M/S. Kuttippuram Service Co-operative Bank Ltd v. The Commissioner Central Excise, Customs & Service Tax, Ernakulam

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE S.V.BHATTI** **&** **THE HONOURABLE MR.JUSTICE BASANT BALAJI WEDNESDAY, THE 1[ST] DAY OF DECEMBER 2021 / 10TH AGRAHAYANA,** ## **1943** **C.E.APPEAL NO. 6 OF 2018** **ST 20329/2017 OF CUSTOMS,EXCISE&SERVICE TAX APP.TRIBUNAL,BANGALORE** ## **APPELLANT/S:** M/S. KUTTIPPURAM SERVICE CO-OPERATIVE BANK LTD NO M729,KUTTIPPURAM P.O,MALAPPURAM DISTRICT REPRESENTED BY ITS SECRETARY IN CHARGE, K.K ABDUL RASHEED BY ADVS. SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON SRI.MAHESH V.MENON ## **RESPONDENT/S:** THE COMMISSIONER CENTRAL EXCISE, CUSTOMS & SERVICE TAX, I.S PRESS ROAD, ERNAKULAM, KOCHI 18 BY ADV SRI.P.R.SREEJITH SC, CENTRAL BOARD OF EXCISE & CUSTOMS THIS CENTRAL EXICISE APPEAL HAVING COME UP FOR ADMISSION ON 01.12.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **C.E.APPEAL NO. 6 OF 2018** -2- ## **S.V.BHATTI & BASANT BALAJI, JJ.** - - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - ## **C.E.APPEAL NO. 6 OF 2018** - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - ## JUDGMENT (Dated this the 1[st] day of December 2021) Basant Balaji J., The Kuttippuram Service Co-operative Bank Ltd., aggrieved by the order of the CESTAT in ST. No.20329 of 2017 dated 8.5.2017 has filed this appeal. 2. The appellant is a Co-operative society registered under the Kerala Co-operative Societies Act, 1969 and functioning with Head office at Kuttippuram in Malappuram District. The Additional Commissioner of Central Excise, Customs and Service Tax imposed service tax and also penalty against the appellant as per order dated 17.8.2015. The appellant challenged the said order before the Commissioner (Appeals) and the Commissioner (Appeals) by order dated 22.9.2016 dismissed the same for **C.E.APPEAL NO. 6 OF 2018** -3- non-compliance of provisions under Section 35-F of the Central Excise Act, 1944 (for short 'the Act'). Aggrieved by the order of the Commissioner (Appeals), the appellant approached the CESTAT, South Zonal Branch, Bangalore by filing ST/20329/2017-SM. The CESTAT heard the parties regarding the preliminary issue of pre-deposit under Section 35-F of the Act and held as follows:- “5. After perusal of the impugned order and the statutory provisions, I am of the view that the present appeals are not maintainable without the mandatory pre-deposit as provided under Section 35F of the Central Excise Act 1944. Therefore, I dispose of all these appeals by directing the appellant to make a pre-deposit as provided under Section 35F before the Commissioner( Appeals) and after the appellant makes a pre-deposit, then in that case the Commissioner (Appeals) will decide the appeals of the appellant on merit. With this the present appeals are disposed of.” ## 3. The said order of the CESTAT is under challenge in **C.E.APPEAL NO. 6 OF 2018** this appeal. 4. Heard the learned counsel for the appellant as well as the respondent. 5. The counsel for the appellant submitted that Section 35F of the Act is introduced with effect from 6.8.2014 and that the show cause notice issued to the appellant was much before the said amendment and hence, the amendment under Section 35-F of the Act, being perspective in nature is not applicable to this case and the disposal of the appeal relying on the pre-deposit is illegal and wrong. 6. Section 35-F of the Act reads as follows:- “ **35-F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.** - The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal.- - (i) under sub-section (1) of section 35, unless the appellant has deposited seven and a **C.E.APPEAL NO. 6 OF 2018** -5- half per cent of the duty demanded or penalty imposed or both, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Commissioner of Central Excise; (ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35-B, unless the appellant has deposited seven and a half per cent of the duty demanded or penalty imposed or both, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35-B, unless the appellant has deposited ten per cent, of the duty demanded or penalty imposed or both, in pursuance of the decision or order appealed against:” 7. As per Section 35-F of the Act, the Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal, unless the appellant has deposited 7½ percent of the duty or 10%, as the case may be. Thus the Commissioner (Appeals) or the Tribunal is restrained from proceeding with the appeal, unless the pre-deposit, as stated **C.E.APPEAL NO. 6 OF 2018** -6- above is made by the appellant. Admittedly, the appellant has not made the pre-deposit as provided under Section 35F of the Act. 8. The Hon'ble High Court of Allahabad had gone through this issue in **Ganesh Yadav v. Union of India [(2015) 59 taxmann.com 447 (Allahabad)]** , wherein it was held as follows: “22. For these reasons, we hold that the petitioner would not be justified in urging that the amended provisions of Section 35F(1) of the Act would not apply merely on the ground that the notice to show cause was issued prior to the enforcement of Finance (No.2) Act, 2014. We find no merit in the constitutional challenge. The petition shall accordingly stand dismissed for the aforesaid reasons.” **C.E.APPEAL NO. 6 OF 2018** -7- 9. In the above decision, the Hon'ble High Court of Allahabad has taken a view that even if the show cause notice was issued prior to the enforcement of the Finance Act 2014, the provision of Section 35-F(1) of the Act would not apply. We are in agreement with the view taken by the Hon'ble High Court of Allahabad. 10. On going through the order of the CESTAT, it is seen that the appeal was disposed of directing the appellant to make the pre-deposit as provided under Section 35-F of the Act before the Commissioner (Appeals) and if the appellant makes the pre-deposit, the Commissioner (Appeals) was directed to decide the appeal on merits. In fact, the order of the CESTAT does not foreclose the appellant's case, but he is given an option to make the predeposit before the 1[st] appellate authority and if the deposit is made, the first appellate authority shall direct to consider the appellant's case on merits. We fully agree with the order of the CESTAT as it is a mandatory provision that the appellant has to make the pre-deposit as per Section 35F of **C.E.APPEAL NO. 6 OF 2018** -8- the Act and only in that case, the appeal need be entertained. In that view of the matter, we confirm the order of the CESTAT. However, we feel that an opportunity can be granted to make the pre-deposit as directed by the CESTAT giving the appellant a period of three months from today to make the pre-deposit. If the deposit is made as directed above, the Commissioner (Appeals) shall dispose of the appeal on merits within a period of six months from the date of receipt of a copy of this judgment. With the above observations, this Central Excise Appeal is disposed of. **sd S.V.BHATTI, JUDGE sd BASANT BALAJI, JUDGE** _dl/_