In Custom Law and in Service Tax Law, when assessment under certain provisions are made, two appealable orders are passed by Authorities :
A) Main order, under which a person is held liable for Custom duty or Service Tax.
B) Then on basis of amount determined under A) a further penalty is imposed.
Provisions are made that if any appeals are made against order A) or order B), certain amount is required to be pre deposited as pre condition of hearing appeals.
What is perhaps missed by Law makers is, order B is wholly dependant on order A. If order A goes in appeal, the order B of penalty has to be set aside also.
It means that when a person has filed appeal against main order, and has pre deposited required amount, he should not be further asked to pay pre deposit against order B also.
Right now, the courts have probably not accepted these arguments and predepisits are insisted upon on orders of Penalty B also.
The Law here is debatable.
Haresh Raichura
25/9/16
