AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2005 (9) TMI 120
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....ter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of central excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied : Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue." 3.The Appellate Authority in the impugned order observed as follows : "This is an arguable case and there are various judgments of higher forums from both the sides on this issue. Though they have prayed to dispense with pre-deposit of Service Tax, interest and penalties on the ground of financial hardship but no documentary proof has been submitted in support of the same. However, in the interest of justice....
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....has been sanctioned the borrowing limit of Rs. 15 Crore by Mizuho Corporate Bank. Company has also been sanctioned loan facility of Rs. 3 Crore by Bank of Tokyo Mitsubishi Ltd. In this respect, copies of the correspondence exchanged with the Applicant are annexed hereto and marked as Annexure-"B" Colly. The new capital investment plan is for Rs. 19 Crore to be completed by March, 2006. Copies of the statement along with the documents establishing the concrete steps and measures takes by the Applicant to implement the said expansion plan are annexed hereto and marked as Annexure-"C" Colly. However, the present impugned order, which is in blatant disregard of the well-settled law unless stayed till the decision in the accompanying Appeal would be a deterrent and add to the financial hardships being faced by MUIPL and would counterblast all the maneuvers of MUIPL towards expansion. 7. The balance of convenience weighs heavily in favour of the Appellant and against the Department. No hardship would be caused to the Department in case the present Application is allowed as prayed for and on the contrary in case the relief as prayed is not granted to the Appellant, the letter will face ....
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....y is required to examine the prima facie on merits of the dispute as well. Pleading of financial disability would not be the only consideration. Where the case is fully covered in favour of the assessee by a binding precedent like that of the judgment of the Supreme Court, jurisdictional High Court or a Special Bench of the Tribunal, then to still insist upon the deposit of duty and penalty levied would certainly cause undue hardship to the assessee. Absence of the financial hardship in such a case would be no ground to decline the dispensation of pre-deposit under the proviso to Section 35F. The power to dispense with such deposit is conferred under the authorities has to be exercised precisely in cases like this type and if it is not exercised under such circumstances then this Court will require it to be exercised. Such like cases where two views are not possible then the condition of pre-deposit before the appeal is heard on merits, can be dispensed with. In case two views are possible on interpretation, based on conflicting judgments of the Tribunal or different High Courts in the absence of the judgment of the jurisdictional High Court then the authorities may pass the order ....
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....or private - of a citizen." 11.In Andhra Civil Construction Co. v. CEGAT, 1992 (58) E.L.T. 184, the Madras High Court has emphasized that unless a very strong prima facie case is made out, stay should not be granted. 12.In B.P.L. Sanyo Utilities and Appliances Ltd. v. Union of India, 1999 (108) E.L.T. 621, the Karnataka High Court held that in the matter of grant of waiver of pre-deposit, each case has to be examined on its own merit and no hard and fast rule can be formulated. 13.In Income-tax Officer v. M.K. Mohammad Kunhi, AIR 1969 SC 430, the Supreme Court held that stay should be granted if a strong prima facie case has been made out and in the most deserving and appropriate cases where entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue, during the pendency of the appeal. 14.In Mehsana District Cooperative Milk P.U. Ltd. v. Union of India, 2003 (154) E.L.T. 347 (S.C.), the Supreme Court considered the case of dispensation of pre-deposit condition and held that the Appellate Authority must address to itself to the prima facie merits of the appellant's case and upon being satisfied of the same, determine the ....
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....on of pre-deposit it has to "safeguard the interest of revenue". While considering the question of dispensing with condition of pre-deposit in the facts of a case, the Appellate Authority has been given wide powers as is apparent from the fact that it can dispense with the condition of pre-deposit in part or in whole "subject to such condition as it may deem fit to impose". There is no doubt that when Legislature provides enabling or discretionary power upon a public authority, even though the words are permissive in character, the concerned authority is required to exercise that power reasonably on relevant considerations and not in a arbitrary or mala fide manner particularly when such exercise of power involves legal right or entitlement or enjoyment and for effectuating such right in favour of someone. The aforesaid view stands fortified in view of the fact that the Court/Tribunal/Authority has to proceed giving strict adherence to the provisions of law. Reference may be made in the cases of Julius v. Lord Bishop of Oxford, (1880) 5 Appeal Cases 214; Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR 1952 SC 16; K.S. Srinivasan v. Union of India & Ors., AIR 1958 SC 419; Y....
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.... relevant circumstances pertaining to each case. It may also be clarified that financial hardship as such, without taking into account other relevant fact or circumstances is of no consequence. Whenever the appellant is required to make a pre-deposit, it will be a case of mere financial hardship. The question, for consideration will be as to whether such financial hardship causes "undue hardship" i.e. by imposing the condition of pre-deposit the very purpose of filing of appeal itself may not be reduced nugatory or illusory for the appellant. 20.From a perusal of the impugned judgment and order dated 29-8-2005 it is manifestly clear and apparent on the face of the record that the Appellate Authority has failed to take into consideration the principles laid down by this Court/Apex Court in the aforementioned judgment and hence the said judgment and order cannot be sustained and is liable to be set aside. Apparently the Appellate Authority has not taken into consideration the precedent laid down by this Court in Civil Misc. Writ Petition No. 1219 of 2003, I.T.C Ltd. v. Commissioner (Appeals), Customs & Central Excise and others, decided on 23-10-2003 [2005 (184) E.L.T. 347 (All.)], ....