Naveen Kumar vs. The Commissioner Central Goods And Services Tax

Facts

The appellant, Naveen Kumar, filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) challenging an order of the Adjudicating Authority dated 29.04.2022 and an order of the Commissioner (Appeals) dated 16.03.2023. The CESTAT dismissed the appellant's appeal on the ground that the pre-deposit requirement of 7.5% for the appeal before the Commissioner (Appeals) was not fulfilled. The appellant contended that he had deposited 7.5% before the Commissioner (Appeals) and the remaining 2.5% before the CESTAT, thus fully complying with the statutory provisions. The CESTAT, however, held that the deposit before the Commissioner (Appeals) was not to be considered as it was not as per a Circular dated 24.06.2019, and the 10% deposit for the CESTAT appeal was independent.

Held

The High Court allowed the appeal. The Court noted that the Revenue, through instructions from the Additional Commissioner, Central Goods and Services Tax, Dehradun, conceded that the amount deposited at the stage of the first appeal before the Commissioner (Appeals) is liable to be taken into account while reckoning the compliance of the mandatory pre-deposit of 10% before the CESTAT, in terms of Section 35F of the Act. The CESTAT's Circular dated 09.07.2018 was cited, which clarifies that the 10% pre-deposit for CESTAT is inclusive of the 7.5% pre-deposit made at the first appellate stage, and the appellant is not required to deposit a fresh 10% in addition to the earlier 7.5%. Consequently, the Court held that the CESTAT's dismissal of the appeal on the ground of non-compliance with pre-deposit requirements was incorrect. The orders of the CESTAT and the Commissioner (Appeals) were set aside. The matter was remitted back to the Commissioner (Appeals) for deciding the appeal on merits. The question of law regarding the deposit requirement in terms of the Circular dated 24.06.2019 was left open for consideration in an appropriate case.

Key Issues

1. Whether, in the facts and circumstances of the case, the CESTAT was justified in dismissing the appeal, ignoring the amount deposited by the appellant during the pendency of the appeal before the Commissioner (Appeals)? (Question of mixed law and fact, turning on Section 35F of the Central Excise Act, 1944 and relevant circulars). 2. Whether, if the entire amount required for maintaining appeals before the Commissioner (Appeals) and the CESTAT had been deposited, the CESTAT should have considered the issues on merits rather than confining itself only to the order of the Commissioner (Appeals)? (Question of law, turning on the interpretation of pre-deposit requirements for appeals). Contentions: Petitioner/Appellant: Argued that the pre-deposit of 7.5% before the Commissioner (Appeals) and the remaining 2.5% before the CESTAT constituted full compliance with the statutory requirement of 10% pre-deposit for the CESTAT appeal. Revenue/Respondents: Initially argued that the pre-deposit before the Commissioner (Appeals) was not to be accounted for the CESTAT appeal pre-deposit, citing Circular dated 24.06.2019 and instructions dated 28.10.2022. However, the Revenue later conceded that the amount deposited at the first appellate stage is liable to be taken into account for the 10% pre-deposit before the CESTAT.