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Issues involved:
The issues involved in this case are the challenge against the order of pre-deposit under Section 35F of the Central Excise Act, 1944, the contention of double taxation for sub-contractors, and the plea of undue hardship faced by the appellant. Challenge against the order of pre-deposit: The writ petitioner challenged the order of pre-deposit directing them to deposit &8377; 4,00,000 in cash under Section 35F of the Central Excise Act, 1944. They argued that as sub-contractors, they should not be liable to remit service tax, and the Appellate Authority should have granted a full waiver of pre-deposit. The writ petitioner claimed that the pre-deposit order would result in double taxation since the main contractor had already discharged the tax liability. The learned Single Judge found that the Appellate Authority had taken a lenient approach by ordering a pre-deposit of only &8377; 4,00,000 against a duty demand of &8377; 47,93,469. The Judge directed the Appellate Authority to decide on the petitioner's liability to pay service tax as a sub-contractor during the appeal process. Plea of undue hardship: The appellant argued that the order of pre-deposit was a non-speaking order as the Appellate Authority did not consider the plea of undue hardship and balance of convenience. The appellant claimed that without a speaking order, the writ petition should have been allowed. The respondents contended that there was no mention of undue hardship in the waiver application, and the Appellate Authority's decision to require a pre-deposit of &8377; 4,00,000, which was less than 10% of the total demand, was a lenient exercise of discretion under Section 35F. The court emphasized that the appellant failed to provide material details regarding the alleged financial hardship, as required by law, and cited legal precedents defining "undue hardship" in such cases. Decision and Conclusion: The Court noted that the appellant did not adequately plead or prove the undue hardship claim before the Appellate Authority, as required by law. The Appellate Authority's decision to order a pre-deposit of &8377; 4,00,000 was considered lenient, given the total demand amount. The court upheld the decision of the Appellate Authority and the learned Single Judge, dismissing the writ petition. The Court emphasized the twin test of undue hardship and safeguarding revenue interests under Section 35F, highlighting the importance of proper pleading and material evidence to support claims of financial hardship in such cases.
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