The question mentioned herein above is a highly debatable issue today. With various contrary orders being passed by the Courts all across the Country, the issue has still not been settled in order to fix the law of the land.
The debate commenced with the enactment of Finance Act (No.2), 2014 w.e.f 06.08.2014 when Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 were substituted with new sections to prescribe mandatory pre-deposit as a percentage of the duty demanded and more specifically with a specific saving clause to state that all pending appeals/ stay applications filed till the enactment of the Finance Bill shall be governed by the erstwhile provisions. There are two school of thoughts wherein one feels that the amended provisions of the Act are not given retrospective effect as of from an anterior date, and the other feels the amended section does not make any distinction whether LIS was issued prior or after the said date.
It may seem interesting to note that almost 5 High Courts of the Country out of which 3, which is a majority, either through interim orders or final orders have taken a stand that if the LIS is prior to the date of amendment i.e 06/08/2015, the erstwhile provisions of the Act shall prevail and the pre-deposit shall not be mandatory.
While the other two, have taken a stand just opposite to the above. In a very recent case, i.e. M/s Ganga Foundations Pvt. Ltd. vs The Commissioner Large Taxpayer Unit reported in 2015-TIOL-2095-HC-MADST, the Hon'ble High Court on September 2, 2015 in view of the fact that the applicability of Section 35F was pending before the division bench of the said Court, directed the Tribunal to receive the appeal along with waiver application without the pre-deposit, the same being subject to the result of the judgment of the Division Bench.
A similar view was taken in yet another judgment of the Madras High Court in the case of M/s Fifth Avenue Sourcing (P) Limited v CST reported in 2015-TIOL- 1592-HC-MAD-ST, wherein the Hon'ble Court on June 12, 2015 very categorically after discussing the second proviso to the S. 35F, finding no merits in the same, held that "Amended provisions of the Act are not given retrospective effect as of from an anterior date, it has been construed that the amendment are prospective." Here it shall be important to mention that the Court before coming to the said conclusion observed that the second proviso to Section 35F mentions that section will not apply to stay applications pending. However in present case, till date no appeal of application was filed.
Followed by a decision contrary to the views above, the Allahabad High Court in the case of Ganesh Yadav v UOI reported in 2015-TIOL-1490-HC-ALL-ST decided the following two issues on Mat 29, 2015:
On issue of constitutionality, it was observed that the "Right of appeal is a statutory right and it is open to the legislature which confers a remedy of an appeal to condition the appeal subject to compliance with conditions unless it is so onerous so as to restrict or abrogate the right of appeal altogether. The requirement of pre-deposit cannot be regarded or held to be arbitrary or violative of Article 14."
And, with regards the issue pertaining to pre-deposit, it observed that the "right of appeal accrues at the commencement of lis and is to be governed by the law at the date of institution of suit or proceeding and not by the law that prevails at the date of its decision or filing of appeal.
However this vested right of appeal can be taken away only by a subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise." Section 35F lays down clearly that this provision will apply to all appeals which would be filed on or from the date of the enforcement of s. 35F.m Further second proviso clarified that provisions shall not apply to stay applications and appeals pending prior to amendment. Therefore, both by virtue of opening words of section and second proviso it is made clear that appeals filed on and after 06.08.2015 shall be governed by the requirement of pre-deposit, the only exemption being applications of stay or appeals pending prior to amendment."
Similarly, the Hon'ble Gujarat High Court in the case of Premier Polyspin (P) Ltd. v UOI reported in 2015-TIOL- 1265-HC-AHM-CX, decided on May 4, 2015 also took a view that S. 35F shall apply to all the appeal filed after 06.08.2015.
However, the Hon'ble Punjab and Haryana High Court in the case of M/s Super Threading (I) Pvt. Ltd. v UOI reported in CWP- 7696- 2015 relying on the judgment of Muthooth Finance directed the petitioner to file the appeal as per the provisions which existed prior to 06.08.2015.
Likewise, the Hon'ble High Court of Kerala, in the cases of Secretary to Govt. of Agriculture v UOI reported in 2015-TIOL-895-HC-KERALA-ST; A.M Motors UOI reported in 2015-TIOL-1069-HC-KERALA-ST; Sea Breeze Courier v CCE reported in 2015-TIOL-1045-HCKERALA- CUS and in Muthooth Finance reported in 2015-TIOL-632-HC-KERALA-ST at various instances has taken the view that the right of appeal that is vested, is to be governed by the law prevailing at the date of institution of suit or proceeding and not at the date of its decision or filing of appeal.
Last but the not the least, it is very important to analyze the interim order of the Andhra Pradesh High Court in the case of K Rama Mohan Rao v UOI and Ors. reported in 2015-TIOL-511-HC-AP-CX, wherein as on the date of initiation of lis, the amendment was not in force, the Hon'ble High Court on 19th Feb 2015, directed the Tribunal to consider the waiver application without insisting on the pre-deposit.
In the light of the above judicial prouncemnets, we analyze that the law is very unsettled on the subject matter. However if to take a stand, the majority of the High Court decisions, till date state that if LIS commences before the amendment, then the law prior to 06.08.2015 shall apply to that set of appeals.
This view again has been taken by the Courts relying upon the judgment of the Hon'ble Apex Court in Hoosein Kasam Dada v State of Madhya Pradesh reported in AIR 1953SC 221 and Garikapatti Veeraya v N. Subbiah Choudhury reported in AIR 1957 SC 540, wherein the Hon'ble Supreme Court of India has very firmly held that "The right of appeal is a vested right and such a right accrues to the litigant and exists as on and from the date of the lis commences and although it may be actually exercised when the adverse judgment is pronounced, such right is to be governed by the law prevailing at the date of institution of suit or proceeding and not at the date of its decision or filing of appeal."
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