Whether the quantum of pre-deposit can be different for assessees under identical situation?

PJ/CASE LAW/2014-15/2444

Case:-SPA VET-MIN PVT LTDVs UNION OF INDIA

Citation:-2014-TIOL-2075-HC-AHM-CX

Brief Facts:- Rule. Mr. Y.N. Ravani, learned standing counsel for the respondents, waives service of notice of rule on behalf of the respondents.Having regard to the controversy involved in the present case which lies in a very narrow compass, with the consent of the learned counsel for the respective parties, the matter was taken up for final hearing.
This petition is directed against the orders dated 3rd April, 2014 and 14th July, 2014 passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (hereinafter referred to as “the Tribunal”) on the stay application filed by the petitioner as well as the modification application filed thereafter.

Briefly stated the facts are that against an order-in-original dated 19th September, 2013 passed by the second respondent confirming duty demand of Rs.5,10,37,989/- with interest and equal amount of penalty under section 11AC of the Central Excise Act, 1944 (hereinafter referred to as “the Act”), the petitioner went in appeal before the Tribunal under section 35B of the Act along with an application under section 35F of the Act seeking waiver of the pre-deposit of duty, interest and penalty. By the impugned order dated 26th March, 2014, the stay application came to be partly allowed by directing the petitioner to deposit a sum of Rs.1 crore within a period of eight weeks from the date of the order and to report compliance therewith. Being aggrieved, the petitioner moved a modification application before the Tribunal submitting that in the case of M/s. Sudeep Pharma Ltd., the Tribunal, on an identical issue, had by an order dated 24.2.2014, directed pre-deposit of 10% of the amount within the limitation period, therefore, similar treatment ought to be accorded to the petitioner also. The Tribunal, by the impugned order dated 14th July, 2014, rejected the stay application and directed the petitioner to deposit the amount with the authorities on or before 21st August, 2014. Being aggrieved, the petitioner has filed the present petition.

Appellant contentions:- Mr. Prakash Shah, learned advocate with Mr. Dhaval Shah, learned advocate for the petitioner, invited the attention of the court to the order dated 24th February, 2014 made by the Tribunal in the case of M/s. Sudeep Pharma Ltd, wherein a similar controversy was involved. It was pointed out that the Tribunal, after recording that the issue involved was a arguable one and that the question as to whether the assessee's product would fall under Chapter Heading 28352500 or other headings also needs to be gone into detail, was of the opinion that the demand of duty within the limitation period from the date of issuance of notice needs to be secured by way of ordering pre-deposit on the said assessee and, accordingly, directed pre-deposit of an amount of Rs.3,00,000/- as against total dues of Rs.3 crores under the order-in-original made in the case of the said assessee. Reference was madeto the decision of the Supreme Court in the case of Vishnu Traders v. State of Haryana & Ors., 1995 Supp (1) SCC 461, to submit that similar treatment is required to be given to similarly situated persons and, hence, the Tribunal was not justified in discriminating against the petitioner and directing it to pre-deposit 10% of the entire amount. The attention of the court was also drawn to the order dated 2.7.2014 made by the Tribunal in the case of M/s. S.A. Pharmachem Pvt. Ltd. to submit that in the facts of the said case also, though the demand under the order-in-original was considerable, the Tribunal had directed the said assessee to deposit an amount of Rs.15,00,000 /- only. It was submitted that in the light of the law laid down by the Supreme Court in the case of Vishnu Traders (supra), the petition deserves to be allowed.

Respondent Contentions:- Opposing the petition, Mr. Y.N. Ravani , learned standing counsel for the respondents, submitted that the Tribunal, by a well reasoned order, has directed the petitioner to pre-deposit an amount of Rs.1 crore which is only 10% of the entire amount that the petitioner is liable to pay under the order- in-original including duty and penalty. It was submitted that the Tribunal has duly considered the facts of the case as well as the status of the petitioner and its financial condition and, as such, there is no warrant for interference. Reliance was placed upon the decision of the Supreme Court in the case of Benara Valves Ltd. v. Commissioner of Central Excise, 2006 (204) E.L.T. 513 (S.C.), for the proposition that while disposing a stay application, two aspects are required to be taken into consideration, namely, (i) undue hardship to such person and (ii) to safeguard the interest of the revenue.
Therefore, while dealing with an application for stay, twin requirements have to be kept in mind, viz., the undue hardship aspect and imposition of conditions to safeguard the interest of the revenue. The Tribunal, while dealing with the stay application, has to consider the material that may be placed by the assessee in support of its plea of undue hardship and is also required to stipulate condition to safeguard the interests of the revenue. According to the learned counsel, the Tribunal, in the facts of the present case, has rightly observed the issue involved is a highly debatable one and needs to be gone into detail and having found as a matter of fact that the assessee was not having any severe financial hardships has thought it fit to impose some conditions. It was submitted that in the light of the above decision of the Supreme Court, the impugned order dated 3.4.2014 being just, legal and proper, does not warrant interference. It was submitted that in the subsequent order dated 14.7.2014 passed on the modification application also, the Tribunal has duly considered the facts of the case and
has found no reason to deviate from the view taken earlier. Under the circumstances, the petition being devoid of merits deserves to be dismissed.

Reasoning of Judgment:- In the backdrop of the facts and contentions noted hereinabove, the sole controversy that arises for consideration is as to whether the Tribunal was justified in directing the petitioner to pre-deposit 10% of the entire demand under the order-in-original including duty and penalty when in case of a similarly situated assessee, the Tribunal had directed pre-deposit of only 10% of the duty demand within the period of limitation.

In this regard, reference may be made to the decision of the Supreme Court in the case of Vishnu Traders v. State of Haryana (supra), wherein the Supreme Court has held that in the matters of interlocutory orders, principle of binding precedents cannot be said to apply. However, the need for consistency of approach and uniformity in the exercise of judicial discretion respecting similar causes and the desirability to eliminate occasions for grievance of discriminating treatment requires that all similar matters should receive similar treatment except where factual differences require a different treatment so that there is assurance of consistency, uniformity, predictability and certainty of judicial approach. Examining the facts of the present case in the light of the above decision, in the impugned orders more particularly the order passed on the modification application, the Tribunal has not delved into the aspect as to whether the assessee in the case of M/s. Sudeep Pharma Ltd. was in any manner not similarly situated to the petitioner when it was the specific case of the petitioner that identical controversy was involved and that the petitioner was similarly situated to the said assessee. On a perusal of the show-cause notice issued in the case of the petitioner as well as in the case of M/s. Sudeep Pharma Ltd., a copy whereof has been placed on record, it is apparent that the controversy involved in both the cases was identical. In the order passed in the case of M/s. Sudeep Pharma Ltd., the Tribunal has not discussed on the aspect of financial hardship. The learned counsel for the respondents is not in a position to point out any notable difference in the case of the petitioner and in the case of M/s. Sudeep Pharma Ltd. Under the circumstances, the above referred decision of the Supreme Court in the case ofVishnu Traders v. State of Haryana (supra) would be squarely applicable to the facts of the present case. The Tribunal, therefore, was not justified in discriminating between the petitioner and the other assessee by directing the petitioner to pre-deposit an amount which is much more than in other cases. Insofar as the decision of the Supreme Court in the case of Benara Valves Ltd. v. Commissioner of Central Excise, (supra) on which reliance has been placed by the learned counsel for the respondents is concerned, the same would not be applicable in the facts of the present case, inasmuch as, the issue involved in the present case is not as regards the quantum of pre-deposit directed by the Tribunal on the facts of the case, but as regards the discriminating treatment meted out to the petitioner qua other assessees. A perusal of the amount demanded by the adjudicating authority and the show-cause notice reveals that in respect of the period within limitation, the duty demand was to the tune of Rs.8,08,588/-. Under the circumstances, adopting the same approach as in the case of Sudeep Pharma Ltd., the Tribunal ought to have directed pre-deposit of an amount of Rs.8.5 lakhs. The impugned orders being contrary to the law laid down by the Supreme Court in the case of Vishnu Traders v. State of Haryana (supra), therefore, cannot be sustained.

In the light of the above discussion, the petition succeeds and is, accordingly, allowed. The impugned order dated 14th July, 2014 is hereby quashed and set aside. The impugned order dated 3rd April, 2014 is hereby modified by directing the petitioner to pre-deposit a sum of Rs.8.5 lakhs within a period of eight weeks from today and report compliance before the Deputy Registrar of the Tribunal. Rule is made absolute accordingly with no order as to costs.

Decision:-Appeal allowed.

Comment:- The need for consistency of approach and uniformity in the exercise of judicial discretion respecting similar causes and the desirability to eliminate occasions for grievance of discriminating treatment requires that all similar matters should receive similar treatment except where factual differences require a different treatment so that there is assurance of consistency, uniformity, predictability and certainty of judicial approach. As observed in the present case, the assessee seeks grant for similar treatment in identical facts and circumstances which is allowed. Thus, the Tribunal should properly delve into the matter & should pass interlocutory/interim orders consistently.

Prepared by:Meet Jain

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PJ/CASE LAW/2014-15/2444

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