Pre –Deposit – You have a strong case but no money – what if?
You are stuck with a huge demand and you appeal to the Tribunal, where you are required to make a pre-deposit of the duty/tax demanded – you really don't have the money to make the pre – deposit, but you know you have a strong case. What do you do?
We are reporting a case tomorrow on such a situation.
The party petitioned the High Court which observed that it had two options – Believe the petitioner that he did not have the money – then Revenue interests are not safe and so waiver of pre-deposit cannot be given. And if the Court does not believe him, it is assumed that he has the money and so pre-deposit need not be waived.
I had a similar experience – I appeared before the High Court with a plea to waive pre-deposit as my client's factory was closed and he has no means to pay the deposit. The Court asked me, “what will you do if you lose the case?”, I said, “I will go to jail, but right now I have no money; please give me an opportunity to prove my innocence”. The Court asked me, if I could give a Bank Guarantee and I submitted that no Bank would give a guarantee to a ‘broke' firm like mine.
The Court was pleased to grant me waiver [ ] , but in the case we are reporting tomorrow, the petitioner was not so lucky.
The Sword of pre-deposit is dangerously hanging over the heads of all assessees – the concept of pre-deposit should be done away with till after the stage of Tribunal as it is almost impossible to get any order favourable to the assessee from the Revenue Adjudicators.