2014 (3) TMI 131 - HC - Central Excise

Waiver of pre deposit - Held that - there is prima facie evidence to suggest that the appellant recovered service tax at the rate of 10.30% and not at the rate of 12.36% from the customers. They also disputed service tax liability at the said higher rate. Under the circumstances, the undisputed rate of duty, which was actually collected by the appellant from the customers, was 10.30%. Taking into account such figure, the principal liability of tax which cannot be disputed by the appellant comes to ₹ 19 lakh. Out of total tax demand of ₹ 72 lakh, this would leave a disputed figure of ₹ 53 lakh. We are of the opinion that by way of predeposit, the appellant should be made to deposit the entire undisputed amount, which in the present case has been recovered by the appellant from the customers and 25% of the disputed tax demand - Conditional stay granted.

Summary

Issues:
Challenge to Tribunal's order requiring deposit of Rs.72 lakh as predeposit pending appeal.

Analysis:
The appellant challenged the Customs, Excise and Service Tax Appellate Tribunal's order, which mandated a predeposit of Rs.72 lakh to stay the remaining demands pending appeal. The appellant contended that the Tribunal had made an arithmetical error in quantifying the amount. The appellant argued that they had not recovered service tax at the rate mentioned by the Tribunal but at a lower rate for the relevant assessment years. The appellant's primary grievance was the discrepancy in the service tax rate applied.

Upon hearing the arguments, the Court found prima facie evidence that the appellant had indeed recovered service tax at a lower rate than what was recorded by the Tribunal. The Court noted that the undisputed rate of duty collected by the appellant was 10.30%, resulting in a principal tax liability of Rs.19 lakh. Out of the total demand of Rs.72 lakh, a disputed amount of Rs.53 lakh remained. The Court directed the appellant to deposit the entire undisputed amount of Rs.19 lakh and 25% of the disputed tax demand, totaling Rs.32 lakh, by a specified date. Upon this deposit, the remaining tax, interest, and penalty demands would be stayed, and the appeal would proceed on merits before the Tribunal.

The Court disposed of the appeal and Civil Application accordingly, emphasizing that the observations made in the order were provisional for the predeposit stage. The Tribunal was instructed to consider all contentions independently during the subsequent proceedings, disregarding the prima facie observations made in this order.