Stay order of the CESTAT - Appeal or Writ?
- 04 11 2013 raised the following issue:
You are aggrieved by a Stay order of the Tribunal - suppose the Tribunal asked you to pre-deposit the duty and interest (as it has done in many cases recently). Now what is your remedy, especially if you have no money to deposit?
Can you appeal to the High Court? Is the Tribunal's Order appealable? Remember you can appeal to the High Court against a CESTAT order only on a question of Law. What Question of Law can you frame against an interim order requiring pre-deposit?
Can you approach the High Court on a writ petition? Is a writ maintainable if there is an alternate remedy? If appeal is possible, will writ be admitted?
The response, mostly from consultants and lawyers, was almost equally divided. Dr.D D Rishi, Advocate, referred to a 1946 decision of the Bombay High Court, "In perhaps the earliest reported case on the subject, it was held in KhurshedModi v. Rent Controller, Bombay; AIR 1947 Bom 46 that the High Court would not refuse to issue a writ of certiorari merely because there was a right of appeal. Ordinarily a High Court would require the petitioner to have recourse to his ordinary remedies, but if it found that there had been a breach of fundamental principles of justice, the High Court should not hesitate to issue the writ of certiorari."
There is a lot of confusion on the issue whether against a pre-deposit order of the Tribunal, one should file a writ or an appeal in the High Court. There seems to be no uniform procedure in the various High Courts and even within the same High Court. Some file writs and some file appeals.
This issue was decided in an exhaustive judgement by the Madras High Court recently on 30th October 2013, in a case in which the Who's Who of Madras Tax Bar extensively argued and in a judgement running into over 18,000 words, the High Court decided in favour of appeal rather than writ.
The Supreme Court had in Raj Kumar Shivare's case , held that writ petition is not ordinarily maintainable to challenge an order of the Tribunal. But this was a FEMA case. Is this decision applicable to decisions of the CESTAT?
In the High Court, Senior CounselArvindDatar submitted:-
For more than 25 years, till the decision was made in Raj Kumar Shivare's case, persons aggrieved by the orders passed under Section 35F/129 E viz., pre-deposit orders, have only filed writ petitions before the High Courts, as reference to the High Court was not maintainable. Even after the abolition of reference provision and introduction of appeal provision, writ petitions are being filed. The decision in Raj Kumar Shivhare's case was made in the context of FEMA, 1999. Pre-deposit orders are only interim orders not passed in appeal but in appeal proceedings. Section 35G(1) is the substantive right whereas Section 35G(2) is only the procedure. An order to be challenged before the High Court in appeal should be an order determining the final issues arising between the parties in the appeal before the appellate Tribunal. Therefore, an order passed under Section 35F is not a final determination. If remedy is not available under the Act, then the remedy under Article 226 of the Constitution of India has to be permitted. The term "every order" shall not include interim order under Section 35F. A decision made on one enactment cannot be applied to another enactment. Against an order made by the Commissioner of Appeals under Section 35F, no appeal would lie before the Tribunal under Section 35B. The same analogy is to be applied even in respect of the appeals to be filed before the High Court. The other High Courts, which followed Raj Kumar Shivhare's case, have not considered the scheme of the relevant Acts. There can be only one appeal under Section 35G or 130 and not many appeals at many points of time. It is impossible that any substantial question of law would arise out of an interlocutory order that deals only with prima facie nature of the case. A substantial question of law would arise only from the order, which finally decides the rights of the parties in controversy.
Let's have a look at the relevant portion of Section 35G.
"SECTION 35G. Appeal to High Court. -
(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.
(2) The Commissioner of Central Excise or the otherparty aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court.
While sub-section (1) reads that an appeal shall lie to the High Court from" every order passed in appeal by the Appellate Tribunal", sub-section (2) further contemplates that the Commissioner of Central Excise or the other party aggrieved may file an appeal to the High Court against" any order passed by the Appellate Tribunal".
The High Court noted a vital difference between sub-section (1) and sub- section (2). The words" in appeal" is conspicuously absent under sub-section (2). The legislature at its wisdom thought fit to enlarge the scope of appeal by providing sub-section (2) with a specific expression "any order passed by the Appellate Tribunal" Thus, it is crystal clear that even against the interim orders passed by the Appellate Tribunal, a remedy of filing of an appeal is always available under Section 35G and 130 of the respective Acts.
The High Court observed,"it is clear that unless there is a specific bar in the statute itself against filing appeal against interlocutory orders or there is an express provision saying only a final order of the Tribunal is appealable, the scope of filing appeal contemplated under Section 35G and 130 cannot be narrowed down or restricted as contended by the petitioners by judicial interpretation. When the language of the statute is clear regarding the nature of the order from which right of appeal has been conferred, no statutory interpretation is warranted either to widen or restrict the same.”
What is the substantial question of law against a pre-deposit order ? The High Court observed,"The grievance of the petitioners herein is that no substantial question of law could be raised as against the pre-deposit order and therefore the appeal cannot be filed. We are unable to appreciate this contention. Even while passing the interim orders, the Tribunal would certainly go into the prima facie case and based on such factual consideration and also by taking note of the hardship pleaded and proved by the appellant as well as by considering the interests of the Revenue, it would pass orders on the waiver application. Therefore, if a party is aggrieved against such order passed by the Tribunal, it is always open to such party to challenge the same by filing an appeal. Whether a substantial question of law would arise in such cases or not would depend upon the facts and circumstances of each case and therefore, there cannot be any general or uniform presumption that no substantial question of law would arise in all pre-deposit orders. In any event, we do not think that such objection or contention can be made any more after the decision of the Raj Kumar Shivhare's case where also the Apex Court has considered the same issue and held that even as against interim orders of pre-deposit, the appeal alone is maintainable and not a writ petition.”
You have 180 days time to appeal to the High Court against a CESTAT Order, but normally only four to six weeks time is given by CESTAT to make pre-deposit. So even while there is time to appeal to the High Court, the order given by the CESTAT would lapse if pre-deposit is not made. Is this a contradiction?: The High Court was not impressed and observed, “pre-deposit is a condition precedent and not a condition to be followed. Therefore, once an order of pre-deposit is passed, it is for the party aggrieved either to comply with the said order within the time stipulated therein or to file an appeal before the High Court under Section 35G or Section 130. If a conditional order is made on pre-deposit application and when the same has not been complied with, it may result in dismissal of the appeal itself. Prescribing a period of limitation for filing an appeal does not mean or be construed that within such period of limitation, the said order cannot be put into operation unless a statutory bar is provided against doing so. Further, the party intends to file appeal need not wait till the last date of limitation to file appeal.
Finally the High Court held, "The order passed by the CESTAT in terms of Section 35F of the Central Excise Act, 1944 or Section 129-E of the Customs Act, 1962 is appealable in terms of Section 35G of the Excise Act, 1944 or Section 130 of the Customs Act, 1962."
And the writ petitions were dismissed.
We bring you this order today.