M/S Amar Enterprises Through Its One Of The Partners Amarjeet Giri vs. The Commissioner Central GST And Central Excise

Facts

The petitioner, M/s Amar Enterprises, a partnership firm, challenged orders from the Deputy Commissioner, CGST & Central Excise, Ranchi, and the Commissioner, CGST & Central Excise, Ranchi. The Deputy Commissioner imposed a service tax liability of Rs. 7,66,636/- and an equal penalty, along with interest, for the financial years 2015-16 and 2016-17, based on contracts executed with the Central Public Works Department (CPWD). The petitioner believed they were exempted from service tax under Notification No. 25/2012. Their appeal before the Commissioner was dismissed solely for failing to deposit the mandatory 7.5% pre-deposit of the duty and penalty, as required by Section 35F of the Central Excise Act, 1944. The petitioner argued they were unaware of the online payment facility for pre-deposit due to COVID-19 restrictions and sought to make the deposit.

Held

The Court held that the impugned order dated 08.07.2022, passed by the Commissioner, CGST & Central Excise, Ranchi, which dismissed the petitioner's appeal on the ground of non-payment of mandatory pre-deposit, was to be set aside. The Court found that there was no apparent intention on the part of the petitioner to avoid making the pre-deposit of 7.5% as provided under Section 35F of the Central Excise Act, 1944. The Court also noted the respondents' acknowledgment of the facility for making pre-deposits by unregistered dealers or registered non-assessees, as indicated by the RBI Instruction and CBIC FAQs. In the interest of justice, the Court decided to remand the matter to the Appellate Authority. The petitioner was granted a period of four weeks from the date of the order to make the mandatory pre-deposit. Upon compliance, the appeal would be heard on its merits. The Court explicitly stated that it had not gone into the merits of the case.

Key Issues

1. Whether the dismissal of the petitioner's appeal by the Commissioner, CGST & Central Excise, Ranchi, on the sole ground of non-payment of the mandatory 7.5% pre-deposit under Section 35F of the Central Excise Act, 1944, was justified, considering the petitioner's claim of unawareness of the payment mechanism and the prevailing COVID-19 circumstances? (Mixed question of law and fact) Petitioner's arguments: The petitioner contended that their appeal should not have been rejected on technical grounds of non-payment of pre-deposit. They claimed ignorance of the RBI Instruction No. RBI/2008-09/165 regarding online payment facilities and argued that they had no intention to evade payment. They sought an opportunity to make the pre-deposit so that their appeal could be heard on its merits. They did not press other grounds related to the merits of the Order-in-Original. Revenue's arguments: The respondents (CGST) argued that the dismissal of the appeal for non-payment of the mandatory pre-deposit was in accordance with the law and not arbitrary. They referred to their counter-affidavit and the FAQs issued by CBIC regarding payment procedures for non-assessees.