2015 (1) TMI 418 - AT - Service Tax

Waiver of pre deposit - Undue harship - Held that - The applicant also submits that financial difficulty would be caused to the applicant if pre-deposit is insisted upon. The law does not provide for the return of the pre-deposit with interest. Therefore, the loss of interest on this account is a financial loss which cannot be recovered by the applicant even if they succeed finally in the matter. On the other hand, if Revenue succeeds they would be entitled to recover the entire amount together with interest thereon. Therefore, the balance of convenience is always in favour of the Revenue. In such a situation inspite of a strong prima facie case in favour of the applicant and if they are directed to pre-deposit any part of the demand it would cause undue hardship to them. - stay granted - Matter remanded back - Decided in favour of assesse.

Issues:
1. Stay application due to payment of service tax, penalty, and interest.
2. Request for remand based on submissions regarding financial difficulty and incorrect remittance.
3. Application citing strong prima facie case and hardship if pre-deposit is insisted upon.
4. Reference to judicial decisions supporting the applicant's case.

Issue 1 - Stay Application:
The appellant submitted that the entire service tax amount along with 25% penalty and interest was paid within one month of the adjudication order, rendering the stay application infructuous. However, the Tribunal found the matter required remand based on the appellant's submissions regarding financial hardship and incorrect remittance. The Tribunal set aside the impugned order and remanded the matter to the original authority for further examination without expressing any opinion on the merits.

Issue 2 - Financial Difficulty and Incorrect Remittance:
The appellant argued that insisting on another pre-deposit would cause undue hardship and misery due to the financial loss incurred by not recovering interest on the pre-deposit if successful. The appellant highlighted an incorrect remittance of the service tax amount directed by the Senior Intelligence Officer, causing additional financial burden. The Tribunal acknowledged the appellant's concerns and decided to remand the matter for review.

Issue 3 - Prima Facie Case and Pre-Deposit Hardship:
The appellant emphasized having a strong prima facie case and the balance of convenience favoring them, citing potential financial hardship if required to pre-deposit any part of the demand. Referring to judicial decisions, the appellant argued that if there is no liability to pay tax and the demand lacks merit, insisting on pre-deposit would lead to undue hardship and misery. The Tribunal considered these arguments and set aside the impugned order for further assessment.

Issue 4 - Judicial Decisions Support:
The appellant referenced Supreme Court decisions like Ravi Gupta vs. Commissioner of Sales Tax, Delhi, Benara Valves Ltd. vs. Commissioner of Central Excise, and United Telecom Ltd. vs. Commissioner of Customs to support their case. These decisions highlighted that if a demand lacks a legal basis, requiring full or substantive pre-deposit would cause undue hardship. The Tribunal took note of these references and remanded the matter for proper examination by the original authority.

In conclusion, the Tribunal, led by Shri B.S.V.Murthy, remanded the case based on the appellant's submissions regarding financial difficulty, incorrect remittance, strong prima facie case, and references to supportive judicial decisions. The order set aside the impugned decision and directed the original authority to reevaluate the matter while considering the appellant's arguments and potential refund claims for the amount already paid.

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