2013 (9) TMI 866 - HC - Service Tax

Waiver of pre-deposit - Road Transport Service tribunal did not grant stay - The writ petitioner contends that though the Tribunal noticed facts and circumstances whereby the amount of tax were not paid by it for the bona fide reason that the DTC was under the impression Held that - There is no dispute that the DTC is a public authority - Its consistent position before the Revenue - including the CESTAT - was that the spaces which it had given to two customers meant that the latter had to deposit the service tax and that indeed they represented through documents that such liability was being discharged - later events disclosed that this was not the correct situation and that the spaces had further been sold and that the deposits had not been made. Stay granted - The CESTAT was directed to hear the appeals without the condition of any pre-deposit and decide the appeals at its earliest convenience Decided in favour of Assessee.

Summary

Issues:
Challenge to order of Customs Excise and Service Tax Appellate Tribunal (CESTAT) regarding pre-deposit for hearing appeal.

Analysis:
The High Court dealt with the issue of pre-deposit directed by the CESTAT in Appeal Nos. 174-176/2010, amounting to Rs. 3.5 crores, which the writ petitioner, a public authority, contested. The petitioner, DTC, argued that it believed its customers had paid the tax, but later discovered fraud. The respondents, relying on the Tribunal's order, opposed any waiver of the deposit, claiming it was reasonable. The Court examined the circumstances, noting the DTC's position and subsequent events revealing non-payment by customers. Considering the DTC's status and ability to meet liabilities, the Court found the deposit condition unsustainable. Consequently, the order mandating the pre-deposit was set aside, directing CESTAT to hear the appeals without such condition and decide them promptly, preferably within four months.

The Court allowed the writ petition in favor of the petitioner, setting aside the pre-deposit condition imposed by CESTAT. The judgment emphasized the DTC's public authority status, its reliance on customers for tax payments, and the subsequent failure of customers to fulfill their obligations. Given these factors, the Court found the deposit requirement unjustified and instructed CESTAT to proceed with the appeals without such a condition. The decision aimed to facilitate a fair hearing and prompt resolution of the appeals, ensuring justice and efficiency in the adjudicative process. Allowing the writ petition in the specified terms, the Court left all contentions open for further consideration if necessary.

In conclusion, the High Court's judgment in W.P. (C) 753/2012 addressed the challenge raised by the DTC against the CESTAT's order demanding a significant pre-deposit for hearing appeals. By considering the DTC's status as a public authority, its reliance on customers for tax payments, and subsequent developments revealing non-payment, the Court deemed the pre-deposit condition unsustainable. The decision aimed to uphold fairness and efficiency in the adjudicative process, directing CESTAT to proceed with the appeals promptly and without the pre-deposit requirement.