Service Tax | Once Pre-Deposit Condition Is Fulfilled, Appeal Must Be Heard On Merits: Jharkhand High Court

The Jharkhand High Court held that once an appeal was dismissed for non-compliance with the mandatory pre-deposit of the Service Tax amount, the Appellate Authority does not become functus officio and was competent to decide the appeal on merits if the mandatory condition of pre-deposit of 7.5% of the Service Tax amount was subsequently complied with by the assessee. A Division Bench comprising of Chief Justice and Justice Rajesh Shankar, stated that the appeal at the earlier occasion was dismissed solely on the ground that the writ petitioner had failed to make the pre-requisite mandatory deposit of 7.5% of the duty amount before filing of the appeal and not on merits and this has been specifically noted in the order dated 10.01.2023. Therefore, once the appeal had not been decided on merits but had, in fact, not been entertained, there was no question of the Authority of having become “functus officio” after the deposit of 7.5% of the duty amount as alleged by the writ petitioner. The Assessee had preferred an appeal assailing the Order (Order-In-Original) passed by the Adjudicating Authority before the Commissioner (Appeals) CGST & Central Excise, Ranchi (“Appellate Authority”) under Section 85 of the Finance Act of 1994. Per Section 35F of the Central Excise Act, 1944 for filing an appeal before the Appellate Authority, the assessee is to comply with pre-requisite mandatory deposit of 7.5% of the Service Tax amount. The Appellate Authority dismissed the appeal, stating that the appeal did not comply with the mandatory provisions of Section 35F of the Central Excise Act of 1944 r/w Section 83 of the Finance Act of 1994. The Assessee, after duly complying with the requisite pre-deposit of 7.5% of the Service Tax amount, again approached the Appellate Authority for the appeal to be heard on merits. However, the Appellate Authority instead of entertaining the appeal, dismissed it without going into the merits of the case by observing that it had become “functus officio”. The Bench opined that the dismissal order of the Appellate Authority is based on a complete misunderstanding of law since the it had previously not decided on merits, and therefore, not functus officio. Accordingly, the Bench allowed the writ petition in favour of the assessee, directing the Appellate Authority to restore the appeal. Case Title: M/s. Maa Kalyani Electrical Vs. Union of India & Ors.LL Citation: 2025 LiveLaw (Jha) 86 Case Number: Writ Petition(T) No. 5009 Of 2025 Appearance for Petitioner: Mr. Ram Kumar, Advocate Appearance for Respondents: Mr. P.A.S. Pati, Sr. S.C. (CGST), Mr. Anurag Vijay Jr. S.C. (CGST), Mr. Shivam Singh, Jr. S.C. (CGST) Click Here To Read/Download The Order

Service Tax | Once Pre-Deposit Condition Is Fulfilled, Appeal Must Be Heard On Merits: Jharkhand High Court

Rajnandini Dutta

Tags