Facts of the Case

  • The Petitioner, M/s. Suraksha Security and Maintenance Service, represented by its Proprietor Shri Shankar Lunavath @ Shankar Naik, challenged an Order-in-Original No. 02/2021-22-Adin (ADC) ST-HYD-GST dated 28-04-2021 passed by the 1st Respondent (Additional Commissioner, Office of the Commissioner of Central Tax, Hyderabad GST Commissionerate).
  • The impugned Order-in-Original confirmed a Service Tax demand of ₹78,93,478.00 for the period from October 2014 to June 2017 under Section 73(2) of the Finance Act, 1994, along with an equivalent penalty under Section 78 and applicable interest.
  • The Petitioner filed a Writ Petition under Article 226 of the Constitution of India before the High Court for the State of Telangana, seeking to set aside the demand and penalty as illegal, arbitrary, and unjust.

Issues Involved

  1. Whether a Writ Petition under Article 226 of the Constitution of India is maintainable when an alternative, statutory appellate remedy is available under Section 85 of the Finance Act, 1994.
  2. Whether the High Court, under its extraordinary writ jurisdiction, can waive or modify the statutory pre-deposit mandatory requirement for filing an appeal before the Commissioner (Appeals) on grounds of financial hardship, business closure, or the COVID-19 pandemic.

Petitioner’s Arguments

  • The Petitioner contended that due to the closure of business and the intervening hardships caused by the COVID-19 pandemic, they were not financially viable or in a position to pay the statutory pre-deposit required to file an appeal before the Commissioner (Appeals).
  • The learned counsel for the Petitioner requested the High Court to waive the mandatory pre-deposit requirement so they could pursue their statutory remedy without financial impediment.

Respondent’s Arguments

  • The Respondents, represented by the Central Tax Revenue Counsel, pointed out that the Order-in-Original is a strictly appealable order before the Commissioner (Appeals) under Section 85(3A) of the Finance Act, 1994.
  • The Revenue opposed the waiver of the pre-deposit, maintaining that statutory compliance cannot be bypassed through writ jurisdiction when an explicit mechanism is established by law.

Court Order / Findings

  • The Hon’ble High Court, comprising Chief Justice Ujjal Bhuyan and Justice C.V. Bhaskar Reddy, observed that the impugned order-in-original is directly appealable under Section 85(3A) of the Finance Act, 1994.
  • The Court strongly declined the Petitioner’s request to waive or reduce the statutory pre-deposit, stating that accepting such a plea would "tantamount to rewriting the statute".
  • Consequently, the High Court refused to entertain the writ petition under Article 226, relegated the Petitioner to the statutory forum of appeal under Section 85 of the Finance Act, 1994, and dismissed the writ petition along with any pending miscellaneous applications without costs.

Important Clarification

  • No Judicial Rewriting of Fiscal Statutes: The High Court clarified that courts cannot use their extraordinary writ jurisdiction to bypass or dilute unambiguous statutory conditions, such as mandatory pre-deposits in tax appeals, even when hardships like business closure or pandemic disruptions are cited. Statutory provisions must be adhered to strictly as enacted by the legislature.

Section Involved

  • Section 73(2) of the Finance Act, 1994 (Demand and recovery of Service Tax)
  • Section 78 of the Finance Act, 1994 (Penalty for willful suppression/misstatement)
  • Section 85 & Section 85(3A) of the Finance Act, 1994 (Appeals to the Commissioner of Central Excise (Appeals) and mandatory pre-deposit requirements)
  • Article 226 of the Constitution of India (Power of High Courts to issue certain writs)

Link to download the order-https://mytaxexpert.co.in/uploads/1783323508_1312compressed.pdf

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