2014 (7) TMI 939 - HC - Service Tax

Waiver of pre-deposit - appellant argued that the nature of services provided by the Railway and considering its status in law the Tribunal should not have directed payment of any sum of ₹ 25 lacs - Held that - perusing Section 99 which came to be inserted by the Finance Act, 2013 with effect from 10.05.2013, we are of the opinion that the Appellants have made out a strong prima facie case and of complete waiver of a predeposit condition. The impugned order is, therefore, quashed and set aside. The application for stay/waiver of predeposit is allowed accordingly. - stay granted.

Summary

Issues:
Central Excise Appeals by Central Railway challenging order on stay application.

Analysis:
The Central Railway filed Central Excise Appeals against the order passed on the stay application, which required a predeposit of Rs. 25 lacs within eight weeks. The Appeals were dismissed for failure to deposit the amount. A subsequent Appeal was filed against the dismissal. The Appeals were heard by the High Court, with Mr. R V Desai representing the Appellants and Mr. Pradeep S Jetly representing the Respondents. The original order pertained to the liability for payment of service tax by the Railway.

Mr. Desai argued that the Tribunal should not have directed the payment of Rs. 25 lacs, considering the nature of services provided by the Railway and its legal status. He contended that the Railway would have complied with final orders without the need for a predeposit, especially after a later clarification by Section 99 of the Finance Act, 2013. On the other hand, Mr. Jetly argued that the Tribunal's order was discretionary and not arbitrary, therefore the Appeals did not raise substantial questions of law.

The High Court opined that the Tribunal failed to consider the strong prima facie case and the public service nature of the Railway, leading to an imbalance in favor of the Railway/Appellant. The Court found the issue debatable and saw no reason to direct the payment of Rs. 25 lacs. The Appeals were deemed to raise a substantial question of law regarding the Tribunal's exercise of discretion in imposing the predeposit condition on the Railway.

After considering Section 99 of the Finance Act, 2013, the High Court concluded that the Appellants had a strong prima facie case warranting a complete waiver of the predeposit condition. The impugned order was quashed, and the application for stay/waiver of predeposit was allowed. The Court clarified that it had not expressed an opinion on the merits of the Appeal, and the case was remanded back to the Tribunal for disposal according to law.

Both Appeals were disposed of with no costs awarded.