2015 (4) TMI 971 - HC - Service Tax

Waiver of pre-deposit - Out-door catering services - benefit of Notification No.12/2003-ST - Held that - whether the petitioner is eligible for the benefit of Notification No.12/2003-ST and whether the extended period of time under proviso to Section 73(1) of the Finance Act, 1994 is invokable to the petitioner s case are disputed questions of fact and the same could be raised before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), as the petitioner has remedy of filing appeal against the order-in-original. This Court is of further view that there is no violation of principles of natural justice in passing the order impugned and the procedures stipulated in Finance Act, 1994 has been thoroughly followed. Thus, the petitioner is bound to pay 7.5% of the total service tax demand of ₹ 63,79,561/- at the time of filing of appeal before the CESTAT. However, it is the case of the petitioner that the levy itself is unwarranted and as such the mandatory payment will cause undue hardship to them. In my considered view, in terms of the provisions of the Act, payment of 7.5% of the total tax demand is mandatory and that cannot be reduced by this Court and further, the petitioner could raise all the points raised before this Court before the CESTAT to substantiate its case. - Decided against assessee.

Summary

Issues:
Challenge to department's order, consideration of Larger Bench decision, eligibility for Notification No.12/2003-ST, applicability of extended period under proviso to Section 73(1) of Finance Act, 1994, violation of natural justice, mandatory payment of 7.5% of total tax demand, remedy of appeal before CESTAT.

1. Challenge to Department's Order:
The petitioner challenged the department's order dated 26.12.2014, seeking direction to consider the decision of a Larger Bench in a specific case. The petitioner provided outdoor catering services to various customers, including institutional clients. The department's Audit Team raised concerns about the split-up cost of materials and services, leading to a show cause notice proposing differential service tax. The petitioner responded to the notice, attended a hearing, and opted for Notifications related to the sale of ingredients. However, the adjudicating authority held the petitioner ineligible for Notification No.12/2003-ST, prompting the writ petition.

2. Eligibility for Notification No.12/2003-ST:
The petitioner argued that the Adjudicating Authority erred in relying on a different case and misinterpreting the relevant provisions. The counsel highlighted the definition of sale under the Tamil Nadu Value Added Tax Act and contended that the petitioner should be eligible for the notification. The Adjudicating Authority emphasized the crucial aspect of the term "sold" in the notification and differentiated catering contracts based on the division of costs between service charges and ingredients. The court noted the disputed factual questions regarding the petitioner's eligibility for the notification and the applicability of the extended period under the Finance Act.

3. Violation of Natural Justice and Mandatory Payment:
The court found no violation of natural justice in the department's order and affirmed that the procedures under the Finance Act were duly followed. It ruled that the petitioner must pay 7.5% of the total service tax demand while filing an appeal before the CESTAT, emphasizing the mandatory nature of this payment. Despite the petitioner's claim of undue hardship, the court maintained the requirement for the mandatory payment and advised the petitioner to raise all relevant points during the appeal process.

4. Remedy of Appeal Before CESTAT:
The court concluded that the petitioner could appeal the order before the CESTAT and address all raised issues during the appellate proceedings. It declined to interfere with the impugned order in the writ petition, dismissing the petition and allowing exclusion of time spent on the petition for calculating the limitation period. No costs were awarded, and the connected miscellaneous petition was closed, providing a comprehensive analysis of the judgment.