The Calcutta High Court has ruled that the amended Section 35F of the Central Excise Act applies retrospectively, making pre-deposits mandatory for appeals irrespective of when the dispute (lis) commenced.
The bench of Chief Justice T.S Sivagnanam and Justice Chaitali Chatterjee (Das) has observed that all cases not covered under the second proviso, the main amendment and main amended Section 35F would apply irrespective of as to when the lis has commenced. The date on which the lis has commenced in each case has no bearing on the amendment as it has retrospective effect and even if the lis has commenced prior to the date of amendment and it had not been filed on that date, even in such a situation the amended Section 35F would apply and a pre-deposit as per amended provision would have to be made.
The appellant/assessee has appealed under Section 35G of the Central Excise Act, 1944 as made applicable to service tax matters by virtue of Section 83 of the Finance Act, 1994.
The assessee raised the issue whether the appellant’s right of appeal continues to be governed by the appellate provisions of the Central Excise Act, 1944 as they existed on the date of issuance of the show cause notices dated 25th September, 2008, 19th March, 2009 and 10th August, 2009 and the provisions of Section 35F substituted with effect from August 6, 2014 have no application in its case.
Section 35F of Central Excise Act: Analysis
Section 35F of the Central Excise Act has a retrospective operation, particularly having regard to the second proviso. In case the second proviso was absent, then possibly the contention of petitioners’ counsel that the amendment had only a prospective operation may have had greater force. But in light of the second proviso, the real intention of the Parliament can be discerned.
If the contention of the petitioners’ counsel is to be accepted, it has to be held that the amendment made to Section 35F does not have a retrospective operation and is prospective with effect from 6/8/2014 onwards i.e., the date on which it received the presidential assent and would not apply to a lis which had commenced prior to that date. Then, in that event, second proviso would become otiose and redundant. No provision of an enactment can be interpreted so as to make any part of it redundant or useless. The real intention of the Parliament is, to insert the second proviso as a saving clause, thereby applying the provision prior to amendment, only in respect of those appeals pending before the appellate authority as on 6/8/2014.
In all other cases, the main amended provision would apply. The reason for such a proviso was necessitated so as to obviate a situation whereby, applications pending before the appellate authority or tribunal would become infructuous on account of the amendment made to Section 35F as the amendment has a retrospective effect. Parliament was also conscious of the fact that as on 6/8/2014, many appeals would be pending before various appellate authorities throughout the country where applications for exercise of discretion of such appellate authorities regarding pre-deposit of duty or penalty had to be considered and disposed of.
Therefore, Parliament was vigilant to ensure that the appellate authority or tribunal would continue to have jurisdiction to exercise discretion in respect of the applications filed under the proviso to Section 35F as it stood prior to amendment.
Thus, if prior to 6/8/2014, an appeal had been preferred by an aggrieved party and the application and appeal were pending before the appellate authority, then the appellate authority could exercise its discretion with regard to the pre- deposit to be made by such a party under the provision as it stood prior to amendment. But if no appeal had been filed prior to 6/8/2014, then the amended Section 35F would apply although the lis had commenced prior to 6/8/2014 as the amendment has a retrospective effect. The amendment, thus, has no bearing on the date on which the particular lis had commenced. This is for the obvious reason that in each case, the lis would commence on a different date.
But the commencement of the amendment must be certain and from a particular date in respect of all lis. In order to ensure that object and in order to have a uniformity in the matter, Parliament has enacted the second proviso to the amended Section 35F. This would mean that in all cases not covered under the second proviso, the main amended Section 35F would apply, irrespective as to when the lis has commenced.
Thus, the date on which the lis has commenced in each case has no bearing on the amendment as it has a retrospective effect. Even if the lis had commenced prior to the date of amendment and an appeal had not been filed on that date, even in such a situation, the main amended Section 35F would apply and a pre-deposit as per amended provision would have to be made.
Conclusion
The court dismissed the appeal and answered against the assessee.
Case Details
Case Title: M/S Perfect Technologies Vs Commissioner Of Central Excise & Service Tax, Siliguri
Case No.: CEXA/11/2015
Date: 21/02/2025
Counsel For Appellant: D.Banerjee
Counsel For Respondent: Bhaskar Prasad Banerjee
Read More: GSTAT Yet To Be Constituted: Calcutta High Court Unconditionally Stays Demand
