Kumarakom Vadakkumbhagom Service Co-Operative Bank Ltd. Vs Commissioner of Central Tax (Kerala High Court)
The Kerala High Court dismissed a Customs Appeal filed by Kumarakom Vadakkumbhagom Service Co-Operative Bank Ltd. against an order by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore Bench. The core issue centered on the appellant’s failure to adhere to the mandatory pre-deposit requirement stipulated under Section 35F of the Central Excise Act, 1944. The appellant argued that the pre-deposit was only applicable when there was a demand for tax, and since they claimed no liability, the requirement was invalid. However, the court found this argument untenable. The records presented showed that a demand for service tax plus penalty had been issued against the appellant by an order dated 14.2.2019. This order had been previously challenged before the First Appellate Authority, which also rejected the appeal due to non-compliance with the pre-deposit rule.
The Kerala High Court, upon reviewing the submissions, determined that the appellant’s assertion lacked merit. The court emphasized that a specific demand had been raised by the original authority. The court referenced the Supreme Court’s ruling in Chandra Sekhar Jha vs. CCE [2022 (380) ELT 130], which established that pre-deposit is a prerequisite for entertaining an appeal. The sustainability of the tax demand was deemed the subject matter of the appeal itself, and therefore, the pre-deposit was a necessary condition. The appellant’s counsel then requested the court to allow the appeal to be contested on merits upon payment of the pre-deposit. However, the court stated that it lacked the authority to issue such a directive within the current proceedings. Consequently, the High Court dismissed the appeal, affirming the CESTAT’s order. The court clarified that the dismissal does not preclude the appellant from pursuing other legal remedies available under the law.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This Customs Appeal arises out of the order dated 4.4.2024 passed by the Customs, Excise and Service Tax Appellate Tribunal, Bangalore Bench, by which, the tribunal, noticing the fact that the appellant had not complied with the condition of pre-deposit as required under Section 35F of the Central Excise Act, 1944, rejected the appeal.
2. In this appeal, the appellant contends that a pre-deposit in an appeal before the tribunal can only be against a demand for tax, and since the appellant has no liability, there is no requirement for making any pre-deposit.
3. Heard Sri. K. Krishna, the learned counsel appearing for the appellant.
4. On consideration of the submissions raised across the Bar, we are of the view that there is no merit in the contention of the appellant. From the records, we find that the demand of service tax plus penalty was raised against the appellant by an order dated 14.2.2019. The said order was challenged before the First Appellate Authority. The First Appellate Authority, by order dated 16.12.2019, rejected the appeal on the ground that the appellant has not made any pre-deposit as required under the Statute. It is against the rejection of the appeal that the appellant approached the Central, Excise and Service Tax Appellate Tribunal by preferring an appeal that was not numbered due to the same defect. The assertion of the appellant that the requirement of pre-deposit will arise only if there is a demand of tax and that there is no liability for the appellant is untenable inasmuch as we find that a specific demand has been raised by the original authority. The sustainability or otherwise of the demand is the subject matter of the appeal, and therefore, going by the principles laid down by the Supreme Court in Chandra Sekhar Jha vs. CCE [2022 (380) ELT 130] the pre-deposit is a requirement for entertaining the appeal and therefore the order passed by the tribunal is correct.
5. Faced with the situation, the learned counsel appearing for the appellant submitted that the appellant may be permitted to contest the matter on merits by payment of pre-deposit. We are afraid that, in this proceeding, we cannot issue any such Thus, we are of the view that the appeal lacks merit, and accordingly, the same is dismissed. However, the dismissal of the appeal will not stand in the way of the appellant working out his remedies available under the law.
