In WPT No. 116 of 2021- CHHAT HC - Chhattisgarh High Court rejects M/s Nava Raipur Atal Nangar Vikas Pradhikaran's plea to waive mandatory pre-deposit under Section 35-F of the Central Excise Act; grants three-month extension for pre-deposit, considering Covid-19 challenges
Justice Parth Prateem Sahu [09-05-2023]

Read Order: M/s Nava Raipur Atal Nangar Vikas Pradhikaran v. The Union of India and Ors

Chahat Varma

New Delhi, May 13, 2023: The High Court of Chhattisgarh has rejected the plea of M/s Nava Raipur Atal Nangar Vikas Pradhikaran (petitioner) seeking exemption from the mandatory pre-deposit requirement as stipulated under section 35-F of the Central Excise Act, 1944.

Factual background of the case was that the petitioner was a statutory body created under the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973. It was created to prepare the development plan for the special areas after approval by the State Govt. and for purpose of implementation of the plan, to acquire, hold, develop, manage and dispose of lands and other property. An inquiry was initiated against the petitioner based on a report of short payment of service tax. A show cause notice was issued, to which the petitioner submitted a reply refuting the allegations. After adjudication, the Principal Commissioner, Central Tax and Central Excise, Raipur, passed an order demanding service tax, interest, and penalty. The petitioner appealed against this order to the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (CESTAT). However, as the petitioner did not deposit the requisite pre-deposit in terms of section 35-F of the Central Excise Act 1944 read with section 83 of the Act, an information letter was issued to the petitioner intimating that mandatory deposit as envisaged under section 129-E of the Customs Act, 1962 read with section 35-F of the Act has not been adduced. Aggrieved with the issuance of letter/notice dated 16.04.2021, petitioner filed the present petition.

The bench observed that the petitioner had cited financial crises during the Covid-19 pandemic period as the reason for not depositing the requisite pre-deposit. However, the petitioner's balance sheet, filed along with the petition, demonstrated that the petitioner had made a profit after the Covid-19 pandemic period.

 The bench examined the decision rendered in M/s Vish Wind Infrastructure LLP and Ors v. Additional Director General [LQ/DelHC/2019/5442], wherein, the Delhi High Court had observed that a reading of section 35-F of the Central Excise Act reveals, by the usage of the peremptory words ‘shall not’ therein, that there is an absolute bar on the CESTAT entertaining any appeal, under section 35 of the said Act, unless the appellant has deposited 7.5% of the duty confirmed against it by the authority below.

Considering the difficulties faced during the Covid-19 pandemic period, the High Court has granted the alternate prayer of the petitioner, giving an extension of three months to deposit the mandatory pre-deposit before the CESTAT.