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2015 DIGILAW 1508 (KER)

UNION OF INDIA v. MUTHOOT FINANCE LTD.

2015-10-29

ANU SIVARAMAN, THOTTATHIL B.RADHAKRISHNAN

body2015
JUDGMENT : THOTTATHIL B. RADHAKRISHNAN, J. 1. These writ appeals are by the Union of India. 2. Heard the learned Senior Standing Counsel for the Central Board of t Excise and Customs and the other learned advocates appearing on behalf of the appellants in different matters. We have also heard the learned Advocates appearing for the respondents who were the petitioners in the writ petitions before the learned Single Judge, leading to these appeals. 3. Different orders issued by the statutory authority confirming demand of service tax and penalty were impeached through writ petitions. The learned Single Judge was of the view that the writ petitioners have effective alternate remedy by way of appeal before the Customs, Central Excise and Service Tax Appellate Tribunal in terms of the provisions of the Finance Act, 1994 as amended. Incidentally, we may note that in one of the writ petitions, the constitutional validity of Section 72 of the Finance Act, 1994 was raised. That issue was left undecided by the learned Single Judge. There is no appeal by the writ petitioners in that case. Therefore, that issue does not arise for decision in these appeals. 4. The appeals at the instance of the Union of India are necessitated by reason of the view taken by the learned Single Judge that the appeals which would be filed by the writ petitioners before the Customs, Central Excise and Service Tax Appellate Tribunal shall be dealt with as if the provisions of Section 35(f) of the Central Excise Act applied as it stood before its substitution by Finance Act (No. 2) of 2014 with effect from 06/08/2014. 5. The crux of the issues germane for consideration in these appeals is as to whether; under the unamended provision of Section 35(f), it was obligatory for the appellants to deposit the entire amount covered by the demand or penalty order unless waiver is sought for and granted by the Appellate Tribunal for reasons in terms of the statutory provisions as it then stood. 6. With the change of law by Section 35(f) with effect from 06/08/2014, the requirement to deposit the entire amount stood modified and there was a uniform requirement to deposit 7.5% of the duty or duty and penalty in dispute. 6. With the change of law by Section 35(f) with effect from 06/08/2014, the requirement to deposit the entire amount stood modified and there was a uniform requirement to deposit 7.5% of the duty or duty and penalty in dispute. The second proviso to Section 35(f) so substituted with effect from 06/08/2014 provided that the provisions of that Section shall not apply to the stay applications and appeals pending before any Appellate Authority prior to the commencement of the Finance Act (No. 2) of 2014, i.e., on 06/08/2014. 7. The learned Single Judge, referring to some of the precedents, directed the Tribunal to entertain the appeals without insisting on pre-deposit in terms of Clause (i) of Section 35(f), as substituted with effect from 06/08/2014, and to treat the appeals as if they would be governed by the provision that originally stood and, accordingly, to consider the applications for waiver, if filed by any of the writ petitioners along with the appeals. 8. Pending consideration of these writ appeals, the writ petitioners have instituted their statutory appeals before the Tribunal. 9. The issue as to whether the appeals now pending before the Tribunal at the instance of the writ petitioners would be governed by Section 35(f) of the Central Excise Act as it stood before 06/08/2014 or by the substituted Section 35(f) was not an issue raised through pleadings or otherwise, for consideration before the learned Single Judge. The Union of India is, therefore, justified in saying that it did not have an opportunity to place its views as to the appropriate construction, interpretation and application of the provisions under Section 35(f) as they stood before and after the substitution effected from 06/08/2014. Different submissions have been made before us, including with reference to the quality and content of the terms used in Section 35(f) and different jurisprudential aspects as regards the quality of the concept of commencement of lis and the right of appeal. 10. We have bestowed our anxious consideration to the different aspects of the matter and are of the firm view that the question whether an appeal is to be entertained or whether the appeal fails on account of non-compliance of any statutory prescription is, at the first instance, with the statutory Appellate Authority. 10. We have bestowed our anxious consideration to the different aspects of the matter and are of the firm view that the question whether an appeal is to be entertained or whether the appeal fails on account of non-compliance of any statutory prescription is, at the first instance, with the statutory Appellate Authority. Therefore, the question whether the appeals by the writ petitioners against the tax demanded or penalty, would be governed under the substituted Section 35(f) with effect from 06/08/2014 or under the earlier provision is a matter to be considered after hearing the necessary parties by the Appellate Tribunal. 11. In the light of the aforesaid particular and peculiar situation of the matter in hand, we are of the view that the Appellate Tribunal ought to take up the appeals which have been instituted by the writ petitioners and hear them and the Revenue on the issue regarding deposit. What will be required to be considered as the first question would be as to whether the provision for deposit will be governed by Section 35(f) before its substitution with effect from 06/08/2014 or such deposit has to be governed by the substituted provision in terms of the substitution made as per Finance Act (No. 2) of 2014. The question whether the second proviso to the substituted Section 35(f) has any bearing on such question is also for the Tribunal to decide at the first instance. If it is held that the provisions of Section 35(f) before its substitution would govern the appeals, the Tribunal will take up any application for waiver of part or whole of the pre-deposit and also any application for stay. The directions contained in the impugned judgment are modified to the aforesaid extent and it is directed that the Appellate Tribunal shall not reject any of the appeals of the writ petitioners without deciding the aforesaid issue. The Tribunal will ensure that it decides the matter untrammelled by anything stated in the judgment of the learned Single Judge. Let this be done within a period of one month from the date of receipt of a copy of this judgment. Writ appeals are ordered accordingly.