2022 (12) TMI 473 - HC - Service Tax

Maintainability of petition - seeking waiver of pre-deposit in the appeal filed by the Petitioner against Order-in-Original No. 30/2022-ST dated 28.01.2022 without insistence of payment of pre-deposit of 7.5% - levy of service tax - whether the petitioner is required to pay service tax on the commission received or the gross amount for the taxi service? HELD THAT - The learned counsel appearing for the petitioner states that during the previous two years, the petitioner could hardly generate any revenue; in fact, the petitioner has suffered huge losses and therefore today is not in a position to make the mandatory pre-deposit quantified at Rs.1.45 crores for filing an appeal before the Customs, Excise and Services Tax Appellate Tribunal (CESTAT). The insistence of pre-deposit in this case would under the remedy of appeal, illusory. Given the mitigating circumstances and the financial condition of the petitioner, this Court considers it apposite to direct that if the petitioner makes the pre-deposit of a sum of Rs.50,00,000/- within a period of two weeks, the petitioner s appeal in respect of its service tax liability for the period December, 2011 to February, 2015 shall be heard by CESTAT on merits. Petition disposed off.

Summary

Issues:
Waiver of pre-deposit in an appeal against Order-in-Original, liability to pay service tax on commission received, liability to pay service tax on gross amount for taxi service, financial hardship of the petitioner.

Analysis:
The petitioner filed a petition seeking a writ of mandamus to declare the waiver of pre-deposit in an appeal against Order-in-Original without insisting on the payment of 7.5%. The petitioner, engaged in the business of connecting customers to taxi operators and receiving commission on the gross amount, claimed to have deposited service tax on the commission received. The main contention revolved around whether the petitioner was liable to pay service tax on the gross amount, which the petitioner never received, for the period of December 2011 to February 2015. The introduction of a new service, 'Rent-a-Cab,' from March 1, 2015, mandated service tax payment on the entire gross amount for aggregators providing such service. The dispute primarily focused on the legal question of whether service tax should be paid on the commission or the gross amount for the taxi service.

The Court acknowledged that the controversy was a legal issue rather than a factual one, emphasizing the interpretation of the law regarding service tax liability. Considering the petitioner's financial hardships, including significant losses over the past two years, the Court directed the petitioner to make a reduced pre-deposit of Rs. 50,00,000 within two weeks. Upon compliance with this directive, the Court allowed the petitioner's appeal on its service tax liability for the period December 2011 to February 2015 to be heard by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) on its merits. This decision aimed to balance the need for pre-deposit requirements with the petitioner's financial constraints, ensuring access to justice while upholding the legal framework governing service tax liabilities.

In conclusion, the judgment addressed the legal dispute surrounding service tax liability, balancing the requirement of pre-deposit with the petitioner's financial difficulties. By allowing a reduced pre-deposit amount and granting the appeal to be heard on its merits, the Court sought to provide a fair resolution to the petitioner's concerns while upholding the legal principles governing service tax obligations.