Cw/9268/2019 Of vs. Lignite Power PVT. LTD. Vs The Principal Commissioner CGST And Central Excise

Held

The Court acknowledged the petitioner's acute financial constraints, making compliance with the mandatory pre-deposit requirement impossible. Consequently, the Court directed that the petitioner deposit ₹50 lakhs within three months, by November 30, 2019. Upon filing the appeal before the CESTAT within three weeks from the date of the order, the appeal would be considered on its merits, without being hindered by any delay. The CESTAT was instructed to verify the deposit of the directed amount before proceeding to hear the arguments on merits after issuing notice to the parties. The writ petition was disposed of in these terms.

Facts

The petitioner, Lignite Power Pvt. Ltd., challenged a demand made pursuant to an order in original dated February 26, 2019, passed by the Principal Commissioner CGST and Central Excise. The revenue contended that the petitioner had an effective alternative remedy by way of an appeal to the CESTAT. The petitioner argued that the mandatory pre-deposit requirement for such an appeal, which was 7.5% of the disputed sum of ₹13 crores (amounting to ₹1 crore), was impossible to meet due to severe financial distress. The petitioner's balance sheets for AY 2017-18 showed significant losses (₹127 crores), and its liabilities exceeded ₹1000 crores, with bank loans recalled. The High Court considered these financial constraints.

Key Issues

1. Whether the petitioner has an efficacious alternative remedy of appeal before the CESTAT, as argued by the revenue. 2. Whether the petitioner's financial inability to meet the mandatory pre-deposit requirement of 7.5% of the disputed sum (₹1 crore) justifies entertaining the writ petition directly. Petitioner's Arguments: The petitioner contended that the mandatory pre-deposit of ₹1 crore was financially impossible to comply with, citing substantial losses and liabilities as evidenced by its balance sheets. They implicitly argued that the financial hardship rendered the alternative remedy ineffective. Revenue's Arguments: The revenue argued that the petitioner possessed an efficacious remedy by way of an appeal to the CESTAT, where all issues and facts could be appropriately raised and considered. They did not present arguments regarding the petitioner's financial condition.