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 confirmd.

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

Tribunal's pre-deposit condition: accept bona fide mis-payment under different registration, verify allocation or condone delay instead of restoration Two SCNs for overlapping periods were consolidated and confirmed; the tribunal remanded the matter with a Rs.25 lakh pre-deposit and directed the adjudicating authority to verify payment within four months. The authority failed to verify or pass a fresh order; the taxpayer deposited the sum under a different registration code for the same legal entity. The department seeks restoration of the original adjudication for non-compliance. Legally, compliance requires payment attributable to the specific demand/registration, so a deposit to a different account may not satisfy the tribunal's condition; however the tribunal's four-month timeline is typically directory rather than an absolute bar, and the long delay and bona fide mis-payment justify asking the tribunal to accept proof, rectify the payment allocation or condone the lapse rather than automatic restoration.