2010 (10) TMI 9 - HC - Service Tax

Stay - pre deposit - precedence - For supply of food and beverages petitioner was paying Sales Tax (VAT) as was applicable. From March 2005 the petitioner was paying service tax on the gross amount charged from the guests under the Mandap Keeper Service excluding the value of food and beverages sold by it in terms of notification No.12/2003-ST dated 20.06.2003 - on earlier two occasions in the case of petitioner itself relating to the earlier assessment years involving identical question, the Tribunal had granted total waiver for entertaining its appeals - Held that - Tribunal has committed gross illegality in not maintaining uniformity and consistency in exercise of its judicial discretion. The reason assigned by the Tribunal for not granting complete waiver in the appeal filed by the petitioner in the third year s challenge to the statement being wholly unsustainable, the impugned order (Annexure P-1) deserves to be and is hereby quashed to the extent of imposition of the condition of pre-deposit of Rs.60,00,000/-.

Summary

Issues:
1. Interpretation of notification regarding service tax on banquet hall services.
2. Applicability of service tax on food and beverages supplied in the banquet hall.
3. Tribunal's decision on waiver of pre-deposit in appeal.

Analysis:
1. The petitioner, a company running a hotel in Indore, claimed to be a "Mandap Keeper" under the Service Tax Act for services provided in the banquet hall. The issue arose when the Commissioner demanded service tax on the gross amount received, excluding the value of food and beverages, based on a show cause notice. The petitioner contended that it was entitled to the benefit of a specific notification, but the Commissioner rejected this claim, leading to a demand for service tax, interest, and penalties.

2. The petitioner challenged the Commissioner's order by filing a statutory appeal before the Tribunal, seeking a waiver of the pre-deposit requirement. The Tribunal, after considering the petitioner's plea, directed a partial deposit of the demanded amount. The petitioner argued that the Tribunal's decision lacked consistency with its previous orders granting total waiver in similar cases. The Union of India, representing the respondents, contended that the Tribunal's decision was lawful as the petitioner failed to establish undue hardship.

3. The High Court analyzed the Tribunal's decision and noted that inconsistency in granting waivers was evident. The Court emphasized the need for uniformity and consistency in judicial discretion, citing legal precedents. It highlighted that the Tribunal's reasoning for denying complete waiver lacked merit and was unsustainable. Consequently, the High Court quashed the condition of pre-deposit and directed the Tribunal to decide the appeal on merits without insisting on the pre-deposit amount. The Court also set a timeline for the Tribunal to finalize all pending appeals of the petitioner promptly.

This judgment clarifies the interpretation of service tax notifications for banquet hall services, addresses the applicability of service tax on food and beverages, and underscores the importance of maintaining consistency and uniformity in judicial decisions, especially concerning waiver requests in appeals.