2013 (9) TMI 836 - HC - Service Tax

Waiver of pre-deposit - Commercial Training or Coaching Services - charitable society - Held that - As per the first proviso to Section 35F of the Central Excise Act, pre-deposit of the duty demanded or penalty levied can be waived where the Appellate Tribunal is of the opinion that such deposit would cause undue hardship to the applicant. As we could see, the Order dated 5.4.2013 came to be passed taking into consideration all the relevant factors including the orders passed by this Court and the Apex Court in respect of the earlier demand made for the period 2003-2007 and the payments that were already made by the petitioner. Thus adopting a reasonable approach, the pre-deposit was restricted to ₹ 25 Crores which in fact is less than 1/3 rd of the total demand of Service Tax and Education Cess. The petitioner s request for modification of the said order was rejected assigning valid reasons therefor - condition of pre-deposit of ₹ 25 Crores was imposed on proper exercise of the discretion vested in the Appellate Tribunal and on proper appreciation of the facts and circumstances of the case. Therefore, the impugned order which cannot be treated either arbitrary or irrational, warrants no interference by us on any ground whatsoever - Decided against assessee.

Summary

Issues:
1. Demand of Service Tax for multiple years
2. Appeal for waiver and stay of pre-deposit
3. Application for modification of the order
4. Interpretation of statutory provisions for pre-deposit waiver

Analysis:
1. Demand of Service Tax for multiple years:
The petitioner, a registered society operating educational institutions, faced demands for Service Tax for various years. Despite explanations disputing the liability, the demands were confirmed by the Commissioner. Appeals were filed before the CESTAT challenging the orders for the years 2007-08 to 2009-10 and 2010-11. The CESTAT directed pre-deposit amounts, leading to subsequent pleas for modification and unconditional stay.

2. Appeal for waiver and stay of pre-deposit:
The petitioner sought waiver and stay of pre-deposit amounts imposed by the CESTAT for the Service Tax demands. The CESTAT directed pre-deposit of significant sums, considering the petitioner's previous payments, financial circumstances, and legal precedents. The petitioner's request for modification and full waiver was denied, leading to the filing of a writ petition before the High Court.

3. Application for modification of the order:
The petitioner filed a miscellaneous application seeking modification of the CESTAT's order for pre-deposit. The CESTAT, after considering the arguments, held that no case was made out for modification. The petitioner was granted additional time for making the pre-deposit as directed in the original order.

4. Interpretation of statutory provisions for pre-deposit waiver:
The High Court analyzed the statutory provisions governing pre-deposit waivers and found that the CESTAT's decision to impose a pre-deposit amount was reasonable and not arbitrary. The Court noted that the pre-deposit amount was less than 1/3rd of the total demand, considering the petitioner's circumstances and previous payments. The High Court upheld the CESTAT's decision, allowing the petitioner to remit the pre-deposit amount in two installments.

In conclusion, the High Court disposed of the writ petition, finding no grounds for interference with the CESTAT's order. The Court allowed the petitioner to pay the pre-deposit amount in two installments, maintaining the balance between statutory requirements and the petitioner's financial situation.