2010 (2) TMI 280 - HC - Service Tax

Stay predeposit CESTAT ordered pre deposit of Rs. 6 lakhs appellant contended that the appellant has a strong prima facie case on merit, inasmuch as the appellant is running in great financial crisis. He further submitted that a sum of Rs. 6 lacs has already been deposited and therefore, deposit of balance amount be waived. He submitted that the tribunal has erred in asking the appellant to deposit a further sum of Rs. 6 lacs, apart from Its. 6 lacs which has already been deposited. Held that - The Tribunal in the impugned order has observed that the interpretation of the notification is doubtful and the appellant may or may not get the relief - In view of the aforesaid observation and the claim of the appellant that it not liable for any service tax, we are of the view that the order of the Tribunal requires modification amount of pre deposit reduced to 3 lacs.

Summary

Issues:
1. Appeal against Tribunal's order for waiver of predeposit of Service tax.
2. Appellant's classification as a tour operator and liability for service tax.
3. Appeal before Commissioner (Appeals) and Tribunal regarding pre-deposit amount.
4. Appellant's financial crisis and request for waiver of balance amount.
5. Interpretation of notification and doubt over appellant's liability for service tax.

Analysis:

1. The appeal was filed against the Tribunal's order directing the appellant to deposit a sum of Rs. 6 lacs as a predeposit of the Service tax. The appellant contested being classified as a tour operator and thus being liable for service tax.

2. The appellant argued that they are not a tour operator and should not be liable for service tax. However, the adjudicating authority did not accept this contention and demanded a significant sum for the period in question.

3. Despite filing an appeal before the Commissioner (Appeals) and an application for waiver of pre-deposit, the appellant was directed to deposit a sum of Rs. 5 lacs. The appellant did not deposit this amount, leading to the rejection of the appeal and subsequent filing of appeals before the Tribunal.

4. The Tribunal initially directed the appellant to deposit Rs. 6 lacs and then, upon further appeal, reiterated the same amount for pre-deposit. The appellant argued their financial crisis and requested a waiver of the balance amount, which was not accepted by the Tribunal.

5. Upon reviewing the Tribunal's order, the High Court found doubts regarding the interpretation of the notification and the appellant's liability for service tax. Considering the appellant's claim and the uncertain interpretation, the Court modified the Tribunal's order.

In conclusion, the High Court directed the appellant to deposit a reduced sum of Rs. 3 lacs within a month. If the appellant complies, the Tribunal is instructed to decide the appeal on merits promptly, bringing an end to the legal proceedings.