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CESTAT Can't Reject Appeal Merely Because Pre-Deposit Was Made In Wrong Account, Especially When Rules Were Unclear: Delhi High Court
Kapil Dhyani
6 March 2025 5:00 PM IST
The Delhi High Court has held that merely because a pre-deposit prescribed under Section 35F of the Central Excise Act, 1944, for preferring an appeal is made in the wrong account, that too when the integrated portal might not have been fully functional, cannot result in rejection of appeal on the ground of defects.A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta...
The Delhi High Court has held that merely because a pre-deposit prescribed under Section 35F of the Central Excise Act, 1944, for preferring an appeal is made in the wrong account, that too when the integrated portal might not have been fully functional, cannot result in rejection of appeal on the ground of defects.
A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta was dealing with a petitioner preferred by M/s DD Interiors, challenging the return of its appeal by CESTAT, stating that since the deposit was in a wrong account, credit cannot be given.
Before the High Court, the Petitioner submitted challans of deposit. It submitted that 7.5% was initially deposited before the Commissioner (Appeals) and thereafter, while approaching the CESTAT, the remaining 2.5% was deposited.
The Department conceded that when the Petitioner made the pre-deposit, the new payment system, i.e. the CBIC-GST Integrated portal, was not available, and the Petitioner had followed the process allowed at that time. The portal was started only in July 2019.
It is in this backdrop that the High Court observed,
“...the appeal could not have been rejected merely on the ground that it was deposited on a wrong account especially when the said integrated portal was not even available for the Petitioner at the time of the initial deposit.”
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's attention was also drawn to a recent decision of CESTAT Allahabad where the Tribunal observed that dismissal of appeal filed by the Appellant, even after making the pre-deposit, merely on the ground that it has not been deposited in the prescribed manner, amounts to “denial of substantial justice”.
As such, the Court directed CESTAT to hear the Petitioner's appeal on merits without insisting on any further deposit.
Appearance: Mr. Ruchir Bhatia, Adv. for Petitioner; Mr. Atul Tripathi, SSC, CBIC and Mr. Shubham Mishra, along with IO in person Mr. Lal Dev Rajak, Assistant Commissioner, CGST and Mr. Himanshu Dubey, Inspector for Respondent
Case title: M/S DD Interiors v. Commissioner Of Service Tax & Anr.
Citation: 2025 LiveLaw (Del) 285
Case no.: W.P.(C) 877/2025