Direction For Payment Of Mandatory Pre-deposit Doesn't Constitute 'Order' Within Meaning Of Sec 35G of Central Excise Act: Calcutta High Court

As per Section 35G of Central Excise Act, 1944, 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.

Single Judge Bench of Justice Raja Basu Chowdhury observed that “it cannot be said that the order passed by the Tribunal on 5th January, 2024 does not qualify as an order for preferring an appeal before the High Court, simply because the same does not seek to adjudicate the rights of the parties”. (Para 23)

The Bench went on to observe that it is altogether a different question whether the High Court would admit the appeal having regard to involvement of substantial questions of law.

The Bench clarified that even though limitations imposed by the statute are required to be followed, such statutory limitations do not make an appealable order, non-appealable, especially when there is no limitation on the nature of order or the decision to be appealed against.

Facts of the case:

The petitioner/ Assessee, claiming to be engaged in the business of providing work contract services to the State Government, local authorities or Government Undertakings by way of construction of roads, bridges, had participated against the tenders. Accordingly, it was awarded work orders for construction of bailey bridges. Now, it was petitioners' contention that since the bailey bridges are used by the general public, and are intended to be used as general road transportation, the construction of these bridges was not liable to service tax. However, this submission was rejected and a demand-cum-show cause notice was issued calling upon the petitioner to show cause as to why service tax amounting to Rs.2,17,50,747/- should not be recovered under proviso to Section 73(1) of the Finance Act, 1994 read with Section 174(2) of the CGST Act, 2017. The SCN also called for applicable interest on the amount of unpaid Service Tax and levy of penalty u/s 77 of the Finance Act, 1994 for failure to furnish information requisitioned by the department. Later, the demand raised in the show cause was confirmed in terms of Section 73(2) of the Central Excise Act, 1944 along with interest & penalty. On appeal, the Tribunal directed for mandatory pre-deposit for maintainability of appeal.

Observations of the High Court:

The Bench considered the argument of the Petitioners that the order directing payment of mandatory pre-deposit does not constitute an order within the meaning of Section 35G of the Act, for maintaining an appeal before a High Court.

The Bench however noticed that the Apex Court in case of Raj Kumar Shivhare, while considering the scope of FEMA Rules, 2000 and FEMA Act, 1999, in relation to an order passed in connection with an application for dispensation of pre-deposit of penalty and the right to prefer an appeal to the High Court in terms of Section 35 thereof, opined that the said Section confers right of appeal to any person aggrieved and such a right to appeal is a right which has been conferred by the statute.

The Bench therefore reiterated that any decision passed, would be appealable u/s 35 of the FEMA and that the legislature has conferred such right to a person aggrieved from “any order” or “decision” of the Appellate Tribunal, though with certain limitations.

“It is not the case of the petitioners that the Tribunal lacked the jurisdiction to pass the order which is impugned or there has been violation of the principles of natural justice”, added the Bench.

Hence, without going into the merits of the issue as to whether the petitioners are entitled to exemption, notwithstanding the mandate of Section 35F, the High Court dismissed Assessee's petition on ground of alternative remedy as well as lack of territorial jurisdiction.

Counsel for Assessee/ Petitioner: Advocates Sutapa Roy Choudhury, Aratrika Roy, Ratnesh Kumar Rai and Sakshi Kejriwal

Counsel for Revenue/ Respondents: Tapan Bhanja

Case Title: Sashreek Constructors Private Limited vs. Customs, Excise and Service Tax Appellate Tribunal

Case Number: WPA 14715 of 2024

Citation :2024 LiveLaw (Cal) 184

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