1. This Appeal under Section 83 of the Finance Act, 1994 read with Section 35G of the Central Excise Act, 1944 (the Act), challenges the order dated 4th August, 2016 passed by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal).
2. This appeal was admitted on 8th April, 2019 on the following substantial questions of law:
“(a) Whether the Central Excise Act, 1944 or the Finance Act, 1994 prescribes any time limit for filing the Stay application before Commissioner (Appeals)?
(b) Whether the Tribunal was justified in dismissing the appeal solely on the ground that there was a delay in filing the stay application before Commissioner (Appeals) even when admittedly the stay application had been filed six months before the date of hearing, and waiver of predeposit was specifically pleaded at the time of hearing before Commissioner (Appeals)?”.
3. At that time i.e. on 8th April, 2019, while admitting this appeal, the parties were put to notice that the appeal itself will be disposed of finally today. Thus, we took up the appeal for final disposal.
4. The brief facts relevant to this appeal are as under:
(i) The Appellant is in the business of providing service of renting out of cars. Thus, it had obtained service tax registration under the category “RentaCab Service”. On 31st October, 2013, the Additional Commissioner of Central Excise confirmed the service tax demand of Rs. 37.18 lakhs along with interest thereof, besides imposing penalties under Sections 76, 77 and 78 of the Finance Act, 1994;
(ii) Being aggrieved with the order dated 31st October, 2013 of the Addl. Commissioner, the Appellant had filed an appeal on 23rd January, 2014 with the Commissioner (Appeals). This appeal was filed under Section 85 of the Finance Act, 1994 within the time provided under the Act. However, along with the above appeal from the order dated 31st October, 2013, the Appellant had neither filed any evidence of depositing the service tax and penalty as adjudicated nor did it file an application for dispensing with the requirement of pre-deposit of tax and penalty as provided under Section 35F of the Act which is made applicable to the Finance Act, 1994 by virtue of Section 83 thereof.
(iii) However, during the pendency of the above appeal, on 12th May, 2015, Appellant filed an application with the Commissioner (Appeals), seeking dispensation of the pre-deposit of the tax and penalty till the final disposal of its appeal. The Commissioner (Appeals) grated a hearing to the Appellant on 24th November, 2015. The Commissioner (Appeals) without taking up the stay application for consideration, by an order dated 10th December, 2015 dismissed the Appellant's appeal. This on the ground of its failure to deposit the tax and penalty before filing of an appeal in terms of Section 35F of the Act;
(iv) Being aggrieved with the order dated 10th December, 2015 of the Commissioner (Appeals), the Appellant filed an appeal to the Tribunal. By an order dated 4th August, 2016, the Tribunal dismissed the Appellant's appeal on the ground that Appellant had failed to comply with the provisions of Section 35F of the Act. It held that as the stay application was not filed within the stipulated period of the three months as available to file appeal under Section 85 of the Finance Act, 1994, the stay application was time barred. Thus, the impugned order dismissed the appeal of the Appellant while upholding the order of the Commissioner (Appeals) for noncompliance of Section 35F of the Act. In support of the impugned order, reliance was placed upon the decision of the Supreme Court in Navin Chandra Chhotelal v/s. Central Board of Excise & Customs 1981 (8) E.L.T. 679.
5. Before dealing with the rival submissions, it would be necessary to reproduce Section 85 of the Finance Act, 1994 and Section 35F of the Act, as in force at the relevant time, which reads as under:
“Section 85. Appeals to the Commissioner of Central Excise (Appeals):- (1) Any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals).
(2) Every appeal shall be in the prescribed form and shall be verified in the prescribed manner.
(3) An appeal shall be presented within three months from the date of receipt of the decision or order of such adjudicating authority, relating to service tax, interest or penalty under this Chapter.
Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months.
(4) The Commissioner of Central Excise (Appeals) shall hear and determine the appeal and, subject to the provisions of this Chapter, pass such orders as he thinks fit and such orders may include an order enhancing the service tax, interest or penalty. Provided that an order enhancing the service tax, interest or penalty shall not be made unless the person affected thereby has been given a reasonable opportunity of showing cause against such enhancement.
(5) Subject to the provisions of this Chapter, in hearing the appeals and making orders under this section, the Commissioner or Central Excise (Appeals) shall exercise the same powers and follow the same procedure as he exercises and follows in hearing the appeals and making orders under the Central Excise Act, 1944.
Section 35F. Deposit, pending appeal, of duty demanded or penalty levied – Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied;
Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause under 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 as to safeguard the interest of revenue:
Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing. Explanation – For the purposes of this section “duty demanded” shall include -
(i) amount determined under section 11D;
(ii) amount of erroneous Cenvat credit taken;
(iii) amount payable under rule 57CC of Central Excise Rules, 1944;
(iv) amount payable under rule 6 of Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004;
(v) interest payable under the provisions of this Act or the rules made thereunder.”
6. Mr. Talekar, the learned Counsel in support of the appeal submits that there is no time limit to file an application for stay under Section 35F of the Act. Thus dismissing the appeal for failure to file an application for stay in an appeal filed within time is bad in law. It is submitted that the decision of the Supreme Court in Navin Chandra Chhotelal (supra), is on different facts. Therefore, it has no application where a stay/ dispensing with pre-deposit of duty/ penalty application was pending with the Appellate Authority on the date the appeal was dismissed as in this case. On the other hand, Mr. Dwivedi, the learned Counsel for the Revenue, supports the impugned order dated 4th August, 2016 and reiterates the reasons given therein for dismissing the appeal.
7. We have considered the rival submissions and examined the statutory provisions. It is an undisputed position that a right to file an appeal is not an absolute right but a right bestowed by the statute. Thus, such a statutory right of appeal can be made subject to conditions. However, though the right of appeal has been made conditional by Section 35F of the Act, as applicable to Finance Act, 1994, the issue which arises is the correct meaning/ interpretation to be given to Section 35F of the Act. A bare reading of Section 35F of the Act makes it clear that a party who desires to challenge the order in appeal will pending the appeal deposit with the Adjudicating Authority, the duty demanded or penalty levied. The requirement to deposit the duty or penalty levied is to be fulfilled “pending the appeal” and not “pending the filing of the appeal”. This is the only reasonable interpretation to the above provision, otherwise it would require adding the words 'filing of' to the above provisions. This is not permitted. Moreover, the appeals are being accepted without the party first showing evidence of predeposit or an order of the Appellate Authority dispensing with such deposit. Section 35F of the Act as it stood at the relevant time did not bar a party from filing an appeal unless the amounts of tax and penalty confirmed by the adjudicating authority, is deposited. In fact, whenever the parliament so desired to restrict the right to file an appeal only on paying the amounts it has so provided. This is evident from Section 106 (7) of the Central Goods and Service Tax Act, 2017 which, inter alia, provides that no appeal shall be filed with the Appellate Authority unless the amount of tax and duty is deposited along with the appeal. Thus, from the above, it is evident that whenever the Parliament desired to make a precondition that the amount of duty and/or penalty should be deposited before the Appeal is filed, it is so provided in the legislation. Thus, in terms of Section 35F of the Act, so long as the appeal is not disposed of/ dismissed by the Appellate Authority, it is open to the party to file an application for dispensing with pre-deposit of duty and penalty pending the disposal of the appeal. Once such an application is filed pending the appeal then in terms of the second proviso to Section 35F of the Act, it has to be disposed of by the Appellate Authority whenever possible within 30 days of filing of such an application.
8. Moreover, it must noted that there is no period of limitation provided in Section 35F of the Act to file an application for dispensing with predeposit of duty and penalty. Therefore, it is not open to read a provision of limitation where it is not found in the section. Undoubtedly, the right of an appeal can be conditional. However, the conditions for the appeal being entertained are to be imposed by legislation and not by executive fiat / action.
9. In the above view, the order of the Commissioner (Appeals) dated 10th December, 2015 and the impugned order of the Tribunal dismissing the appeal itself on the ground that the stay application has been filed belatedly in a pending appeal, is not sustainable. In the present facts, the application for dispensing with the requirement of predeposit under Section 35F of the Act was on record before Commissioner of Central Excise (Appeals) when he passed an order, dismissing the appeal. In fact, he ought to have dealt with the Appellant's appeal for stay before dismissing the appeal. This is particularly so, as there is no period of limitation provided for filing an application under Section 35F of the Act. Section 85 of the Finance Act, 1994 doe not prohibit/bar a person from filing an appeal with the Appellate Authority in the absence of depositing amounts of duty and penalty confirmed by the lower authorities. Thus, the Appellant was entitled to file an application under Section 35F of the Act even after it had filed an appeal, provided it is filed before the appeal is dismissed for noncompliance of Section 35F of the Act. Reliance upon the decision of the Supreme Court in Navin Chandra Chhotelal (supra) is misplaced. This as the aforesaid decision would have no application to the fact that the present case as in that case
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, the party had not complied with the order of the Appellate Authority directing a part deposit of the penalty imposed, for the appeal to be heard on merits. In the present case, the application for stay although pending when the appeal was dismissed was not taken up for consideration before dismissal. 10. Therefore, the impugned order dated 4th August, 2016 of the Tribunal and the order dated 25th December, 2015 of the Commissioner (Appeals) are to be set aside, being bad in law. 11. In the above view, the substantial questions of law are answered as under: Question (a) - In the negative i.e. in favour of the Appellant-Assessee and against the Respondent Revenue; and Question (b) - In the negative i.e. in favour of the Appellant-Assessee and against the Respondent-Revenue. 12. The impugned order dated 4th August, 2016 and the order dated 10th December, 2015 of the Commissioner (Appeals) are set aside. The matter is remanded to the Commissioner (Appeals) for fresh consideration. We note that the application for stay of the Appellant has not been examined on merits by the Commissioner (Appeals). Thus, the Appeal and stay application of the Appellant before the Commissioner (Appeals) is restored to it for a fresh consideration and disposal in accordance with law. 13. Appeal disposed of the in the above terms.