2015 (1) TMI 905 - HC - Service Tax

Waiver of pre deposit - Held that - Though the position as canvassed by the learned standing counsel for the respondent is unassailable still fact remains that in so far as this case is concerned Annexure D order passed by the adjudicating officer demands an amount of 11, 61, 898/- towards service tax 23, 237/- towards education cess and 8, 500/- towards secondary and higher education cess . An equal amount is also levied as penalty under Section 78 of the Finance Act 1994. - direction requiring the appellant to remit an amount of 8 00, 000 /- is too onerous. Therefore we reduce the amount as ordered by the Tribunal and direct that the appellant shall deposit an amount of 5, 00, 000 within two weeks - Partial stay granted.

Summary

Issues:
1. Interpretation of provisions under the Finance Act, 2014 regarding pre-deposit requirements for stay applications.
2. Assessment of the onerousness of the deposit amount imposed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
3. Consideration of financial hardships and penalties in determining the appropriate deposit amount for the appellant.

Analysis:
1. The appellant contended that under the Finance Act, 2014, only 10% of the demanded amount should be deposited, challenging the order by CESTAT to remit Rs. 8,00,000. However, the court noted that the Act's second proviso to Section 35F excluded its application to pending stay applications and appeals before the Act's commencement on 6/8/2014. Since the appellant's stay application dated 15/4/14 was pending before CESTAT when the Act came into force, the Act's provisions did not apply in this case.

2. The appellant argued that the Rs. 8,00,000 deposit ordered by CESTAT was burdensome, citing prima facie case and financial hardships. The respondent relied on Circular No.984/08/2014-CX, stating that the total amount due, including duty and penalty, should be considered. Despite the respondent's valid argument, the court noted that the adjudicating officer's order demanded Rs. 11,61,898 for service tax, along with additional amounts for education cess and penalty under Section 78 of the Finance Act, 1994. Considering the penalty and the overall circumstances, the court found the Rs. 8,00,000 deposit excessive and reduced it to Rs. 5,00,000, directing the appellant to remit this reduced amount within two weeks.

3. In light of the equal penalty imposed on the appellant and the total amount due, the court found the original deposit requirement of Rs. 8,00,000 to be excessive. Therefore, the court exercised its discretion to reduce the deposit amount to Rs. 5,00,000, considering the financial circumstances and penalties involved. The appellant was directed to remit the reduced amount within two weeks, with the waiver of pre-deposit for the balance dues and stay against recovery as ordered by CESTAT, thereby disposing of the Customs, Excise Appeal.