2020 (9) TMI 1157 - HC - Central Excise

High Court allows appeal against service tax liability rejection, emphasizes procedural fairness and right to appeal.

The Kerala High Court allowed a writ petition challenging the rejection of an appeal against a service tax liability order due to non-payment of the ... Maintainability of appeal - non-submission of mandatory 7.5% of the amount confirmed against him by the assessment order, for maintaining an appeal before the First Appellate Authority - non-deposit on account of financial distress - HELD THAT:- Inasmuch as the appeal preferred by the petitioner against the assessment order was numbered by the appellate authority, and was taken up for hearing in 2020, the appellate authority ought to have granted the petitioner an opportunity of paying the deposit amount before proceeding to reject the appeal on the ground of non-payment of predeposit. Had the appellate authority found that the appeal was not one that could be maintained in the absence of the pre-deposit, it ought not to have numbered the appeal and given an impression to the petitioner that he had filed a valid appeal against the assessment order. The petitioner can be given a month's time to pay the pre-deposit amount required for maintaining the appeal before the 1st respondent - Petition is allowed by quashing Ext.P5 order and directing the petitioner to pay the required pre-deposit amount as per the statute within a month from the date of receipt of a copy of this judgment. Issues:1. Rejection of appeal due to non-payment of mandatory deposit amount.2. Opportunity for petitioner to pay the deposit amount.3. Validity of appeal and consideration by the appellate authority.4. Directions for the appellate authority to hear and dispose of the appeal.Analysis:The petitioner approached the Kerala High Court aggrieved by the rejection of an appeal against an order involving liability to service tax due to non-payment of the mandatory deposit amount. The appellate authority rejected the appeal as the petitioner had not deposited 7.5% of the confirmed amount against him by the assessment order. The petitioner argued financial constraints prevented earlier payment, and since the appeal was numbered, an opportunity should have been given to pay the deposit amount. The Court considered the circumstances and held that the appellate authority should have allowed the petitioner to pay the deposit amount before rejecting the appeal. The Court noted that by numbering the appeal, the authority gave the impression that a valid appeal was filed. As a result, the Court allowed the writ petition, quashed the rejection order, and directed the petitioner to pay the required pre-deposit amount within a month. Upon payment, the appellate authority was instructed to consider the appeal as valid, hear the petitioner, and dispose of the appeal on merits within three months from the date of hearing.This judgment highlights the importance of procedural fairness and the duty of appellate authorities to provide opportunities for compliance before rejecting appeals. It emphasizes the need for consistency and clarity in the handling of appeals to ensure justice is served. The Court's decision to allow the petitioner to pay the deposit amount within a specified time frame demonstrates a balanced approach to addressing the issue of non-payment while upholding the right to appeal. The directions provided for the appellate authority to consider the appeal as valid and proceed with the hearing underscore the Court's commitment to ensuring due process and a fair consideration of the petitioner's case.