In a significant ruling the Delhi High Court observed that the High Court has writ jurisdiction under Article 226 of the Constitution of India to waive statutory pre-deposit for filing appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
The writ petition has been preferred seeking to invoke the extraordinary jurisdiction conferred upon the Court by Article 226 of the Constitution and to frame directions for waiver of the pre-deposit requirement as placed in terms of Section 129E of the Customs Act, 1962.
The petitioner, Ajay Sagar, was constrained to approach the High Court since Section 129E of the Customs Act no longer incorporates a provision which may be invoked by either the Commissioner (Appeals) Customs and Central Excise or the Customs, Excise and Service Tax Appellate Tribunal to waive the condition of pre-deposit in case of undue hardship.
It is pertinent to note that Section 129E of the Customs Act as it stood prior to its amendment by Finance Act had conferred a discretion on the Commissioner (Appeals) as well as the CESTAT to dispense with the deposit liable to be made for the purposes of an assessee pursuing an appeal where it was found that the deposit of duty, interest or penalty levied would cause undue hardship.
The counsel for the petitioner had contended that notwithstanding the deletion of that provision from Section 129E of the Customs Act, and the Court by virtue of its constitutional powers would still be entitled to waive the condition of a pre-deposit in appropriate cases.
Mohd. Akmam Uddin Ahmed & Ors. vs. Commissioner Appeals Customs and Central Excise and Others constitutes an authoritative precedent for the proposition that Section 129E of the Customs Act as it stands presently, would not detract from the powers of a High Court in appropriate cases to absolve assesses‟ of the financial burden flowing from the requirement of a pre deposit. However, the judgment enters a note of caution by holding that the said power would be liable to be invoked in “rare and deserving” cases or where extraordinary situations and circumstances warrant the exercise of that discretion
A Division Bench comprising Justice Yashwant Varma and Justice Dharmesh Sharma observed that “We find ourselves unable to hold that his case would fall in the category of rare and exceptional cases. Prima facie, and solely for the purposes of examining whether waiver is merited, we have delved through the relevant record and find that the conclusions drawn by the respondents insofar as the petitioner is concerned can neither be said to be wholly perverse or unsustainable.
The Court thus concluded by noting that the circumstances do not warrant the invocation of the extraordinary power conferred by Article 226 of the Constitution.”
Counsels Deepak Gandhi and Bhavneet Arora appeared for the petitioner and Senior Standing Counsel along with Ms Vaishali Goyal appeared for the respondent.
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