M/S Manoj Kumar Gupta Through Its Sole Proprietor Manoj Kumar Gupta vs. The Union Of INDIA

Held

The Court held that the grounds of extreme financial hardship during the COVID period are not to be summarily rejected. It acknowledged the exceptional circumstances prevailing during the pandemic and the Supreme Court's suo motu orders extending limitation periods. The Court found the petitioner's grounds of extreme financial hardship understandable, especially since the Order-in-Original was passed during the COVID period. The Court distinguished the Delhi High Court judgment cited by the respondents, stating it was from 2016 and not applicable to the exceptional circumstances of the COVID period. The Court directed that subject to the petitioner depositing 7.5% of the duty and penalty amount within two weeks, his Appeal No. 50/RAN/2022 shall be restored before the Commissioner (Appeals). If the petitioner fails to comply with this condition, the impugned order of dismissal will remain in effect. The Court did not expressly leave any issue undecided.

Facts

The petitioner, Manoj Kumar Gupta, proprietor of M/s R.C. Transport, approached the High Court challenging the dismissal of his statutory appeal (Appeal No. 50/RAN/2022) by the Commissioner (Appeals) on April 13, 2022. The appeal was dismissed solely for failing to make a pre-deposit of 7.5% of the duty and penalty. The original proceedings were initiated by a demand-cum-show cause notice dated September 28, 2020, and culminated in an ex-parte Order-in-Original dated December 6, 2021, issued during the COVID-19 lockdown period. The petitioner contended extreme financial hardship during the relevant period prevented him from making the pre-deposit and sought an opportunity to appeal.

Key Issues

1. Whether the Commissioner (Appeals) erred in dismissing the petitioner's appeal solely on the ground of non-compliance with the pre-deposit requirement under Section 35F of the Central Excise Act, 1944, read with Section 142(7)(a) and 142(7)(b) of the CGST Act, 2017, and Section 85(4) of the Finance Act, 1994, in light of the petitioner's plea of extreme financial hardship during the COVID-19 pandemic? Petitioner's Arguments: The petitioner argued that due to extreme financial difficulty during the COVID-19 period, he was unable to make the mandatory pre-deposit. He relied on a previous judgment of the Jharkhand High Court in W.P (T) No. 1506/2021 (Brij Bihari Tiwari Vs. The Union of India & Others) which allowed a similar writ petition on similar grounds. Respondents' Arguments: The Respondent Department contended that the appeal was correctly dismissed by the Appellate Authority as the petitioner failed to make the mandatory pre-deposit. They argued that Section 35F of the Central Excise Act, 1944, as amended in 2014, does not permit any waiver of pre-deposit. The respondents cited a Delhi High Court judgment in W.P.(C) No. 3380 of 2016 [Suvidha Signs Studios Pvt. Ltd. Vs. Union of India] where such a request was declined.