Brij Bihari Tiwari vs. The Union Of INDIA

Facts

The Petitioner, Brij Bihari Tiwari, approached the High Court challenging the dismissal of his statutory appeal (Appeal No. 23/RAN/2021) by the Commissioner (Appeals), Central GST & CX, Ranchi. The appeal was dismissed on February 12, 2021, solely due to the Petitioner's failure 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 April 26, 2018, and culminated in an order-in-original dated June 2, 2020, during the COVID-19 lockdown period. The Petitioner contended that financial difficulties prevented him from making the pre-deposit and sought an opportunity to appeal on grounds of extreme financial hardship.

Held

The Court held that the grounds of extreme financial hardship during the COVID-19 period are not to be outrightly rejected. It acknowledged the Supreme Court's suo motu orders extending limitation periods during the pandemic. The Court found the Petitioner's plea of extreme financial hardship understandable, especially as the order-in-original was passed during the peak of the first COVID-19 wave. The Court distinguished the Delhi High Court's 2016 judgment relied upon by the Respondent, deeming it inapplicable to the exceptional circumstances of the COVID period. Consequently, the Court directed that the Petitioner's appeal (Appeal No. 23/RAN/2021) be restored before the Commissioner (Appeals) subject to the Petitioner depositing 7.5% of the duty and penalty amount within two weeks. Failure to comply with this condition would render the impugned order intact. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the Petitioner's appeal, dismissed for non-compliance with the mandatory pre-deposit requirement under Section 35F of the Central Excise Act, 1944 (as applicable), should be restored given the grounds of extreme financial hardship during the COVID-19 pandemic. Petitioner's argument: The Petitioner argued that due to extreme financial hardship during the relevant period, he was unable to make the pre-deposit. He expressed willingness to comply with the pre-deposit requirement if granted an opportunity to appeal. Respondent's argument: The Respondent Department contended that the appeal was correctly dismissed in exercise of powers under Section 142(7)(a) and 142(7)(b) of the CGST Act, 2017, read with Section 85(4) of the Finance Act, 1994, and Section 35F of the Central Excise Act, 1944. They asserted that Section 35F, as amended in 2014, does not permit any waiver of pre-deposit and relied on the Delhi High Court's judgment in Suvidha Signs Studios Pvt. Ltd. Vrs. Union of India.