The Central Board of Indirect Taxes and Customs (CBIC) provided guidelines on pre-deposit payment methods in central excise and service tax cases.
Some Commissioners (Appeals) have dismissed pleas for non-compliance with pre-deposit needs mandated under Section 35F of the Central Excise Act, 1994, read with Section 35F of the CEA. Payments were made through Form GST DRC-03 on the common GST portal. The rejection of the petition was there on the basis that the same does not have a specified way of payment of the pre-deposit.
The case was also directed to the Board by the High Court of Bombay in the case of Sodexo India Services Pvt. Ltd vs. Union of India and Ors., with directives to analyze and provide specific guidelines.
The board reported sub-sections (6)(b), (7)(a), and (8)(a) of section 142 of the CGST Act, 2017 that any credit, tax, interest, fine, or penalty recoverable via the person under the existing law (Central Excise Act and Chapter-V of the Finance Act, 1994) would get recovered as an arrear of tax beneath CGST act. Settlement of the pre-deposit as a need for practising the right to appeal would not be the kind of duty and also it does not treat as arrears beneath the current law and thus it could not come beneath the transitional provisions of the CGST act.
Under the CGST regime, CBIC mentioned that the payment via DRC-03 does not a valid payment mode for making pre-deposits under section 35F of the Central Excise Act, 1944, and Section 83 of the Finance Act, 1994, which should exclusively be used to build pre-deposits under the Central Excise Act, 1944 and the Finance Act, 1994.
