2015 (9) TMI 480 - HC - Service Tax

Waiver of pre-deposit - cenvat credit - exempted and taxable services - trading activity - tribunal directed the appellant to deposit 50% of the CENVAT Credit disallowed - prima facie view - Held that - So long as any tentative and prima facie finding will suffice for disposal of such interim applications, the Tribunal must be careful and render only them and nothing more. We find that not just absence of a word prima facie but otherwise as well the findings cannot be termed as tentative. In these circumstances, we are of the opinion that we should not express any view on the debatable issue and on merits. Rather we should only interfere with that part of the Tribunal s order where it has imposed conditions of deposit. Interest of justice would be served if the appellant deposits a sum equivalent to 25% of the confirmed demand and if that deposit is made within a period of eight weeks from the date of receipt of a copy of this order, the Tribunal shall hear the appeal on merits and according to law. - Stay order modified - Decided partly in favor of assessee.

Summary

Issues:
Challenge to interim order passed by Customs, Excise and Service Tax Appellate Tribunal regarding pre-deposit condition and stay of recovery.

Analysis:
1. The appellant challenged an interim order requiring a pre-deposit of 50% of disallowed credit by the Tribunal. The appellant contended that the issue raised in the show cause notice was debatable due to legislative amendments impacting the period under dispute. The Tribunal had conclusively decided on the issue of trading being an exempted service before a certain date, which the appellant argued required further consideration. The appellant also raised concerns regarding the Tribunal's approach to limitation/time extension.

2. The appellant argued that the issues before the Tribunal were debatable and should have warranted a more reasonable condition or total dispensation of pre-deposit. However, the Tribunal, while acknowledging the arguable nature of the issue, decided not to waive the pre-deposit condition entirely. The appellant sought the Court's intervention to admit the appeal based on the debatable nature of the issues raised.

3. On the other hand, the Revenue supported the Tribunal's order, highlighting that the Tribunal had previously addressed similar legal issues in another case. The Revenue contended that the Tribunal's decision was fair and just, and there was no need for further interference in the appellate jurisdiction.

4. The Court, after reviewing the arguments and the impugned order, found that the appeal raised substantial questions of law. The Court admitted the appeal based on the substantial questions regarding the justification of the pre-deposit condition imposed by the Tribunal and the conflicting views on the issue at hand.

5. The Court noted the Tribunal's conclusive findings on the main issue raised in the appeal and criticized the Tribunal for expressing final opinions on debatable matters at an interlocutory stage. The Court emphasized the importance of balancing the rights and equities of both parties, especially when detailed arguments are presented. The Court decided not to express any view on the debatable issues and interference with the part of the Tribunal's order imposing deposit conditions.

6. Finally, the Court ordered the appellant to deposit 25% of the confirmed demand within eight weeks to proceed with the appeal on merits. Non-compliance would have legal consequences. The Court clarified that its interference did not indicate a stance on the merits of the controversy and kept all contentions open. The appeal was disposed of without costs.