2013 (7) TMI 908 - HC - Service Tax

Waiver of pre deposit - Held that - Having broadly seen the facts of the case and the subsidy component being received by the appellant from Larsen & Toubro Limited, for providing subsidized food articles to the employees of Larsen & Toubro Limited, the interests of justice would be served if the appellant is required to pre-deposit 40% of the service tax demand of ₹ 5,67,93,185/- confirmed against the appellant by the Commissioner (TAR), Mumbai within six weeks from today. On such deposit, the recovery of balance amounts will be stayed and the appeal will be taken up by the Tribunal for final disposal on merits in its turn - Appellant that the amount as directed by this Court will be deposited with the respondent authorities within six weeks from today, we direct that the order of freezing/attachment of the bank account of the appellant by the respondent authorities shall stand vacated forthwith - Appeal disposed of.

Summary

Issues:
1. Pre-deposit of service tax amount for appeal from Order-in-Original
2. Merits of the contentions raised by the appellant
3. Subsidy component received by the appellant
4. Freezing/attachment of the bank account of the appellant

Analysis:

1. The High Court addressed the issue of pre-deposit of the service tax amount for the appeal from the Order-in-Original. The Tribunal had directed the appellant to deposit 50% of the service tax amount within eight weeks. However, after considering the facts of the case and the subsidy component received by the appellant, the Court modified the pre-deposit requirement to 40% of the service tax demand. The Court ordered the appellant to deposit this amount within six weeks, with recovery of the balance amounts stayed during the pendency of the appeal.

2. The appellant's counsel raised various contentions on merits, including that the service rendered was not covered by the definition of Outdoor Caterers, no service tax was payable due to the concept of mutuality, and the subsidy received from Larsen & Toubro Ltd. was not chargeable to service tax. The Court acknowledged these contentious issues and stated that they would be appropriately considered by the Tribunal during the final hearing of the appeal.

3. The Court specifically considered the subsidy component received by the appellant from Larsen & Toubro Limited for providing subsidized food articles to the employees. In the interest of justice, the Court required the appellant to pre-deposit 40% of the service tax demand confirmed against them by the Commissioner (TAR), Mumbai. This pre-deposit was deemed necessary before the appeal could be taken up for final disposal on merits by the Tribunal.

4. Regarding the freezing/attachment of the appellant's bank account by the respondent authorities, the Court directed that this order would stand vacated immediately upon the appellant's compliance with the pre-deposit requirement. The Court further instructed that no coercive recovery measures should be initiated by the respondent authorities during this period.

In conclusion, the High Court disposed of the appeal accordingly, with no order as to costs being issued.