G.S. Promoters PVT. LTD vs. The Commissioner Of Central Excise And CGST

Facts

The petitioner, G.S. Promoters Pvt. Ltd., filed a writ petition seeking waiver of the pre-deposit of 7.5% of the duty demanded in an order-in-original dated 26.11.2021, passed by the Commissioner, Adjudication, Central Tax, GST, Delhi East. The petitioner argued that the revenue's interest was protected by an unprocessed CENVAT credit refund and that the demand was based on an erroneous premise regarding the availment of abatement. The petitioner also cited a favourable decision for its sister concern, M/s GR Realcon Private Limited, and stated that it lacked funds for the pre-deposit due to ongoing RERA proceedings. The petitioner proposed appropriating available CENVAT credits for the pre-deposit or making a reduced deposit.

Held

The Court held that it could not accept the petitioner's contention that its obligation to make a pre-deposit could be set off against its claim for a refund of CENVAT credit. However, the Court found merit in the petitioner's argument that its remedy of appeal would be rendered illusory if it could not make the required pre-deposit due to financial circumstances. After some arguments, the petitioner proposed to deposit 2.5% of the liability instead of 7.5%. The Court directed that if the petitioner deposits an amount equivalent to 2.5% of its liability, its appeal against the order-in-original would not be rejected solely for want of the requisite pre-deposit. The Court explicitly refrained from making any observations on the merits of the case. The ratio decidendi is that while statutory pre-deposit requirements are binding, courts may grant relief to ensure the appellate remedy is not rendered illusory due to genuine financial hardship, by directing a reduced pre-deposit.

Key Issues

1. Whether the petitioner is entitled to a waiver of the pre-deposit of 7.5% of the duty demanded in the order-in-original dated 26.11.2021, considering its financial constraints and the pendency of CENVAT credit refund claims. Petitioner's arguments: The petitioner contended that its appeal remedy would be rendered illusory if it were unable to make the pre-deposit due to a lack of liquid funds, exacerbated by ongoing RERA proceedings. It argued that its CENVAT credit refund claim should be considered, and suggested appropriating these credits or making a reduced deposit. The petitioner also relied on a favourable decision for its sister concern on the merits of the case. Revenue's arguments: The judgment does not record specific arguments made by the respondent revenue.