2014 (1) TMI 150 - HC - Service Tax

Waiver of pre deposit - Demand of service tax - Held that - impugned order came to be passed without considering the dispute raised by the petitioner with regard to the quantum of interest - it would be appropriate to waive the pre-deposit of the penalty component - Conditional stay granted.

Summary

Issues: Liability to pay Service Tax, Interest payment, Penalty imposition, Waiver of pre-deposit

Liability to pay Service Tax:
The petitioner's liability to pay Service Tax was determined under the Order in Original, confirming a demand of Rs.6,49,02,329/- for Service Tax on Mobilization advances received. Additionally, interest at applicable rates and a penalty of the same amount were imposed for late payment and non-payment of Service Tax, respectively. The petitioner appealed before the CESTAT seeking waiver of pre-deposit and stay of further proceedings, which was initially declined. The High Court, considering the dispute on the quantum of interest and the appropriateness of waiving the penalty component, set aside the impugned order. The Court held that the petitioner would be entitled to waiver of the pre-deposit on the condition of depositing the Service Tax amount and the admitted interest within a specified timeline.

Interest payment:
The petitioner contested the interest liability, arguing that they had already paid Service Tax on the advances received, thus reducing the interest liability to Rs.1,10,69,280/-. The High Court noted the dispute regarding the quantum of interest and found merit in the petitioner's submission. The Court observed that the impugned order was passed without considering this dispute, leading to the decision to set aside the order and grant the petitioner waiver of the pre-deposit subject to specific deposit conditions.

Penalty imposition:
In addition to the Service Tax demand and interest payment, a penalty of Rs.6,49,02,329/- was imposed on the petitioner for non-payment of Service Tax by suppression of taxable services with intent to evade payment. The High Court, while not delving into the contentious issues on the case's merits, focused solely on the waiver of pre-deposit. It was deemed appropriate to waive the pre-deposit of the penalty component, provided the petitioner complied with the deposit conditions specified by the Court.

Waiver of pre-deposit:
The primary issue in the writ petition was the waiver of pre-deposit, as the Court chose not to address all contentious issues related to the case's merits. The High Court, after considering the arguments and submissions, set aside the impugned order and disposed of the writ petition by granting the petitioner waiver of the pre-deposit. The waiver was subject to the petitioner depositing the Service Tax amount and the admitted interest within the stipulated deadline. Failure to comply with the deposit conditions would result in the revival of the impugned order.