Case Law Details
In the case of Satya Nand Jha vs Union of India Honourable Supreme Court Upheld the Judgment of Jharkhand High Court and upheld the constitutional validity of Section 35F of the Central Excise Act, 1944.
Earlier High Court has held as under:-
A statute relating to taxation cannot be struck down merely because the right to prefer an appeal is made conditional, otherwise, the whole revenue will be in litigation and the budgetary provision will be upset. Moreover, if the amount is compelled to be deposited by few percentage only and if appeals preferred by the appellant-assessee are dismissed, nothing would have been left out to be recovered from the revenue, whereas, if the appeals of the appellant-assessee are allowed, the amount deposited, can be easily recovered from the Union of India, with interest, more particularly looking to Section 106 of the Finance (No.2)Act, 2014, by virtue of which Section 35FF is being inserted. Thus, insertion of Section 35FF makes the provision of Section 35F more balanced because the amount so deposited by the assessee-appellant, will be refunded with interest in case the appeal is allowed in favour of the assessee-appellant and the rate of interest will vary from 5% to maximum of 36% per annum depending upon the notification published by the Central Government. Thus, all care has been taken by the Finance (no.2) Act, 2014, to make provision of Section 35 F in favour of the assessee-tax payers. From every angle the tax payers are being protected. Most part of the tax assessed and adjudicated upon by the first authority has already been waived from the amount to be deposited and only 7.5% or 10% of the duty demanded or penalty levied is to be deposited and that too with a cap of maximum amount of Rs.10 crores, whereas, previously under the old provision of Section 35F, as a matter of rule, 100% duty demanded or penalty levied was to be deposited. In case of undue hardship the appellate authority or the Tribunal waived few percentage of duty demanded or penalty levied to be deposited.
Thus, substituted Section 35F, is not at all confiscatory in nature. On the contrary it is more than reasonable and leaning more towards the assessee rather than the revenue.
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