.

Ratio Decidendi: An amendment imposing mandatory pre-deposit is prospective unless expressly made retrospective, and appeals filed before the cut-off date must be considered under the unamended law, with discretion exercised on prima facie case and undue hardship.

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