2016 (8) TMI 451 - HC - Service Tax

Amended Excise Act Applies to Appeals After 2014 without Violating Right of Appeal

The High Court held that the amended Section 35F of the Central Excise Act, 1944, applies to all appeals filed after August 6, 2014, without violating the ... Section 35F of the Central Excise Act, 1944 – pre-deposit - Held that: - On and after the enforcement of the provision of Section 35F of the Act, as amended, an appellant has to deposit the duty and penalty as stipulated and unless the appellant were to do so, the Tribunal shall not entertain any appeal. This provision would, therefore, indicate that it would apply to all appeals which would be filed on and from the date of the enforcement of Section 35F of the Act. Thus, If the appellants deposit the sum mandated by section 35F(1) with its provisos within a period of three months from the date of receipt of a copy of this order, the Tribunal shall entertain the said appeal and decide it on merits and in accordance with law. Once we broadly agree with Ms. Cardozo that the prescription as is carved out by section 35F would apply to all such appeals and stay applications as are referred to in the second proviso, then, it is not possible to agree with the appellant's senior counsel. More so, when the order-in-original was challenged in appeal which is filed in this case after 6th August, 2014, and the stay application was also after this date. Hence, the amended section is rightly applied to the above undisputed factual position. appeal allowed with a direction Issues Involved:1. Applicability of the amended provisions of Section 35F of the Central Excise Act, 1944.2. Interpretation of the second proviso to the amended Section 35F.3. Impact of the amended Section 35F on the vested right of appeal.Detailed Analysis:1. Applicability of the Amended Provisions of Section 35F:The primary issue in this case was whether the amended provisions of Section 35F of the Central Excise Act, 1944, which came into effect on August 6, 2014, would apply to appeals filed after this date, even if the lis (dispute) arose before the amendment. The Tribunal had dismissed the appellant's application for stay due to non-compliance with the mandatory pre-deposit of 7.5% of the tax amount demanded as per the amended Section 35F. The appellant argued that the unamended provision, which allowed for discretionary waiver of pre-deposit, should apply as the lis commenced in 2008.2. Interpretation of the Second Proviso to the Amended Section 35F:The second proviso to the amended Section 35F states that the provisions shall not apply to stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014. The appellant contended that this proviso should be interpreted to mean that the amended Section 35F would not apply to any appeal where the lis commenced before August 6, 2014. However, the Tribunal and subsequently the High Court interpreted this proviso to mean that the amended provisions apply to all appeals filed after August 6, 2014, regardless of when the lis commenced, except for those appeals and stay applications pending before the commencement date.3. Impact of the Amended Section 35F on the Vested Right of Appeal:The appellant argued that the right of appeal is a vested right and cannot be curtailed by a subsequent amendment. They relied on precedents such as Garikapatti Veeraya vs. N. Subbiah Choudhry and M/s. Hoosein Kasam Dada (India) Ltd. vs. The State of Madhya Pradesh & Ors., which held that the law prevailing at the date of commencement of the lis governs the right of appeal. However, the High Court, agreeing with the Allahabad High Court's decision in Ganesh Yadav vs. Union of India, held that the amended Section 35F did not take away the right of appeal but imposed a reasonable condition of pre-deposit to secure the interest of the Revenue. The Court found that the legislative intent was clear and unambiguous, and the amended provisions applied to all appeals filed after August 6, 2014.Conclusion:The High Court dismissed the appeal, holding that the amended Section 35F of the Central Excise Act, 1944, applies to all appeals filed after August 6, 2014, and does not violate the vested right of appeal. The Court directed the appellant to comply with the pre-deposit requirement within three months for the Tribunal to entertain the appeal. Failure to comply would result in the dismissal of the appeal.