2012 (12) TMI 735 - HC - Service Tax

Pre-deposit of Rs.3 Crores to hear the appeal on merits - Whether the word roads would include within it runways at airports - Held that - Runways at the airports are species of the genus road . Therefore, the runways should also normally receive the same treatment as roads for service tax purpose. Prima facie the case of the appellant is a very arguable case. However, in the order of the Tribunal dated 30/7/2012 there is no consideration of the issue even for the purposes of taking a prima facie view. Set aside the order of the Tribunal dated 30/7/2012 demanding, interest or penalty for pre deposit and direct the Tribunal to hear the appellant s appeal on merits as the amount involved in the appeal is over Rs.10 crores the Tribunal directed to hear the appellant s appeal on merits itself at the earliest within a period of three months from today.

Summary

Issues:
1) Whether the Tribunal was justified in directing the appellant to pre-deposit Rs.3 Crores for hearing the appeal on merits.
2) Whether the term "roads" includes "runways" for service tax purposes.

Analysis:
1) The appellant, a Service Tax Provider, received a show cause notice demanding duty of Rs.10.25 crores for maintaining and repairing roads and runways. The Commissioner confirmed the duty and imposed penalties. The Tribunal partially dispensed with the pre-deposit, exempting repairs of roads from service tax but not runways. The High Court found the appellant's case arguable, directing the Tribunal to hear the appeal on merits without pre-deposit, considering the amount involved.

2) The High Court considered whether "roads" under Section 65(64) of the Act includes "runways." The Tribunal directed the appellant to deposit Rs.3 crores for repairing runways, as it was not exempted from service tax. The High Court found runways to be a species of the genus "road," indicating they should receive similar treatment for service tax. The Court set aside the Tribunal's order, directing a final hearing without pre-deposit due to the substantial amount involved.

In conclusion, the High Court allowed the appeal, emphasizing the need for a final hearing without pre-deposit due to the significant amount in question. The Court clarified its observations as prima facie views, urging the Tribunal to decide the appeal on merits independently.