TaxTMI 
TaxTMI 
Pre-Deposit is must, to file appeal and cannot be frustrated for Assessee’s financial hardship
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....re-Deposit is must, to file appeal and cannot be frustrated for Assessee’s financial hardship<br>By: - Bimal jain<br>Central Excise<br>Dated:- 23-8-2025<br>The Hon'ble Supreme Court in ALTAFHUSEN MAYUDDIN KHATRI Versus UNION OF INDIA & ANR. - 2025 (8) TMI 1062 - SC Order held that financial hardship cannot be a ground to waive or reduce the statutory pre-deposit requirement under Sections 35B an....
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....d 35F of the Central Excise Act, 1944. Facts: Altafhusen Mayuddin Khatri ("the Petitioner") filed an appeal before the CESTAT challenging the original adjudication order, which confirmed a demand of over Rs.400 crores, along with interest and an equivalent penalty. The statutory requirement under Section 35F mandated a pre-deposit of Rs.10 crores for the appeal's maintainability. The Revenue&nb....
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....sp; ("the Respondent") rejected the Petitioner's plea for waiver or reduction of this pre-deposit amount. The Petitioner contended before the Gujarat High Court that due to acute financial hardship, it was impossible to arrange the pre-deposit, and that such requirement effectively denied access to appellate remedies. The Respondent contended that the pre-deposit requirement is a mandatory statut....
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....ory condition, intended to safeguard revenue interests, and cannot be dispensed with merely on the ground of financial incapacity. Aggrieved by the High Court's dismissal of the writ petition challenging the pre-deposit requirement, the Petitioner approached the Supreme Court under Article 136 of the Constitution by way of a Special Leave Petition. Issue: Whether financial hardship can be a gro....
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....und for waiver or reduction of the mandatory pre-deposit required under Sections 35B and 35F of the Central Excise Act, 1944? Held: The Hon'ble Supreme Court in ALTAFHUSEN MAYUDDIN KHATRI Versus UNION OF INDIA & ANR. - 2025 (8) TMI 1062 - SC Order held as under: * Observed that, the provisions of Sections 35B and 35F are couched in mandatory terms and leave no discretion to waive the pre-depos....
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....it in appellate proceedings before the CESTAT. * Noted that, the object of pre-deposit provisions is to balance the right of appeal with protection of government revenue, and such object cannot be frustrated merely due to the appellant's inability to pay. * Held that, just because you are unable to make payment of pre-deposit, you cannot invoke the writ jurisdiction of High Cour. Whenever reve....
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....nue is involved and liability is fixed and the provision for pre-deposit has some object behind it. * Held that, there was no infirmity in the Gujarat High Court's reasoning, and no interference was warranted in exercise of the Supreme Court's discretionary jurisdiction under Article 136. Accordingly, the Special Leave Petition was dismissed, and all pending applications were disposed of. Our C....
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....omments: This judgment reinforces the consistent judicial position that statutory pre-deposit requirements under Section 35F of the Central Excise Act, 1944 (and pari materia provisions in GST law under Section 107 & 112 of the CGST Act, 2017) are mandatory and not subject to waiver on grounds of financial hardship. The Supreme Court's reliance on legislative intent mirrors earlier decisions such....
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.... as M/s Tecnimont Pvt. Ltd. (Formerly known as Tecnimont ICB Private Limited) Versus State of Punjab & Others - 2019 (9) TMI 788 - Supreme Court, where the Court emphasised that pre-deposit provisions are meant to curb frivolous appeals while ensuring revenue protection. Relevant Provisions: Section 35F, Central Excise Act, 1944 "Section 35F. Deposit of certain percentage of duty dema....
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....nded or penalty imposed before filing appeal. - The Tribunal or the Commissioner (Appeals) , as the case may be, shall not entertain any appeal- ( i ) under sub-section (1) of section 35, unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute,....
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.... in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Principal Commissioner of Central Excise or Commissioner of Central Excise ; (ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35B, unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty an....
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....d penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispu....
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....te, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten crores: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014." (Author ca....
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