The right to file an appeal has been universally recognised as one of the basic remedy available across various laws and lands. It is imperative for any assessee to understand the system that is in place for adjudication of cases. Under Service Tax law when a person is issued Show Cause Notice by the department, adjudication proceedings take place. If the assessee finds that the order issued by the adjudicating authority is not just and legal, he may challenge the same in various appeal forums available. If the duty involved in the Show Cause Notice is more than Rs. 50 Lakh then such matter is adjudicated by Commissioner of Service Tax and against such order, the assessee can go in appeal only before Tribunal. In case the matter is of Rs. 50 Lakhs or less, than the said matter is decided by the officer below the rank of the Commissioner. The assessee has two stages of appellate levels. First, the assessee may approach the Commissioner (Appeals) and if he is not satisfied by the order of the Commissioner (Appeals) he may approach the Tribunal.
Section 35F of Central Excise Act which is made applicable to Service Tax has been amended by Finance Act, 2014. This newly amended Section provides that Commissioner (Appeals) or CESTAT shall not ‘entertain’ appeal unless specified pre-deposit of duty or penalty is made. Such amended provisions are in force from 06.08.2014, i.e. the day when the President gave his assent to the Finance Bill, 2014.
As stated above, if the duty amount is less than Rs.50 lakhs, the First appeal lies before commissioner appeals. If duty amount is more than 50 lakhs the First appeal lies before Tribunal. With effect from 06.08.2014 it has been mandated that, the Commissioner (Appeals) shall not entertain any appeal, unless the appellant has deposited seven and a half percent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Commissioner of Central Excise. Further, if the assessee is not satisfied with the order of the Commissioner (Appeals), then he has to file an appeal before the Tribunal, i.e. second stage of appellate proceedings. In such a case the assessee needs to deposit ten per cent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute. However, in cases where the matter is adjudicated by the Commissioner of Central Excise/Service Tax, then appeal lies before Tribunal only and in such cases, the assessee needs to deposit seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute.
The government has brought such provisions to reduce the burden of the judiciary, but at the same time it is undue hardship for the assessee who has a meritorious case. Unnecessarily they will be required to register themselves and make payment of pre-deposit which under erstwhile law could have been avoided. Further when there is delay on the part of the assessee, the interest rates go as high as 30%, but, if an assessee as made pre-deposit and the order is in his favour he will be granted interest at the meagre the rate of six percent per annum. The whole point of having judicial system is to ensure fairness, but at least in case of pre-deposit it doesn’t seem fair to judge all assessee on one yardstick irrespective of the merits of their case.
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