Pegasus Farmaco INDIA PVT LTD vs. The Union Of INDIA

Held

The Court held that the High Court, in the exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India, cannot issue directions contrary to explicit statutory provisions. The Court found that Section 35F of the Central Excise Act, as substituted, unequivocally mandates the deposit of 7.5% of the disputed duty for an appeal to be entertained, and no discretion is conferred on any authority to waive this requirement. The Court distinguished the Delhi High Court's judgment in *Shubh Impex*, stating that a High Court's decision is only binding within its territorial jurisdiction and that the ratio of decisions from other High Courts has persuasive, not binding, effect. Furthermore, the Court emphasized that a decision is an authority only for what it actually decides, not for every observation. The scope of interference in an intra-Court appeal is limited, and no patent illegality was found in the learned Single Judge's order. Therefore, the Court saw no reason to deviate from the Single Judge's view.

Facts

The appellants, Pegasus Farmaco India Pvt. Ltd. and another, filed a Special Appeal before the Uttarakhand High Court challenging the dismissal of their Writ Petition by a learned Single Judge. The appellants had sought to quash an adjudication order dated 30.04.2019 passed by the Commissioner, CGST, Dehradun. Prior to filing the writ petition, they had availed their appellate remedy under Section 35B of the Central Excise Act but sought exemption from depositing 7.5% of the disputed duty, as mandated by Section 35F of the Central Excise Act, due to alleged inability to do so. The learned Single Judge dismissed the writ petition, finding it impermissible to escape the statutory deposit requirement through a writ petition.

Key Issues

1. Whether the High Court, in its writ jurisdiction under Article 226 of the Constitution of India, can waive the statutory requirement of depositing 7.5% of the disputed duty as a pre-condition for entertaining an appeal before the Tribunal, as stipulated by Section 35F of the Central Excise Act? Appellants' Contention: The appellants argued that the law laid down by a Division Bench of the Delhi High Court in *Shubh Impex v. Union of India* would apply to their case. They contended that in their specific circumstances, the huge financial losses suffered and deficient working capital would render the deposit requirement crippling, thus warranting consideration by the Court. Respondents' Contention: The respondents, through their counsel, implicitly supported the learned Single Judge's order, which held that the statutory deposit was mandatory and could not be bypassed via a writ petition. The judgment does not explicitly record separate arguments from the respondents on the legal issues but implies their stance aligns with upholding the statutory provision.