Spandana Spoorthy Financial Ltd. vs C.C.,C. Ex. and S.T.

Kalyan Jyoti Sengupta, C.J.—This writ petition has been filed impugning the order of the Central Excise and Service Tax Tribunal, Hyderabad, dated 10-7-2013 by which the learned Tribunal has directed to make pre-deposit of the basic tax component as well as 50% of the penalty under Sec. 78 and discrepancy of Rs. 12.00 lakhs between the petitioner''s own assessment of tax liability and the adjudicating authority''s determination. According to us, when the appeal is admitted for hearing and the order of the assessment is under scrutiny, unless the order of assessment reaches its finality, the question of initiation of penalty proceedings does not and cannot arise. The power of dispensation of pre-deposit has been given under proviso to Sec. 35F of the Central Excise Act, 1944, which reads as follows:

...Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue... ?

Therefore, it is clear that in view of insertion of the word or the Tribunal cannot ask to make pre-deposit in both at a time. According to us, the pre-deposit of the penalty amount will be required when the order of the penalty alone is under challenge. But if there is a composite order namely assessment order, tax component and also penalty order like here, direction for pre-deposit of any portion of the penalty amount would result in injustice as well as hardship. Under this circumstance, we are of the view that the direction for pre-deposit of penalty component of the order has to be deleted and is deleted and the rest portion of the order would remain.

We direct the Tribunal to decide the appeal as early as possible preferably within a period of three weeks from the date of communication of this order. In the event, the writ petitioner carries out the order of the learned Tribunal read with our order within two weeks from date, our order will remain and in case of failure, the learned Tribunal will pass appropriate orders.

The writ petition is thus disposed of. No order as to costs. As a sequel to the disposal of the writ petition, all the pending interim applications shall also stand disposed of.