Kindle Infraheights PVT. LTD vs. The Commissioner Of Central Excise And CGST & Anr.

Facts

The petitioner, Kindle Infraheights Pvt. Ltd., filed a writ petition before the Delhi High Court seeking waiver of the pre-deposit of 7.5% of the duty demanded in an order dated 27.10.2021, passed by the Commissioner, Adjudication, Central Tax, GST, Delhi East. The petitioner contended that the demand was raised erroneously, and a similar issue was decided in favour of its sister concern. The petitioner argued that it lacked the liquid funds to make the pre-deposit due to ongoing proceedings under RERA and requested that available CENVAT credits be appropriated for the pre-deposit. The Court noted that the petitioner's remedy of appeal would be rendered illusory if the pre-deposit could not be made.

Held

The Court held that while it could not accept the petitioner's contention to set off its pre-deposit obligation against its claim for CENVAT credit refund, it found merit in the argument that the petitioner's remedy of appeal would be rendered illusory due to a lack of liquid funds. Consequently, 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 a High Court, in its writ jurisdiction, can direct a reduced pre-deposit amount to ensure the appellate remedy is not rendered illusory, especially when the appellant demonstrates financial hardship and a prima facie case, without prejudice to the merits of the appeal.

Key Issues

1. Whether the petitioner is entitled to a waiver of the pre-deposit of 7.5% of the duty demanded, considering its financial constraints and the alleged merits of its case? Petitioner's arguments: The petitioner argued that the demand was based on an erroneous premise regarding the availment of CENVAT credits, citing a favourable decision for its sister concern. It claimed a strong case on merits but was unable to make the pre-deposit due to financial difficulties arising from RERA proceedings. The petitioner also suggested appropriating available CENVAT credits towards the pre-deposit. The petitioner relied on the order in original dated 16.12.2022, passed by the Additional Commissioner, Adjudication, Delhi East, in the case of M/s GR Realcon Private Limited. Revenue's arguments: The judgment does not record any specific arguments made by the revenue or respondents.