Pre-Deposit – Post-adjudication Blues - Delete Section 35F
Writing in our Budget Run up, noted Senior Advocate Arvind Datar had suggested that Section 35F should be deleted from the Central Excise Act. He said, “Before the Tribunal, it leads to tremendous delay in disposal of cases as a lot of time is consumed at the interlocutory stage. If Sec. 35F is abolished, it will save considerable amount of judicial time as CESTAT can straightaway hear and dispose off the main appeal itself.”
Central Excise Officers go to ridiculous lengths to demand duty on unimaginable grounds and the poor assessee is under the Damocles' sword of a huge pre-deposit falling on his head at any moment. The first few fresh hours in the Tribunal are spent in disposing of stay and waiver of pre-deposit petitions. And many of the consultants invariably argue their whole case at the stay hearing stage itself. Even in many cases where huge pre-deposits are ordered, the final verdict is in favour of the assessee. And when huge pre-deposits are ordered, the cases invariably go to the High Courts by writ petitions, though High Courts have a set policy that they normally will not interfere in interlocutory matters. We are simply clogging our courts. The whole purpose of setting up Tribunals is for speedy disposal and if best time of the Tribunal is spent in disposing pre-deposit matters, the purpose is defeated.
The pre-deposit concept has also been instrumental in breeding corruption at all levels. Even honest assessees are happy with the corrupt officers, for obvious reasons! So there should be no pre-deposit at least till the Tribunal stage or it should be mandatorily fixed at 5% of the duty demanded. (Considering the huge perverse demands being made, even ten percent, as suggested by Jai Kumar and Natarajan in another Budget run-up piece we carried, is too much). Then there would be no stay applications before the Tribunal and Tribunal can concentrate on finally deciding the cases instead of wasting their precious time on pre-deposit matters.
Speaking at a Seminar the other day, an eminent tax expert said that if there is one change he wanted the Finance Minister to make, it was doing away with pre-deposit.
But who will consider all these? After all the system thrives on corruption, complications, litigation and liaisoning.
The Indian Businessman is a great species – but for his urge to stay in business, he would have become a terrorist and shot down all the personnel of the numerous enforcement agencies, he has to cope up with.