2014 (5) TMI 137 - HC - Service Tax

Waiver of pre deposit - Section 35F - appellant contended that the appellant is the Statutory Board fully controlled and financed by the State Government and discharging public functions of supplying portable water and other sewage works. - Held that - Under Section 35F of the Act, the appellant has to deposit the entire amount to maintain the appeal. However, where in any particular case, the Appellate Tribunal is of the opinion that depositing of the said amount would cause undue hardship to such person, the Tribunal may dispense with such deposit subject to such condition as it may deem fit to impose so as to safeguard the interest of the Revenue - pre-deposit of the amount demanded is one of the conditions precedent to maintain the appeal. The pre-deposit of the amount due is applicable to the statutory authority set up by the State Government. When the Legislature has not made any distinction, we cannot make any distinction by judicial order. Therefore, we do not find any justification to interfere with the order passed by the Appellate Tribunal - Decided against assessee.

Summary

Issues:
1. Appellant directed to deposit a sum of Rs.50,00,000/- as a condition for maintaining an appeal.
2. Contention regarding exemption from pre-deposit by a Statutory Board.
3. Interpretation of Section 35F of the Central Excise Act, 1944.

Analysis:
1. The appellant challenged an order directing them to deposit Rs.50,00,000/- for maintaining an appeal against a service tax demand. The Tribunal required this deposit under Section 35F of the Act, which mandates pre-deposit to appeal a decision related to duty or penalty. The appellant contested this requirement, arguing they should be exempt due to being a Statutory Board performing public functions. The Tribunal's order was upheld by the High Court, emphasizing the legislative requirement of pre-deposit for appeals, without room for judicial distinction.

2. The appellant, a Statutory Board controlled by the State Government, claimed exemption from the pre-deposit based on a circular stating such entities need not pay. However, the High Court held that the legislative provision under Section 35F imposes a mandatory pre-deposit condition for maintaining an appeal, without exceptions for entities like the appellant. The Court emphasized the absence of a legal basis for judicially creating exemptions not provided by the legislature.

3. Section 35F of the Act requires the deposit of the entire amount for maintaining an appeal, with a provision for the Tribunal to dispense with the deposit in cases of undue hardship. The High Court clarified that the legislative intent mandates pre-deposit as a condition precedent for appeals, without discretion for exemptions based on the nature of the appellant. The Court's interpretation focused on upholding the statutory requirement, affirming the Tribunal's decision and dismissing the appellant's challenge.