Pre-deposit waiver under Section 35F turns on prima facie case and financial hardship, not automatic insistence on full deposit.

Waiver of pre-deposit under Section 35F depends on the assessee's prima facie case and financial hardship. The High Court noted that the petitioner had withdrawn the earlier depreciation claim by revised return, that similar matters had been favourably considered, and that continuing losses showed financial difficulty. In those circumstances, insisting on full deposit as a condition for entertaining the appeal was not justified. The pre-deposit direction was set aside and the Tribunal was directed to hear the appeal on merits without insisting on deposit.

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Issues: Whether the Tribunal was justified in insisting on pre-deposit of the Modvat credit amount while considering the appeal, having regard to the petitioner's prima facie case and financial hardship.

Analysis: The relief under Section 35F depends on the existence of a prima facie case and the assessee's financial position. The record showed that the petitioner had withdrawn the earlier depreciation claim by revised return and that similar matters had been favourably considered by the Tribunal. The petitioner's continued losses also showed financial difficulty. On these facts, insistence on full deposit as a condition for entertaining the appeal was not justified.

Conclusion: The pre-deposit direction was set aside and the Tribunal was directed to hear the appeal on merits without insisting on deposit of the amount.

Final Conclusion: The writ petition succeeded, and the petitioner obtained relief from the pre-deposit condition so that the appeal could be decided on merits.

Ratio Decidendi: Waiver of pre-deposit under Section 35F is governed by the assessee's prima facie case and financial hardship, and a condition of full deposit cannot be sustained where both factors justify relief.

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