CESTAT Cannot Reject Appeal merely because Pre-Deposit was Made in Wrong Account: Delhi HC [Read Order]

The Delhi High Court ruled that an appeal cannot be denied on the grounds of defects just because a pre-deposit required by Section 35F of the Central Excise Act, 1944, for filing an appeal is made in the incorrect account, even though the integrated portal may not have been fully operational at the time.

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The petitioner, DD Interiors, filed deposit challans.  It claimed that 7.5% had been put first before the Commissioner (Appeals), and the remaining 2.5% had been deposited as it approached the CESTAT.  The Department acknowledged that the Petitioner had followed the procedure permitted at the time and that the new payment method, the CBIC-GST Integrated portal, was unavailable when the Petitioner made the pre-deposit.  The platform was only launched in July of 2019.

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It relied on the Bombay High Court's decision in Sodexo India Services Pvt. Ltd. vs. Union of India (2022) where under similar circumstances, the High Court had ordered the appeals to be heard on merits by the CESTAT. The Bombay High Court had also flagged the “confusion” due to there being no proper legal provision to accept payment of pre-deposit under Section 35F. It had asked the CBIC to step in and issue suitable clarifications.

The Court also took note of a recent CESTAT Allahabad ruling in which the Tribunal noted that dismissing the appellant's appeal—even after making the pre-deposit—on the grounds that it was not deposited in the correct way amounted to "denial of substantial justice."

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 After the Bombay High Court's ruling in Sodexo India Services Pvt. Ltd. vs. Union of India, a division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta ordered that the appeal be examined by CESTAT on its merits without requiring any additional deposits.  The pre-deposit criterion will be deemed satisfied by the already made deposit.

While allowing the appeal, the order passed by CESTAT is set aside. The petition of the Petitioner is restored to its original number before CESTAT and shall now be heard on merits without any further pre-deposit.

To Read the full text of the Order CLICK HERE

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