Commissioner (Appeals) Dismisses Appeal for failure to make pre-deposit - What is Remedy?
AN Additional Commissioner passes an order demanding a duty/tax of about Rs. 40 Lakhs. You appeal to the Commissioner (Appeals) with a prayer for waiver of pre-deposit. [The Commissioner (Appeals) is considered by the Department as a Catalyst for Revenue collection; he is asked to attend Revenue Drive meetings conducted by the Chief Commissioners and is expected to boost revenue collection by liberal doses of pre-deposit.] So, the Commissioner (Appeals) orders a pre-deposit. You appeal to him again to reconsider his order of pre-deposit as your financial position is precarious. The Commissioner (Appeals) is not convinced and he asserts that once he passes an order he becomes a functus officio and he cannot review his own order. So he dismisses your appeal, as you have not complied with his orders of pre-deposit.
This is not a hypothetical situation but a real life fact for many an assessee. And this can happen in Customs, Excise or Service Tax.
What do you do in such a situation?
Nobody had any clear idea. Some said you have to file a writ in the High Court; some said you can appeal to the Tribunal. Over the years it rather got settled that an appeal can be filed before the Tribunal and various Benches of the Tribunal have been hearing such appeals and remanding the matters to the Commissioner (Appeals) with or without pre-deposit.
Then came a bombshell in the shape of Aakash Cable TV Network vs. CC & CE, Jaipur II, 2013-TIOL-1807-CESTAT-DEL. In this case, the Tribunal held that the appellant was bound to comply with the order of pre-deposit as directed, unless he had obtained an eclipse of the order in appropriate proceedings, including perhaps in judicial review. Not having done so, the consequences must follow. There was failure of pre-deposit and consequently in view of the provisions of Section 35F of the Central Excise Act, 1944, the order of Commissioner (Appeals) dismissing the appeal is impeccable and warrants no interference .
Suddenly all established norms became irrelevant and the Commissioner (Appeals) became a virtual Supreme Court with no appellate authority against his orders. Advocate BN Gururaj writing for us - Suspended from Aakash by Cable! observed, "One hopes that this ratio does not become the law of the land, and the appellant will challenge this judgment in appeal and have it set aside." Several other cases were decided on the line of Aakash Cable.
Relief came, but through a different unexpected route:
In an order delivered just six days ago (and made available yesterday), the Tribunal had an occasion to view this issue again. As the issue is a recurrent one and has general application, Tribunal invited the bar to make submissions in the case of Girnar Transformers Pvt. Ltd. Vs CCE, Kanpur.
After referring to nearly fifty decisions of various Authorities from Tribunal to Supreme Court, the CESTAT held:
1. While considering an application for waiver of pre-deposit, the appellate Commissioner is required to avoid a mechanical and ritualistic approach. A waiver of pre-deposit application must be disposed of applying the principles set out in the judgments of the Allahabad High Court in ITC vs. Commissioner (Appeals) Meerut - and the A.P. High Court in CCE, Guntur vs. Sri Chaitanya Educational Committee - 2011-TIOL-147-HC-AP-ST.;
2. The Commissioner (Appeals) has the power, authority and jurisdiction to entertain an application for rectification or modification of an order of pre-deposit/ stay passed by that authority. While no power is specifically conferred on the Commissioner (Appeals) either under Sections 35 or 35A of the 1944, Act to review his own decision; and though the provisions of Section 35C(2) of this Act confer the power (to rectify any mistake apparent on the record) only on this Tribunal, the Commissioner (Appeals) may entertain an application for rectification/ modification of a pre-deposit order, but only for rectification of an error on the face of the record;
3. The appellate Commissioner could avoid an invitation/ plea for rectification by a careful, good faith and critical analysis of the prima-facie merits of the case and other relevant parameters, while disposing of an application for pre-deposit. Adjudicatory discipline mandates that the appellate Commissioner must follow established judicial norms by unreservedly following decisions of the Supreme Court, the High Courts and of this Tribunal, wherever such decisions operate and are brought to his notice, instead of proceeding on an independent analysis of the applicable legal provisions and persisting in applying such interpretation though it be at variance with interpretations by the Supreme Court, the High Court or the Tribunal, as the case may be;
4. An appeal to this Tribunal is maintainable against an order of the Commissioner (Appeals) dismissing an appeal for failure of pre-deposit.
5. Since an order of pre-deposit passed by the appellate Commissioner, in exercise of discretion under Section 35F of the 1944 Act amounts to an order passed under the generality of the appellate jurisdiction under Section 35, an appeal lies to this Tribunal against such order as well, apart from an appeal against the final order dismissing an appeal for failure of pre-deposit;
6. While considering an appeal preferred against a final order passed, rejecting an appeal for failure of pre-deposit, the Tribunal is authorized to consider the correctness/ appropriateness of an earlier order (of pre-deposit) passed by the appellate Commissioner, the non compliance whereof resulted in dismissal of the appeal by that authority;
7. While disposing of an appeal against a final order of the appellate Commissioner, (dismissing an appeal for failure of pre-deposit), the Tribunal shall not adjudicate upon the merits of the appeal. If the order of pre-deposit passed by the Commissioner (Appeals), in the given facts and circumstances is erroneous, the Tribunal is required to set aside the order of the appellate authority and remit the matter to the appellate Commissioner for de novo consideration, after passing an appropriate order as to pre-deposit. (This is what the Tribunal has been doing all these days)
Surprisingly the Tribunal made absolutely no reference to the Aakash Cable TV Network case and why it was being deviated from. Incidentally the Hon'ble president wrote both the orders in Aakash Cable and the present case. Maybe Precedent does not apply to the President.
But who are we to complain against an order hugely favourable to the assessee and which is absolutely fair and just? But what will happen to Aakash and other victims of Aakash? The moot point is whether justice should be of men or laws - if the laws keep changing according to the men who occupy the seats of justice, the victims are the ones who are expected to follow the law - whatever that is.
We (and only we - at least for a few more hours) bring you this important order today.