By TIOL News Service

NEW DELHI, FEB 26, 2014: A Deputy Commissioner passes an order confirming a demand, imposing penalty and demanding interest. The aggrieved assessee appeals to the Commissioner(A) who orders a pre-deposit. The appellant requests the Commissioner(A) to reconsider the Order of Pre-deposit since it was under severe financial distress.

The Commissioner(A) held that he had no power to review his own order and if the assessee was aggrieved with the order of pre-deposit, its only option was to approach the higher judicial forum (appeal to the Tribunal or writ to High Court?). So he dismissed the appeal for non-compliance of the order of pre-deposit. Assessee is before the Tribunal against dismissal of the appeal by the Commissioner(A). At the Stay stage, the Tribunal entertained doubts as to whether:-

1. an appeal against such order of the appellate Commissioner was maintainable;

2. if maintainable whether it is permissible to reconsider the correctness of the appellate Commissioner's order directing pre-deposit;

3. if not whether the impugned order rejecting the appeal for failure of pre-deposit is liable to be interfered with by this Tribunal.

The Tribunal observed on a primary analysis that:-

1. an appeal to this Tribunal lies only against a final order passed by the Commissioner (Appeals) in an appeal preferred to him;

2. and not against an (interlocutory) order of pre-deposit passed by him, in exercise of discretion under the first proviso to Section 35 F of the 1944 Act.

3. Since it is the settled legal principle that an appellate remedy is a creature of the statute; and availability of an inherent appellate remedy shall not be assumed; and requires to be legislatively provided, it is legitimate to infer that no appellate recourse to this Tribunal is open to an assessee against an (interlocutory) order of pre-deposit passed by the Commissioner (Appeals), since such an order would not be an order, which by itself disposes of appeal on merits.

4. The appropriate remedy available to an assessee aggrieved by an order of pre-deposit passed by the Commissioner (Appeals) would therefore be judicial review under Article 226 or a supervisory curative recourse under Article 227, of the Constitution.

But the Tribunal found that Precedents however appear to belie this empirical assumption .

The Tribunal considered as many as 48 decided cases and noted that while no uniform, or a wholly coherent norm could be culled out from the several decisions adverted to, it was able to identify the following principles from the precedents:

1. While considering an application for waiver of pre-deposit, the appellate Commissioner is required to avoid a mechanical and ritualistic approach. A waiver of pre-deposit application must be disposed of applying the principles set out in the judgments of the Allahabad High Court in ITC vs. Commissioner (Appeals) Meerut - 2004-TIOL-53-HC-ALL-CX and the A. P. High Court in CCE, Guntur vs. Sri Chaitanya Educational Committee - 2011-TIOL-147-HC-AP-ST .;

2. The Commissioner (Appeals) has the power, authority and jurisdiction to entertain an application for rectification or modification of an order of pre-deposit/ stay passed by that authority. While no power is specifically conferred on the Commissioner (Appeals) either under Sections 35 or 35A of the 1944, Act to review his own decision; and though the provisions of Section 35C(2) of this Act confer the power (to rectify any mistake apparent on the record) only on this Tribunal, the Commissioner (Appeals) may entertain an application for rectification/ modification of a pre-deposit order, but only for rectification of an error on the face of the record;

3. The appellate Commissioner could avoid an invitation/ plea for rectification by a careful, good faith and critical analysis of the prima-facie merits of the case and other relevant parameters, while disposing of an application for pre-deposit. Adjudicatory discipline mandates that the appellate Commissioner must follow established judicial norms by unreservedly following decisions of the Supreme Court, the High Courts and of this Tribunal, wherever such decisions operate and are brought to his notice, instead of proceeding on an independent analysis of the applicable legal provisions and persisting in applying such interpretation though it be at variance with interpretations by the Supreme Court, the High Court or the Tribunal, as the case may be;

4. An appeal to this Tribunal is maintainable against an order of the Commissioner (Appeals) dismissing an appeal for failure of pre-deposit.

5. Since an order of pre-deposit passed by the appellate Commissioner, in exercise of discretion under Section 35F of the 1944 Act amounts to an order passed under the generality of the appellate jurisdiction under Section 35, an appeal lies to this Tribunal against such order as well, apart from an appeal against the final order dismissing an appeal for failure of pre-deposit;

6. While considering an appeal preferred against a final order passed, rejecting an appeal for failure of pre-deposit, the Tribunal is authorized to consider the correctness/ appropriateness of an earlier order (of pre-deposit) passed by the appellate Commissioner, the non compliance whereof resulted in dismissal of the appeal by that authority;

7. While disposing of an appeal against a final order of the appellate Commissioner, (dismissing an appeal for failure of pre-deposit), the Tribunal shall not adjudicate upon the merits of the appeal. If the order of pre-deposit passed by the Commissioner (Appeals), in the given facts and circumstances is erroneous, the Tribunal is required to set aside the order of the appellate authority and remit the matter to the appellate Commissioner for denovo consideration, after passing an appropriate order as to pre-deposit.

In the particular case on hand, the Tribunal set aside the orders of the Commissioner(A) dismissing the appeal and ordering pre-deposit and remanded the case to the Commissioner(A) to decide the case afresh without pre-deposit.

What happened to Aakash Cable TV Network - 2013-TIOL-1807-CESTAT-DEL ?. In this case the Tribunal had held that the appellant was bound to comply with the order of pre-deposit as directed, unless he had obtained an eclipse of the order in appropriate proceedings, including perhaps in judicial review. Not having done so, the consequences must follow. There was failure of pre-deposit and consequently in view of the provisions of Section 35F of the Central Excise Act, 1944, the order of Commissioner (Appeals) dismissing the appeal is impeccable and warrants no interference . That order as well as the present one was written by the Hon'ble President of the Tribunal and in the present order, there is not even a whisper about the previous (diametrically) opposite order.