M/S Saisun Outsourcing Service PVT. LTD. vs. Union Of INDIA

Held

The Court held that the petitioner's reliance on previous judgments and the legal treatise was misplaced. The judgments cited by the petitioner were based on the provisions of Section 35F of the Act as it existed prior to its amendment by Act 25 of 2014, effective from August 6, 2014. The amended Section 35F, which is applicable to the present case, makes only two exceptions: the pre-deposit amount shall not exceed ten crores rupees, and the section does not apply to stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014. The Court found that no third exception could be carved out based on repealed provisions. Therefore, the petitioner's request to waive the pre-deposit requirement and for permission to file an application for waiver before the CESTAT was dismissed. The Court explicitly stated that the amended provision is not pari materia to the earlier provisions and will not apply to cases originating from proceedings after August 6, 2014. Consequently, the writ petition failed and was dismissed. However, the Court granted a liberty to the petitioner to fulfill the pre-deposit requirement within 60 days, after which the CESTAT was requested to endeavor to decide the appeal within a further period of 120 days.

Facts

The petitioner, M/s. Saisun Outsourcing Service Pvt. Ltd., filed a writ petition challenging the requirement of pre-deposit under Section 35F of the Central Excise Act, 1944, which is applicable to Service Tax. The petitioner argued that they have a "paltry sum" in their bank accounts and cannot fulfill the pre-deposit requirement. They relied on previous judgments from coordinate and division benches of the Madhya Pradesh High Court that allowed appeals without insisting on pre-deposit. The petitioner also sought liberty to approach the competent authority (CESTAT) to waive the pre-deposit requirement, citing a legal treatise. The revenue, represented by the Union of India and Commissioner CGST, relied on a division bench judgment that rejected a similar plea where no plea of undue hardship was raised before the Commissioner.

Key Issues

1. Whether the petitioner is entitled to an exemption from the pre-deposit requirement under Section 35F of the Central Excise Act, 1944, based on previous judgments and the argument of financial hardship? 2. Whether the petitioner can be granted liberty to file an application before the CESTAT to waive the pre-deposit requirement? The petitioner contended that previous judgments by coordinate and division benches of the Madhya Pradesh High Court in cases like Madhya Pradesh Power Transmission Company Limited vs. Customs Excise and Service Tax Appellate Tribunal and Mukesh Kalway v. Customs Excise and Service Tax Appellate Tribunal directed appeals to be heard without insisting on pre-deposit. They also argued, citing a treatise, that the appellate authority may dispense with pre-deposit on grounds of undue hardship. The revenue, relying on M/s. G.L. Sharma and Sons vs. the Commissioner, argued that no plea of undue hardship was raised before the Commissioner and that the petitioner's sole contention was that amounts were already deposited by a third party, which was not the case here. The revenue also highlighted that the petitioner's current contention of financial hardship was not raised before the Commissioner.