Restoration of case in CESTAT on the ground of non-compliance of the direction given by the CESTAT in previous order.

[Sudhir Kumar]

Two Show Cause Notice one for the period 2005-06 to 2008-09 and another for the period 2005-06 to 2009-10 were issued to the same tax-payer in 2014 on different ground. Later on both the case was adjudicated with a common order and demand proposed in SCN was confirmed.

Being aggrieved, the party filed an Appeal before the CESTAT. The CESTAT passing the order directed the party to make a pre-deposit of Rs. 25,00,000/-. The was remanded to the Adjudicating Authority for fresh order but on the condition of verification of pre-deposit amount made by the party. The CESTAT in his order dated 09.09.2014 mentioned that 4 months would be sufficient to pass the Order after verification of payment.

The Adjudicating Authority due to whatever the reason be neither verified the payment nor passed the fresh order within 4 months.

In August 2025, department has issued a letter seeking clarification on payment of pre-deposit amount made in compliance of the CESTAT Order dated 09.09.2014.

Actually the payment of pre-deposit was mistakenly made on another STC instead of the STC on which SCN was issued and demand was proposed. However, both the STC pertains to the same party.

Departments view is that the payment has not been made and the order of CESTAT has not been complied with till now. The deposit made by the party do not pertains to the Registration which is taken for Audit and Demand. Hence, the Department also requested to the CESTAT through letter to re-store the previous Adjudication Order on the ground of non-compliance.

Now, the question is whether the action taken by the department is legal. Is it not hit by the time limitation given by the CESTAT for passing the fresh order i.e 4 months from the date of passing the order. Pre-deposit made in another STC of the same party is not liable to be treated as compliance of CESTAT Order which the basic ground of department for seeking restoration of previous order.

AI Summary

Whether misapplied Rs.25 lakh pre-deposit satisfies condition and timeliness of department's restoration request after remand Two related show-cause notices were consolidated and confirmed by the adjudicating authority; on appeal the tribunal remanded the matter subject to a Rs.25 lakh pre-deposit and directed the authority to verify payment and pass fresh order within four months. The authority failed to act; a deposit was made but credited to a different service tax code of the same taxpayer. The department treats this as non-compliance and seeks restoration of the earlier order. The legal issues are timeliness of the department's restoration request given the tribunal's four-month direction, whether a misapplied deposit can satisfy the pre-deposit condition (adjustment/refund remedies exist), and grounds to challenge restoration in higher courts.