The Hon’ble High Court of Delhi vide its order dated 02.03.2023 in the matter of G.S. Promoters Pvt. Ltd. Vs. The Commissioner Of Central Excise And CGST in W.P. (C) – 2307/2023 & C.M. Appl. 8759/2023, reduced the amount of pre-deposit for filing the Appeal to 2.5% from 7.5% when the assessee did not have the adequate funds to make the pre-deposit of 7.5% of the demand.  It was found that the remedy of an appeal would be illusory in the given circumstances where the petitioner does not have the liquid funds to make the said pre-deposit.

The Petitioner file the writ petition before the Hon’ble High Court, seeking waiver of pre-deposit of demand for filing appeal against the order-in-original dated 26.11.2021, passed by the Commissioner, Adjudication, Central Tax, GST, Delhi East.

Petitioner’s Submissions: –

  • It was submitted on the behalf of the petitioner that the interest of the revenue is fully protected as the petitioner is entitled to refund of CENVAT Credit which has not been processed yet. Further, the demand has been raised on erroneous ground that the petitioner could not avail the benefit of abatement as it had availed of CENVAT Credit.
  • That the said issue has been decided in favour in the case of petitioner’s sister concern i.e., M/s GR Realcon Private Limited vide order-in-original dated 16.12.2022 passed by the Additional Commissioner, Adjudication, Delhi East. Thus, the petitioner has a strong case on merits.  However, its remedy of appeal is rendered illusory as the petitioner is not in a position to make the pre-deposit of 7.5% of the demand.
  • It was submitted that proceedings under (RERA) Real Estate (Regulation & Development) Act, 2016 has been initiated against the petitioner and the petitioner does not have adequate funds to make the pre-deposit. That the CENVAT Credit available may be directed to be appropriated to discharge the obligation of making the pre-deposit for maintaining an appeal against the order-in-original dated 26.11.2021.
  • It was also submitted that the petitioner would make a pre-deposit of 2.5% of the liability instead of 7.5% to maintain the appeal against the order-in-original dated 26.11.2021.

Held: –

  • The Hon’ble Court after considering the submissions made & facts of the case, was unable to accept that the petitioner can set off its obligation to make a pre-deposit against its claim for the refund of CENVAT Credit.
  • However, the Hon’ble Court found merit in the contention that the petitioner’s remedy of appeal would be rendered illusory in the given circumstances where the petitioner does not have the liquid funds to make the said deposit.
  • Considering the given circumstance, it was found appropriate by the Hon’ble Court to direct that if the petitioner deposits an amount equivalent to 2.5% of its liability, the petitioner’s appeal against the order in original would not be rejected solely for want of the requisite pre-deposit.

The Hon’ble Court with above observations & findings, disposed of the writ petition and pending applications without making any observations on merit.

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